N-CSR

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 Chairman and Chief Executive Officer 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
Date of reporting period:		April 30, 2007

Item 1. Reports to Stockholders.

The Registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:

2007 Annual Report to Shareholders

30 April 2007

PowerShares Dynamic Market Portfolio

PowerShares Dynamic OTC Portfolio

PowerShares Dynamic MagniQuant Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	12
Frequency Distribution of Discounts & Premiums	14
Fees and Expenses	16
Broad Market Portfolios
Schedules of Investments
PowerShares Dynamic Market Portfolio	17
PowerShares Dynamic OTC Portfolio	19
PowerShares Dynamic MagniQuant Portfolio	21
PowerShares FTSE RAFI US 1000 Portfolio	24
Statements of Assets and Liabilities	36
Statements of Operations	37
Statements of Changes in Net Assets	38
Financial Highlights	40
Notes to Financial Statements	42
Report of Independent Registered Public Accounting Firm	50
Supplemental Information (Unaudited)	51
Information about Advisory Agreement (Unaudited)	56

My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US 1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing investor with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P 500^® Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the end of summer 2006, energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

PowerShares Dynamic Market Portfolio (ticker: PWC)

The PowerShares Dynamic Market Portfolio returned 12.12% over the reporting period, while the S&P 500^® Index returned 15.24% and the Russell 3000^® Index returned 14.48%. Performance during the reporting period was somewhat narrow, making it difficult for the fund to keep pace due to its underweighting of names like Exxon Mobil, Microsoft, Johnson & Johnson and Altria Group relative to a cap-weighted portfolio.

Large cap and small cap value stocks were the biggest contributors to overall performance, while mid-cap growth stocks faired the worst. Consumer discretionary and staple stocks and industrial shares contributed the most to performance, while financials and technology contributed the least. Relative to the broad U.S. market, the Fund benefited from the index's effective stock selection in the food and staple retailing space, consumer durables and apparel stocks as well as commercial services companies; the index's stock selection was not effective among insurance, technology hardware or diversified financials, hurting the Fund's performance relative to the market.

The PowerShares Dynamic Market Portfolio bases its stock selection, portfolio management, and asset allocation decisions on an enhanced index called the Dynamic Market Intellidex^SM Index. The Fund utilized a direct index replication method during the reporting period (less fees and expenses).

The index's investment decisions are derived from a proprietary methodology which incorporates some of the most 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 a company's overall investment potential. Securities identified by the criteria that possess the greatest capital appreciation potential are selected for the index and incorporated by the portfolio manager.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	20.5
Information Technology	14.8
Consumer Discretionary	12.6
Health Care	12.2
Industrials	10.4
Energy	10.3
Consumer Staples	9.1
Utilities	3.6
Materials	3.6
Telecommunication Services	2.8
Money Market Fund	0.1
Other	0.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Baker Hughes, Inc.	4.0
Exxon Mobil Corp.	3.4
General Mills, Inc.	3.2
PepsiCo, Inc.	3.1
Boeing Co.	2.6
PG&E Corp.	2.5
International Paper Co.	2.5
Hartford Financial Services Group (The), Inc.	2.5
ACE Ltd. (Cayman Islands)	2.4
Travelers Cos. (The), Inc.	2.4
Total	28.6

Style Allocation (%)

Large-Cap Value	43.6
Mid-Cap Value	19.9
Large-Cap Growth	14.2
Mid-Cap Growth	10.4
Small-Cap Value	9.1
Small-Cap Growth	2.8

4

Manager's Analysis (Continued)

PowerShares Dynamic Market Portfolio (ticker: PWC)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)     As of 30 April 2007

Index

	Avg. Ann.†				Fund Inception
	1 Year		3 Year		Avg. Ann.†		Cumulative
Dynamic Market IntellidexSM Index		12.35		16.29		20.03		107.58
S&P 500® Index		15.24		12.25		14.83		73.86
Russell 3000® Index		14.48		13.08		15.99		80.99

Fund

NAV Return	12.12	15.77	19.31	102.62
Share Price Return	12.06	15.73	19.29	102.47

Fund Inception: 1 May 2003

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.63%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.60% while the Fund's gross annualized total operating expense ratio was 0.62%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are based upon a hypothetical investment in its constituent securities. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 3000^® Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 500 and 3,000 common stocks, respectively.

^† Average annualized.

5

Manager's Analysis

PowerShares Dynamic OTC Portfolio (ticker: PWO)

The PowerShares Dynamic OTC Portfolio returned 2.67% over the reporting period, while the Nasdaq Composite returned 8.72%. Performance during the period was narrow, driven buy a few of the largest names in the Nasdaq market, causing the Fund to trail due to its underweighting of names like Apple, Oracle and Cisco Systems relative to a cap-weighted portfolio. Exposure to software companies Citrix Systems and BEA Systems and communication equipment makers Tellabs and QLogic had a negative impact on fund performance as well.

The Fund suffered from more exposure to mid-cap growth names and less effective stock selection among large-cap value names. Health care equipment & services, insurance and software & services companies contributed the most to performance; technology hardware, consumer services and biotechnology companies contributed negatively.

The PowerShares Dynamic OTC Portfolio bases its stock selection, portfolio management, and asset allocation decisions on an enhanced index called the Dynamic OTC Intellidex^SM Index. The Fund utilized a direct index replication method during the reporting period (less fees and expenses). The index's investment decisions are derived from a proprietary methodology which incorporates some of the most 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 company's overall investment potential. Securities identified by the criteria that possess the greatest capital appreciation potential are selected for the index and incorporated by the portfolio manager.

Sector Breakdown (% of the Fund's

Net Assets)

Information Technology	50.3
Consumer Discretionary	14.7
Health Care	13.8
Financials	10.5
Industrials	5.4
Energy	1.7
Telecommunication Services	1.6
Consumer Staples	1.5
Materials	0.7
Other	(0.2	)

Style Allocation (%)

Mid-Cap Growth	39.5
Small-Cap Value	19.1
Mid-Cap Value	15.0
Large-Cap Growth	13.2
Small-Cap Growth	13.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Apple, Inc.	3.5
Synopsys, Inc.	3.2
Microsoft Corp.	3.2
Compuware Corp.	3.2
BEA Systems, Inc.	3.0
Polycom, Inc.	3.0
QLogic Corp.	3.0
Fiserv, Inc.	3.0
Cisco Systems, Inc.	3.0
Autodesk, Inc.	3.0
Total	31.1

6

Manager's Analysis (Continued)

PowerShares Dynamic OTC Portfolio (ticker: PWO)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)    As of 30 April 2007

Index

	Avg. Ann.†				Fund Inception
	1 Year		3 Year		Avg. Ann.†		Cumulative
Dynamic OTC IntellidexSM Index		2.99		15.21		18.57		97.62
Nasdaq Composite Index		8.72		9.56		14.43		71.48
Nasdaq 100 Index		9.82		10.05		13.81		67.78

Fund

NAV Return	2.67	14.62	17.85	92.88
Share Price Return	2.67	14.57	17.82	92.69

Fund Inception: 1 May 2003

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.69%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.60% while the Fund's gross annualized total operating expense ratio was 0.69%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Nasdaq Composite Index and the Nasdaq 100 Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 3,300 and 100 common stocks, respectively.

^† Average annualized.

7

Manager's Analysis

PowerShares Dynamic MagniQuant Portfolio (ticker: PIQ)

The PowerShares Dynamic MagniQuant Portfolio returned 10.67% since the Fund's inception on October 12, 2006, while the S&P 500^® Index returned 9.84% and the Russell 3000^® Index returned 10.11%.

Insurance, materials and capital goods stocks contributed the most to performance, while telecom and utilities contributed least. Relative to the broad U.S. market, the Fund benefited from the index's effective stock selection in the technology hardware, consumer durables and semiconductor space; stock selection was not as effective among pharmaceuticals, autos and consumer services stocks.

The PowerShares Dynamic MagniQuant Portfolio bases its stock selection, portfolio management, and asset allocation decisions on an enhanced index called the Dynamic Top 200 Intellidex^SM Index. The Fund utilized a direct index replication method during the reporting period (less fees and expenses).

The index's investment decisions are derived from a proprietary methodology which incorporates some of the most 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 criteria that possess the greatest capital appreciation potential are selected for the index and incorporated by the portfolio manager.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	32.7
Consumer Discretionary	14.3
Industrials	13.8
Information Technology	12.4
Health Care	9.3
Consumer Staples	7.5
Materials	6.6
Utilities	2.2
Telecommunication Services	0.5
Energy	0.5
Other	0.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Merck & Co., Inc.	0.6
Deckers Outdoor Corp.	0.6
GAMCO Investors. Inc., Class A	0.6
Cleveland-Cliffs, Inc.	0.6
Dean Foods Co.	0.6
Brocade Communications Systems, Inc.	0.6
Perini Corp.	0.6
Baxter International, Inc.	0.6
Honeywell International, Inc.	0.6
Seaboard Corp.	0.5
Total	5.9

Style Allocation (%)

Mid-Cap Value	31.2
Large-Cap Value	20.6
Small-Cap Value	18.6
Mid-Cap Growth	14.7
Large-Cap Growth	11.2
Small-Cap Growth	3.7

8

Manager's Analysis (Continued)

PowerShares Dynamic MagniQuant Portfolio (ticker: PIQ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)    As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Top 200 IntellidexSM Index		11.06
S&P 500® Index		9.84
Russell 3000® Index		10.11

Fund

NAV Return	10.67
Share Price Return	10.84

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.67% while the Fund's gross annualized total operating expense ratio was 0.84%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 3000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 3,000 common stocks, respectively.

9

Manager's Analysis

PowerShares FTSE RAFI US 1000 Portfolio (ticker: PRF)

The PowerShares FTSE RAFI US 1000 Portfolio posted strong results during the reporting period outperforming the S&P 500^® and Russell 1000^® total return indices. For the prior twelve months, the Fund returned 17.60%, outpacing the S&P 500^® Index which returned 15.24% and the Russell 1000^® which returned 15.16%.

Top gainers in the portfolio were utilities and telecommunications sectors. Relative to the S&P 500^®, the consumer discretionary, information technology, and utilities sectors generated the greatest relative outperformance.

The index benefited from over-weighting the utilities and telecommunications sectors, and underweighting the information technology sector. Stock selection was most effective in the consumer discretionary and energy sectors.

The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE RAFI US 1000 Index. The FTSE RAFI US 1000 Index is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. U.S. equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the 1,000 equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight. The portfolio manager incorporates the stocks selected by the index into the Fund.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	22.2
Consumer Discretionary	13.4
Consumer Staples	11.5
Industrials	10.7
Information Technology	9.5
Energy	9.3
Health Care	9.1
Utilities	6.6
Telecommunication Services	3.9
Materials	3.7
Money Market	0.1
Other	0.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Exxon Mobil Corp.	2.9
General Electric Co.	2.7
Kraft Foods, Inc., Class A	2.2
Citigroup, Inc.	2.1
Microsoft Corp.	1.7
Bank of America Corp.	1.6
Chevron Corp.	1.5
Wal-Mart Stores, Inc.	1.5
Verizon Communications, Inc.	1.4
AT&T, Inc.	1.2
Total	18.8

Style Allocation (%)

Large-Cap Value	52.7
Large-Cap Growth	19.6
Mid-Cap Value	17.1
Mid-Cap Growth	7.0
Small-Cap Value	3.1
Small-Cap Growth	0.5

10

Manager's Analysis (Continued)

PowerShares FTSE RAFI US 1000 Portfolio (ticker: PRF)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)    As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
FTSE RAFI US 1000 Index		18.51		18.36		25.80
S&P 500® Index		15.24		14.79		20.66
Russell 1000® Index		15.16		14.96		20.91

Fund

NAV Return	17.60	17.48	24.53
Share Price Return	17.69	17.00	23.83

Fund Inception: 19 December 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.00%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.70% while the Fund's gross annualized total operating expense ratio was 0.71%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 1000^® Index are unmanaged indices based on the average performance of approximately 500 and 1,000 common stocks, respectively.

^† Average annualized.

11

Funds' Distribution History

	Ex-Dividend	4/13/07		3/16/07		3/15/07		2/15/07		1/15/07		12/15/06		11/15/06
	Record	4/17/07		3/20/07		3/20/07		2/20/07		1/17/07		12/19/06		11/17/06
	Payable	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06
Fund	Ticker
PowerShares Dynamic Market Portfolio	PWC		—		0.06501		—		—		—		0.16017		—
PowerShares Dynamic OTC Portfolio	PWO		—		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio	PIQ		—		0.02020		—		—		—		0.03317		—
PowerShares FTSE RAFI US 1000 Portfolio	PRF		—		0.12360		—		—		—		0.20592		—

	Ex-Dividend	12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05		12/31/04
	Record	1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05		1/4/05
	Payable	1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05		1/31/05
Fund	Ticker
PowerShares Dynamic Market Portfolio	PWC		—		0.13055		0.04739		0.10797		—		0.02900		—
PowerShares Dynamic OTC Portfolio	PWO		—		—		0.05663		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio	PIQ		—		—		—		—		—		—		—
PowerShares FTSE RAFI US 1000 Portfolio	PRF		—		—		—		—		—		—		—

12

	10/16/06		9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	10/18/06		9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	10/31/06		9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund
PowerShares Dynamic Market Portfolio		—		0.04994		—		—		0.04868		—		—		0.04452
PowerShares Dynamic OTC Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio		—		—		—		—		—		—		—		—
PowerShares FTSE RAFI US 1000 Portfolio		—		0.13450		—		—		0.14583		—		—		0.12172

	12/17/04		9/17/04		6/18/04		3/19/04		12/24/03		9/19/03		6/20/03
	12/21/04		9/21/04		6/22/04		3/23/04		12/29/03		9/23/03		6/24/03
	1/31/05		10/29/04		7/30/04		4/30/04		1/30/04		10/31/03		7/31/03
Fund
PowerShares Dynamic Market Portfolio		0.08784		0.03096		0.07211		0.05300		0.03646		0.04418		0.16848
PowerShares Dynamic OTC Portfolio		—		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio		—		—		—		—		—		—		—
PowerShares FTSE RAFI US 1000 Portfolio		—		—		—		—		—		—		—

13

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PWC	PowerShares Dynamic Market Portfolio	5/1/03		892		567		63		9		0		0		0
PWO	PowerShares Dynamic OTC Portfolio	5/1/03		892		462		31		11		0		0		0
PIQ	PowerShares Dynamic MagniQuant Portfolio	10/12/06		136		77		1		0		0		0		0
PRF	PowerShares FTSE RAFI US 1000 Portfolio	12/19/05		332		219		7		1		0		0		0

14

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PWC		250		3		0		0		0		0
PWO		374		12		2		0		0		0
PIQ		58		0		0		0		0		0
PRF		95		4		6		0		0		0

15

Fees and Expenses

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 period ended April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Market Portfolio
Actual	$	1,000.00	$	1,097.29		0.60	%	$	3.12
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.60	%	$	3.01
PowerShares Dynamic OTC Portfolio
Actual	$	1,000.00	$	1,068.54		0.60	%	$	3.08
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.60	%	$	3.01
PowerShares Dynamic MagniQuant Portfolio
Actual	$	1,000.00	$	1,098.87		0.67	%	$	3.49
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.47		0.67	%	$	3.36
PowerShares FTSE RAFI US 1000 Portfolio
Actual	$	1,000.00	$	1,092.60		0.69	%	$	3.58
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.37		0.69	%	$	3.46

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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.

16

Schedule of Investments

PowerShares Dynamic Market Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.9%
		Consumer Discretionary—12.6%
	116,411	American Eagle Outfitters, Inc.	$	3,430,632
	63,743	Autoliv, Inc.		3,706,655
	119,116	Charlotte Russe Holding, Inc.*		3,255,440
	58,205	Deckers Outdoor Corp.*		4,407,865
	126,302	Hasbro, Inc.		3,992,406
	68,596	International Speedway Corp., Class A		3,388,642
	801,889	Mattel, Inc.		22,693,460
	680,363	Newell Rubbermaid, Inc.		20,866,733
	370,920	Nordstrom, Inc.		20,370,926
	203,166	Omnicom Group, Inc.		21,273,512
	113,487	Payless ShoeSource, Inc.*		3,620,235
	251,660	Sinclair Broadcast Group, Inc., Class A		4,109,608
	143,942	Tempur-Pedic International, Inc.		3,738,174
	127,651	Wolverine World Wide, Inc.		3,648,266
				122,502,554
		Consumer Staples—9.1%
	102,039	Campbell Soup Co.		3,989,725
	167,392	ConAgra Foods, Inc.		4,114,495
	137,191	Dean Foods Co.		4,997,868
	523,173	General Mills, Inc.		31,338,064
	84,520	J.M. Smucker (The) Co.		4,717,906
	463,227	PepsiCo, Inc.		30,614,672
	1,944	Seaboard Corp.		4,846,392
	70,865	UST, Inc.		4,016,628
				88,635,750
		Energy—10.3%
	479,233	Baker Hughes, Inc.		38,525,541
	416,417	Exxon Mobil Corp.		33,055,181
	176,725	Gulfmark Offshore, Inc.*		8,465,128
	120,091	Holly Corp.		7,637,788
	140,355	Plains Exploration & Production Co.*		6,595,281
	67,976	SEACOR Holdings, Inc.*		6,476,753
				100,755,672
		Financials—20.5%
	397,904	ACE Ltd. (Cayman Islands)		23,659,372
	54,883	AMBAC Financial Group, Inc.		5,038,259
	135,307	American Financial Group, Inc.		4,772,278
	74,347	Arch Capital Group Ltd. (Bermuda)*		5,413,949
	90,988	Assurant, Inc.		5,234,540
	432,200	Chubb (The) Corp.		23,265,326
	124,537	City Holding Co.		4,728,670
	122,398	FBL Financial Group, Inc., Class A		4,741,699
	237,505	Hartford Financial Services Group (The), Inc.		24,035,505
	89,388	Nationwide Financial Services, Inc., Class A		5,106,736
	69,295	PartnerRe Ltd. (Bermuda)		4,990,626
	364,369	Principal Financial Group, Inc.		23,133,788
	984,321	Progressive (The) Corp.		22,708,285
	85,848	RLI Corp.		4,780,875
	71,952	Safeco Corp.		4,802,076
	75,957	Transatlantic Holdings, Inc.		5,278,252

Number of Shares			Value
		Common Stocks (Continued)
	432,357	Travelers Cos. (The), Inc.	$	23,390,514
	97,490	Zenith National Insurance Corp.		4,508,913
				199,589,663
		Health Care—12.2%
	88,633	AMERIGROUP Corp.*		2,493,246
	94,824	Apria Healthcare Group, Inc.*		3,009,714
	399,349	Baxter International, Inc.		22,615,134
	40,522	Bio-Rad Laboratories, Inc., Class A*		2,867,742
	65,692	Chemed Corp.		3,304,308
	138,236	CIGNA Corp.		21,508,139
	95,173	DENTSPLY International, Inc.		3,179,730
	59,965	Edwards Lifesciences Corp.*		2,938,285
	121,138	Emergency Medical Services Corp., Class A*		4,055,700
	51,470	Hillenbrand Industries, Inc.		3,147,391
	310,073	Johnson & Johnson		19,912,888
	78,565	Lincare Holdings, Inc.*		3,098,604
	776,403	Pfizer, Inc.		20,543,623
	55,054	Techne Corp.*		3,246,534
	38,359	WellCare Health Plans, Inc.*		3,091,352
				119,012,390
		Industrials—10.4%
	354,153	Avery Dennison Corp.		22,028,317
	266,520	Boeing Co.		24,786,359
	65,649	Cascade Corp.		4,068,269
	148,737	Ennis, Inc.		3,636,620
	97,820	Equifax, Inc.		3,893,236
	76,272	John H. Harland Co.		4,011,907
	235,634	Lockheed Martin Corp.		22,653,853
	104,123	Perini Corp.*		4,435,640
	56,552	Teleflex, Inc.		4,062,130
	163,924	Tredegar Corp.		3,830,904
	80,102	Watson Wyatt Worldwide, Inc., Class A		3,775,207
				101,182,442
		Information Technology—14.8%
	329,221	BEA Systems, Inc.*		3,881,516
	468,362	Brocade Communications Systems, Inc.*		4,575,897
	146,576	Convergys Corp.*		3,702,510
	116,740	Dolby Laboratories, Inc., Class A*		4,134,931
	697,120	Electronic Data Systems Corp.		20,383,788
	62,903	Factset Research Systems, Inc.		3,869,164
	98,005	Fair Isaac Corp.		3,499,759
	369,272	Fiserv, Inc.*		19,634,192
	206,647	International Business Machines Corp.		21,121,389
	108,410	ManTech International Corp., Class A*		3,326,019
	43,756	Mettler Toledo International, Inc.*		4,271,461
	149,189	Synopsys, Inc.*		4,126,568
	101,734	Syntel, Inc.		3,566,794
	629,740	Total System Services, Inc.		19,559,724
	195,248	Western Digital Corp.*		3,451,985
	1,129,500	Xerox Corp.*		20,895,749
				144,001,446

See Notes to Financial Statements.
17

Schedule of Investments (Continued)

PowerShares Dynamic Market Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Materials—3.6%
	79,895	Albemarle Corp.	$	3,391,543
	642,512	International Paper Co.		24,235,553
	102,141	Sealed Air Corp.		3,360,439
	90,285	Sonoco Products Co.		3,849,752
				34,837,287
		Telecommunication Services—2.8%
	147,050	ALLTEL Corp.		9,218,565
	249,191	AT&T, Inc.		9,648,675
	57,284	CenturyTel, Inc.		2,637,928
	44,676	Golden Telecom, Inc.		2,618,460
	47,145	Telephone & Data Systems, Inc.		2,684,908
				26,808,536
		Utilities—3.6%
	109,990	Northwest Natural Gas Co.		5,588,592
	487,894	PG&E Corp.		24,687,436
	102,025	Wisconsin Energy Corp.		4,977,800
				35,253,828
		Total Common Stocks (Cost $900,618,330)		972,579,568
		Money Market Fund—0.1%
	681,728	Liquid Assets Portfolio Private Class** (Cost $681,728)		681,728
		Total Investments (Cost $901,300,058)—100.0%		973,261,296
		Liabilities in excess of other assets—0.0%		(156,684	)
		Net Assets—100.0%	$	973,104,612

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	939,197,349			96.5	%
Cayman Islands		23,659,372			2.4
Bermuda		10,404,575			1.1
Total investments		973,261,296			100.0
Liabilities in excess of other assets		(156,684	)		(0.0	)
Net Assets	$	973,104,612			100.0	%

See Notes to Financial Statements.
18

Schedule of Investments

PowerShares Dynamic OTC Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Consumer Discretionary—14.7%
	130,610	American Eagle Outfitters, Inc.	$	3,849,077
	33,561	Applebee's International, Inc.		912,188
	36,476	Big 5 Sporting Goods Corp.		933,786
	28,636	Charlotte Russe Holding, Inc.*		782,622
	13,992	Deckers Outdoor Corp.*		1,059,614
	191,402	Expedia, Inc.*		4,520,915
	37,239	Helen of Troy Ltd. (Bermuda)*		845,325
	16,491	International Speedway Corp., Class A		814,655
	27,865	Perry Ellis International, Inc.*		925,118
	121,729	Ross Stores, Inc.		4,035,316
	60,505	Sinclair Broadcast Group, Inc., Class A		988,047
	152,755	Staples, Inc.		3,788,324
				23,454,987
		Consumer Staples—1.5%
	35,438	Costco Wholesale Corp.		1,898,414
	14,193	USANA Health Sciences, Inc.*		565,449
				2,463,863
		Energy—1.7%
	93,502	Global Industries Ltd.*		1,941,102
	29,336	Matrix Service Co.*		715,798
				2,656,900
		Financials—10.5%
	13,329	American Physicians Capital, Inc.*		527,029
	44,800	Arch Capital Group Ltd. (Bermuda)*		3,262,335
	13,704	Argonaut Group, Inc.*		460,591
	12,863	City Holding Co.		488,408
	12,798	First Community Bancshares, Inc.		420,670
	11,369	FPIC Insurance Group, Inc.*		523,656
	14,574	Harleysville Group, Inc.		445,090
	100,224	IPC Holdings Ltd. (Bermuda)		3,004,716
	16,408	Ohio Casualty Corp.		519,149
	62,589	Philadelphia Consolidated Holding Co.*		2,716,363
	10,938	Safety Insurance Group, Inc.		438,176
	46,556	SEI Investments Co.		2,841,313
	20,377	Selective Insurance Group		531,432
	21,373	United America Indemnity Ltd., Class A (Cayman Islands)*		533,898
				16,712,826
		Health Care—13.8%
	12,468	Biosite, Inc.*		1,153,290
	34,851	Cross Country Healthcare, Inc.*		686,216
	111,174	DENTSPLY International, Inc.		3,714,323
	46,051	Express Scripts, Inc.*		4,400,174
	91,762	Lincare Holdings, Inc.*		3,619,093
	15,786	Magellan Health Services, Inc.*		677,219
	22,883	MedCath Corp.*		680,083
	31,990	PSS World Medical, Inc.*		642,999
	29,500	Sciele Pharma, Inc.*		729,240
	12,249	Techne Corp.*		722,324

Number of Shares			Value
		Common Stocks (Continued)
	93,444	VCA Antech, Inc.*	$	3,684,497
	38,424	ViroPharma, Inc.*		579,434
	30,970	Wright Medical Group, Inc.*		731,511
				22,020,403
		Industrials—5.4%
	105,500	Copart, Inc.*		3,057,390
	79,682	Herman Miller, Inc.		2,741,858
	16,187	Hub Group, Inc., Class A*		582,732
	9,711	Nordson Corp.		445,055
	15,883	Resources Connection, Inc.*		479,190
	16,293	TeleTech Holdings, Inc.*		614,735
	12,371	Woodward Governor Co.		610,509
				8,531,469
		Information Technology—50.3%
	36,321	Advanced Energy Industries, Inc.*		889,865
	33,410	Agilysys, Inc.		702,612
	22,568	Ansoft Corp.*		728,721
	55,077	Apple, Inc.*		5,496,686
	857,635	Atmel Corp.*		4,562,618
	115,509	Autodesk, Inc.*		4,767,056
	410,517	BEA Systems, Inc.*		4,839,995
	88,338	Brocade Communications Systems, Inc.*		863,062
	178,323	Cisco Systems, Inc.*		4,768,357
	513,146	Compuware Corp.*		5,064,751
	20,369	Comtech Telecommunications Corp.*		770,967
	28,540	Covansys Corp.*		953,236
	150,820	Credence Systems Corp.*		559,542
	29,088	CSG Systems International, Inc.*		778,977
	61,274	Cybersource Corp.*		778,793
	89,699	Fiserv, Inc.*		4,769,296
	35,101	Gevity HR, Inc.		654,634
	36,789	Global Imaging Systems, Inc.*		1,062,834
	20,973	Interdigital Communications Corp.*		689,592
	31,191	Inter-Tel, Inc.		786,637
	24,466	Intevac, Inc.*		594,768
	30,300	Jack Henry & Associates, Inc.		719,625
	20,448	ManTech International Corp., Class A*		627,345
	41,316	Mentor Graphics Corp.*		668,493
	12,916	MICROS Systems, Inc.*		707,797
	169,747	Microsoft Corp.		5,082,225
	5,800	MicroStrategy, Inc., Class A*		659,808
	19,105	MTS Systems Corp.		812,154
	27,042	National Instruments Corp.		753,390
	26,063	NETGEAR, Inc.*		875,977
	35,795	NetRatings, Inc.*		744,894
	46,406	Photronics, Inc.*		698,410
	144,967	Polycom, Inc.*		4,827,401
	269,099	QLogic Corp.*		4,811,490
	12,083	Rofin-Sinar Technologies, Inc.*		800,861
	106,462	Skyworks Solutions, Inc.*		733,523
	45,027	Sykes Enterprises, Inc.*		831,198

See Notes to Financial Statements.
19

Schedule of Investments (Continued)

PowerShares Dynamic OTC Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	186,032	Synopsys, Inc.*	$	5,145,646
	19,189	Syntel, Inc.		672,766
	22,290	THQ, Inc.*		743,817
	80,220	TIBCO Software, Inc.*		731,606
	53,770	United Online, Inc.		775,901
	15,048	Varian Semiconductor Equipment Associates, Inc.*		998,585
	40,548	VASCO Data Security International, Inc.*		867,322
	15,701	WebEx Communications, Inc.*		890,875
				80,264,108
		Materials—0.7%
	6,289	Innospec, Inc.		337,656
	18,833	Sigma-Aldrich Corp.		792,493
				1,130,149
		Telecommunication Services—1.6%
	11,819	Golden Telecom, Inc.		692,712
	25,054	Leap Wireless International, Inc.*		1,912,371
				2,605,083
		Total Investments (Cost $149,129,123)—100.2%		159,839,788
		Liabilities in excess of other assets—(0.2%)		(240,843	)
		Net Assets—100.0%	$	159,598,945

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007(Unaudited)

	Value			Net Assets
United States	$	152,193,514			95.4	%
Bermuda		7,112,376			4.5
Cayman Islands		533,898			0.3
Total investments		159,839,788			100.2
Liabilities in excess of other assets		(240,843	)		(0.2	)
Net Assets	$	159,598,945			100.0	%

See Notes to Financial Statements.
20

Schedule of Investments

PowerShares Dynamic MagniQuant Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—14.3%
	12,853	American Eagle Outfitters, Inc.	$	378,778
	7,039	Autoliv, Inc.		409,318
	11,599	Brinker International, Inc.		360,729
	11,164	Brown Shoe Co., Inc.		301,205
	13,151	Charlotte Russe Holding, Inc.*		359,417
	8,179	Coach, Inc.*		399,381
	6,426	Deckers Outdoor Corp.*		486,641
	8,085	Genuine Parts Co.		399,480
	15,100	Hanesbrands, Inc.*		401,509
	13,946	Hasbro, Inc.		440,833
	17,102	Helen of Troy Ltd. (Bermuda)*		388,215
	7,573	International Speedway Corp., Class A		374,106
	4,863	J.C. Penney Co., Inc.		384,615
	8,259	Marriott International, Inc., Class A		373,389
	15,178	Mattel, Inc.		429,537
	12,878	Newell Rubbermaid, Inc.		394,968
	7,021	Nordstrom, Inc.		385,593
	3,846	Omnicom Group, Inc.		402,715
	12,530	Payless ShoeSource, Inc.*		399,707
	4,669	Polo Ralph Lauren Corp.		430,062
	11,979	Ross Stores, Inc.		397,104
	27,786	Sinclair Broadcast Group, Inc., Class A		453,745
	6,029	Starwood Hotels & Resorts Worldwide, Inc.		404,064
	15,892	Tempur-Pedic International, Inc.		412,715
	14,357	TJX Cos., Inc.		400,417
	5,080	VF Corp.		446,075
	11,632	Walt Disney (The) Co.		406,887
	14,095	Wolverine World Wide, Inc.		402,835
	6,755	Yum! Brands, Inc.		417,864
				11,641,904
		Consumer Staples—7.5%
	6,382	Altria Group, Inc.		439,847
	9,760	Campbell Soup Co.		381,616
	16,010	ConAgra Foods, Inc.		393,526
	13,119	Dean Foods Co.		477,925
	7,148	General Mills, Inc.		428,165
	8,658	H.J. Heinz Co.		407,878
	8,085	J.M. Smucker (The) Co.		451,305
	10,385	McCormick & Co., Inc.		385,491
	7,859	NBTY, Inc.*		388,313
	6,329	PepsiCo, Inc.		418,284
	6,305	Procter & Gamble (The) Co.		405,475
	11,628	Safeway, Inc.		422,096
	186	Seaboard Corp.		463,698
	6,646	USANA Health Sciences, Inc.*		264,777
	6,778	UST, Inc.		384,177
				6,112,573
		Energy—0.5%
	4,136	SEACOR Holdings, Inc.*		394,078

Number of Shares			Value
		Common Stocks (Continued)
		Financials—32.7%
	6,037	A.G. Edwards, Inc.	$	437,381
	7,097	ACE Ltd. (Cayman Islands)		421,988
	4,568	AMBAC Financial Group, Inc.		419,342
	11,263	American Financial Group, Inc.		397,246
	6,189	Arch Capital Group Ltd. (Bermuda)*		450,683
	11,044	Argonaut Group, Inc.*		371,189
	7,573	Assurant, Inc.		435,675
	7,733	Bank of America Corp.		393,610
	9,615	Bank of New York (The) Co., Inc.		389,215
	11,301	CB Richard Ellis Group, Inc., Class A*		382,539
	12,866	Chittenden Corp.		373,886
	7,709	Chubb Corp.		414,975
	10,366	City Holding Co.		393,597
	9,732	CNA Financial Corp.*		454,192
	18,810	CNA Surety Corp.*		388,238
	6,488	Comerica, Inc.		401,672
	13,642	Commerce Group, Inc.		444,866
	9,986	Delphi Financial Group, Inc., Class A		426,402
	11,266	Eaton Vance Corp.		430,587
	4,132	Everest Re Group Ltd. (Bermuda)		415,844
	10,188	FBL Financial Group, Inc., Class A		394,683
	3,303	Franklin Resources, Inc.		433,717
	10,576	GAMCO Investors, Inc., Class A		482,477
	1,888	Goldman Sachs Group (The), Inc.		412,736
	11,745	Harleysville Group, Inc.		358,692
	4,236	Hartford Financial Services Group (The), Inc.		428,683
	12,682	HCC Insurance Holdings, Inc.		388,830
	19,289	Horace Mann Educators Corp.		405,841
	13,846	IPC Holdings Ltd. (Bermuda)		415,103
	8,010	JPMorgan Chase & Co.		417,321
	10,459	KeyCorp		373,177
	5,171	Lehman Brothers Holdings, Inc.		389,273
	5,800	Lincoln National Corp.		412,670
	9,271	Loews Corp.		438,704
	831	Markel Corp.*		381,354
	9,051	Mellon Financial Corp.		388,559
	4,590	Merrill Lynch & Co, Inc.		414,156
	6,263	MetLife, Inc.		411,479
	6,062	Moody's Corp.		400,819
	7,442	Nationwide Financial Services, Inc., Class A		425,161
	10,448	Odyssey Re Holdings Corp.		437,771
	13,224	Ohio Casualty Corp.		418,407
	17,857	Old Republic International Corp.		379,818
	5,768	PartnerRe Ltd. (Bermuda)		415,411
	8,647	Philadelphia Consolidated Holding Co.*		375,280
	5,944	Piper Jaffray Cos., Inc.*		379,287
	8,594	PMI Group (The), Inc.		416,551
	6,499	Principal Financial Group, Inc.		412,622
	17,557	Progressive (The) Corp.		405,040
	4,421	Prudential Financial, Inc.		419,995
	6,962	Reinsurance Group of America, Inc.		433,802

See Notes to Financial Statements.
21

Schedule of Investments (Continued)

PowerShares Dynamic MagniQuant Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	7,145	RLI Corp.	$	397,905
	5,989	Safeco Corp.		399,706
	8,815	Safety Insurance Group, Inc.		353,129
	6,432	SEI Investments Co.		392,545
	16,422	Selective Insurance Group		428,286
	5,905	State Street Corp.		406,677
	4,699	SunTrust Banks, Inc.		396,690
	6,322	Transatlantic Holdings, Inc.		439,316
	7,712	Travelers Cos. (The), Inc.		417,219
	17,225	United America Indemnity Ltd., Class A (Cayman Islands)*		430,281
	12,046	W.R. Berkley Corp.		391,375
	10,283	Willis Group Holdings Ltd. (Bermuda)		421,809
	5,606	XL Capital Ltd., Class A (Cayman Islands)		437,156
	8,115	Zenith National Insurance Corp.		375,319
				26,597,959
		Health Care—9.3%
	8,874	Aetna, Inc.		416,013
	11,685	AMERIGROUP Corp.*		328,699
	12,542	Applera Corp. - Applied Biosystems Group		391,812
	12,503	Apria Healthcare Group, Inc.*		396,845
	8,206	Baxter International, Inc.		464,706
	5,269	Becton, Dickinson & Co.		414,618
	2,841	Cigna Corp.		442,031
	7,332	Coventry Health Care, Inc.*		424,010
	12,550	DENTSPLY International, Inc.		419,296
	7,511	Forest Laboratories, Inc.*		399,660
	6,372	Johnson & Johnson		409,210
	7,123	McKesson Corp.		419,046
	9,518	Merck & Co., Inc.		489,606
	15,954	Pfizer, Inc.		422,143
	7,708	UnitedHealth Group, Inc.		408,986
	7,296	Waters Corp.*		433,601
	5,057	WellCare Health Plans, Inc.*		407,544
	4,780	Zimmer Holdings, Inc.*		432,494
				7,520,320
		Industrials—13.8%
	6,915	Acuity Brands, Inc.		408,815
	6,016	Avery Dennison Corp.		374,195
	4,527	Boeing Co.		421,011
	6,930	Cascade Corp.		429,452
	5,393	Consolidated Graphics, Inc.*		405,823
	8,538	Cooper Industries Ltd., Class A (Bermuda)		424,851
	13,625	Copart, Inc.*		394,853
	7,863	Dollar Thrifty Automotive Group*		368,617
	15,720	Ennis, Inc.		384,354
	10,340	Equifax, Inc.		411,532
	8,571	Honeywell International, Inc.		464,377
	13,254	Horizon Lines, Inc., Class A		450,769
	6,705	ITT Corp.		427,846
	8,062	John H. Harland Co.		424,061

Number of Shares			Value
		Common Stocks (Continued)
	4,003	Lockheed Martin Corp.	$	384,848
	6,437	Manitowoc (The) Co., Inc.		439,197
	7,981	McDermott International, Inc. (Panama)*		428,260
	5,492	Northrop Grumman Corp.		404,431
	11,005	Perini Corp.*		468,812
	8,521	Pitney Bowes, Inc.		409,008
	10,611	R.R. Donnelley & Sons Co.		426,562
	5,971	Rockwell Collins, Inc.		392,116
	5,977	Teleflex, Inc.		429,328
	7,596	Thomas & Betts Corp.*		413,830
	17,326	Tredegar Corp.		404,909
	6,051	United Technologies Corp.		406,204
	8,466	Watson Wyatt Worldwide, Inc., Class A		399,003
				11,197,064
		Information Technology—12.4%
	12,432	Ansoft Corp.*		401,429
	34,204	BEA Systems, Inc.*		403,265
	12,773	BMC Software, Inc.*		413,462
	48,659	Brocade Communications Systems, Inc.*		475,399
	14,857	Cisco Systems, Inc.*		397,276
	15,229	Convergys Corp.*		384,685
	12,129	Dolby Laboratories, Inc., Class A*		429,609
	14,110	Electronic Data Systems Corp.		412,576
	6,534	Factset Research Systems, Inc.		401,906
	10,183	Fair Isaac Corp.		363,635
	7,474	Fiserv, Inc.*		397,393
	10,013	Hewlett-Packard Co.		421,948
	20,165	Ingram Micro, Inc., Class A*		395,637
	4,182	International Business Machines Corp.		427,442
	6,433	Lexmark International, Inc., Class A*		350,599
	11,263	ManTech International Corp., Class A*		345,549
	4,546	Mettler Toledo International, Inc.*		443,781
	14,144	Microsoft Corp.		423,471
	8,480	NCR Corp.*		427,392
	22,421	QLogic Corp.*		400,887
	15,500	Synopsys, Inc.*		428,730
	10,570	Syntel, Inc.		370,584
	12,745	Total System Services, Inc.		395,860
	20,284	Western Digital Corp.*		358,621
	22,860	Xerox Corp.*		422,910
				10,094,046
		Materials—6.6%
	9,570	Albemarle Corp.		406,247
	6,932	Cleveland-Cliffs, Inc.		480,317
	7,714	E.I. du Pont de Nemours & Co.		379,297
	6,578	Greif, Inc., Class A		365,737
	19,445	Hercules, Inc.*		366,344
	10,994	International Paper Co.		414,694
	6,346	Nucor Corp.		402,717
	7,696	OM Group, Inc.*		404,271
	6,315	Praxair, Inc.		407,633

See Notes to Financial Statements.
22

Schedule of Investments (Continued)

PowerShares Dynamic MagniQuant Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	12,234	Sealed Air Corp.	$	402,499
	9,624	Sigma-Aldrich Corp.		404,978
	10,813	Sonoco Products Co.		461,066
	4,390	United States Steel Corp.		445,761
				5,341,561
		Telecommunication Services—0.5%
	7,314	Telephone & Data Systems, Inc.		416,532
		Utilities—2.2%
	8,702	Edison International		455,550
	9,001	Northwest Natural Gas Co.		457,340
	8,556	PG&E Corp.		432,934
	8,350	Wisconsin Energy Corp.		407,397
				1,753,221
		Total Investments (Cost $77,753,906)—99.8%		81,069,258
		Other assets less liabilities—0.2%		199,745
		Net Assets—100.0%	$	81,269,003

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007(Unaudited)

	Value		Net Assets
United States	$	76,419,657		94.1	%
Bermuda		2,931,916		3.6
Cayman Islands		1,289,425		1.6
Panama		428,260		0.5
Total investments		81,069,258		99.8
Other assets less liabilities		199,745		0.2
Net Assets	$	81,269,003		100.0	%

See Notes to Financial Statements.
23

Schedule of Investments

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.9%
		Consumer Discretionary—13.4%
	2,727	Abercrombie & Fitch Co., Class A	$	222,687
	7,530	Advance Auto Parts, Inc.		310,236
	7,909	Amazon.com, Inc.*		485,059
	9,718	American Axle & Manufacturing Holdings, Inc.		271,618
	5,630	American Eagle Outfitters, Inc.		165,916
	8,016	American Greetings Corp., Class A		204,007
	4,836	AnnTaylor Stores Corp.*		186,089
	4,406	Apollo Group, Inc., Class A*		208,404
	22,055	ArvinMeritor, Inc.		455,436
	10,008	Asbury Automotive Group, Inc.		287,930
	8,153	Autoliv, Inc.		474,097
	55,680	Autonation, Inc.*		1,138,099
	3,797	AutoZone, Inc.*		505,153
	7,036	Barnes & Noble, Inc.		278,133
	6,053	Beazer Homes USA, Inc.		202,049
	10,615	Bed Bath & Beyond, Inc.*		432,455
	12,986	Belo Corp., Class A		250,240
	24,796	Best Buy Co., Inc.		1,156,733
	10,633	Big Lots, Inc.*		342,383
	4,794	Black & Decker Corp.		434,912
	62,510	Blockbuster, Inc., Class A*		387,562
	37,601	Blockbuster, Inc., Class B*		217,710
	9,808	Borders Group, Inc.		207,047
	3,930	BorgWarner, Inc.		306,186
	3,828	Boyd Gaming Corp.		174,174
	8,840	Brinker International, Inc.		274,924
	11,407	Brunswick Corp.		373,693
	6,744	Burger King Holdings, Inc.		158,282
	10,691	Cablevision Systems Corp., Class A*		350,451
	5,874	Career Education Corp.*		173,518
	6,764	CarMax, Inc.*		168,559
	40,935	Carnival Corp. (Panama)		2,001,312
	3,420	CBRL Group, Inc.		152,464
	94,829	CBS Corp., Class B		3,012,717
	14,732	Centex Corp.		659,552
	14,766	Charming Shoppes, Inc.*		184,575
	98,291	Charter Communications, Inc., Class A*		296,839
	23,794	Circuit City Stores, Inc.		415,205
	4,431	Claire's Stores, Inc.		144,318
	34,124	Clear Channel Communications, Inc.		1,209,013
	11,251	Clear Channel Outdoor Holdings, Inc., Class A*		321,216
	4,124	Coach, Inc.*		201,375
	117,344	Comcast Corp., Class A*		3,128,392
	60,916	Comcast Corp., Special Class A*		1,608,182
	15,067	Cooper Tire & Rubber Co.		291,245
	31,690	D.R. Horton, Inc.		702,884
	7,781	Darden Restaurants, Inc.		322,756
	12,444	Dillard's, Inc., Class A		430,936
	40,042	DIRECTV Group (The), Inc.*		954,601

Number of Shares			Value
		Common Stocks (Continued)
	18,776	Discovery Holding Co., Class A*	$	408,378
	27,381	Dollar General Corp.		584,584
	7,254	Dollar Tree Stores, Inc.*		285,227
	5,964	Dow Jones & Co., Inc.		216,672
	56,127	Eastman Kodak Co.		1,398,124
	11,531	EchoStar Communications Corp., Class A*		536,537
	7,136	EW Scripps Co., Class A		308,989
	21,302	Expedia, Inc.*		503,153
	12,135	Family Dollar Stores, Inc.		386,378
	36,313	Federated Department Stores, Inc.		1,594,867
	15,717	Foot Locker, Inc.		373,907
	1,394,037	Ford Motor Co.		11,208,058
	9,901	Fortune Brands, Inc.		793,070
	10,263	Furniture Brands International, Inc.		165,029
	6,602	GameStop Corp., Class A*		218,988
	21,564	Gannett Co., Inc.		1,230,442
	62,146	Gap (The), Inc.		1,115,521
	2,989	Garmin Ltd. (Cayman Islands)		173,930
	382,478	General Motors Corp.		11,944,789
	16,276	Genuine Parts Co.		804,197
	2,732	Getty Images, Inc.*		142,064
	31,227	Goodyear Tire & Rubber (The) Co.*		1,038,610
	5,652	Group 1 Automotive, Inc.		231,732
	27,367	H&R Block, Inc.		618,768
	16,698	Hanesbrands, Inc.*		444,000
	9,693	Harley-Davidson, Inc.		613,761
	1,750	Harman International Industries, Inc.		213,308
	8,800	Harrah's Entertainment, Inc.		750,640
	10,394	Hasbro, Inc.		328,554
	7,051	Hearst-Argyle Television, Inc.		187,768
	13,153	Hilton Hotels Corp.		447,202
	138,763	Home Depot (The), Inc.		5,254,956
	11,615	Hovnanian Enterprises, Inc., Class A*		278,644
	23,944	IAC/InterActiveCorp*		912,745
	37,309	Idearc, Inc.		1,296,488
	9,019	International Game Technology		343,985
	34,362	Interpublic Group of Cos., Inc.*		435,710
	16,545	J.C. Penney Co., Inc.		1,308,544
	2,432	Jack in the Box, Inc.*		162,020
	14,851	Johnson Controls, Inc.		1,519,703
	12,493	Jones Apparel Group, Inc.		417,141
	9,762	KB Home		430,602
	4,524	Kellwood Co.		127,486
	16,042	Kohl's Corp.*		1,187,750
	3,724	Lamar Advertising Co., Class A		224,706
	1,934	Las Vegas Sands Corp.*		164,757
	10,476	La-Z-Boy, Inc.		122,464
	21,913	Lear Corp.*		804,645
	20,110	Leggett & Platt, Inc.		472,987
	16,796	Lennar Corp., Class A		717,357
	11,660	Liberty Global, Inc., Class A*		418,477
	11,671	Liberty Global, Inc., Series C*		389,928

See Notes to Financial Statements.
24

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	2,792	Liberty Media Corp. Capital, Series A*	$	315,412
	53,214	Liberty Media Corp. Interactive, Series A*		1,331,946
	36,148	Limited Brands, Inc.		996,600
	7,559	Live Nation, Inc.*		153,372
	7,773	Liz Claiborne, Inc.		347,609
	75,436	Lowe's Cos., Inc.		2,305,324
	5,965	M.D.C. Holdings, Inc.		305,766
	9,799	Marriott International, Inc., Class A		443,013
	22,319	Mattel, Inc.		631,628
	5,203	McClatchy Co., Class A		150,367
	63,229	McDonald's Corp.		3,052,696
	13,265	McGraw-Hill (The) Cos., Inc.		869,255
	2,356	Meredith Corp.		136,460
	4,320	Meritage Homes Corp.*		150,379
	9,751	MGM MIRAGE*		655,755
	6,212	Mohawk Industries, Inc.*		560,074
	16,272	New York Times (The) Co., Class A		380,765
	25,043	Newell Rubbermaid, Inc.		768,069
	79,981	News Corp., Class A		1,790,775
	36,398	News Corp., Class B		873,552
	21,178	NIKE, Inc., Class B		1,140,647
	9,216	Nordstrom, Inc.		506,143
	553	NVR, Inc.*		455,672
	25,018	Office Depot, Inc.*		841,105
	9,218	OfficeMax, Inc.		453,710
	8,571	Omnicom Group, Inc.		897,469
	5,334	O'Reilly Automotive, Inc.*		189,890
	5,890	OSI Restaurant Partners, Inc.		234,481
	6,398	Payless ShoeSource, Inc.*		204,096
	9,166	PEP Boys-Manny Moe & Jack		170,946
	6,598	PetSmart, Inc.		218,988
	22,084	Pier 1 Imports, Inc.		166,734
	2,875	Polaris Industries, Inc.		145,274
	2,722	Polo Ralph Lauren Corp.		250,723
	27,995	Pulte Homes, Inc.		753,066
	12,944	RadioShack Corp.		376,282
	51,100	Regal Entertainment Group, Class A		1,111,425
	11,683	Rent-A-Center, Inc.*		325,255
	7,741	Ross Stores, Inc.		256,614
	17,288	Royal Caribbean Cruises Ltd. (Liberia)		718,662
	5,707	Ryland Group, Inc.		252,820
	22,176	Saks, Inc.		464,365
	20,965	Sally Beauty Holdings, Inc.*		205,876
	5,904	Scholastic Corp.*		182,256
	11,696	Sears Holdings Corp.*		2,232,883
	18,586	Service Corp. International		225,820
	28,823	ServiceMaster (The) Co.		443,586
	7,764	Sherwin-Williams (The) Co.		495,110
	27,583	Six Flags, Inc.*		164,395
	4,648	Snap-On, Inc.		253,316
	10,086	Sonic Automotive, Inc., Class A		288,359
	9,265	Standard-Pacific Corp.		193,175

Number of Shares			Value
		Common Stocks (Continued)
	6,348	Stanley Works (The)	$	369,961
	33,055	Staples, Inc.		819,764
	15,068	Starbucks Corp.*		467,409
	11,518	Starwood Hotels & Resorts Worldwide, Inc.		771,936
	1,683	Station Casinos, Inc.		146,421
	50,605	Sun-Times Media Group, Inc., Class A		308,691
	6,023	Talbots (The), Inc.		141,540
	52,090	Target Corp.		3,092,583
	9,986	Tenneco, Inc.*		299,081
	5,916	Tiffany & Co.		282,134
	4,706	Tim Hortons, Inc.		148,380
	5,133	Timberland Co., Class A*		132,483
	216,491	Time Warner, Inc.		4,466,210
	29,836	TJX Cos., Inc.		832,126
	15,809	Toll Brothers, Inc.*		470,792
	31,765	Tribune Co.		1,041,892
	25,231	TRW Automotive Holdings Corp.*		935,061
	6,474	Tupperware Brands Corp.		182,049
	16,072	United Auto Group, Inc.		325,940
	7,475	VF Corp.		656,380
	33,304	Viacom, Inc., Class B*		1,373,790
	18,526	Virgin Media, Inc.		467,411
	74,989	Visteon Corp.*		683,900
	159,091	Walt Disney (The) Co.		5,565,004
	9,719	Warner Music Group Corp.		167,167
	523	Washington Post (The) Co., Class B		389,112
	9,364	WCI Communities, Inc.*		204,510
	10,739	Wendy's International, Inc.		404,860
	9,171	Whirlpool Corp.		972,401
	7,806	Williams-Sonoma, Inc.		274,927
	9,919	Wyndham Worldwide Corp.*		343,197
	10,763	Yum! Brands, Inc.		665,799
	7,481	Zale Corp.*		208,795
				141,749,332
		Consumer Staples—11.5%
	11,618	Alberto-Culver Co.		282,201
	165,552	Altria Group, Inc.		11,409,844
	45,840	Anheuser-Busch Cos., Inc.		2,254,870
	50,633	Archer-Daniels-Midland Co.		1,959,497
	20,698	Avon Products, Inc.		823,780
	11,922	BJ's Wholesale Club, Inc.*		411,667
	1,600	Brown-Forman Corp., Class A		107,168
	3,497	Brown-Forman Corp., Class B		223,563
	12,283	Bunge Ltd. (Bermuda)		930,560
	21,703	Campbell Soup Co.		848,587
	10,917	Chiquita Brands International, Inc.		161,899
	8,791	Clorox Co.		589,700
	118,450	Coca-Cola (The) Co.		6,181,906
	65,441	Coca-Cola Enterprises, Inc.		1,435,776
	21,535	Colgate-Palmolive Co.		1,458,781
	96,542	ConAgra Foods, Inc.		2,373,002

See Notes to Financial Statements.
25

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	17,363	Constellation Brands, Inc., Class A*	$	389,105
	6,166	Corn Products International, Inc.		245,530
	35,723	Costco Wholesale Corp.		1,913,681
	88,503	CVS Corp.		3,207,349
	14,903	Dean Foods Co.		542,916
	21,249	Del Monte Foods Co.		246,488
	2,573	Energizer Holdings, Inc.*		250,044
	9,552	Estee Lauder (The) Cos., Inc., Class A		491,164
	11,635	Fresh Del Monte Produce, Inc. (Cayman Islands)		237,005
	25,830	General Mills, Inc.		1,547,217
	11,766	Great Atlantic & Pacific Tea Co., Inc.*		378,748
	29,050	H.J. Heinz Co.		1,368,546
	11,743	Hershey (The) Co.		645,395
	9,889	Hormel Foods Corp.		376,672
	3,910	J.M. Smucker (The) Co.		218,256
	26,219	Kellogg Co.		1,387,247
	33,028	Kimberly-Clark Corp.		2,350,603
	700,781	Kraft Foods, Inc., Class A		23,455,139
	124,118	Kroger (The) Co.		3,662,722
	12,653	Loews Corp. - Carolina Group		968,334
	4,840	Longs Drug Stores Corp.		264,942
	6,914	McCormick & Co., Inc.		256,648
	6,235	Molson Coors Brewing Co., Class B		587,836
	5,374	Nash Finch Co.		209,425
	2,890	NBTY, Inc.*		142,795
	3,649	Pantry (The), Inc.*		164,169
	17,522	Pathmark Stores, Inc.*		221,128
	22,397	Pepsi Bottling Group (The), Inc.		734,846
	13,582	PepsiAmericas, Inc.		327,869
	68,326	PepsiCo, Inc.		4,515,665
	9,283	Performance Food Group Co.*		290,094
	7,038	Pilgrim's Pride Corp.		256,957
	111,858	Procter & Gamble (The) Co.		7,193,588
	28,641	Reynolds American, Inc.		1,840,471
	117,264	Rite Aid Corp.*		720,001
	5,877	Ruddick Corp.		176,486
	50,957	Safeway, Inc.		1,849,739
	107,644	Sara Lee Corp.		1,766,438
	61	Seaboard Corp.		152,073
	19,466	Smithfield Foods, Inc.*		595,076
	15,890	Spectrum Brands, Inc.*		110,594
	26,362	SUPERVALU, Inc.		1,210,016
	46,449	Sysco Corp.		1,520,740
	62,662	Tyson Foods, Inc., Class A		1,313,396
	4,259	Universal Corp.		266,954
	11,759	UST, Inc.		666,500
	44,867	Walgreen Co.		1,969,661
	320,622	Wal-Mart Stores, Inc.		15,364,206
	3,662	Weis Markets, Inc.		157,613
	4,895	Whole Foods Market, Inc.		229,037
	12,286	Wm. Wrigley Jr. Co.		723,400
				121,133,325

Number of Shares			Value
		Common Stocks (Continued)
		Energy—9.3%
	39,347	Anadarko Petroleum Corp.	$	1,835,931
	20,078	Apache Corp.		1,455,655
	5,107	Arch Coal, Inc.		184,209
	12,447	Baker Hughes, Inc.		1,000,614
	11,333	BJ Services Co.		324,804
	4,043	Cameron International Corp.*		261,057
	19,637	Chesapeake Energy Corp.		662,749
	209,452	Chevron Corp.		16,293,270
	7,614	Cimarex Energy Co.		299,992
	7,357	CNX Gas Corp.*		206,437
	134,588	ConocoPhillips		9,333,677
	6,056	CONSOL Energy, Inc.		253,565
	27,911	Devon Energy Corp.		2,033,875
	3,285	Diamond Offshore Drilling, Inc.		281,196
	8,686	Dresser-Rand Group, Inc.*		277,170
	102,371	El Paso Corp.		1,535,565
	4,630	ENSCO International, Inc.		261,039
	8,569	EOG Resources, Inc.		629,307
	381,432	Exxon Mobil Corp.		30,278,071
	2,779	FMC Technologies, Inc.*		196,976
	8,486	Forest Oil Corp.*		299,047
	6,095	Foundation Coal Holdings, Inc.		240,082
	4,658	Frontier Oil Corp.		164,567
	7,635	GlobalSantaFe Corp. (Cayman Islands)		488,106
	3,274	Grant Prideco, Inc.*		168,742
	17,225	Halliburton Co.		547,238
	7,434	Hanover Compressor Co.*		160,797
	28,383	Hess Corp.		1,610,735
	3,143	Houston Exploration Co.*		174,028
	5,132	Kinder Morgan, Inc.		546,866
	32,248	Marathon Oil Corp.		3,274,784
	6,231	Massey Energy Co.		167,801
	12,211	Murphy Oil Corp.		676,978
	16,210	Nabors Industries Ltd. (Bermuda)*		520,665
	6,063	National-Oilwell Varco, Inc.*		514,446
	9,497	Newfield Exploration Co.*		415,494
	3,508	Noble Corp. (Cayman Islands)		295,409
	5,960	Noble Energy, Inc.		350,508
	55,046	Occidental Petroleum Corp.		2,790,832
	3,373	Overseas Shipholding Group, Inc.		238,808
	7,472	Patterson-UTI Energy, Inc.		182,242
	7,746	Peabody Energy Corp.		371,653
	8,323	Pioneer Natural Resources Co.		417,815
	5,777	Pogo Producing Co.		278,798
	11,056	Pride International, Inc.*		362,747
	4,889	Rowan Cos., Inc.		179,133
	41,087	Schlumberger Ltd. (Netherlands)		3,033,453
	1,422	SEACOR Holdings, Inc.*		135,488
	6,400	Ship Finance International Ltd. (Bermuda)		190,336
	6,797	Smith International, Inc.		356,435
	3,578	Southwestern Energy Co.*		150,276
	56,331	Spectra Energy Corp.		1,470,239

See Notes to Financial Statements.
26

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	5,649	Stone Energy Corp.*	$	167,380
	14,745	Sunoco, Inc.		1,113,690
	6,335	Teekay Shipping Corp. (Marshall Islands)		377,883
	5,365	Tesoro Corp.		650,238
	3,150	Tidewater, Inc.		199,112
	8,468	Transocean, Inc. (Cayman Islands)*		729,942
	10,798	USEC, Inc.*		217,796
	43,655	Valero Energy Corp.		3,065,891
	15,551	Weatherford International Ltd. (Bermuda)*		816,272
	45,450	Williams Cos., Inc.		1,340,775
	3,104	World Fuel Services Corp.		143,436
	9,629	XTO Energy, Inc.		522,566
				97,724,688
		Financials—22.2%
	4,558	A.G. Edwards, Inc.		330,227
	22,804	ACE Ltd. (Cayman Islands)		1,355,926
	23,510	AFLAC, Inc.		1,207,003
	416	Alleghany Corp.*		148,845
	16,313	Allied Capital Corp.		471,446
	6,621	Allied World Assurance Holdings Ltd. (Bermuda)		293,443
	53,950	Allstate (The) Corp.		3,362,164
	6,402	AMB Property Corp.		389,946
	5,831	AMBAC Financial Group, Inc.		535,286
	9,512	American Capital Strategies Ltd.		463,044
	49,116	American Express Co.		2,979,868
	9,614	American Financial Group, Inc.		339,086
	12,950	American Financial Realty Trust		137,270
	5,778	American Home Mortgage Investment Corp.		143,179
	158,819	American International Group, Inc.		11,103,035
	3,068	American National Insurance		400,435
	11,269	AmeriCredit Corp.*		284,317
	16,280	Ameriprise Financial, Inc.		968,172
	30,389	Annaly Capital Management, Inc.		483,489
	26,312	Aon Corp.		1,019,590
	9,171	Apartment Investment & Management Co., Class A		507,156
	4,312	Arch Capital Group Ltd. (Bermuda)*		314,000
	14,098	Archstone-Smith Trust		734,647
	6,661	Arthur J. Gallagher & Co.		186,242
	5,084	Aspen Insurance Holdings Ltd. (Bermuda)		134,777
	9,705	Associated Banc-Corp.		314,248
	8,988	Assurant, Inc.		517,080
	8,979	Astoria Financial Corp.		238,482
	3,400	AvalonBay Communities, Inc.		415,684
	8,500	Axis Capital Holdings Ltd. (Bermuda)		315,350
	7,105	BancorpSouth, Inc.		174,570
	326,988	Bank of America Corp.		16,643,688
	3,439	Bank of Hawaii Corp.		181,923
	44,491	Bank of New York (The) Co., Inc.		1,800,996
	45,791	BB&T Corp.		1,905,821

Number of Shares			Value
		Common Stocks (Continued)
	8,020	Bear Stearns (The) Cos., Inc.	$	1,248,714
	3,055	Berkshire Hathaway, Inc., Class B*		11,083,539
	3,066	BOK Financial Corp.		157,378
	6,595	Boston Properties, Inc.		775,308
	4,449	Brandywine Realty Trust		146,283
	2,927	BRE Properties, Inc.		175,737
	3,609	Camden Property Trust		251,367
	18,211	Capital One Financial Corp.		1,352,349
	5,017	CB Richard Ellis Group, Inc., Class A*		169,825
	4,807	CBL & Associates Properties, Inc.		218,478
	35,868	Charles Schwab (The) Corp.		685,796
	322	Chicago Mercantile Exchange Holdings, Inc., Class A		166,394
	29,360	Chubb (The) Corp.		1,580,449
	12,882	Cincinnati Financial Corp.		582,782
	17,007	CIT Group, Inc.		1,014,468
	415,043	Citigroup, Inc.		22,254,605
	3,002	City National Corp.		219,806
	19,685	CNA Financial Corp.*		918,699
	10,078	Colonial BancGroup (The), Inc.		242,477
	3,970	Colonial Properties Trust		196,952
	16,806	Comerica, Inc.		1,040,459
	8,214	Commerce Bancorp, Inc.		274,676
	4,306	Commerce Bancshares, Inc.		203,846
	7,130	Commerce Group, Inc.		232,509
	6,543	Compass Bancshares, Inc.		446,102
	23,334	Conseco, Inc.*		412,778
	55,726	Countrywide Financial Corp.		2,066,320
	4,160	Cousins Properties, Inc.		139,651
	17,651	Crescent Real Estate EQT Co.		362,022
	3,318	Cullen/Frost Bankers, Inc.		169,782
	6,271	Developers Diversified Realty Corp.		408,242
	82,203	Doral Financial Corp.*		115,084
	2,108	Downey Financial Corp.		141,131
	12,538	Duke Realty Corp.		540,513
	18,836	E*Trade Financial Corp.*		415,899
	4,842	Endurance Specialty Holdings Ltd. (Bermuda)		181,188
	2,552	Equity Lifestyle Properties, Inc.		138,497
	5,374	Equity One, Inc.		150,096
	20,513	Equity Residential		952,419
	4,005	Erie Indemnity Co., Class A		210,463
	1,021	Essex Property Trust, Inc.		131,566
	3,862	Everest Re Group Ltd. (Bermuda)		388,672
	2,291	Federal Realty Investment Trust		206,579
	4,638	Federated Investors, Inc., Class B		176,986
	17,751	Fidelity National Financial, Inc., Class A		452,473
	47,662	Fifth Third Bancorp		1,934,601
	10,119	First American Corp.		521,129
	12,273	First Horizon National Corp.		481,224
	5,184	First Industrial Realty Trust, Inc.		227,007

See Notes to Financial Statements.
27

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	10,163	FirstMerit Corp.	$	212,203
	6,643	Franklin Resources, Inc.		872,292
	120,286	Freddie Mac		7,792,127
	19,712	Fremont General Corp.		148,826
	39,887	Friedman Billings Ramsey Group, Inc., Class A		221,373
	13,483	Fulton Financial Corp.		198,470
	8,428	General Growth Properties, Inc.		538,128
	75,025	Genworth Financial, Inc., Class A		2,737,662
	5,271	Glimcher Realty Trust		142,370
	18,419	Goldman Sachs Group (The), Inc.		4,026,578
	4,806	Hanover Insurance Group (The), Inc.		220,884
	21,615	Hartford Financial Services Group (The), Inc.		2,187,438
	5,453	HCC Insurance Holdings, Inc.		167,189
	10,786	Health Care Property Investors, Inc.		381,717
	5,154	Health Care REIT, Inc.		233,167
	5,581	Healthcare Realty Trust, Inc.		190,089
	5,722	Highwoods Properties, Inc.		233,343
	3,611	Home Properties, Inc.		201,133
	9,044	Hospitality Properties Trust		411,773
	14,305	Host Hotels & Resorts, Inc.		366,780
	24,978	HRPT Properties Trust		305,731
	31,562	Hudson City Bancorp, Inc.		420,406
	22,215	Huntington Bancshares, Inc.		492,729
	36,727	IMPAC Mortgage Holdings, Inc.		203,835
	6,560	IndyMac Bancorp, Inc.		198,374
	11,558	iStar Financial, Inc.		553,859
	11,076	Janus Capital Group, Inc.		277,122
	5,345	Jefferies Group, Inc.		169,437
	247,932	JPMorgan Chase & Co.		12,917,256
	38,212	KeyCorp		1,363,404
	9,696	Kimco Realty Corp.		466,087
	3,013	LandAmerica Financial Group, Inc.		242,095
	7,418	Lazard Ltd., Class A (Bermuda)		401,685
	2,979	Legg Mason, Inc.		295,487
	29,240	Lehman Brothers Holdings, Inc.		2,201,187
	8,236	Leucadia National Corp.		248,233
	7,990	Liberty Property Trust		386,636
	13,044	Lincoln National Corp.		928,081
	27,351	Loews Corp.		1,294,249
	5,939	M&T Bank Corp.		661,248
	2,960	Macerich (The) Co.		281,555
	8,090	Mack-Cali Realty Corp.		396,167
	409	Markel Corp.*		187,694
	61,592	Marsh & McLennan Cos., Inc.		1,956,162
	14,297	Marshall & Ilsley Corp.		686,542
	11,651	MBIA, Inc.		810,444
	21,393	Mellon Financial Corp.		918,401
	5,302	Mercury General Corp.		287,103
	52,799	Merrill Lynch & Co. Inc.		4,764,054
	50,457	MetLife, Inc.		3,315,025

Number of Shares			Value
		Common Stocks (Continued)
	6,754	MGIC Investment Corp.	$	416,114
	13,261	Montpelier Re Holdings Ltd. (Bermuda)		242,146
	3,631	Moody's Corp.		240,082
	70,352	Morgan Stanley		5,910,272
	67,582	National City Corp.		2,470,122
	11,097	Nationwide Financial Services, Inc., Class A		633,972
	5,673	Nationwide Health Properties, Inc.		181,876
	27,298	New York Community Bancorp, Inc.		476,623
	5,071	Newcastle Investment Corp.		148,124
	10,105	Northern Trust Corp.		636,110
	22,259	Novastar Financial, Inc.		163,826
	2,887	Nuveen Investments, Inc., Class A		153,877
	6,246	NYSE Euronext*		526,725
	4,461	Odyssey Re Holdings Corp.		186,916
	5,045	Ohio Casualty Corp.		159,624
	26,824	Old Republic International Corp.		570,546
	5,058	PartnerRe Ltd. (Bermuda)		364,277
	3,245	Pennsylvania Real Estate Investment Trust		150,763
	7,672	People's United Financial, Inc.		152,750
	13,523	Phoenix (The) Cos., Inc.		201,493
	15,776	Plum Creek Timber Co., Inc.		626,307
	5,963	PMI Group (The), Inc.		289,027
	25,852	PNC Financial Services Group, Inc.		1,915,633
	30,086	Popular, Inc.		505,746
	3,979	Post Properties, Inc.		186,496
	3,395	Potlatch Corp.		147,309
	13,966	Principal Financial Group, Inc.		886,701
	40,783	Progressive (The) Corp.		940,864
	10,290	ProLogis		666,792
	6,106	Protective Life Corp.		286,371
	29,784	Prudential Financial, Inc.		2,829,480
	5,356	Public Storage, Inc.		499,822
	5,358	Radian Group, Inc.		311,353
	5,809	Raymond James Financial, Inc.		178,220
	5,526	Rayonier, Inc.		239,663
	6,789	Realty Income Corp.		189,413
	4,285	Redwood Trust, Inc.		215,150
	3,328	Regency Centers Corp.		274,227
	37,508	Regions Financial Corp.		1,316,156
	4,700	Reinsurance Group of America, Inc.		292,857
	4,248	RenaissanceRe Holdings Ltd. (Bermuda)		230,029
	9,715	Safeco Corp.		648,379
	7,041	Senior Housing Properties Trust		160,746
	4,993	Simon Property Group, Inc.		575,593
	8,557	Sky Financial Group, Inc.		233,178
	1,174	SL Green Realty Corp.		165,417
	21,979	SLM Corp.		1,183,130
	5,572	South Financial Group (The), Inc.		126,094
	20,818	Sovereign Bancorp, Inc.		505,253
	4,028	Stancorp Financial Group, Inc.		191,733
	14,179	State Street Corp.		976,508

See Notes to Financial Statements.
28

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	8,969	Strategic Hotels & Resorts, Inc.	$	194,179
	1,368	Student Loan Corp.		278,662
	26,256	SunTrust Banks, Inc.		2,216,532
	18,127	Synovus Financial Corp.		572,088
	7,371	T. Rowe Price Group, Inc.		366,191
	10,556	TCF Financial Corp.		285,856
	11,989	TD Ameritrade Holding Corp.*		204,412
	14,186	Thornburg Mortgage, Inc.		394,371
	6,925	Torchmark Corp.		472,978
	4,265	Transatlantic Holdings, Inc.		296,375
	42,123	Travelers (The) Cos., Inc.		2,278,854
	6,902	Tri-Continental Corp.		173,654
	4,849	Trustmark Corp.		129,032
	132,320	U.S. Bancorp		4,545,192
	11,522	UnionBanCal Corp.		708,373
	8,663	UDR, Inc.		260,237
	8,241	Unitrin, Inc.		388,563
	40,708	Unum Group		1,012,815
	8,667	Valley National Bancorp		219,882
	3,865	Ventas, Inc.		162,948
	7,064	Vornado Realty Trust		838,002
	4,253	W.P. Carey & Co. LLC		145,665
	10,133	W.R. Berkley Corp.		329,221
	122,097	Wachovia Corp.		6,781,267
	8,049	Washington Federal, Inc.		190,842
	28,106	Washington Mutual, Inc.		1,179,890
	4,186	Webster Financial Corp.		186,068
	5,525	Weingarten Realty Investors		264,426
	232,933	Wells Fargo & Co.		8,359,965
	308	Wesco Financial Corp.		137,060
	625	White Mountain Insurance Group Ltd. (Bermuda)		358,125
	4,794	Whitney Holding Corp.		147,511
	7,603	Willis Group Holdings Ltd. (Bermuda)		311,875
	4,808	Wilmington Trust Corp.		194,532
	13,732	XL Capital Ltd., Class A (Cayman Islands)		1,070,821
	5,804	Zions Bancorp.		474,767
				234,388,701
		Health Care—9.1%
	78,841	Abbott Laboratories		4,463,977
	3,623	Advanced Medical Optics, Inc.*		146,478
	29,973	Aetna, Inc.		1,405,134
	7,539	Alcon, Inc. (Switzerland)		1,017,237
	2,556	Allergan, Inc.		309,787
	28,282	AmerisourceBergen Corp.		1,413,817
	39,104	Amgen, Inc.*		2,508,131
	7,534	Applera Corp. - Applied Biosystems Group		235,362
	4,686	Apria Healthcare Group, Inc.*		148,734
	3,572	Barr Pharmaceuticals, Inc.*		172,742
	4,553	Bausch & Lomb, Inc.		267,853
	26,672	Baxter International, Inc.		1,510,435
	3,598	Beckman Coulter, Inc.		225,990
	8,879	Becton, Dickinson & Co.		698,689

Number of Shares			Value
		Common Stocks (Continued)
	12,748	Biogen Idec, Inc.*	$	601,833
	5,913	Biomet, Inc.		255,442
	47,217	Boston Scientific Corp.*		729,030
	193,686	Bristol-Myers Squibb Co.		5,589,778
	3,091	C.R. Bard, Inc.		256,955
	36,335	Cardinal Health, Inc.		2,541,633
	4,067	Charles River Laboratories International, Inc.*		192,613
	8,786	CIGNA Corp.		1,367,014
	8,350	Community Health Systems, Inc.*		307,280
	8,104	Coventry Health Care, Inc.*		468,654
	3,392	Dade Behring Holdings, Inc.		166,581
	4,754	DaVita, Inc.*		259,616
	5,750	DENTSPLY International, Inc.		192,108
	68,471	Eli Lilly & Co.		4,048,690
	9,540	Express Scripts, Inc.*		911,547
	8,984	Forest Laboratories, Inc.*		478,039
	11,613	Genentech, Inc.*		928,924
	8,481	Genzyme Corp.*		553,894
	4,656	Gilead Sciences, Inc.*		380,488
	16,003	Health Management Associates, Inc., Class A		171,072
	11,413	Health Net, Inc.*		616,987
	5,223	Henry Schein, Inc.*		272,275
	4,386	Hillenbrand Industries, Inc.		268,204
	8,137	Hospira, Inc.*		329,955
	11,696	Humana, Inc.*		739,655
	6,492	IMS Health, Inc.		190,410
	3,393	Invitrogen Corp.*		222,140
	146,722	Johnson & Johnson		9,422,487
	7,130	Kindred Healthcare, Inc.*		248,980
	16,778	King Pharmaceuticals, Inc.*		343,110
	4,846	Laboratory Corp. of America Holdings*		382,543
	4,654	LifePoint Hospitals, Inc.*		169,918
	5,690	Lincare Holdings, Inc.*		224,414
	3,753	Magellan Health Services, Inc.*		161,004
	4,229	Manor Care, Inc.		274,420
	39,692	McKesson Corp.		2,335,080
	29,898	Medco Health Solutions, Inc.*		2,332,642
	5,561	MedImmune, Inc.*		315,197
	34,064	Medtronic, Inc.		1,803,008
	247,846	Merck & Co., Inc.		12,749,199
	12,324	Mylan Laboratories, Inc.		270,265
	7,944	Omnicare, Inc.		263,502
	5,648	Owens & Minor, Inc.		199,657
	5,491	Patterson Cos., Inc.*		198,005
	8,692	PerkinElmer, Inc.		210,346
	397,728	Pfizer, Inc.		10,523,884
	9,125	Quest Diagnostics, Inc.		446,121
	74,564	Schering-Plough Corp.		2,365,916
	10,112	St. Jude Medical, Inc.*		432,692
	7,537	Stryker Corp.		489,453

See Notes to Financial Statements.
29

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	128,764	Tenet Healthcare Corp.*	$	955,429
	7,432	Thermo Fisher Scientific, Inc.*		386,910
	9,371	Triad Hospitals, Inc.*		497,975
	45,956	UnitedHealth Group, Inc.		2,438,425
	4,421	Universal Health Services, Inc., Class B		268,443
	2,999	Varian Medical Systems, Inc.*		126,588
	10,961	Watson Pharmaceuticals, Inc.*		299,235
	35,151	WellPoint, Inc.*		2,775,874
	72,847	Wyeth		4,043,009
	6,628	Zimmer Holdings, Inc.*		599,701
				96,118,615
		Industrials—10.7%
	45,629	3M Co.		3,776,712
	11,633	ACCO Brands Corp.*		276,865
	2,578	Acuity Brands, Inc.		152,411
	6,446	AGCO Corp.*		268,992
	4,538	Alaska Air Group, Inc.*		134,325
	3,494	Alexander & Baldwin, Inc.		186,754
	2,293	Alliant Techsystems, Inc.*		213,547
	60,730	Allied Waste Industries, Inc.*		811,960
	2,642	AMERCO*		184,834
	9,777	American Standard Cos., Inc.		538,322
	20,103	AMR Corp.*		524,487
	8,017	Avery Dennison Corp.		498,657
	81,537	Avis Budget Group, Inc.		2,293,636
	43,313	Boeing Co.		4,028,109
	6,000	Briggs & Stratton Corp.		178,020
	3,479	Brink's (The) Co.		220,917
	9,352	Builders FirstSource, Inc.*		150,848
	20,171	Burlington Northern Santa Fe Corp.		1,765,769
	4,583	C.H. Robinson Worldwide, Inc.		245,007
	3,889	Carlisle Cos., Inc.		160,149
	40,619	Caterpillar, Inc.		2,949,752
	4,195	ChoicePoint, Inc.*		159,284
	8,428	Cintas Corp.		315,797
	11,869	Continental Airlines, Inc., Class B*		433,931
	5,335	Con-way, Inc.		291,451
	11,251	Cooper Industries Ltd., Class A (Bermuda)		559,850
	2,888	Corrections Corp. of America*		164,038
	4,223	Crane Co.		179,520
	28,530	CSX Corp.		1,231,640
	6,876	Cummins, Inc.		633,692
	8,626	Danaher Corp.		614,085
	13,661	Deere & Co.		1,494,513
	7,496	Deluxe Corp.		283,724
	4,293	Dollar Thrifty Automotive Group*		201,256
	12,098	Dover Corp.		582,156
	1,761	Dun & Bradstreet (The) Corp.		159,018
	10,180	Eaton Corp.		908,158
	3,704	EMCOR Group, Inc.*		232,204
	49,917	Emerson Electric Co.		2,345,600

Number of Shares			Value
		Common Stocks (Continued)
	4,751	Equifax, Inc.	$	189,090
	4,270	Expeditors International of Washington, Inc.		178,486
	15,201	FedEx Corp.		1,602,793
	3,979	Flowserve Corp.		242,759
	5,900	Fluor Corp.		564,158
	5,851	GATX Corp.		286,758
	20,706	General Dynamics Corp.		1,625,421
	771,451	General Electric Co.		28,435,684
	9,354	Goodrich Corp.		531,681
	5,661	Harsco Corp.		288,711
	3,426	HNI Corp.		143,001
	56,809	Honeywell International, Inc.		3,077,912
	5,114	Hubbell, Inc., Class B		264,343
	20,974	IKON Office Solutions, Inc.		313,771
	27,959	Illinois Tool Works, Inc.		1,434,576
	21,931	Ingersoll-Rand Co. Ltd., Class A (Bermuda)		979,219
	8,860	ITT Corp.		565,357
	6,728	Jacobs Engineering Group, Inc.*		339,293
	7,149	JB Hunt Transport Services, Inc.		193,452
	4,624	Kansas City Southern*		171,782
	6,617	Kelly Services, Inc., Class A		189,908
	2,828	Kennametal, Inc.		199,544
	6,069	L-3 Communications Holdings, Inc.		545,785
	8,176	Laidlaw International, Inc.		280,028
	5,538	Lennox International, Inc.		187,240
	22,252	Lockheed Martin Corp.		2,139,307
	7,629	Manpower, Inc.		612,227
	41,679	Masco Corp.		1,134,086
	2,758	Monster Worldwide, Inc.*		115,974
	5,204	Mueller Industries, Inc.		170,691
	1,200	NACCO Industries, Inc., Class A		191,256
	25,116	Norfolk Southern Corp.		1,337,176
	32,063	Northrop Grumman Corp.		2,361,119
	2,662	Oshkosh Truck Corp.		148,912
	15,332	PACCAR, Inc.		1,287,581
	6,687	Pall Corp.		280,520
	7,373	Parker Hannifin Corp.		679,348
	8,483	Pentair, Inc.		272,644
	14,818	PHH Corp.*		451,949
	17,522	Pitney Bowes, Inc.		841,056
	2,685	Precision Castparts Corp.		279,535
	6,178	Quanta Services, Inc.*		169,833
	19,850	R.R. Donnelley & Sons Co.		797,970
	34,754	Raytheon Co.		1,860,729
	11,247	Republic Services, Inc.		314,129
	4,566	Robert Half International, Inc.		152,048
	7,966	Rockwell Automation, Inc.		474,296
	4,657	Rockwell Collins, Inc.		305,825
	8,796	Ryder System, Inc.		463,021
	1,001	Sequa Corp., Class A*		117,317

See Notes to Financial Statements.
30

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	208	Sequa Corp., Class B*	$	24,752
	6,881	Shaw Group (The), Inc.*		223,151
	46,014	Southwest Airlines Co.		660,301
	5,393	SPX Corp.		382,256
	12,596	Steelcase, Inc., Class A		245,874
	7,426	Swift Transportation Co., Inc.*		232,285
	6,354	Tecumseh Products Co., Class A*		64,557
	1,797	Tecumseh Products Co., Class B*		18,401
	3,264	Teleflex, Inc.		234,453
	4,298	Terex Corp.*		334,599
	9,819	Textron, Inc.		998,298
	10,735	Timken (The) Co.		354,040
	3,735	Trinity Industries, Inc.		173,304
	139,314	Tyco International Ltd. (Bermuda)		4,545,816
	19,477	Union Pacific Corp.		2,225,247
	63,030	United Parcel Service, Inc., Class B		4,439,203
	14,214	United Rentals, Inc.*		476,169
	4,440	United Stationers, Inc.*		264,269
	52,395	United Technologies Corp.		3,517,276
	5,919	URS Corp.*		258,660
	3,970	USG Corp.*		183,216
	5,709	W.W. Grainger, Inc.		471,678
	3,422	Washington Group International, Inc.*		229,000
	42,215	Waste Management, Inc.		1,579,263
	7,268	Werner Enterprises, Inc.		137,438
	3,090	WESCO International, Inc.*		195,195
	9,124	YRC Worldwide, Inc.*		363,044
				112,971,036
		Information Technology—9.5%
	32,272	Accenture Ltd., Class A (Bermuda)		1,261,835
	8,168	Activision, Inc.*		163,360
	6,338	Adobe Systems, Inc.*		263,407
	38,441	Advanced Micro Devices, Inc.*		531,255
	8,963	Affiliated Computer Services, Inc., Class A*		536,973
	17,298	Agilent Technologies, Inc.*		594,532
	2,569	Alliance Data Systems Corp.*		163,543
	8,042	Altera Corp.		181,267
	7,991	Amdocs Ltd. (Guernsey)*		293,669
	13,221	Amkor Technology, Inc.*		184,962
	10,646	Analog Devices, Inc.		411,149
	17,143	Andrew Corp.*		187,202
	3,321	Anixter International, Inc.*		237,784
	10,502	Apple, Inc.*		1,048,100
	47,473	Applied Materials, Inc.		912,431
	15,997	Arrow Electronics, Inc.*		632,201
	31,163	Atmel Corp.*		165,787
	24,722	Automatic Data Processing, Inc.		1,106,557
	33,450	Avaya, Inc.*		432,174
	13,075	Avnet, Inc.*		534,768
	13,004	AVX Corp.		216,387
	13,755	BEA Systems, Inc.*		162,171

Number of Shares			Value
		Common Stocks (Continued)
	6,827	Benchmark Electronics, Inc.*	$	144,596
	6,415	BMC Software, Inc.*		207,654
	7,464	Broadcom Corp., Class A*		242,953
	6,185	Broadridge Financial Solutions, Inc.*		123,947
	17,722	CA, Inc.		483,102
	12,216	Cadence Design System, Inc.*		271,195
	4,686	CDW Corp.		337,439
	5,933	Ceridian Corp.*		200,298
	9,252	Check Point Software Technologies (Israel)*		217,885
	3,598	CheckFree Corp.*		121,109
	143,105	Cisco Systems, Inc.*		3,826,627
	4,699	Citrix Systems, Inc.*		153,187
	24,056	Computer Sciences Corp.*		1,336,070
	20,219	Compuware Corp.*		199,562
	11,116	Convergys Corp.*		280,790
	26,639	Corning, Inc.*		631,877
	124,076	Dell, Inc.*		3,127,955
	5,066	Diebold, Inc.		241,496
	3,185	DST Systems, Inc.*		248,589
	29,388	eBay, Inc.*		997,429
	8,605	Electronic Arts, Inc.*		433,778
	64,611	Electronic Data Systems Corp.		1,889,226
	94,283	EMC Corp.*		1,431,216
	9,566	Fairchild Semiconductor International, Inc.*		168,362
	19,814	Fidelity National Information Services, Inc.		1,001,201
	47,528	First Data Corp.		1,539,907
	8,403	Fiserv, Inc.*		446,788
	70,188	Flextronics International Ltd. (Singapore)*		782,596
	71,517	Gateway, Inc.*		156,622
	1,927	Google, Inc., Class A*		908,349
	4,168	Harris Corp.		214,027
	7,888	Hewitt Associates, Inc., Class A*		234,668
	146,304	Hewlett-Packard Co.		6,165,250
	60,123	Ingram Micro, Inc., Class A*		1,179,613
	8,994	Insight Enterprises, Inc.*		178,261
	314,894	Intel Corp.		6,770,220
	90,478	International Business Machines Corp.		9,247,755
	4,095	International Rectifier Corp.*		144,472
	6,171	Intersil Corp., Class A		183,834
	9,306	Intuit, Inc.*		264,756
	9,161	Iron Mountain, Inc.*		257,424
	16,085	Jabil Circuit, Inc.		374,781
	9,601	JDS Uniphase Corp.*		158,224
	28,132	Juniper Networks, Inc.*		629,032
	5,314	Kla-Tencor Corp.		295,193
	3,484	Lam Research Corp.*		187,370
	7,387	Lexmark International, Inc., Class A*		402,592
	9,086	Linear Technology Corp.		339,998
	37,214	LSI Logic Corp.*		316,319

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	13,499	Marvell Technology Group Ltd. (Bermuda)*	$	217,739
	2,919	Mastercard, Inc., Class A		325,994
	10,726	Maxim Integrated Products, Inc.		340,229
	5,661	McAfee, Inc.*		183,926
	1,592	Mettler Toledo International, Inc.*		155,411
	4,696	Microchip Technology, Inc.		189,437
	61,944	Micron Technology, Inc.*		710,498
	582,757	Microsoft Corp.		17,447,744
	5,280	Molex, Inc.		157,766
	4,486	Molex, Inc., Class A		120,180
	4,614	MoneyGram International, Inc.		131,176
	148,798	Motorola, Inc.		2,578,669
	8,491	National Semiconductor Corp.		223,313
	10,529	NCR Corp.*		530,662
	4,956	Network Appliance, Inc.*		184,413
	22,603	Novell, Inc.*		165,002
	6,275	Novellus Systems, Inc.*		203,122
	7,444	NVIDIA Corp.*		244,833
	128,980	Oracle Corp.*		2,424,824
	9,990	Paychex, Inc.		370,629
	9,521	Perot Systems Corp., Class A*		170,426
	30,260	QUALCOMM, Inc.		1,325,388
	7,386	SanDisk Corp.*		320,922
	164,964	Sanmina-SCI Corp.*		569,126
	22,703	Seagate Technology (Cayman Islands)		502,871
	230,032	Solectron Corp.*		770,607
	18,156	Spansion, Inc., Class A*		178,292
	184,819	Sun Microsystems, Inc.*		964,755
	24,223	Symantec Corp.*		426,325
	11,354	SYNNEX Corp.*		221,971
	6,842	Synopsys, Inc.*		189,250
	22,972	Tech Data Corp.*		816,425
	26,749	Tellabs, Inc.*		284,074
	8,567	Teradyne, Inc.*		149,494
	51,711	Texas Instruments, Inc.		1,777,307
	5,184	Total System Services, Inc.		161,015
	42,712	Unisys Corp.*		334,862
	17,274	UTStarcom, Inc.*		123,336
	9,856	VeriSign, Inc.*		269,562
	23,559	Vishay Intertechnology, Inc.*		392,257
	10,259	Western Digital Corp.*		181,379
	17,988	Western Union (The) Co.		378,647
	71,495	Xerox Corp.*		1,322,658
	9,602	Xilinx, Inc.		283,067
	25,275	Yahoo!, Inc.*		708,711
				99,645,402
		Materials—3.7%
	12,682	Air Products & Chemicals, Inc.		970,173
	3,493	Airgas, Inc.		155,613
	7,780	AK Steel Holding Corp.*		237,446
	3,763	Albemarle Corp.		159,739

Number of Shares			Value
		Common Stocks (Continued)
	76,883	Alcoa, Inc.	$	2,728,578
	1,788	Allegheny Technologies, Inc.		195,929
	8,391	Ashland, Inc.		503,041
	6,960	Ball Corp.		352,802
	9,154	Bemis Co., Inc.		304,096
	10,771	Bowater, Inc.		235,777
	4,658	Cabot Corp.		211,007
	16,453	Celanese Corp., Series A		545,746
	21,265	Chemtura Corp.		234,553
	7,632	Commercial Metals Co.		255,901
	19,769	Crown Holdings, Inc.*		477,817
	2,815	Cytec Industries, Inc.		154,544
	96,093	Dow Chemical (The) Co.		4,286,708
	73,531	E.I. du Pont de Nemours & Co.		3,615,519
	9,743	Eastman Chemical Co.		659,601
	9,826	Ecolab, Inc.		422,420
	3,010	FMC Corp.		231,559
	15,495	Freeport-McMoRan Copper & Gold, Inc.		1,040,644
	32,446	Graphic Packaging Corp.*		166,448
	2,094	Greif, Inc., Class A		116,426
	626	Greif, Inc., Class B		31,801
	8,510	Hercules, Inc.*		160,328
	27,193	Huntsman Corp.		532,983
	5,493	International Flavors & Fragrances, Inc.		267,344
	65,740	International Paper Co.		2,479,713
	13,812	Louisiana-Pacific Corp.		272,235
	5,683	Lubrizol Corp.		340,639
	20,874	Lyondell Chemical Co.		649,599
	1,712	Martin Marietta Materials, Inc.		249,644
	23,444	MeadWestvaco Corp.		782,092
	15,836	Monsanto Co.		934,166
	10,123	Mosaic (The) Co.*		298,629
	11,776	Nalco Holding Co.		313,006
	18,509	Newmont Mining Corp.		771,825
	12,870	Nucor Corp.		816,730
	9,230	Olin Corp.		158,202
	24,058	Owens-Illinois, Inc.*		723,905
	7,579	Packaging Corporation of America		187,656
	9,646	Pactiv Corp.*		333,559
	16,202	PPG Industries, Inc.		1,192,143
	14,078	Praxair, Inc.		908,735
	3,637	Reliance Steel & Aluminum Co.		216,038
	6,758	Rockwood Holdings, Inc.*		207,471
	16,539	Rohm & Haas Co.		846,301
	10,468	RPM International, Inc.		222,654
	3,289	Scotts Miracle-Gro (The) Co., Class A		147,906
	12,250	Sealed Air Corp.		403,025
	5,220	Sigma-Aldrich Corp.		219,658
	2,793	Silgan Holdings, Inc.		160,262
	50,152	Smurfit-Stone Container Corp.*		604,332
	9,056	Sonoco Products Co.		386,148
	9,417	Southern Copper Corp.		756,185

See Notes to Financial Statements.
32

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	3,856	Steel Dynamics, Inc.	$	170,859
	7,444	Temple-Inland, Inc.		440,983
	2,746	Titanium Metals Corp.*		94,819
	7,237	United States Steel Corp.		734,845
	6,415	Valhi, Inc.		107,644
	7,955	Valspar (The) Corp.		215,103
	3,754	Vulcan Materials Co.		464,257
	21,218	Weyerhaeuser Co.		1,680,890
	10,551	Worthington Industries, Inc.		234,760
				38,981,161
		Telecommunication Services—3.9%
	32,762	ALLTEL Corp.		2,053,850
	10,728	American Tower Corp., Class A*		407,664
	333,662	AT&T, Inc.		12,919,394
	11,046	CenturyTel, Inc.		508,668
	32,420	Cincinnati Bell, Inc.*		164,369
	42,827	Citizens Communications Co.		666,816
	5,674	Crown Castle International Corp.*		194,845
	23,237	Embarq Corp.		1,395,149
	21,949	Level 3 Communications, Inc.*		122,036
	2,107	NII Holdings, Inc.*		161,712
	129,463	Qwest Communications International, Inc.*		1,149,631
	255,317	Sprint Nextel Corp.		5,114,001
	4,257	Telephone & Data Systems, Inc.		242,436
	4,778	Telephone & Data Systems, Inc., Special Shares		252,278
	6,006	U.S. Cellular Corp.*		435,435
	400,902	Verizon Communications, Inc.		15,306,439
				41,094,723
		Utilities—6.6%
	45,097	AES (The) Corp.*		991,683
	6,915	AGL Resources, Inc.		301,079
	8,815	Allegheny Energy, Inc.*		471,250
	4,715	ALLETE, Inc.		228,253
	12,681	Alliant Energy Corp.		555,428
	25,259	Ameren Corp.		1,327,866
	58,843	American Electric Power Co., Inc.		2,955,095
	6,394	Aqua America, Inc.		141,371
	105,286	Aquila, Inc.*		434,831
	10,075	Atmos Energy Corp.		319,579
	7,926	Avista Corp.		186,974
	4,331	Black Hills Corp.		172,417
	68,013	CenterPoint Energy, Inc.		1,280,685
	5,801	Cleco Corp.		162,776
	34,595	CMS Energy Corp.		640,699
	33,621	Consolidated Edison, Inc.		1,723,412
	13,129	Constellation Energy Group, Inc.		1,170,056
	31,966	Dominion Resources, Inc.		2,915,299
	11,400	DPL, Inc.		357,390
	26,982	DTE Energy Co.		1,365,019

Number of Shares			Value
		Common Stocks (Continued)
	120,114	Duke Energy Corp.	$	2,464,739
	10,745	Duquesne Light Holdings, Inc.		214,255
	73,232	Dynegy, Inc., Class A*		689,113
	31,636	Edison International		1,656,145
	3,342	Energen Corp.		187,319
	25,252	Energy East Corp.		611,603
	16,099	Entergy Corp.		1,821,441
	5,034	Equitable Resources, Inc.		261,818
	42,656	Exelon Corp.		3,216,690
	31,686	FirstEnergy Corp.		2,168,590
	29,953	FPL Group, Inc.		1,928,075
	11,591	Great Plains Energy, Inc.		378,330
	11,389	Hawaiian Electric Industries, Inc.		299,758
	6,579	IDACORP, Inc.		226,647
	6,091	Integrys Energy Group, Inc.		341,705
	25,340	KeySpan Corp.		1,049,329
	13,474	MDU Resources Group, Inc.		408,262
	23,988	Mirant Corp.*		1,076,342
	7,820	National Fuel Gas Co.		367,618
	3,318	New Jersey Resources Corp.		178,177
	6,249	Nicor, Inc.		320,199
	45,663	NiSource, Inc.		1,122,853
	19,206	Northeast Utilities		617,857
	4,018	NorthWestern Corp.		141,193
	4,960	NRG Energy, Inc.*		391,642
	13,275	NSTAR		476,573
	10,895	OGE Energy Corp.		418,804
	11,376	ONEOK, Inc.		550,712
	27,410	Pepco Holdings, Inc.		809,143
	35,382	PG&E Corp.		1,790,329
	7,872	Piedmont Natural Gas Co., Inc.		207,742
	13,797	Pinnacle West Capital Corp.		666,257
	7,754	PNM Resources, Inc.		252,393
	7,753	Portland General Electric Co.		224,682
	25,442	PPL Corp.		1,109,526
	37,144	Progress Energy, Inc.		1,877,629
	23,161	Public Service Enterprise Group, Inc.		2,002,268
	16,549	Puget Energy, Inc.		427,295
	3,838	Questar Corp.		372,785
	339,263	Reliant Energy, Inc.*		7,555,388
	14,231	SCANA Corp.		619,475
	19,018	Sempra Energy		1,207,263
	16,633	Sierra Pacific Resources*		303,719
	82,370	Southern (The) Co.		3,112,763
	7,964	Southern Union Co.		242,583
	4,520	Southwest Gas, Corp.		171,263
	30,633	TECO Energy, Inc.		549,862
	24,320	TXU Corp.		1,594,906
	11,200	UGI Corp.		317,632
	4,167	UIL Holdings Corp.		142,303
	4,091	Unisource Energy Corp.		157,135
	10,557	Vectren Corp.		306,892

See Notes to Financial Statements.
33

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	11,318	Westar Energy, Inc.	$	308,076
	7,542	WGL Holdings, Inc.		255,221
	11,357	Wisconsin Energy Corp.		554,108
	62,964	Xcel Energy, Inc.		1,516,803
				69,942,392
		Total Common Stocks (Cost $989,381,932)		1,053,749,375
		Money Market Fund—0.1%
	1,207,457	Liquid Assets Portfolio Private Class** (Cost $1,207,457)		1,207,457
		Total Investments (Cost $990,589,389)—100.0%		1,054,956,832
		Other assets less liabilities—0.0%		231,778
		Net Assets—100.0%	$	1,055,188,610

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007(Unaudited)

	Value		Net Assets
United States	$	1,028,102,266		97.4	%
Bermuda		13,557,859		1.3
Cayman Islands		4,854,010		0.5
Netherlands		3,033,453		0.3
Panama		2,001,312		0.2
Switzerland		1,017,237		0.1
Singapore		782,596		0.1
Liberia		718,662		0.1
Marshall Islands		377,883		0.0
Guernsey		293,669		0.0
Israel		217,885		0.0
Total investments		1,054,956,832		100.0
Other assets less liabilities		231,778		0.0
Net Assets	$	1,055,188,610		100.0	%

See Notes to Financial Statements.
34

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Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

April 30, 2007

	PowerShares Dynamic Market Portfolio			PowerShares Dynamic OTC Portfolio			PowerShares Dynamic MagniQuant Portfolio			PowerShares FTSE RAFI US 1000 Portfolio
ASSETS:
Unaffiliated investments at value	$	972,579,568		$	159,839,788		$	81,069,258		$	1,053,749,375
Affiliated investments at value		681,728			—			—			1,207,457
Cash		—			—			227,624			409,362
Receivables:
Dividends		446,657			6,106			35,817			835,072
Due from Adviser		88,696			27,034			14,228			55,594
Capital stock sold		—			—			—			6,149,020
Investments sold		—			—			—			9,140,858
Other assets		7,158			8,956			17,886			—
Total Assets		973,803,807			159,881,884			81,364,813			1,071,546,738
LIABILITIES:
Due to custodian		1,925			116,420			—			—
Payables:
Investments purchased		—			—			—			15,604,153
Accrued advisory fees		392,847			64,907			31,424			406,780
Accrued expenses		304,423			101,612			64,386			347,195
Total Liabilities		699,195			282,939			95,810			16,358,128
NET ASSETS	$	973,104,612		$	159,598,945		$	81,269,003		$	1,055,188,610
NET ASSETS CONSIST OF:
Paid-in capital	$	1,005,435,550		$	187,973,752		$	78,651,326		$	990,335,583
Undistributed net investment income		2,394,598			—			196,534			1,674,587
Accumulated net realized loss on investments		(106,686,774	)		(39,085,472	)		(894,209	)		(1,189,003	)
Net unrealized appreciation on investments		71,961,238			10,710,665			3,315,352			64,367,443
Net Assets	$	973,104,612		$	159,598,945		$	81,269,003		$	1,055,188,610
Shares outstanding (unlimited amount authorized, $0.01 par value)		18,250,000			2,900,000			2,900,000			17,300,000
Net asset value	$	53.32		$	55.03		$	28.02		$	60.99
Unaffiliated investments at cost	$	900,618,330		$	149,129,123		$	77,753,906		$	989,381,932
Affiliated investments at cost	$	681,728		$	—		$	—		$	1,207,457

See Notes to Financial Statements.
36

Statements of Operations

	PowerShares Dynamic Market Portfolio			PowerShares Dynamic OTC Portfolio			PowerShares Dynamic MagniQuant Portfolio			PowerShares FTSE RAFI US 1000 Portfolio
	Year Ended April 30, 2007			Year Ended April 30, 2007			For the period October 12, 2006* through April 30, 2007			Year Ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	13,497,548		$	822,619		$	499,195		$	9,472,639
Affiliated dividend income		20,181			—			—			20,677
Foreign withholding tax		—			—			—			(861	)
Total Income		13,517,729			822,619			499,195			9,492,455
EXPENSES:
Advisory fees		4,602,483			906,029			146,255			2,258,401
Printing		415,758			88,746			17,273			222,010
Licensing		276,149			54,362			14,626			451,680
Administration fees		138,075			59,998			6,891			77,815
Accounting		92,050			54,998			5,375			57,855
Custodian & transfer agent fees		56,128			19,762			5,049			32,590
Legal		37,091			8,972			2,500			4,197
Trustees		34,942			6,494			1,187			18,740
Audit		16,500			16,500			16,500			16,500
Listing fee and expenses		12,151			10,523			10,000			5,186
Registration & filings		—			—			1,913			22,385
Offering costs		—			—			5,104			9,948
Other expenses		39,077			19,845			12,236			32,073
Total Expenses		5,720,404			1,246,229			244,909			3,209,380
Less fees waived:
Advisory		(206,366	)		(158,385	)		(49,137	)		(62,357	)
Net Expenses		5,514,038			1,087,844			195,772			3,147,023
Net Investment Income (Loss)		8,003,691			(265,225	)		303,423			6,345,432
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(59,168,002	)		(20,320,844	)		(894,209	)		(1,185,394	)
In-kind redemptions		125,856,245			27,485,411			2,366,191			21,836,853
Net realized gain		66,688,243			7,164,567			1,471,982			20,651,459
Net change in unrealized appreciation/ depreciation on investments		29,944,772			(5,390,297	)		3,315,352			61,838,256
Net realized and unrealized gain on investments		96,633,015			1,774,270			4,787,334			82,489,715
Net increase in net assets resulting from operations	$	104,636,706		$	1,509,045		$	5,090,757		$	88,835,147

*  Commencement of Investment Operations.

See Notes to Financial Statements.
37

Statements of Changes in Net Assets

	PowerShares Dynamic Market Portfolio						PowerShares Dynamic OTC Portfolio
	For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2007			For the year ended April 30, 2006
OPERATIONS:
Net investment income (loss)	$	8,003,691		$	4,507,218		$	(265,225	)	$	(68,374	)
Net realized gain on investments		66,688,243			50,752,159			7,164,567			16,160,854
Net change in unrealized appreciation/depreciation of investments		29,944,772			45,428,370			(5,390,297	)		15,104,755
Net increase in net assets resulting from operations		104,636,706			100,687,747			1,509,045			31,197,235
Undistributed net investment income included in the price of units issued and redeemed		4,323			—			91,702			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(6,116,430	)		(4,155,736	)		—			(51,000	)
Tax return of capital		—			—			—			(107,644	)
Total distributions		(6,116,430	)		(4,155,736	)		—			(158,644	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		1,426,914,403			1,422,241,078			259,930,591			365,564,123
Value of shares repurchased		(1,471,486,113	)		(883,237,374	)		(324,280,921	)		(239,909,539	)
Net income equalization		(4,323	)		—			(91,702	)		—
Net increase (decrease) in net assets resulting from shares transactions		(44,576,033	)		539,003,704			(64,442,032	)		125,654,584
Increase (decrease) in Net Assets		53,948,566			635,535,715			(62,841,285	)		156,693,175
NET ASSETS:
Beginning of period		919,156,046			283,620,331			222,440,230			65,747,055
End of period	$	973,104,612		$	919,156,046		$	159,598,945		$	222,440,230
Undistributed net investment income (loss) at end of period	$	2,394,598		$	507,337		$	—		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		29,700,000			31,600,000			5,150,000			7,500,000
Shares repurchased		(30,650,000	)		(19,652,228	)		(6,400,000	)		(4,901,424	)
Shares outstanding, beginning of period		19,200,000			7,252,228			4,150,000			1,551,424
Shares outstanding, end of period		18,250,000			19,200,000			2,900,000			4,150,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
38

	PowerShares Dynamic MagniQuant Portfolio			PowerShares FTSE RAFI US 1000 Portfolio
	For the period October 12, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period December 19, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	303,423		$	6,345,432		$	323,389
Net realized gain on investments		1,471,982			20,651,459			918,416
Net change in unrealized appreciation/depreciation of investments		3,315,352			61,838,256			2,529,187
Net increase in net assets resulting from operations		5,090,757			88,835,147			3,770,992
Undistributed net investment income included in the price of units issued and redeemed		34,154			2,687,242			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(106,889	)		(4,798,111	)		(194,752	)
Tax return of capital		—			—			—
Total distributions		(106,889	)		(4,798,111	)		(194,752	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		118,994,387			1,023,566,925			121,737,639
Value of shares repurchased		(42,709,252	)		(157,298,357	)		(20,430,873	)
Net income equalization		(34,154	)		(2,687,242	)		—
Net increase (decrease) in net assets resulting from shares transactions		76,250,981			863,581,326			101,306,766
Increase (decrease) in Net Assets		81,269,003			950,305,604			104,883,006
NET ASSETS:
Beginning of period		—			104,883,006			—
End of period	$	81,269,003		$	1,055,188,610		$	104,883,006
Undistributed net investment income (loss) at end of period	$	196,534		$	1,674,587		$	129,021
CHANGES IN SHARES OUTSTANDING:
Shares sold		4,500,000			18,000,000			2,400,000
Shares repurchased		(1,600,000	)		(2,700,000	)		(400,000	)
Shares outstanding, beginning of period		—			2,000,000			—
Shares outstanding, end of period		2,900,000			17,300,000			2,000,000

39

Financial Highlights

PowerShares Dynamic Market Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2005			For the year May 1, 2003* through April 30, 2004
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	47.87		$	39.11		$	35.05		$	26.99	†
Net investment income**		0.42			0.34			0.26			0.15	†
Net realized and unrealized gain on investments		5.35			8.75			4.02			8.09	†
Total from operations  .		5.77			9.09			4.28			8.24	†
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—			—			—
Distributions to shareholders from:
Net investment income		(0.32	)		(0.33	)		(0.22	)		(0.18	)†
Net asset value at end of period	$	53.32		$	47.87		$	39.11		$	35.05	†
TOTAL RETURN***		12.12	%		23.30	%		12.23	%		30.50	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)  .	$	973,105		$	919,156		$	283,620		$	85,946
Ratio to average net assets of:
Expenses, net of waivers		0.60	%		0.60	%		0.60	%		0.60	%
Expenses, prior to waivers		0.62	%		0.63	%		0.70	%		1.26	%
Net investment income, net of waivers		0.87	%		0.76	%		0.68	%		0.46	%
Portfolio turnover rate ††		114	%		103	%		94	%		58	%

PowerShares Dynamic OTC Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2005			For the year May 1, 2003* through April 30, 2004
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	53.60		$	42.38		$	36.59		$	28.57	†
Net investment loss**		(0.07	)		(0.02	)		(0.03	)		(0.04	)†
Net realized and unrealized gain on investments		1.47			11.30			5.82			8.06	†
Total from operations		1.40			11.28			5.79			8.02	†
Undistributed net investment income included in price of units issued and redeemed**		0.03			—			—			—
Distributions to shareholders from:
Net investment income		—			(0.02	)		—			—
Tax return of capital		—			(0.04	)		—			—
Total distributions		—			(0.06	)		—			—
Net asset value at end of period	$	55.03		$	53.60		$	42.38		$	36.59	†
TOTAL RETURN***		2.67	%		26.63	%		15.81	%		28.07	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	159,599		$	222,440		$	65,747		$	34,817
Ratio to average net assets of:
Expenses, net of waivers		0.60	%		0.60	%		0.60	%		0.60	%
Expenses, prior to waivers		0.69	%		0.69	%		1.06	%		1.66	%
Net investment loss, net of waivers		(0.15	)%		(0.04	)%		(0.06	)%		(0.10	)%
Portfolio turnover rate ††		107	%		77	%		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 9).

††  Portfolio turnover is not annualized and does not include securities received or delivered from processing creations or redemptions.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
40

Financial Highlights (Continued)

PowerShares Dynamic MagniQuant Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.37
Net investment income**		0.15
Net realized and unrealized gain on investments		2.53
Total from operations		2.68
Undistributed net investment income included in price of units issued and redeemed**		0.02
Distributions to shareholders from:
Net investment income		(0.05	)
Net asset value at end of period	$	28.02
TOTAL RETURN***		10.67	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	81,269
Ratio to average net assets of:
Expenses, net of waivers		0.67	%†
Expenses, prior to waivers		0.84	%†
Net investment income, net of waivers		1.04	%†
Portfolio turnover rate ††		23	%

PowerShares FTSE RAFI US 1000 Portfolio

	For the year ended April 30, 2007			For the period December 19, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	52.44		$	49.64
Net investment income**		0.78			0.24
Net realized and unrealized gain on investments		8.05			2.68
Total from operations		8.83			2.92
Undistributed net investment income included in price of units issued and redeemed**		0.33			—
Distributions to shareholders from:
Net investment income		(0.61	)		(0.12	)
Net asset value at end of period	$	60.99		$	52.44
TOTAL RETURN***		17.60	%		5.89	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	1,055,189		$	104,883
Ratio to average net assets of:
Expenses, net of waivers		0.70	%		0.76	%†
Expenses, prior to waivers		0.71	%†††		1.00	%†
Net investment income, net of waivers		1.40	%		1.38	%†
Portfolio turnover rate ††		8	%		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.

†††  These expenses, prior to waivers include amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the year ended, April 30, 2007.

See Notes to Financial Statements.
41

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

PowerShares Dynamic Market Portfolio	"Dynamic Market Portfolio"
PowerShares Dynamic OTC Portfolio	"Dynamic OTC Portfolio"
PowerShares Dynamic MagniQuant Portfolio	"Dynamic MagniQuant Portfolio"
PowerShares FTSE RAFI US 1000 Portfolio	"FTSE RAFI US 1000 Portfolio"

Dynamic MagniQuant Portfolio commenced investment operations on October 12, 2006. Each portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on the American Stock Exchange except for shares of the FTSE RAFI US 1000 Portfolio. The shares of FTSE RAFI US 1000 are traded on the New York Stock Exchange. The Funds' market prices may differ to some degree from the 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, each 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 the Fund's fees and expenses) of the following equity indices:

Fund	Index
Dynamic Market Portfolio	Dynamic Market IntellidexSM Index
Dynamic OTC Portfolio	Dynamic OTC IntellidexSM Index
Dynamic MagniQuant Portfolio	Top 200 Dynamic IntellidexSM Index
FTSE RAFI US 1000 Portfolio	FTSE RAFI US 1000 Index

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 at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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.

42

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions 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. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

Beginning May 1, 2006 (or since inception, if later), all Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost of repurchases of capital shares is applied to undistributed net investment income. The amount of equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services. The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.50% per annum on each Fund's average daily net assets.

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, for the Dynamic MagniQuant Portfolio and the FTSE RAFI 1000 Portfolio, 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,

43

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

offering costs, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange. For the Dynamic Market Portfolio and the Dynamic OTC Portfolio, 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, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year at least until April 30, 2008.

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dynamic Market Portfolio	$	206,366	$	—
Dynamic OTC Portfolio		158,385		—
Dynamic MagniQuant Portfolio		49,137		—
FTSE RAFI US 1000 Portfolio		62,357		—

Except for the Dynamic Market Portfolio and the Dynamic OTC Portfolio, the Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which expenses borne by the Adviser are subject to reimbursement by each Fund up to three years from the date the fee or expense was incurred, but no reimbursement payment will be made by each Fund if it would result in each Fund exceeding its Expense Cap as specified above. 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.

During the period ended April 30, 2007, details of expense waivers and reimbursements to the Adviser under the Expense Agreement was as follows:

	Gross Waivers			Gross Reimbursements		Net Waivers
FTSE RAFI US 1000 Portfolio	$	(138,397	)	$	76,040	$	(62,357	)

The net amounts of waivers are also shown on the Statements of Operations.

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dynamic MagniQuant Portfolio	$	49,137	$	49,137	$	49,137
FTSE RAFI US 1000 Portfolio		118,831		118,831		118,831

44

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Distribution Agreement

Effective September 18, 2006 (or since inception, if later), A I M 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. Prior to September 18, 2006, ALPS Distributors, Inc. served as the distributor.

The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the following Licensors:

Fund	Licensor
Dynamic Market Portfolio	American Stock Exchange
Dynamic OTC Portfolio	American Stock Exchange
Dynamic MagniQuant Portfolio	American Stock Exchange
FTSE RAFI US 1000 Portfolio	FTSE International Ltd.

The above trademarks are owned by the respective Licensors. These trademarks have been licensed to the Adviser for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensors and the Licensors make no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the licensing fees which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

Note 4. INVESCO Transaction and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVESCAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO PLC, announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by A I M Advisors, Inc., an affiliate of the Adviser.

45

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax-basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
Dynamic Market Portfolio	$	2,394,598	$	(93,407,517	)	$	71,875,919	$	78,965,448	$	(7,089,529	)	$	(19,137,000	)
Dynamic OTC Portfolio		—		(33,418,433	)		10,671,603		13,830,354		(3,158,751	)		(22,746,830	)
Dynamic MagniQuant Portfolio		196,534		—			3,315,352		4,405,525		(1,090,173	)		3,511,886
FTSE RAFI US 1000 Portfolio		1,674,587		(44,432	)		63,239,109		69,936,942		(6,697,833	)		64,869,264

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

Dynamic Market Portfolio	$	901,385,377
Dynamic OTC Portfolio		149,168,185
Dynamic MagniQuant Portfolio		77,753,906
FTSE RAFI US 1000 Portfolio		991,717,723

Distributions to Shareholders:

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
Dynamic Market Portfolio	$	6,116,430
Dynamic MagniQuant Portfolio		106,889
FTSE RAFI US 1000 Portfolio		4,798,111

The tax character of distributions paid during the period ended April 30, 2006 was as follows:

	Distributions paid from Ordinary Income
Dynamic Market Portfolio	$	4,155,736
Dynamic OTC Portfolio		51,000
FTSE RAFI US 1000 Portfolio		194,752
	Distributions paid from Return of Capital
Dynamic OTC Portfolio	$	107,644

46

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

At April 30, 2007, 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.

	Capital Loss Available Through										Total
	2011		2012		2013		2014		2015		Amount
Dynamic Market Portfolio	$	225,469	$	8,920,879	$	5,021,729	$	13,686,812	$	65,552,628	$	93,407,517
Dynamic OTC Portfolio		252,044		651,452		5,297,385		5,449,844		21,767,708		33,418,433
FTSE RAFI US 1000 Portfolio		—		—		—		—		44,432		44,432

Capital losses incurred after October 31 ("post-October losses") within the taxable year are deemed to arise on the first business day of each Fund's next taxable year.

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
Dynamic Market Portfolio	$	13,193,938
Dynamic OTC Portfolio		5,627,977
Dynamic MagniQuant Portfolio		894,209
FTSE RAFI US 1000 Portfolio		16,237

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in real estate investment trusts, investments in partnerships, wash sales from redemption in-kind transactions, redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			Undistributed Capital Gains/ (Accumulated Losses)			Paid in Capital
Dynamic Market Portfolio	$	(4,323	)	$	(125,622,091	)	$	125,626,414
Dynamic OTC Portfolio		173,523			(27,351,891	)		27,178,368
Dynamic MagniQuant Portfolio		(34,154	)		(2,366,191	)		2,400,345
FTSE RAFI US 1000 Portfolio		(2,688,997	)		(21,760,737	)		24,449,734

47

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 6. Investment Transactions

For the period ended April 30, 2007, 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	$	1,048,035,645	$	1,053,064,043
Dynamic OTC Portfolio		194,086,392		196,895,072
Dynamic MagniQuant Portfolio		12,759,491		12,940,641
FTSE RAFI US 1000 Portfolio		37,061,432		45,751,002

For the period ended April 30, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Market Portfolio	$	1,419,715,581	$	1,456,545,525
Dynamic OTC Portfolio		257,955,251		319,533,596
Dynamic MagniQuant Portfolio		119,189,148		42,726,074
FTSE RAFI US 1000 Portfolio		1,019,719,754		144,293,340

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

Note 8. 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 $5,000 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 9. Stock Split

On July 15, 2003, the Board of Trustees of the Trust declared a 4-for-1 stock split for Dynamic Market Portfolio and Dynamic OTC Portfolio 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 Dynamic Market Portfolio and 601,068 shares were issued for Dynamic OTC Portfolio. All capital share activity and per share data have been restated to reflect these stock splits.

Note 10. Risk of Concentration

The Funds concentrate their investments in certain industries, subjecting them to greater risk than funds that invest in a wider range of industries.

48

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 11. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

Note 12. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of FIN 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of FIN 48, if any, on the Funds' financial statements.

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

49

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

50

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
Dynamic Market Portfolio		100	%		100	%
Dynamic OTC Portfolio		0	%		0	%
Dynamic MagniQuant Portfolio		100	%		100	%
FTSE RAFI US 1000 Portfolio		100	%		100	%

51

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989- Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

52

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994-1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

53

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002- Present); Manager, Nuveen Investments (April 1998- August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)(19) of the 1940 Act.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

54

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001-2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

55

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

56

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the Funds, information describing the Adviser's current organization, including operations assistance provided by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

57

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

58

PowerShares        Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (EFT). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com

This page contains advertising materials and should not be viewed as part of the Annual Report.
59

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market

PWO  -  Dynamic OTC

PIQ  -  Dynamic MagniQuant

PJF  -  Dynamic Large Cap

PJG  -  Dynamic Mid Cap

PJM  -  Dynamic Small Cap

PWB  -  Dynamic Large Cap Growth

PWV  -  Dynamic Large Cap Value

PWJ  -  Dynamic Mid Cap Growth

PWP  -  Dynamic Mid Cap Value

PWT  -  Dynamic Small Cap Growth

PWY  -  Dynamic Small Cap Value

PGZ  -  Dynamic Aggressive Growth

PVM  -  Dynamic Deep Value

PYZ  -  Dynamic Basic Materials Sector

PEZ  -  Dynamic Consumer Discretionary Sector

PSL  -  Dynamic Consumer Staples Sector

PXI  -  Dynamic Energy Sector

PFI  -  Dynamic Financials Sector

PTH  -  Dynamic Healthcare Sector

PRN  -  Dynamic Industrials Sector

PTF  -  Dynamic Technology Sector

PTE  -  Dynamic Telecommunications & Wireless

PUI  -  Dynamic Utilities

PJB  -  Dynamic Banking

PBE  -  Dynamic Biotechnology & Genome

PKB  -  Dynamic Building & Construction

PXE  -  Dynamic Energy Exploration & Production

PBJ  -  Dynamic Food & Beverage

PHW  -  Dynamic Hardware & Consumer Electronics

PTJ  -  Dynamic Healthcare Services

PIC  -  Dynamic Insurance

PEJ  -  Dynamic Leisure and Entertainment

PBS  -  Dynamic Media

PXQ  -  Dynamic Networking

PXJ  -  Dynamic Oil & Gas Services

PJP  -  Dynamic Pharmaceuticals

PMR  -  Dynamic Retail

PSI  -  Dynamic Semiconductors

PSJ  -  Dynamic Software

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

This page contains advertising materials and should not be viewed as part of the Annual Report.
60

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000

PRFZ  -  FTSE RAFI US 1500 Small-Mid

PRFM  -  FTSE RAFI Basic Materials Sector

PRFG  -  FTSE RAFI Consumer Goods Sector

PRFS  -  FTSE RAFI Consumer Services Sector

PRFE  -  FTSE RAFI Energy Sector

PRFF  -  FTSE RAFI Financials Sector

PRFH  -  FTSE RAFI Health Care Sector

PRFN  -  FTSE RAFI Industrials Sector

PRFQ  -  FTSE RAFI Telecom & Technology Sector

PRFU  -  FTSE RAFI Utilities Sector

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense

ADRA  -  BLDRS Asia 50 ADR Index Fund

ADRD  -  BLDRS Developed Markets 100 ADR Index Fund

ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  -  BLDRS Europe 100 ADR Index Fun

PKW  -  Buyback Achievers

PZD  -  Cleantech

PFM  -  Dividend Achievers

PDP  -  DWA Technical Lenders

PGF  -  Financial Preferred

PGJ  -  Golden Dragon Halter USX China

PHJ  -  High Growth Rate Dividend Achievers

PEY  -  High Yield Equity Dividend Achievers

PID  -  International Dividend Achievers

PSP  -  Listed Private Equity

PXN  -  Lux Nanotech

QQQQ  -  PowerShares QQQ

PYH  -  Value Line Industry Rotation

PIV  -  Value Line Timeliness Select

PHO  -  Water Resources

PBW  -  Wilderhill Clean Energy

PUW  -  Wilderhill Progressive Energy

PZI  -  Zacks Micro Cap

PZJ  -  Zacks Small Cap

This page contains advertising materials and should not be viewed as part of the Annual Report.
61

PowerShares Asset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFG  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

This page contains advertising materials and should not be viewed as part of the Annual Report.
62

PowerShares Risk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

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63

Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

This page contains advertising materials and should not be viewed as part of the Annual Report.
64

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs area not closed-end funds and trade at or near net asset values.

This page contains advertising materials and should not be viewed as part of the Annual Report.
65

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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) 337-4246. 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) 337-4246; 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.

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 ETFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares ETFs 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.

A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares ETFs call A I M Distributors, Inc. at (800)337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-2

2007 Annual Report to Shareholders

30 April 2007

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 Large Cap Portfolio

PowerShares Dynamic Mid Cap Portfolio

PowerShares Dynamic Small Cap Portfolio

PowerShares Dynamic Aggressive Growth Portfolio

PowerShares Dynamic Deep Value Portfolio

PowerShares Zacks Micro Cap Portfolio

PowerShares Zacks Small Cap Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	30
Frequency Distribution of Discounts & Premiums	32
Fees and Expenses	34
Style Portfolios
Schedules of Investments
PowerShares Dynamic Large Cap Growth Portfolio	37
PowerShares Dynamic Large Cap Value Portfolio	38
PowerShares Dynamic Mid Cap Growth Portfolio	39
PowerShares Dynamic Mid Cap Value Portfolio	41
PowerShares Dynamic Small Cap Growth Portfolio	43
PowerShares Dynamic Small Cap Value Portfolio	45
PowerShares Dynamic Large Cap Portfolio	47
PowerShares Dynamic Mid Cap Portfolio	49
PowerShares Dynamic Small Cap Portfolio	51
PowerShares Dynamic Aggressive Growth Portfolio	54
PowerShares Dynamic Deep Value Portfolio	56
PowerShares Zacks Micro Cap Portfolio	58
PowerShares Zacks Small Cap Portfolio	63
Statements of Assets and Liabilities	66
Statements of Operations	68
Statements of Changes in Net Assets	70
Financial Highlights	74
Notes to Financial Statements	81
Report of Independent Registered Public Accounting Firm	92
Supplemental Information (Unaudited)	93
Information about Advisory Agreement (Unaudited)	98

To My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US 1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing investors with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P 500^® Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the end of summer 2006, energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

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 and seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Large Cap Growth Portfolio posted a return of 6.92% over the reporting period. During this time, growth stocks trailed value stocks. The Fund behaved accordingly and underperformed the general market. Financials stock Goldman Sachs contributed significantly to the Fund's performance. Information stock Qualcomm and energy stock Peabody hurt the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets)

Information Technology	29.4
Health Care	23.4
Consumer Discretionary	21.8
Industrials	9.9
Financials	7.1
Energy	5.5
Utilities	2.9
Money Market Fund	0.1
Other	(0.1	)

Style Allocation (%)

Large-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Schlumberger Ltd. (Netherlands)	3.8
Apple, Inc.	3.7
Oracle Corp.	3.7
3M Co.	3.6
Dell, Inc.	3.5
Microsoft Corp.	3.4
Medtronic, Inc.	3.4
Boeing Co.	3.4
Google, Inc., Class A	3.3
UnitedHealth Group, Inc.	3.3
Total	35.1

4

Manager's Analysis (Continued)

PowerShares Dynamic Large Cap Growth Portfolio (ticker: PWB)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Large Cap Growth IntellidexSM Index		7.65		8.67		19.66
Dow Jones US Large Cap Growth Index		9.48		6.90		15.49
Russell 1000® Growth Index		12.25		10.40		23.80

Fund

NAV Return	6.92	7.92	17.89
Share Price Return	7.01	7.85	17.73

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.80%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.68%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Large Cap Growth Index and the Russell 1000^® Growth Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 108 and 671, respectively, widely held stocks.

^† Average annualized.

5

Manager's Analysis

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 and seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Large Cap Value Portfolio performed very well over the reporting period posting a 20.85% return. The Fund was the best performing PowerShares style fund over this period. Financials was the most heavily weighted sector in the Fund with Morgan Stanley, JP Morgan, and Merrill Lynch making significant contributions to performance. The Fund also benefited from good stock selection within industrials and information technology. In particular, allocations to technology stock IBM and industrials stock Paccar boosted the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	40.4
Health Care	10.5
Consumer Staples	9.0
Energy	8.5
Industrials	7.4
Telecommunication Services	6.6
Utilities	6.0
Information Technology	4.8
Materials	4.1
Consumer Discretionary	2.7
Other	0.0

Style Allocation (%)

Large-Cap Value 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Merck & Co., Inc.	3.9
Chevron Corp.	3.5
Altria Group, Inc.	3.5
Exxon Mobil Corp.	3.4
AT&T, Inc.	3.4
International Business Machines Corp.	3.4
Morgan Stanley	3.4
Pfizer, Inc.	3.3
JPMorgan Chase & Co.	3.3
American International Group, Inc.	3.3
Total	34.4

6

Manager's Analysis (Continued)

PowerShares Dynamic Large Cap Value Portfolio (ticker: PWV)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Large Cap Value IntellidexSM Index		21.62		18.63		44.60
Dow Jones US Large Cap Value Index		15.93		11.04		25.37
Russell 1000® Value Index		18.15		14.76		34.60

Fund

NAV Return	20.85	17.82	42.49
Share Price Return	20.85	17.77	42.35

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.94%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.67%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Large Cap Value Index and the Russell 1000^® Value Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 130 and 597, respectively, widely held stocks.

^† Average annualized.

7

Manager's Analysis

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 and seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Mid Cap Growth Portfolio performed the best of the three PowerShares growth funds, posting a solid 12.91% return for the reporting period. The highest contributing sector was consumer discretionary with Coach, Starwood Hotels, and Polo Ralph Lauren making solid contributions. Industries aerospace and defense and textiles contributed significantly to the Fund's performance while oil and gas and commercial services lagged.

Sector Breakdown (% of the Fund's

Net Assets)

Consumer Discretionary	23.4
Information Technology	22.7
Health Care	14.6
Financials	12.4
Industrials	10.1
Materials	7.4
Energy	4.7
Utilities	3.5
Telecommunication Services	0.6
Consumer Staples	0.5
Other	0.1

Style Allocation (%)

Mid-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Express Scripts, Inc.	3.8
CBOT Holdings, Inc., Class A	3.6
Allegheny Energy, Inc.	3.5
ENSCO International, Inc.	3.4
Precision Castparts Corp.	3.3
Polo Ralph Lauren Corp.	3.3
Humana, Inc.	3.3
T. Rowe Price Group, Inc.	3.2
Biomet, Inc.	3.2
Allegheny Technologies, Inc.	3.2
Total	33.8

8

Manager's Analysis (Continued)

PowerShares Dynamic Mid Cap Growth Portfolio (ticker: PWJ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Mid Cap Growth IntellidexSM Index		13.55		18.24		43.58
Dow Jones US Mid Cap Growth Index		10.89		15.64		36.85
Russell Mid Cap Growth Index		11.13		14.61		34.23

Fund

NAV Return	12.91	17.39	41.35
Share Price Return	12.89	17.31	41.14

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.90%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.73%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Mid Cap Growth Index and the Russell Mid Cap Growth Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 210 and 528, respectively, widely held stocks.

^† Average annualized.

9

Manager's Analysis

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 and seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Mid Cap Value Portfolio posted solid results during the fiscal year, returning 19.14%, making it the second best performing PowerShares style fund. Financial and industrial stocks contributed most to Fund performance with large allocations and strong returns. Health care was a lower weighted sector, however, it made significant contributions to performance due to the strong performance from CIGNA. Energy stocks lagged being the only sector with negative contribution.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	29.3
Consumer Discretionary	19.0
Industrials	18.7
Information Technology	9.0
Consumer Staples	8.9
Materials	7.5
Health Care	3.9
Utilities	2.4
Telecommunication Services	0.6
Money Market Fund	0.2
Other	0.5

Style Allocation (%)

Mid-Cap Value 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
CNA Financial Corp.	3.5
VF Corp.	3.4
United States Steel Corp.	3.4
CIGNA Corp.	3.4
XL Capital Ltd., Class A (Cayman Islands)	3.3
Eaton Corp.	3.3
Mattel, Inc.	3.3
Parker Hannifin Corp.	3.3
ITT Corp.	3.3
NCR Corp.	3.3
Total	33.5

10

Manager's Analysis (Continued)

PowerShares Dynamic Mid Cap Value Portfolio (ticker: PWP)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Mid Cap Value IntellidexSM Index		20.04		17.18		40.83
Dow Jones US Mid Cap Value Index		13.82		12.73		29.52
Russell Mid Cap Value Index		19.66		18.21		43.51

Fund

NAV Return	19.14	16.15	38.16
Share Price Return	19.17	16.10	38.02

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.13%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.82%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are based upon a hypothetical investment in its constituent securities. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Mid Cap Value Index and the Russell Mid Cap Value Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 229 and 470, respectively, widely held stocks.

^† Average annualized.

11

Manager's Analysis

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 and seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Small Cap Growth Portfolio posted the weakest results of the six original PowerShares style funds during the fiscal year, returning 0.43%. Consumer discretionary and materials stocks led performance in the Fund. Consumer staples, information technology, and industrials lagged.

Sector Breakdown (% of the Fund's

Net Assets)

Consumer Discretionary	26.6
Information Technology	25.5
Health Care	18.3
Industrials	13.1
Financials	10.8
Telecommunication Services	2.3
Materials	1.8
Energy	0.9
Consumer Staples	0.8
Other	(0.1	)

Style Allocation (%)

Small-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
International Securities Exchange Holdings, Inc.	3.1
WebEx Communications, Inc.	2.8
CommScope, Inc.	2.8
DeVry, Inc.	2.7
TeleTech Holdings, Inc.	2.7
GFI Group, Inc.	2.6
Cohen & Steers, Inc.	2.6
Aeropostale, Inc.	2.5
West Pharmaceutical Services, Inc.	2.5
Valeant Pharmaceuticals International	2.4
Total	26.7

12

Manager's Analysis (Continued)

PowerShares Dynamic Small Cap Growth Portfolio (ticker: PWT)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Small Cap Growth IntellidexSM Index		0.84		10.55		24.18
Dow Jones US Small Cap Growth Index		7.48		12.08		27.91
Russell 2000® Growth Index		4.53		12.03		27.80

Fund

NAV Return	0.43	10.08	23.03
Share Price Return	0.38	9.99	22.83

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.90%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.84%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Small Cap Growth Index and the Russell 2000^® Growth Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 305 and 1,274 widely held stocks, respectively.

^† Average annualized.

13

Manager's Analysis

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 and seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Small Cap Value Portfolio posted a 10.64% return over the reporting period. Small cap stocks underperformed during the period but value outperformed growth. The Fund was in the middle of the pack for the six original PowerShares style funds. The Fund had balanced contributions from various sectors with energy, materials, consumer staples, and industrials leading the way. No sector contributed negatively to the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	45.2
Consumer Discretionary	13.9
Industrials	12.9
Energy	12.1
Information Technology	7.1
Materials	4.1
Health Care	3.4
Utilities	0.8
Consumer Staples	0.5
Other	0.0

Style Allocation (%)

Small-Cap Value 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Global Industries, Ltd.	3.5
Western Refining, Inc.	3.2
Deluxe Corp.	2.6
Commerce Group (The), Inc.	2.5
Perot Systems Corp., Class A	2.4
Delphi Financial Group, Inc., Class A	2.4
ProAssurance Corp.	2.4
Phoenix (The) Cos., Inc.	2.4
IKON Office Solutions, Inc.	2.4
Ohio Casualty Corp.	2.3
Total	26.1

14

Manager's Analysis (Continued)

PowerShares Dynamic Small Cap Value Portfolio (ticker: PWY)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Small Cap Value IntellidexSM Index		11.49		12.09		27.95
Dow Jones US Small Cap Value Index		10.02		13.30		30.93
Russell 2000® Value Index		11.22		14.48		33.89

Fund

NAV Return	10.64	11.23	25.83
Share Price Return	10.71	11.16	25.67

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.06%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.80%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Small Cap Value Index and the Russell 2000^® Value Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 373 and 1,281, respectively, widely held stocks.

^† Average annualized.

15

Manager's Analysis

PowerShares Dynamic Large Cap Portfolio (ticker: PJF)

The PowerShares Dynamic Large Cap Portfolio is based on the Dynamic Large Cap Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Large Cap Portfolio posted a 7.55% return since its inception on December 1, 2006 through April 30, 2007. Good stock selection within the financial and health care sectors boosted the Fund's performance. In particular large brokerage houses such as JP Morgan, Morgan Stanley, and Goldman Sachs helped the Fund's performance. No sector contributed negatively to the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	31.8
Health Care	14.1
Consumer Staples	11.8
Industrials	11.6
Information Technology	11.1
Consumer Discretionary	8.5
Utilities	4.5
Energy	3.6
Materials	3.5
Money Market Fund	0.4
Other	(0.9	)

Style Allocation (%)

Large-Cap Value	61.7
Large-Cap Growth	38.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Merck & Co., Inc.	2.0
Schlumberger Ltd. (Netherlands)	1.9
Apple, Inc.	1.9
Oracle Corp.	1.8
Coca-Cola (The) Co.	1.8
Wyeth	1.8
Altria Group, Inc.	1.8
Exxon Mobil Corp.	1.7
General Electric Co.	1.7
International Business Machines Corp.	1.7
Total	18.1

16

Manager's Analysis (Continued)

PowerShares Dynamic Large Cap Portfolio (ticker: PJF)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Large Cap IntellidexSM Index		7.08
S&P 100® Index		5.82
Russell Top 200® Index		6.46

Fund

NAV Return	7.55
Share Price Return	7.53

Fund Inception: 1 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.74% while the Fund's gross annualized total operating expense ratio was 1.45%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 100^® Index and the Russell Top 200^® Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 100 and 200, respectively, widely held stocks.

17

Managers' Analysis

PowerShares Dynamic Mid Cap Portfolio (ticker: PJG)

The PowerShares Dynamic Mid Cap Portfolio is based on the Dynamic Mid Cap Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Mid Cap Portfolio posted an 11.04% return since its inception on December 1, 2006 through April 30, 2007. Since the Fund's inception mid cap stocks have performed very well. Good stock selection within financials and health care has driven much of the Fund's performance. Consumer discretionary, industrials, and materials also made contributions to the Fund's performance. No sector contributed negatively to the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	25.3
Consumer Discretionary	18.7
Industrials	14.3
Information Technology	13.2
Health Care	10.9
Consumer Staples	6.2
Materials	4.6
Utilities	4.2
Energy	2.6
Telecommunications	0.3
Money Market Fund	0.5
Other	(0.8	)

Style Allocation (%)

Mid-Cap Value	70.7
Mid-Cap Growth	29.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Express Scripts, Inc.	1.9
PPL Corp.	1.8
Unum Group	1.8
Allegheny Energy, Inc.	1.8
CNA Financial Corp.	1.8
ENSCO International, Inc.	1.8
VF Corp.	1.7
United States Steel Corp.	1.7
Estee Lauder (The) Cos., Inc., Class A	1.7
CIGNA Corp.	1.7
Total	17.7

18

Managers' Analysis (Continued)

PowerShares Dynamic Mid Cap Portfolio (ticker: PJG)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Mid Cap IntellidexSM Index		10.78
S&P Mid Cap 400® Index		8.47
Russell Mid Cap Index		8.60

Fund

NAV Return	11.04
Share Price Return	11.15

Fund Inception: 1 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.74% while the Fund's gross annualized total operating expense ratio was 1.55%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Mid Cap 400^® Index and the Russell Mid Cap Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 400 and 765, respectively, widely held stocks.

19

Manager's Analysis

PowerShares Dynamic Small Cap Portfolio (ticker: PJM)

The PowerShares Dynamic Small Cap Portfolio is based on the Dynamic Small Cap Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Small Cap Portfolio posted a 6.01% return since its inception on December 1, 2006 through April 30, 2007. Since the Fund's inception small cap stocks have lagged the overall market. The Fund benefited from good stock selection within the energy sector. Global Industries and Western Refining in particular made large contributions to the Fund's performance. Since inception, the Fund outperformed relative to other small cap indices, such as the S&P Small Cap 600^® Index, which returned 5.96% and the Russell 2000^® Index, which returned 4.78%.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	24.3
Consumer Discretionary	21.9
Industrials	19.1
Information Technology	16.4
Health Care	9.6
Energy	5.5
Telecommunication Services	1.1
Materials	1.1
Consumer Staples	0.9
Utilities	0.4
Money Market Fund	0.4
Other	(0.7	)

Style Allocation (%)

Small-Cap Value	67.5
Small-Cap Growth	32.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Global Industries, Ltd.	1.8
Western Refining, Inc.	1.6
WebEx Communications, Inc.	1.4
CommScope, Inc.	1.4
Deluxe Corp.	1.3
DeVry, Inc.	1.3
TeleTech Holdings, Inc.	1.3
Cohen & Steers, Inc.	1.3
Wabtec Corp.	1.3
Commerce Group (The), Inc	1.3
Total	14.0

20

Manager's Analysis (Continued)

PowerShares Dynamic Small Cap Portfolio (ticker: PJM)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Small Cap IntellidexSM Index		6.12
S&P Small Cap 600® Index		5.96
Russell 2000® Index		4.78

Fund

NAV Return	6.01
Share Price Return	6.03

Fund Inception: 1 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.74% while the Fund's gross annualized total operating expense ratio was 1.55%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Small Cap 600^® Index and the Russell 2000^® Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 600 and 2,000, respectively, widely held stocks.

21

Manager's Analysis

PowerShares Dynamic Aggressive Growth Portfolio (ticker: PGZ)

The PowerShares Dynamic Aggressive Growth Portfolio is based on the Dynamic Aggressive Growth Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Aggressive Growth Portfolio posted a 6.11% return since its inception on December 20, 2006 through April 30, 2007. Industrials, information technology, and health care all made significant contributions to the Fund's performance. The consumer staples sector was the only sector making a slightly negative contribution to performance.

Sector Breakdown (% of the Fund's

Net Assets)

Information Technology	28.3
Health Care	24.9
Industrials	19.0
Consumer Discretionary	16.1
Financials	5.2
Energy	2.2
Materials	2.0
Utilities	1.1
Telecommunications	1.0
Consumer Staples	0.6
Money Market Fund	0.1
Other	(0.5	)

Style Allocation (%)

Mid-Cap Growth	53.1
Small-Cap Growth	35.9
Large-Cap Growth	11.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Schering-Plough Corp.	1.3
WebEx Communications, Inc.	1.2
ITT Educational Services, Inc.	1.2
Harman International Industries, Inc.	1.2
Foster Wheeler Ltd. (Bermuda)	1.2
Middleby (The) Corp.	1.2
Brocade Communications Systems, Inc.	1.2
CBOT Holdings, Inc., Class A	1.1
Cytyc Corp.	1.1
Perini Corp.	1.1
Total	11.8

22

Manager's Analysis (Continued)

PowerShares Dynamic Aggressive Growth Portfolio (ticker: PGZ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Aggressive Growth IntellidexSM Index		6.39
Russell 3000® Growth Index		5.32
S&P 500® Pure Growth Index		5.44

Fund

NAV Return	6.11
Share Price Return	6.11

Fund Inception: 20 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.75% while the Fund's gross annualized total operating expense ratio was 1.76%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Russell 3000^® Growth Index and the S&P 500^® Pure Growth Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 3,000 and 151, respectively, widely held stocks.

23

Manager's Analysis

PowerShares Dynamic Deep Value Portfolio (ticker: PVM)

The PowerShares Dynamic Deep Value Portfolio is based on the Dynamic Deep Value Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Deep Value Portfolio posted a 5.59% return since its inception on December 20, 2006 through April 30, 2007. While value stocks have done very well over the past year, they have pulled back slightly since the Fund's inception. Financials have the largest weighting in the Fund and have lagged the overall market. Materials, industrials, and consumer staples all posted solid returns and contributed positively to the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	46.5
Consumer Staples	9.3
Industrials	9.2
Materials	9.2
Information Technology	7.7
Utilities	7.3
Health Care	5.3
Consumer Discretionary	4.9
Energy	1.1
Money Market Fund	0.7
Other	(1.2	)

Style Allocation (%)

Mid-Cap Value	39.9
Large-Cap Value	34.0
Small-Cap Value	26.1

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Cummins, Inc.	1.3
Merck & Co., Inc.	1.2
GAMCO Investors, Inc., Class A	1.2
Energen Corp.	1.2
Cleveland-Cliffs, Inc.	1.2
Dean Foods Co.	1.1
Universal Corp.	1.1
Sonoco Products Co.	1.1
Northwest Natural Gas Co.	1.1
Edison International	1.1
Total	11.6

24

Manager's Analysis (Continued)

PowerShares Dynamic Deep Value Portfolio (ticker: PVM)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Deep Value IntellidexSM Index		5.82
Russell 3000® Value Index		4.80
S&P 500® Pure Value Index		6.76

Fund

NAV Return	5.59
Share Price Return	5.61

Fund Inception: 20 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.74% while the Fund's gross annualized total operating expense ratio was 1.55%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Russell 3000^® Value Index and the S&P 500^® Pure Value Index are unmanaged indices that are broad measurements of change in stock market conditions based on the average performance of approximately 1,878 and 142, respectively, widely held stocks.

25

Manager's Analysis

PowerShares Zacks Micro Cap Portfolio (ticker: PZI)

The PowerShares Zacks Micro Cap Portfolio seeks to replicate, before fees and expenses, the Zacks Micro Cap Index, and is designed to identify a group of micro cap stocks with the greatest potential to outperform passive benchmark micro cap indices and other actively managed U.S. micro cap strategies. Due to their low correlation to large, medium and small sized companies, micro caps may complement existing blended portfolios by improving risk adjusted performance.

The PowerShares Zacks Micro Cap Portfolio returned 4.99% over the past year, performing in-line with the comparable Russell Micro Cap Index which returned 5.15% over the same period.

The consumer discretionary, consumer staples and financials sectors provided significant contributions to the Fund's performance. Performance lagged in the technology and industrials sectors.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	25.0
Information Technology	20.9
Consumer Discretionary	18.9
Industrials	14.3
Health Care	7.4
Materials	4.3
Energy	4.0
Consumer Staples	3.0
Telecommunication Services	1.3
Utilities	0.7
Rights	0.0
Money Market Fund	0.1
Other	0.1

Style Allocation (%)

Small-Cap Value	58.3
Small-Cap Growth	41.7

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Twin Disc, Inc.	0.4
Jinpan International Ltd.
(British Virgin Islands)	0.4
AZZ, Inc.	0.3
Libbey, Inc.	0.3
NexCen Brands, Inc.	0.3
T-3 Energy Services, Inc.	0.3
Globecomm Systems, Inc.	0.3
K2, Inc.	0.3
Ampco-Pittsburgh Corp.	0.3
Echelon Corp.	0.3
Total	3.2

26

Manager's Analysis (Continued)

PowerShares Zacks Micro Cap Portfolio (ticker: PZI)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†				Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Zacks Micro Cap Index		5.03		13.54		24.08
Russell Micro Cap Index		5.15		13.71		24.40
S&P 500® Index		15.24		14.29		25.48

Fund

NAV Return	4.99	13.55	24.10
Share Price Return	4.65	13.23	23.49

Fund Inception: 18 August 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.82%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 0.78%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Russell Micro Cap Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 1,000 and 500 common stocks, respectively.

^† Average annualized.

27

Manager's Analysis (Continued)

PowerShares Zacks Small Cap Portfolio (ticker: PZJ)

The PowerShares Zacks Small Cap Portfolio is based on the Zacks Small Cap Index. The index is designed to identify a group of small cap stocks with the greatest potential to outperform passive benchmark small cap indices and other actively managed U.S. small cap strategies. The portfolio is rebalanced and reconstituted quarterly.

For the year ending April 30, 2007 the Small Cap Portfolio returned 3.03%, lagging the broader market as most small caps did. The Fund was underweight in many sectors which performed well, especially the telecommunications, energy and utilities sectors. The portfolio's higher weighted sectors, specifically technology and health care, dragged the Fund down additionally by their negative performance.

Sector Breakdown (% of the Fund's

Net Assets)

Information Technology	19.5
Consumer Discretionary	19.0
Health Care	16.3
Financials	12.1
Industrials	11.0
Energy	8.5
Materials	6.0
Consumer Staples	3.6
Utilities	2.1
Telecommunication Services	1.6
Money Market Fund	0.0
Other	0.3

Style Allocation (%)

Small-Cap Growth	50.6
Small-Cap Value	49.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Echelon Corp.	0.7
USEC, Inc.	0.6
Dendrite International, Inc.	0.6
Covansys Corp.	0.6
CommScope, Inc.	0.6
TeleTech Holdings, Inc.	0.6
Sinclair Broadcast Group, Inc., Class A	0.5
Dril-Quip, Inc.	0.5
Nuance Communications, Inc.	0.5
PharmaNet Development Group, Inc.	0.5
Total	5.7

28

Manager's Analysis (Continued)

PowerShares Zacks Small Cap Portfolio (ticker: PZJ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.† 1 Year		Fund Inception Cumulative
Zacks Small Cap Index		2.77		8.24
Russell 2000® Index		7.83		12.87
S&P Small Cap Index		5.29		11.62

Fund

NAV Return	3.03	8.51
Share Price Return	2.94	8.32

Fund Inception: 16 February 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.17%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 0.89%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Russell 2000^® Index and the S&P Small Cap Index are unmanaged indices based on the average performance of approximately 2,000 and 600 common stocks, respectively.

^† Average annualized.

29

Funds' Distribution History

	Ex-Dividend	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06
	Record	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06
	Payable	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06
Fund	Ticker
PowerShares Dynamic Large Cap Growth Portfolio	PWB		—		—		—		—		—		0.01906		—
PowerShares Dynamic Large Cap Value Portfolio	PWV		—		0.06823		—		—		—		0.11068		—
PowerShares Dynamic Mid Cap Growth Portfolio	PWJ		—		—		—		—		—		0.09682		—
PowerShares Dynamic Mid Cap Value Portfolio	PWP		—		0.03230		—		—		—		0.11224		—
PowerShares Dynamic Small Cap Growth Portfolio	PWT		—		—		—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio	PWY		—		0.03120		—		—		—		0.05147		—
PowerShares Dynamic Large Cap Portfolio	PJF		—		0.05700		—		—		—		0.01958		—
PowerShares Dynamic Mid Cap Portfolio	PJG		—		0.02010		—		—		—		0.04345		—
PowerShares Dynamic Small Cap Portfolio	PJM		—		—		—		—		—		0.00194		—
PowerShares Dynamic Aggressive Growth Portfolio	PGZ		—		—		—		—		—		—		—
PowerShares Dynamic Deep Value Portfolio	PVM		—		0.07260		—		—		—		—		—
PowerShares Zacks Micro Cap Portfolio	PZI		—		—		—		—		—		0.02151		—
PowerShares Zacks Small Cap Portfolio	PZJ		—		0.01358		—		—		—		0.01065		—

	Ex-Dividend	12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05
	Record	1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05
	Payable	1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05
Fund	Ticker
PowerShares Dynamic Large Cap Growth Portfolio	PWB		—		0.00241		—		—		—		—
PowerShares Dynamic Large Cap Value Portfolio	PWV		—		0.07647		0.05490		0.06233		—		0.01222
PowerShares Dynamic Mid Cap Growth Portfolio	PWJ		—		—		—		—		—		—
PowerShares Dynamic Mid Cap Value Portfolio	PWP		—		0.12251		0.04806		0.04852		—		0.02010
PowerShares Dynamic Small Cap Growth Portfolio	PWT		—		—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio	PWY		—		0.02879		0.02835		0.03471		—		—
PowerShares Dynamic Large Cap Portfolio	PJF		—		—		—		—		—		—
PowerShares Dynamic Mid Cap Portfolio	PJG		—		—		—		—		—		—
PowerShares Dynamic Small Cap Portfolio	PJM		—		—		—		—		—		—
PowerShares Dynamic Aggressive Growth Portfolio	PGZ		—		—		—		—		—		—
PowerShares Dynamic Deep Value Portfolio	PVM		—		—		—		—		—		—
PowerShares Zacks Micro Cap Portfolio	PZI		—		0.01012		—		—		—		—
PowerShares Zacks Small Cap Portfolio	PZJ		—		—		—		—		—		—

30

	10/13/06		9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	10/17/06		9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	10/31/06		9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund
PowerShares Dynamic Large Cap Growth Portfolio		—		—		—		—		0.00120		—		—		—
PowerShares Dynamic Large Cap Value Portfolio		—		0.05101		—		—		0.05675		—		—		0.04783
PowerShares Dynamic Mid Cap Growth Portfolio		—		—		—		—		0.01708		—		—		—
PowerShares Dynamic Mid Cap Value Portfolio		—		0.03813		—		—		0.05155		—		—		0.03356
PowerShares Dynamic Small Cap Growth Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio		—		0.02539		—		—		0.02139		—		—		0.01644
PowerShares Dynamic Large Cap Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Mid Cap Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Small Cap Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Aggressive Growth Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Deep Value Portfolio		—		—		—		—		—		—		—		—
PowerShares Zacks Micro Cap Portfolio		—		—		—		—		—		—		—		—
PowerShares Zacks Small Cap Portfolio		—		0.01385		—		—		0.01784		—		—		—

31

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PWB	PowerShares Dynamic Large Cap Growth Portfolio	3/3/05		543		344		18		1		0		0		0
PWV	PowerShares Dynamic Large Cap Value Portfolio	3/3/05		543		380		10		5		0		0		0
PWJ	PowerShares Dynamic Mid Cap Growth Portfolio	3/3/05		543		297		5		3		0		0		0
PWP	PowerShares Dynamic Mid Cap Value Portfolio	3/3/05		543		296		4		2		0		0		0
PWT	PowerShares Dynamic Small Cap Growth Portfolio	3/3/05		543		277		16		2		0		0		0
PWY	PowerShares Dynamic Small Cap Value Portfolio	3/3/05		543		286		15		3		0		0		0
PJF	PowerShares Dynamic Large Cap Portfolio	12/1/06		101		28		0		1		0		0		0
PJG	PowerShares Dynamic Mid Cap Portfolio	12/1/06		101		44		6		0		0		0		0
PJM	PowerShares Dynamic Small Cap Portfolio	12/1/06		101		22		1		0		0		0		0
PGZ	PowerShares Dynamic Aggressive Growth Portfolio	12/20/06		88		19		4		0		0		0		0
PVM	PowerShares Dynamic Deep Value Portfolio	12/20/06		88		35		0		0		0		0		0
PZI	PowerShares Zacks Micro Cap Portfolio	8/18/05		426		175		16		5		0		0		0
PZJ	PowerShares Zacks Small Cap Portfolio	2/16/06		300		156		4		0		0		0		0

32

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PWB		176		3		1		0		0		0
PWV		139		6		3		0		0		0
PWJ		233		4		1		0		0		0
PWP		239		2		0		0		0		0
PWT		232		13		3		0		0		0
PWY		229		7		3		0		0		0
PJF		72		0		0		0		0		0
PJG		50		1		0		0		0		0
PJM		77		1		0		0		0		0
PGZ		58		7		0		0		0		0
PVM		53		0		0		0		0		0
PZI		222		7		1		0		0		0
PZJ		138		2		0		0		0		0

33

Fees and Expenses

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 April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Large Cap Growth Portfolio Actual	$	1,000.00	$	1,072.38		0.63	%	$	3.24
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Large Cap Value Portfolio Actual	$	1,000.00	$	1,098.80		0.63	%	$	3.28
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Mid Cap Growth Portfolio Actual	$	1,000.00	$	1,123.25		0.63	%	$	3.32
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Mid Cap Value Portfolio Actual	$	1,000.00	$	1,136.84		0.63	%	$	3.34
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16

34

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Small Cap Growth Portfolio Actual	$	1,000.00	$	1,044.97		0.63	%	$	3.19
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Small Cap Value Portfolio Actual	$	1,000.00	$	1,080.33		0.63	%	$	3.25
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
	Beginning Account Value December 1, 2006 (Commencement of Investment Operations)		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on Number of Days in the Period			Expenses Paid During Period (2) December 1, 2006 (Commencement of Investment Operations) to April 30, 2007
PowerShares Large Cap Portfolio Actual	$	1,000.00	$	1,075.52		0.88	%	$	3.75
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.43		0.88	%	$	4.41
PowerShares Mid Cap Portfolio Actual	$	1,000.00	$	1,110.40		0.89	%	$	3.86
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.38		0.89	%	$	4.46
PowerShares Small Cap Portfolio Actual	$	1,000.00	$	1,060.07		0.89	%	$	3.77
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.38		0.89	%	$	4.46
	Beginning Account Value December 20, 2006 (Commencement of Investment Operations)		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on Number of Days in the Period			Expenses Paid During Period (3) December 20, 2006 (Commencement of Investment Operations) to April 30, 2007
PowerShares Dynamic Aggressive Growth Portfolio Actual	$	1,000.00	$	1,061.14		0.87	%	$	3.22
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.48		0.87	%	$	4.36
PowerShares Dynamic Deep Value Portfolio Actual	$	1,000.00	$	1,055.91		0.90	%	$	3.32
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.33		0.90	%	$	4.51

35

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Zacks Micro Cap Portfolio Actual	$	1,000.00	$	1,071.38		0.70	%	$	3.60
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.32		0.70	%	$	3.51
PowerShares Zacks Small Cap Portfolio Actual	$	1,000.00	$	1,062.31		0.70	%	$	3.58
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.32		0.70	%	$	3.51

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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 December 1, 2006 (commencement of investment operations) to April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 151 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 December 20, 2006 (commencement of investment operations) to April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 132 and then dividing the result by 365.

36

Schedule of Investments

PowerShares Dynamic Large Cap Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—21.8%
	78,792	Coach, Inc.*	$	3,847,413
	172,084	DIRECTV Group (The), Inc.*		4,102,483
	90,181	International Game Technology		3,439,503
	46,846	J.C. Penney Co., Inc.		3,705,050
	54,233	Kohl's Corp.*		4,015,411
	79,556	Marriott International, Inc., Class A		3,596,727
	58,960	McGraw-Hill (The) Cos., Inc.		3,863,649
	389,112	News Corp., Class A		8,712,218
	67,626	Nordstrom, Inc.		3,714,020
	144,805	Staples, Inc.		3,591,164
	145,593	Target Corp.		8,643,856
	261,438	Walt Disney (The) Co.		9,145,102
				60,376,596
		Energy—5.5%
	60,241	Baker Hughes, Inc.		4,842,774
	142,256	Schlumberger Ltd. (Netherlands)		10,502,760
				15,345,534
		Financials—7.1%
	204,746	Charles Schwab (The) Corp.		3,914,744
	7,224	Chicago Mercantile Exchange Holdings, Inc., Class A		3,733,002
	31,816	Franklin Resources, Inc.		4,177,759
	58,391	Moody's Corp.		3,860,813
	56,881	State Street Corp.		3,917,394
				19,603,712
		Health Care—23.4%
	138,711	Amgen, Inc.*		8,896,924
	79,046	Baxter International, Inc.		4,476,375
	50,751	Becton, Dickinson & Co.		3,993,596
	83,952	Biogen Idec, Inc.*		3,963,374
	54,352	Cardinal Health, Inc.		3,801,922
	72,351	Forest Laboratories, Inc.*		3,849,797
	68,605	McKesson Corp.		4,036,032
	178,908	Medtronic, Inc.		9,469,601
	165,291	Schering-Plough Corp.		5,244,683
	61,395	Stryker Corp.		3,986,991
	173,240	UnitedHealth Group, Inc.		9,192,114
	46,043	Zimmer Holdings, Inc.*		4,165,971
				65,077,380
		Industrials—9.9%
	120,548	3M Co.		9,977,758
	101,761	Boeing Co.		9,463,773
	53,156	Danaher Corp.		3,784,176
	37,901	Union Pacific Corp.		4,330,189
				27,555,896

Number of Shares			Value
		Common Stocks (Continued)
		Information Technology—29.4%
	96,904	Adobe Systems, Inc.*	$	4,027,330
	103,141	Apple, Inc.*		10,293,473
	205,173	Applied Materials, Inc.		3,943,425
	85,657	Automatic Data Processing, Inc.		3,834,007
	333,946	Cisco Systems, Inc.*		8,929,716
	182,196	Corning, Inc.*		4,321,689
	379,783	Dell, Inc.*		9,574,329
	19,523	Google, Inc., Class A*		9,202,752
	317,889	Microsoft Corp.		9,517,597
	546,193	Oracle Corp.*		10,268,428
	92,903	Paychex, Inc.		3,446,701
	122,237	Texas Instruments, Inc.		4,201,286
				81,560,733
		Utilities—2.9%
	176,717	AES (The) Corp.*		3,886,007
	65,599	TXU Corp.		4,301,982
				8,187,989
		Total Common Stocks (Cost $257,181,909)		277,707,840
		Money Market Fund—0.1%
	157,501	Liquid Assets Portfolio Private Class** (Cost $157,501)		157,501
		Total Investments (Cost $257,339,410)—100.1%		277,865,341
		Liabilities in excess of other assets—(0.1%)		(267,792	)
		Net Assets—100.0%	$	277,597,549

*  Non-income producing security.

**  Affiliated investments.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	267,362,581			96.3	%
Netherlands		10,502,760			3.8
Total investments		277,865,341			100.1
Liabilities in excess of other assets		(267,792	)		(0.1	)
Net Assets	$	277,597,549			100.0	%

See Notes to Financial Statements.
37

Schedule of Investments

PowerShares Dynamic Large Cap Value Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—2.7%
	204,893	Gap (The), Inc.	$	3,677,829
	88,221	McDonald's Corp.		4,259,310
				7,937,139
		Consumer Staples—9.0%
	147,883	Altria Group, Inc.		10,192,096
	96,917	Campbell Soup Co.		3,789,455
	70,983	General Mills, Inc.		4,251,882
	85,975	H.J. Heinz Co.		4,050,282
	63,831	Reynolds American, Inc.		4,101,780
				26,385,495
		Energy—8.5%
	133,259	Chevron Corp.		10,366,218
	125,906	Exxon Mobil Corp.		9,994,418
	43,836	Marathon Oil Corp.		4,451,546
				24,812,182
		Financials—40.4%
	70,481	ACE Ltd. (Cayman Islands)		4,190,800
	137,678	American International Group, Inc.		9,625,069
	64,807	Ameriprise Financial, Inc.		3,854,072
	179,170	Bank of America Corp.		9,119,753
	76,555	Chubb (The) Corp.		4,120,956
	176,135	Citigroup, Inc.		9,444,359
	112,155	Genworth Financial, Inc., Class A		4,092,536
	42,072	Hartford Financial Services Group (The), Inc.		4,257,686
	185,597	JPMorgan Chase & Co.		9,669,604
	103,862	KeyCorp		3,705,796
	57,598	Lincoln National Corp.		4,098,098
	92,059	Loews Corp.		4,356,232
	62,200	MetLife, Inc.		4,086,540
	116,966	Morgan Stanley		9,826,313
	53,759	PNC Financial Services Group, Inc.		3,983,542
	174,353	Progressive (The) Corp.		4,022,324
	43,906	Prudential Financial, Inc.		4,171,070
	46,658	SunTrust Banks, Inc.		3,938,868
	76,585	Travelers Cos. (The), Inc.		4,143,249
	111,049	U.S. Bancorp		3,814,533
	265,814	Wells Fargo & Co.		9,540,064
				118,061,464
		Health Care—10.5%
	147,638	Johnson & Johnson		9,481,312
	220,559	Merck & Co., Inc.		11,345,556
	369,668	Pfizer, Inc.		9,781,415
				30,608,283

Number of Shares			Value
		Common Stocks (Continued)
		Industrials—7.4%
	85,113	Honeywell International, Inc.	$	4,611,422
	39,751	Lockheed Martin Corp.		3,821,661
	54,544	Northrop Grumman Corp.		4,016,620
	55,433	PACCAR, Inc.		4,655,264
	117,210	Waste Management, Inc.		4,384,826
				21,489,793
		Information Technology—4.8%
	96,908	International Business Machines Corp.		9,904,967
	227,010	Xerox Corp.*		4,199,685
				14,104,652
		Materials—4.1%
	76,600	E.I. du Pont de Nemours & Co.		3,766,422
	109,174	International Paper Co.		4,118,043
	63,019	Nucor Corp.		3,999,186
				11,883,651
		Telecommunication Services—6.6%
	255,968	AT&T, Inc.		9,911,080
	246,575	Verizon Communications, Inc.		9,414,234
				19,325,314
		Utilities—6.0%
	203,863	Duke Energy Corp.		4,183,269
	86,412	Edison International		4,523,668
	63,907	FirstEnergy Corp.		4,373,795
	84,972	PG&E Corp.		4,299,583
				17,380,315
		Total Investments (Cost $270,452,046)—100.0%		291,988,288
		Other assets less liabilities—0.0%		141,610
		Net Assets—100.0%	$	292,129,898

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	287,797,488		98.6	%
Cayman Islands		4,190,800		1.4
Total investments		291,988,288		100.0
Other assets less liabilities		141,610		0.0
Net Assets	$	292,129,898		100.0	%

See Notes to Financial Statements.
38

Schedule of Investments

PowerShares Dynamic Mid Cap Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.9%
		Consumer Discretionary—23.4%
	13,258	Abercrombie & Fitch Co., Class A	$	1,082,648
	33,250	American Eagle Outfitters, Inc.		979,878
	139,619	Bed Bath & Beyond, Inc.*		5,688,078
	48,326	Burger King Holdings, Inc.		1,134,211
	208,693	Clear Channel Outdoor Holdings, Inc., Class A*		5,958,185
	103,384	Garmin Ltd. (Cayman Islands)		6,015,915
	10,239	Harman International Industries, Inc.		1,248,032
	12,859	ITT Educational Services, Inc.*		1,250,023
	23,587	Men's Wearhouse (The), Inc.		1,020,610
	18,868	Phillips-Van Heusen		1,054,721
	67,895	Polo Ralph Lauren Corp.		6,253,808
	30,990	Ross Stores, Inc.		1,027,319
	87,664	Starwood Hotels & Resorts Worldwide, Inc.		5,875,241
	208,767	TJX Cos. (The), Inc.		5,822,512
				44,411,181
		Consumer Staples—0.5%
	20,329	NBTY, Inc.*		1,004,456
		Energy—4.7%
	116,179	ENSCO International, Inc.		6,550,172
	15,652	FMC Technologies, Inc.*		1,109,414
	23,300	Grant Prideco, Inc.*		1,200,882
				8,860,468
		Financials—12.4%
	37,403	Brown & Brown, Inc.		963,127
	164,324	CB Richard Ellis Group, Inc., Class A*		5,562,367
	36,576	CBOT Holdings, Inc., Class A*		6,900,795
	29,145	Eaton Vance Corp.		1,113,922
	23,295	First Marblehead (The) Corp.		844,444
	9,672	Jones Lang LaSalle, Inc.		1,039,643
	16,637	SEI Investments Co.		1,015,356
	122,625	T. Rowe Price Group, Inc.		6,092,010
				23,531,664
		Health Care—14.6%
	32,444	Applera Corp. - Applied Biosystems Group		1,013,551
	140,210	Biomet, Inc.		6,057,071
	32,464	DENTSPLY International, Inc.		1,084,622
	20,451	Edwards Lifesciences Corp.*		1,002,099
	75,589	Express Scripts, Inc.*		7,222,528
	97,661	Humana, Inc.*		6,176,081
	21,250	Mentor Corp.		826,838
	18,778	Techne Corp.*		1,107,339
	27,288	VCA Antech, Inc.*		1,075,966
	18,871	Waters Corp.*		1,121,504
	13,084	WellCare Health Plans, Inc.*		1,054,440
				27,742,039

Number of Shares			Value
		Common Stocks (Continued)
		Industrials—10.1%
	17,891	Acuity Brands, Inc.	$	1,057,716
	35,245	Copart, Inc.*		1,021,400
	26,620	Herman Miller, Inc.		915,994
	22,709	Jacobs Engineering Group, Inc.*		1,145,215
	16,650	Manitowoc Co. (The), Inc.		1,136,030
	20,647	McDermott International, Inc. (Panama)*		1,107,918
	60,520	Precision Castparts Corp.		6,300,738
	25,448	Robert Half International, Inc.		847,418
	86,820	Rockwell Collins, Inc.		5,701,469
				19,233,898
		Information Technology—22.7%
	16,797	Alliance Data Systems Corp.*		1,069,297
	31,175	Amphenol Corp., Class A		1,094,554
	184,851	Atmel Corp.*		983,407
	139,950	Autodesk, Inc.*		5,775,737
	88,481	BEA Systems, Inc.*		1,043,191
	33,043	BMC Software, Inc.*		1,069,602
	125,876	Brocade Communications Systems, Inc.*		1,229,809
	62,836	Cognizant Technology Solutions Corp., Class A*		5,617,538
	31,374	Dolby Laboratories, Inc.*		1,111,267
	16,903	Factset Research Systems, Inc.		1,039,704
	47,542	Gartner, Inc.*		1,199,485
	33,409	McAfee, Inc.*		1,085,458
	108,381	MEMC Electronic Materials, Inc.*		5,947,949
	11,760	Mettler Toledo International, Inc.*		1,148,011
	34,633	MoneyGram International, Inc.		984,616
	32,805	Novellus Systems, Inc.*		1,061,898
	182,038	NVIDIA Corp.*		5,987,229
	31,247	Polycom, Inc.*		1,040,525
	58,002	QLogic Corp.*		1,037,076
	40,098	Synopsys, Inc.*		1,109,111
	32,971	Total System Services, Inc.		1,024,079
	21,443	Varian Semiconductor Equipment Associates, Inc.*		1,422,958
				43,082,501
		Materials—7.4%
	55,130	Allegheny Technologies, Inc.		6,041,145
	135,543	Ecolab, Inc.		5,826,994
	17,014	Greif, Inc., Class A		945,978
	43,602	Nalco Holding Co.		1,158,941
				13,973,058
		Telecommunication Services—0.6%
	18,922	Telephone & Data Systems, Inc.		1,077,608

See Notes to Financial Statements.
39

Schedule of Investments (Continued)

PowerShares Dynamic Mid Cap Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Utilities—3.5%
	124,084	Allegheny Energy, Inc.*	$	6,633,530
		Total Investments (Cost $171,435,629)—99.9%		189,550,403
		Other assets less liabilities—0.1%		243,656
		Net Assets—100.0%	$	189,794,059

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	182,426,570		96.1	%
Cayman Islands		6,015,915		3.2
Panama		1,107,918		0.6
Total investments		189,550,403		99.9
Other assets less liabilities		243,656		0.1
Net Assets	$	189,794,059		100.0	%

See Notes to Financial Statements.
40

Schedule of Investments

PowerShares Dynamic Mid Cap Value Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.3%
		Consumer Discretionary—19.0%
	10,493	Autoliv, Inc.	$	610,168
	7,804	BorgWarner, Inc.		608,010
	67,745	Genuine Parts Co.		3,347,280
	22,509	Hanesbrands, Inc.*		598,514
	20,789	Hasbro, Inc.		657,140
	11,290	International Speedway Corp., Class A		557,726
	127,189	Mattel, Inc.		3,599,449
	107,914	Newell Rubbermaid, Inc.		3,309,722
	18,679	Payless ShoeSource, Inc.*		595,860
	48,939	Sherwin-Williams (The) Co.		3,120,840
	42,570	VF Corp.		3,738,073
				20,742,782
		Consumer Staples—8.9%
	134,164	ConAgra Foods, Inc.		3,297,751
	19,557	Dean Foods Co.		712,461
	6,962	Energizer Holdings, Inc.*		676,567
	12,052	J.M. Smucker (The) Co.		672,743
	8,364	Loews Corp. - Carolina Group		640,097
	15,482	McCormick & Co., Inc.		574,692
	56,794	UST, Inc.		3,219,084
				9,793,395
		Financials—29.3%
	9,000	A.G. Edwards, Inc.		652,050
	38,279	AMBAC Financial Group, Inc.		3,514,012
	16,790	American Financial Group, Inc.		592,183
	11,290	Assurant, Inc.		649,514
	11,441	Bank of Hawaii Corp.		605,229
	81,553	CNA Financial Corp.*		3,806,079
	54,368	Comerica, Inc.		3,365,923
	10,869	Erie Indemnity Co., Class A		571,166
	6,160	Everest Re Group, Ltd. (Bermuda)		619,942
	16,358	Federated Investors, Inc., Class B		624,221
	27,583	M&T Bank Corp.		3,071,091
	62,355	Nationwide Financial Services, Inc., Class A		3,562,341
	15,575	Odyssey Re Holdings Corp.		652,593
	26,620	Old Republic International Corp.		566,207
	8,599	PartnerRe Ltd. (Bermuda)		619,300
	12,812	PMI Group (The), Inc.		620,998
	13,437	Protective Life Corp.		630,195
	10,379	Reinsurance Group of America, Inc.		646,716
	8,928	Safeco Corp.		595,855
	22,328	TCF Financial Corp.		604,642
	9,367	Torchmark Corp.		639,766
	12,766	Unitrin, Inc.		601,917
	17,959	W.R. Berkley Corp.		583,488
	46,985	XL Capital Ltd., Class A (Cayman Islands)		3,663,890
				32,059,318

Number of Shares			Value
		Common Stocks (Continued)
		Health Care—3.9%
	23,804	CIGNA Corp.	$	3,703,664
	10,117	Hillenbrand Industries, Inc.		618,655
				4,322,319
		Industrials—18.7%
	8,969	Avery Dennison Corp.		557,872
	8,426	Cummins, Inc.		776,540
	40,756	Eaton Corp.		3,635,843
	56,187	ITT Corp.		3,585,292
	9,269	Kennametal, Inc.		654,021
	39,020	Parker Hannifin Corp.		3,595,303
	71,402	Pitney Bowes, Inc.		3,427,296
	88,920	R.R. Donnelley & Sons Co.		3,574,584
	8,911	Teleflex, Inc.		640,077
				20,446,828
		Information Technology—9.0%
	46,944	Avaya, Inc.*		606,516
	118,232	Electronic Data Systems Corp.		3,457,104
	15,180	Fair Isaac Corp.		542,078
	30,061	Ingram Micro, Inc., Class A*		589,797
	9,590	Lexmark International, Inc., Class A*		522,655
	71,062	NCR Corp.*		3,581,525
	30,240	Western Digital Corp.*		534,643
				9,834,318
		Materials—7.5%
	17,745	Bemis Co., Inc.		589,489
	20,564	Celanese Corp., Series A		682,108
	10,335	Cleveland-Cliffs, Inc.		716,112
	7,926	FMC Corp.		609,747
	28,989	Hercules, Inc.*		546,153
	14,348	Sigma-Aldrich Corp.		603,764
	16,120	Sonoco Products Co.		687,357
	36,794	United States Steel Corp.		3,736,062
				8,170,792
		Telecommunication Services—0.6%
	13,249	CenturyTel, Inc.		610,116
		Utilities—2.4%
	12,777	Energen Corp.		716,151
	14,263	ONEOK, Inc.		690,472
	22,526	Pepco Holdings, Inc.		664,967
	12,448	Wisconsin Energy Corp.		607,338
				2,678,928
		Total Common Stocks (Cost $98,634,795)		108,658,796

See Notes to Financial Statements.
41

Schedule of Investments (Continued)

PowerShares Dynamic Mid Cap Value Portfolio

April 30, 2007

Number of Shares			Value
		Money Market Fund—0.2%
	191,310	Liquid Assets Portfolio Private Class** (Cost $191,310)	$	191,310
		Total Investments (Cost $98,826,105)—99.5%		108,850,106
		Other assets less liabilities—0.5%		506,223
		Net Assets—100.0%	$	109,356,329

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	103,946,974		95.0	%
Cayman Islands		3,663,890		3.4
Bermuda		1,239,242		1.1
Total investments		108,850,106		99.5
Other assets less liabilities		506,223		0.5
Net Assets	$	109,356,329		100.0	%

See Notes to Financial Statements.
42

Schedule of Investments

PowerShares Dynamic Small Cap Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Consumer Discretionary—26.6%
	51,137	Aaron Rents, Inc.	$	1,450,757
	37,630	Aeropostale, Inc.*		1,548,474
	5,810	Arbitron, Inc.		286,317
	39,343	Brown Shoe Co., Inc.		1,061,474
	9,620	Build-A-Bear-Workshop, Inc.*		265,031
	10,839	Carter's, Inc.*		283,982
	8,514	Charlotte Russe Holding, Inc.*		232,688
	25,360	Children's Place Retail Stores (The), Inc.*		1,340,783
	8,749	Coinstar, Inc.*		272,006
	4,157	Deckers Outdoor Corp.*		314,810
	49,757	DeVry, Inc.		1,641,483
	34,601	DSW, Inc., Class A*		1,341,135
	13,270	GSI Commerce, Inc.*		293,267
	6,718	Gymboree (The) Corp.*		256,493
	8,225	Hibbett Sports Goods, Inc.*		239,759
	26,793	Morningstar, Inc.*		1,395,112
	42,013	Pinnacle Entertainment, Inc.*		1,179,725
	7,146	Skechers U.S.A., Inc., Class A*		224,384
	11,725	Strayer Education, Inc.		1,457,886
	74,873	Triarc Cos., Inc., Class B		1,218,184
				16,303,750
		Consumer Staples—0.8%
	19,020	Playtex Products, Inc.*		289,484
	4,303	USANA Health Sciences, Inc.*		171,432
				460,916
		Energy—0.9%
	18,755	Input/Output, Inc.*		262,382
	7,172	NATCO Group, Inc., Class A*		273,971
				536,353
		Financials—10.8%
	31,197	Cohen & Steers, Inc.		1,600,718
	23,246	GFI Group, Inc.*		1,609,786
	28,981	International Securities Exchange Holdings, Inc.		1,932,743
	32,979	Investment Technology Group, Inc.*		1,247,925
	8,543	Penson Worldwide, Inc.*		229,123
				6,620,295
		Health Care—18.3%
	41,178	AMERIGROUP Corp.*		1,158,337
	9,350	AMN Healthcare Services, Inc.*		227,673
	12,122	Conceptus Inc*		250,683
	7,940	CorVel Corp.*		215,889
	13,370	Cross Country Healthcare, Inc.*		263,255
	4,140	Dionex Corp.*		285,660
	10,340	Emergency Medical Services Corp., Class A*		346,183
	38,800	Incyte Corp.*		299,148
	5,830	LCA-Vision, Inc.		244,685
	8,780	MedCath Corp.*		260,942
	52,061	Medicines (The) Co.*		1,185,950

Number of Shares			Value
		Common Stocks (Continued)
	9,556	Meridian Bioscience, Inc.	$	284,100
	7,710	Myriad Genetics, Inc.*		281,800
	10,380	Noven Pharmaceuticals, Inc.*		242,996
	12,270	PSS World Medical, Inc.*		246,627
	12,250	Regeneron Pharmaceuticals, Inc.*		333,200
	11,317	Sciele Pharma, Inc.*		279,756
	35,393	Sunrise Senior Living, Inc.*		1,355,198
	81,475	Valeant Pharmaceuticals International		1,468,179
	14,738	ViroPharma, Inc.*		222,249
	30,460	West Pharmaceutical Services, Inc.		1,515,994
	11,886	Wright Medical Group, Inc.*		280,747
				11,249,251
		Industrials—13.1%
	7,040	Administaff, Inc.		233,658
	4,900	Advisory Board (The) Co.*		232,652
	2,740	AMREP Corp.		165,112
	11,344	Cenveo, Inc.*		290,974
	5,032	Clean Harbors, Inc.*		234,089
	4,909	CRA International, Inc.*		253,157
	8,843	Healthcare Services Group, Inc.		247,604
	5,600	Heidrick & Struggles International, Inc.*		264,208
	8,583	Horizon Lines, Inc., Class A		291,908
	7,894	Hub Group, Inc., Class A*		284,184
	7,926	II-VI, Inc.*		214,715
	10,662	InfraSource Services, Inc.*		355,898
	11,260	Knoll, Inc.		261,457
	10,810	Korn/Ferry International*		254,792
	2,251	Middleby (The) Corp.*		309,017
	13,550	Orbital Sciences Corp.*		282,789
	45,313	Owens Corning, Inc.*		1,388,843
	7,120	Perini Corp.*		303,312
	7,920	RBC Bearings, Inc.*		301,039
	7,750	Resources Connection, Inc.*		233,817
	43,259	TeleTech Holdings, Inc.*		1,632,162
				8,035,387
		Information Technology—25.5%
	12,950	Advanced Energy Industries, Inc.*		317,275
	8,048	Ansoft Corp.*		259,870
	11,416	Blackbaud, Inc.		252,065
	17,940	C-COR, Inc.*		221,021
	36,810	CommScope, Inc.*		1,717,187
	7,260	Comtech Telecommunications Corp.*		274,791
	29,080	Harmonic, Inc.*		240,492
	16,240	Interwoven, Inc.*		247,985
	11,091	j2 Global Communications, Inc.*		318,977
	9,112	Manhattan Associates, Inc.*		263,519
	7,296	ManTech International Corp., Class A*		223,841
	80,210	Mentor Graphics Corp.*		1,297,798
	11,257	MicroStrategy, Inc., Class A*		1,280,596
	9,289	NETGEAR, Inc.*		312,203
	12,760	NetRatings, Inc.*		265,536

See Notes to Financial Statements.
43

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	171,900	RealNetworks, Inc.*	$	1,297,845
	10,000	Synaptics, Inc.*		299,600
	6,840	Syntel, Inc.		239,810
	33,210	Tessera Technologies, Inc.*		1,421,056
	43,270	THQ, Inc.*		1,443,920
	155,737	TIBCO Software, Inc.*		1,420,321
	30,482	WebEx Communications, Inc.*		1,729,549
	11,728	Websense, Inc.*		289,799
				15,635,056
		Materials—1.8%
	31,956	Hecla Mining Co.*		281,532
	4,855	Innospec, Inc.		260,665
	14,910	Myers Industries, Inc.		334,730
	17,419	Wausau Paper Corp.		234,460
				1,111,387
		Telecommunication Services—2.3%
	24,428	Golden Telecom, Inc.		1,431,725
		Total Investments (Cost $56,727,751)—100.1%		61,384,120
		Liabilities in excess of other assets—(0.1%)		(37,389	)
		Net Assets—100.0%	$	61,346,731

*  Non-income producing security.

See Notes to Financial Statements.
44

Schedule of Investments

PowerShares Dynamic Small Cap Value Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—13.9%
	20,437	American Greetings Corp., Class A	$	520,122
	79,513	Ameristar Casinos, Inc.		2,414,015
	18,426	Asbury Automotive Group, Inc.		530,116
	141,948	Belo Corp., Class A		2,735,338
	13,359	Bob Evans Farms, Inc.		490,275
	13,842	Buckle (The), Inc.		493,052
	10,471	CBRL Group, Inc.		466,797
	45,485	Coinmach Service Corp., Class A		481,231
	84,637	Domino's Pizza, Inc.		2,729,543
	20,784	Helen of Troy Ltd. (Bermuda)*		471,797
	8,521	IHOP Corp.		502,057
	36,928	Journal Communications, Inc., Class A		498,159
	63,490	Regis Corp.		2,427,223
	33,766	Sinclair Broadcast Group, Inc., Class A		551,399
	61,319	Stewart Enterprises, Inc., Class A		461,119
	20,617	Tupperware Brands Corp.		579,750
				16,351,993
		Consumer Staples—0.5%
	9,036	Universal Corp.		566,376
		Energy—12.1%
	195,951	Global Industries, Ltd.*		4,067,943
	72,296	Grey Wolf, Inc.*		517,639
	13,077	Gulfmark Offshore, Inc.*		626,388
	72,361	St. Mary Land & Exploration Co.		2,649,860
	96,369	Western Refining, Inc.		3,818,140
	59,539	Whiting Petroleum Corp.*		2,620,907
				14,300,877
		Financials—45.2%
	10,971	Advanta Corp., Class B		502,691
	26,111	Alfa Corp.		468,431
	14,663	AMCORE Financial, Inc.		419,508
	13,420	Argonaut Group, Inc.*		451,046
	9,981	BancFirst Corp.		427,287
	104,567	BancorpSouth, Inc.		2,569,211
	14,441	Capital City Bank Group, Inc.		430,486
	16,386	Chemical Financial Corp.		437,998
	15,633	Chittenden Corp.		454,295
	12,597	City Holding Co.		478,308
	22,859	CNA Surety Corp.*		471,810
	90,258	Commerce Group (The), Inc.		2,943,313
	22,115	Community Bank System, Inc.		453,357
	66,065	Delphi Financial Group, Inc., Class A		2,820,975
	40,046	Downey Financial Corp.		2,681,080
	12,377	FBL Financial Group, Inc., Class A		479,485
	11,537	First Financial Bankshares, Inc.		446,482
	185,598	First Niagara Financial Group, Inc.		2,524,133
	12,851	GAMCO Investors, Inc., Class A		586,263
	19,649	Glacier Bancorp, Inc.		422,061
	58,631	Hancock Holding Co.		2,293,645

Number of Shares			Value
		Common Stocks (Continued)
	14,269	Harleysville Group, Inc.	$	435,775
	23,440	Horace Mann Educators Corp.		493,178
	10,442	Infinity Property & Casualty Corp.		485,657
	88,086	International Bancshares Corp.		2,532,472
	91,606	IPC Holdings Ltd. (Bermuda)		2,746,348
	9,431	Navigators Group, Inc.*		481,830
	39,605	Ocwen Financial Corp.*		564,767
	87,484	Ohio Casualty Corp.		2,767,994
	5,096	Park National Corp.		452,372
	186,749	Phoenix (The) Cos., Inc.		2,782,560
	58,332	Potlatch Corp.		2,531,025
	52,271	ProAssurance Corp.*		2,814,271
	27,303	Provident Financial Services, Inc.		467,973
	8,685	RLI Corp.		483,668
	10,712	Safety Insurance Group, Inc.		429,123
	19,957	Selective Insurance Group, Inc.		520,479
	14,797	State Auto Financial Corp.		444,650
	22,225	Sterling Financial Corp.		370,046
	91,113	Trustmark Corp.		2,424,517
	69,624	UMB Financial Corp.		2,723,691
	20,930	United America Indemnity Ltd., Class A (Cayman Islands)*		522,831
	13,692	United Fire & Casualty Co.		503,181
	53,687	Zenith National Insurance Corp.		2,483,024
				53,223,297
		Health Care—3.4%
	15,193	Apria Healthcare Group, Inc.*		482,226
	8,975	Biosite, Inc.*		830,187
	61,893	Magellan Health Services, Inc.*		2,655,210
				3,967,623
		Industrials—12.9%
	11,616	American Woodmark Corp.		400,868
	53,127	Armstrong World Industries, Inc.*		2,709,477
	8,332	Cascade Corp.		516,334
	6,554	Consolidated Graphics, Inc.*		493,189
	81,695	Deluxe Corp.		3,092,156
	9,558	Dollar Thrifty Automotive Group, Inc.*		448,079
	19,103	Ennis, Inc.		467,068
	185,852	IKON Office Solutions, Inc.		2,780,346
	9,793	John H. Harland Co.		515,112
	25,446	Labor Ready, Inc.*		552,178
	17,291	Pacer International, Inc.		441,785
	148,093	SAIC, Inc.*		2,708,621
				15,125,213
		Information Technology—7.1%
	22,364	Agilysys, Inc.		470,315
	19,103	Covansys Corp.*		638,040
	19,471	CSG Systems International, Inc.*		521,434
	26,487	Emulex Corp.*		555,697
	234,281	Gateway, Inc.*		513,076

See Notes to Financial Statements.
45

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Value Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	24,627	Global Imaging Systems, Inc.*	$	711,474
	21,737	Paxar Corp.*		652,327
	157,951	Perot Systems Corp., Class A*		2,827,323
	31,063	Photronics, Inc.*		467,498
	71,262	Skyworks Solutions, Inc.*		490,995
	35,991	United Online, Inc.		519,350
				8,367,529
		Materials—4.1%
	104,324	H.B. Fuller Co.		2,667,565
	12,089	Metal Management, Inc.		581,118
	9,349	OM Group, Inc.*		491,103
	12,554	Quanex Corp.		540,199
	19,403	Sensient Technologies Corp.		507,970
				4,787,955
		Utilities—0.8%
	10,941	Northwest Natural Gas Co.		555,913
	12,843	UIL Holdings Corp.		438,588
				994,501
		Total Investments (Cost $112,586,475)—100.0%		117,685,364
		Liabilities in excess of other assets—(0.0%)		(5,502	)
		Net Assets—100.0%	$	117,679,862

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	113,944,388			96.8	%
Bermuda		3,218,145			2.7
Cayman Islands		522,831			0.5
Total investments		117,685,364			100.0
Liabilities in excess of other assets		(5,502	)		(0.0	)
Net Assets	$	117,679,862			100.0	%

See Notes to Financial Statements.
46

Schedule of Investments

PowerShares Dynamic Large Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.5%
		Consumer Discretionary—8.5%
	1,522	Coach, Inc.*	$	74,319
	904	J.C. Penney Co., Inc.		71,497
	1,048	Kohl's Corp.*		77,594
	1,536	Marriott International, Inc., Class A		69,443
	1,139	McGraw-Hill (The) Cos., Inc.		74,639
	1,408	NIKE, Inc., Class B		75,835
	1,305	Nordstrom, Inc.		71,671
	715	Omnicom Group, Inc.		74,868
	2,797	Staples, Inc.		69,366
	5,049	Walt Disney (The) Co.		176,613
	1,257	Yum! Brands, Inc.		77,758
				913,603
		Consumer Staples—11.8%
	2,767	Altria Group, Inc.		190,702
	1,816	Campbell Soup Co.		71,006
	3,754	Coca-Cola (The) Co.		195,920
	1,112	Colgate-Palmolive Co.		75,327
	1,329	General Mills, Inc.		79,607
	1,611	H.J. Heinz Co.		75,894
	1,086	Kimberly-Clark Corp.		77,291
	2,747	PepsiCo, Inc.		181,549
	2,738	Procter & Gamble (The) Co.		176,081
	1,196	Reynolds American, Inc.		76,855
	2,162	Safeway, Inc.		78,481
				1,278,713
		Energy—3.6%
	2,359	Exxon Mobil Corp.		187,257
	2,747	Schlumberger Ltd. (Netherlands)		202,811
				390,068
		Financials—31.8%
	1,321	ACE Ltd. (Cayman Islands)		78,547
	1,565	AFLAC, Inc.		80,347
	1,242	Allstate (The) Corp.		77,401
	3,058	American Express Co.		185,529
	2,579	American International Group, Inc.		180,298
	1,213	Ameriprise Financial, Inc.		72,137
	3,357	Bank of America Corp.		170,871
	1,788	Bank of New York (The) Co., Inc.		72,378
	3,954	Charles Schwab (The) Corp.		75,600
	1,435	Chubb (The) Corp.		77,246
	1,873	Fifth Third Bancorp		76,025
	614	Franklin Resources, Inc.		80,624
	819	Goldman Sachs Group (The), Inc.		179,042
	788	Hartford Financial Services Group (The), Inc.		79,746
	3,477	JPMorgan Chase & Co.		181,152
	1,945	KeyCorp		69,398
	962	Lehman Brothers Holdings, Inc.		72,419
	1,079	Lincoln National Corp.		76,771

Number of Shares			Value
		Common Stocks (Continued)
	1,724	Loews Corp.	$	81,580
	1,685	Mellon Financial Corp.		72,337
	1,993	Merrill Lynch & Co, Inc.		179,828
	1,164	MetLife, Inc.		76,475
	1,128	Moody's Corp.		74,583
	2,190	Morgan Stanley		183,982
	1,008	PNC Financial Services Group, Inc.		74,693
	1,208	Principal Financial Group, Inc.		76,696
	3,266	Progressive (The) Corp.		75,347
	823	Prudential Financial, Inc.		78,185
	1,099	State Street Corp.		75,688
	875	SunTrust Banks, Inc.		73,868
	1,434	Travelers Cos., (The), Inc.		77,579
	4,855	U.S. Bancorp		166,769
	4,979	Wells Fargo & Co.		178,696
				3,431,837
		Health Care—14.1%
	1,651	Aetna, Inc.		77,399
	1,527	Baxter International, Inc.		86,474
	979	Becton, Dickinson & Co.		77,038
	1,398	Forest Laboratories, Inc.*		74,388
	2,766	Johnson & Johnson		177,632
	1,326	McKesson Corp.		78,009
	4,132	Merck & Co., Inc.		212,549
	6,925	Pfizer, Inc.		183,235
	3,193	Schering-Plough Corp.		101,314
	3,345	UnitedHealth Group, Inc.		177,486
	3,503	Wyeth		194,416
	889	Zimmer Holdings, Inc.*		80,437
				1,520,377
		Industrials—11.6%
	998	3M Co.		82,604
	1,966	Boeing Co.		182,839
	1,027	Danaher Corp.		73,112
	962	General Dynamics Corp.		75,517
	5,055	General Electric Co.		186,328
	1,595	Honeywell International, Inc.		86,417
	745	Lockheed Martin Corp.		71,624
	1,022	Northrop Grumman Corp.		75,260
	1,387	Raytheon Co.		74,260
	732	Union Pacific Corp.		83,631
	2,626	United Technologies Corp.		176,283
	2,195	Waste Management, Inc.		82,115
				1,249,990
		Information Technology—11.1%
	1,992	Apple, Inc.*		198,801
	6,449	Cisco Systems, Inc.*		172,446
	4,347	Hewlett-Packard Co.		183,183
	1,816	International Business Machines Corp.		185,613
	6,139	Microsoft Corp.		183,802

See Notes to Financial Statements.
47

Schedule of Investments (Continued)

PowerShares Dynamic Large Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	10,547	Oracle Corp.*	$	198,284
	4,253	Xerox Corp.*		78,681
				1,200,810
		Materials—3.5%
	980	Air Products & Chemicals, Inc.		74,970
	1,434	E.I. du Pont de Nemours & Co.		70,510
	2,046	International Paper Co.		77,175
	1,181	Nucor Corp.		74,946
	1,175	Praxair, Inc.		75,846
				373,447
		Utilities—4.5%
	3,413	AES (The) Corp.*		75,052
	3,819	Duke Energy Corp.		78,366
	1,620	Edison International		84,807
	1,591	PG&E Corp.		80,505
	1,013	Public Service Enterprise Group, Inc.		87,573
	1,267	TXU Corp.		83,090
				489,393
		Total Common Stocks (Cost $10,212,001)		10,848,238
		Money Market Fund—0.4%
	43,653	Liquid Assets Portfolio Private Class** (Cost $43,653)		43,653
		Total Investments (Cost $10,255,654)—100.9%		10,891,891
		Liabilities in excess of other assets—(0.9%)		(93,414	)
		Net Assets—100.0%	$	10,798,477

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	10,610,533			98.3	%
Netherlands		202,811			1.9
Cayman Islands		78,547			0.7
Total Investments		10,891,891			100.9
Liabilities in excess of other assets		(93,414	)		(0.9	)
Net Assets	$	10,798,477			100.0	%

See Notes to Financial Statements.
48

Schedule of Investments

PowerShares Dynamic Mid Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.3%
		Consumer Discretionary—18.7%
	989	American Eagle Outfitters, Inc.	$	29,146
	542	Autoliv, Inc.		31,517
	1,350	AutoZone, Inc.*		179,604
	893	Brinker International, Inc.		27,772
	899	Claire's Stores, Inc.		29,280
	3,639	E.W. Scripps Co., Class A		157,569
	3,497	Genuine Parts Co.		172,787
	1,162	Hanesbrands, Inc.*		30,898
	305	Harman International Industries, Inc.		37,176
	1,073	Hasbro, Inc.		33,918
	583	International Speedway Corp., Class A		28,800
	441	Jack in the Box, Inc.*		29,379
	6,566	Mattel, Inc.		185,818
	5,571	Newell Rubbermaid, Inc.		170,863
	964	Payless Shoesource, Inc.*		30,752
	2,020	Polo Ralph Lauren Corp.		186,062
	922	Ross Stores, Inc.		30,564
	2,526	Sherwin-Williams (The) Co.		161,083
	2,608	Starwood Hotels & Resorts Worldwide, Inc.		174,788
	6,211	TJX Cos. (The), Inc.		173,225
	2,198	VF Corp.		193,006
				2,094,007
		Consumer Staples—6.2%
	6,926	ConAgra Foods, Inc.		170,241
	1,010	Dean Foods Co.		36,794
	3,734	Estee Lauder (The) Cos., Inc., Class A		192,002
	622	J.M. Smucker (The) Co.		34,720
	799	McCormick & Co., Inc.		29,659
	605	NBTY, Inc.*		29,893
	14	Seaboard Corp.		34,902
	2,932	UST, Inc.		166,186
				694,397
		Energy—2.6%
	3,456	ENSCO International, Inc.		194,850
	563	Holly Corp.		35,807
	658	Plains Exploration & Production Co.*		30,919
	318	SEACOR Holdings, Inc.*		30,299
				291,875
		Financials—25.3%
	465	A.G. Edwards, Inc.		33,689
	1,976	AMBAC Financial Group, Inc.		181,397
	867	American Financial Group, Inc.		30,579
	476	Arch Capital Group Ltd. (Bermuda)*		34,662
	583	Assurant, Inc.		33,540
	4,889	CB Richard Ellis Group, Inc., Class A*		165,493
	4,210	CNA Financial Corp.*		196,481
	2,807	Comerica, Inc.		173,781
	867	Eaton Vance Corp.		33,137
	561	Erie Indemnity Co., Class A		29,481

Number of Shares			Value
		Common Stocks (Continued)
	318	Everest Re Group Ltd. (Bermuda)	$	32,004
	844	Federated Investors, Inc., Class B		32,207
	976	HCC Insurance Holdings, Inc.		29,924
	288	Jones Lang LaSalle, Inc.		30,957
	1,424	M&T Bank Corp.		158,548
	64	Markel Corp.*		29,370
	3,219	Nationwide Financial Services, Inc., Class A		183,901
	2,815	Northern Trust Corp.		177,204
	804	Odyssey Re Holdings Corp.		33,688
	1,374	Old Republic International Corp.		29,225
	444	PartnerRe Ltd. (Bermuda)		31,977
	665	Philadelphia Consolidated Holding Co.*		28,861
	661	PMI Group (The), Inc.		32,039
	694	Protective Life Corp.		32,549
	536	Reinsurance Group of America, Inc.		33,398
	461	Safeco Corp.		30,767
	495	SEI Investments Co.		30,210
	5,339	Synovus Financial Corp.		168,499
	3,648	T. Rowe Price Group, Inc.		181,233
	1,153	TCF Financial Corp.		31,223
	487	Transatlantic Holdings, Inc.		33,842
	659	Unitrin, Inc.		31,072
	8,145	Unum Group		202,647
	927	W.R. Berkley Corp.		30,118
	1,223	Waddell & Reed Financial, Inc., Class A		29,621
	55	White Mountain Insurance Group Ltd. (Bermuda)		31,515
	791	Willis Group Holdings Ltd. (Bermuda)		32,447
	2,426	XL Capital Ltd., Class A (Cayman Islands)		189,179
				2,830,465
		Health Care—10.9%
	3,214	AmerisourceBergen Corp.		160,668
	965	Applera Corp. - Applied Biosystems Group		30,147
	411	Bio-Rad Laboratories, Inc., Class A*		29,086
	1,229	CIGNA Corp.		191,220
	3,172	Coventry Health Care, Inc.*		183,437
	966	DENTSPLY International, Inc.		32,274
	608	Edwards Lifesciences Corp.*		29,792
	2,249	Express Scripts, Inc.*		214,892
	522	Hillenbrand Industries, Inc.		31,920
	2,905	Humana, Inc.*		183,712
	797	Lincare Holdings, Inc.*		31,434
	559	Techne Corp.*		32,964
	561	Waters Corp.*		33,340
	389	WellCare Health Plans, Inc.*		31,350
				1,216,236
		Industrials—14.3%
	532	Acuity Brands, Inc.		31,452
	463	Avery Dennison Corp.		28,799
	3,693	Cooper Industries Ltd., Class A (Bermuda)		183,764
	1,049	Copart, Inc.*		30,400

See Notes to Financial Statements.
49

Schedule of Investments (Continued)

PowerShares Dynamic Mid Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	435	Cummins, Inc.	$	40,090
	796	Equifax, Inc.		31,681
	869	Gardner Denver, Inc.*		32,848
	616	Goodrich Corp.		35,013
	792	Herman Miller, Inc.		27,253
	2,901	ITT Corp.		185,112
	676	Jacobs Engineering Group, Inc.*		34,091
	478	Kennametal, Inc.		33,728
	495	Manitowoc (The) Co., Inc.		33,774
	401	Manpower, Inc.		32,180
	614	McDermott International, Inc. (Panama)*		32,947
	2,014	Parker Hannifin Corp.		185,569
	3,686	Pitney Bowes, Inc.		176,928
	4,590	R.R. Donnelley & Sons Co.		184,517
	2,583	Rockwell Collins, Inc.		169,626
	460	Teleflex, Inc.		33,042
	585	Thomas & Betts Corp.*		31,871
	685	URS Corp.*		29,935
				1,604,620
		Information Technology—13.2%
	5,315	Agilent Technologies, Inc.*		182,676
	5,499	Atmel Corp.*		29,255
	4,163	Autodesk, Inc.*		171,807
	2,632	BEA Systems, Inc.*		31,031
	983	BMC Software, Inc.*		31,820
	3,745	Brocade Communications Systems, Inc.*		36,589
	1,172	Convergys Corp.*		29,605
	933	Dolby Laboratories, Inc., Class A*		33,047
	425	DST Systems, Inc.*		33,171
	6,104	Electronic Data Systems Corp.		178,480
	503	FactSet Research Systems, Inc.		30,940
	784	Fair Isaac Corp.		27,997
	3,233	Fiserv, Inc.*		171,899
	1,552	Ingram Micro, Inc., Class A*		30,450
	495	Lexmark International, Inc., Class A*		26,978
	994	McAfee, Inc.*		32,295
	350	Mettler Toledo International, Inc.*		34,167
	3,669	NCR Corp.*		184,917
	930	Polycom, Inc.*		30,969
	1,726	QLogic Corp.*		30,861
	1,219	Sybase, Inc.*		29,488
	1,193	Synopsys, Inc.*		32,998
	981	Total System Services, Inc.		30,470
	1,561	Western Digital Corp.*		27,598
				1,479,508
		Materials—4.6%
	737	Albemarle Corp.		31,286
	916	Bemis Co., Inc.		30,430
	534	Cleveland-Cliffs, Inc.		37,001
	506	Greif, Inc., Class A		28,134
	1,496	Hercules, Inc.*		28,185

Number of Shares			Value
		Common Stocks (Continued)
	1,297	Nalco Holding Co.	$	34,474
	946	Pactiv Corp.*		32,713
	942	Sealed Air Corp.		30,992
	741	Sigma-Aldrich Corp.		31,181
	832	Sonoco Products Co.		35,476
	1,899	United States Steel Corp.		192,823
				512,695
		Telecommunication Services—0.3%
	563	Telephone & Data Systems, Inc.		32,063
		Utilities—4.2%
	3,691	Allegheny Energy, Inc.*		197,321
	660	Energen Corp.		36,993
	4,708	PPL Corp.		205,316
	643	Wisconsin Energy Corp.		31,372
				471,002
		Total Common Stocks (Cost $10,459,596)		11,226,868
		Money Market Fund—0.5%
	48,241	Liquid Assets Portfolio Private Class** (Cost $48,241)		48,241
		Total Investments (Cost $10,507,837)—100.8%		11,275,109
		Liabilities in excess of other assets—(0.8%)		(84,691	)
		Net Assets—100.0%	$	11,190,418

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	10,706,614			95.7	%
Bermuda		346,369			3.1
Cayman Islands		189,179			1.7
Panama		32,947			0.3
Total Investments		11,275,109			100.8
Liabilities in excess of other assets		(84,691	)		(0.8	)
Net Assets	$	11,190,418			100.0	%

See Notes to Financial Statements.
50

Schedule of Investments

PowerShares Dynamic Small Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.3%
		Consumer Discretionary—21.9%
	3,316	Aaron Rents, Inc.	$	94,075
	2,440	Aeropostale, Inc.*		100,407
	705	American Greetings Corp., Class A		17,942
	2,746	Ameristar Casinos, Inc.		83,369
	3,524	Applebee's International, Inc.		95,782
	635	Asbury Automotive Group, Inc.		18,269
	4,906	Belo Corp., Class A		94,539
	2,516	Blockbuster, Inc., Class A*		15,599
	463	Bob Evans Farms, Inc.		16,992
	2,552	Brown Shoe Co., Inc.		68,853
	478	Buckle (The), Inc.		17,026
	362	CBRL Group, Inc.		16,138
	553	Charlotte Russe Holding, Inc.*		15,113
	1,646	Children's Place Retail Stores (The), Inc.*		87,024
	1,572	Coinmach Service Corp., Class A		16,632
	269	Deckers Outdoor Corp.*		20,371
	3,228	DeVry, Inc.		106,493
	2,926	Domino's Pizza, Inc.		94,364
	804	Dress Barn, Inc.*		16,008
	609	Fossil, Inc.*		17,156
	435	Gymboree (The) Corp.*		16,608
	717	Helen of Troy Ltd. (Bermuda)*		16,276
	534	Hibbett Sports, Inc.*		15,566
	294	IHOP Corp.		17,322
	1,275	Journal Communications, Inc., Class A		17,200
	642	Modine Manufacturing Co.		14,849
	1,730	Priceline.com, Inc.*		96,258
	2,193	Regis Corp.		83,838
	474	Scholastic Corp.*		14,632
	1,165	Sinclair Broadcast Group, Inc., Class A		19,024
	463	Skechers U.S.A., Inc., Class A*		14,538
	592	Steven Madden Ltd.		17,612
	2,118	Stewart Enterprises, Inc., Class A		15,927
	759	Strayer Education, Inc.		94,374
	3,632	Tempur-Pedic International, Inc.		94,323
	4,857	Triarc Cos., Inc., Class B		79,023
	711	Tupperware Brands Corp.		19,993
	3,223	Wolverine World Wide, Inc.		92,113
				1,751,628
		Consumer Staples—0.9%
	2,035	Alliance One International, Inc.*		19,963
	1,233	Playtex Products, Inc.*		18,766
	312	Universal Corp.		19,556
	278	USANA Health Sciences, Inc.*		11,076
				69,361
		Energy—5.5%
	505	Copano Energy LLC		19,725
	6,771	Global Industries, Ltd.*		140,566
	2,497	Grey Wolf, Inc.*		17,879
	452	Gulfmark Offshore, Inc.*		21,651

Number of Shares			Value
		Common Stocks (Continued)
	306	Lufkin Industries, Inc.	$	19,039
	2,499	St. Mary Land & Exploration Co.		91,513
	3,330	Western Refining, Inc.		131,935
				442,308
		Financials—24.3%
	379	Advanta Corp., Class B		17,366
	901	Alfa Corp.		16,164
	507	AMCORE Financial, Inc.		14,505
	464	Argonaut Group, Inc.*		15,595
	344	BancFirst Corp.		14,727
	3,614	BancorpSouth, Inc.		88,796
	498	Capital City Bank Group, Inc.		14,845
	566	Chemical Financial Corp.		15,129
	541	Chittenden Corp.		15,721
	434	City Holding Co.		16,479
	791	CNA Surety Corp.*		16,326
	2,024	Cohen & Steers, Inc.		103,851
	3,119	Commerce Group (The), Inc.		101,711
	2,284	Delphi Financial Group, Inc., Class A		97,527
	1,383	Downey Financial Corp.		92,592
	428	FBL Financial Group, Inc., Class A		16,581
	400	First Financial Bankshares, Inc.		15,480
	6,413	First Niagara Financial Group, Inc.		87,217
	446	GAMCO Investors, Inc., Class A		20,347
	680	Glacier Bancorp, Inc.		14,606
	493	Harleysville Group, Inc.		15,056
	369	Hilb, Rogal & Hobbs Co.		16,033
	810	Horace Mann Educators Corp.		17,042
	360	Infinity Property & Casualty Corp.		16,744
	3,043	International Bancshares Corp.		87,486
	2,138	Investment Technology Group, Inc.*		80,902
	3,166	IPC Holdings Ltd. (Bermuda)		94,917
	326	Navigators Group, Inc.*		16,655
	1,367	Ocwen Financial Corp.*		19,493
	3,023	Ohio Casualty Corp.		95,648
	177	Park National Corp.		15,712
	6,454	Phoenix (The) Cos., Inc.		96,165
	249	Piper Jaffray Cos.*		15,889
	2,017	Potlatch Corp.		87,518
	1,806	ProAssurance Corp.*		97,235
	945	Provident Financial Services, Inc.		16,197
	299	RLI Corp.		16,651
	370	Safety Insurance Group, Inc.		14,822
	690	Selective Insurance Group		17,995
	511	State Auto Financial Corp.		15,356
	768	Sterling Financial Corp.		12,787
	603	SWS Group, Inc.		15,672
	1,657	Trustco Bank Corp.		15,195
	3,147	Trustmark Corp.		83,742
	724	United America Indemnity Ltd., Class A (Cayman Islands)*		18,086

See Notes to Financial Statements.
51

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	474	United Fire & Casualty Co.	$	17,419
	888	Universal American Financial Corp.*		16,481
	533	WesBanco, Inc.		15,633
	525	WP Carey & Co. LLC		17,981
	1,856	Zenith National Insurance Corp.		85,840
				1,947,917
		Health Care—9.6%
	2,672	AMERIGROUP Corp.*		75,163
	607	AMN Healthcare Services, Inc.*		14,780
	710	Amsurg Corp., Class A*		16,295
	526	Apria Healthcare Group, Inc.*		16,695
	310	Biosite, Inc.*		28,675
	363	Chemed Corp.		18,259
	787	Conceptus Inc*		16,275
	670	Emergency Medical Services Corp., Class A*		22,432
	2,516	Incyte Corp.*		19,398
	2,140	Magellan Health Services, Inc.*		91,807
	570	MedCath Corp.*		16,940
	3,376	Medicines (The) Co.*		76,905
	311	National Healthcare Corp.		15,957
	797	PSS World Medical, Inc.*		16,020
	733	Sciele Pharma, Inc.*		18,120
	3,435	STERIS Corp.		87,799
	2,294	Sunrise Senior Living, Inc.*		87,837
	1,638	Varian, Inc.*		94,939
	955	ViroPharma, Inc.*		14,401
	771	Wright Medical Group, Inc.*		18,211
				766,908
		Industrials—19.1%
	626	ABM Industries, Inc.		17,616
	455	Administaff, Inc.		15,101
	402	American Woodmark Corp.		13,873
	178	AMREP Corp.		10,726
	1,835	Armstrong World Industries, Inc.*		93,585
	290	Cascade Corp.		17,971
	293	Ceradyne, Inc.*		17,243
	2,795	CLARCOR, Inc.		88,154
	227	Consolidated Graphics, Inc.*		17,082
	318	CRA International, Inc.*		16,399
	2,822	Deluxe Corp.		106,813
	329	Dollar Thrifty Automotive Group, Inc.*		15,424
	1,519	EMCOR Group, Inc.*		95,226
	661	Ennis, Inc.		16,161
	573	Healthcare Services Group, Inc.		16,044
	362	Heidrick & Struggles International, Inc.*		17,079
	556	Horizon Lines, Inc., Class A		18,910
	512	Hub Group, Inc., Class A*		18,432
	6,422	IKON Office Solutions, Inc.		96,073
	691	InfraSource Services, Inc.*		23,066
	340	John H. Harland Co.		17,884
	730	Knoll, Inc.		16,951

Number of Shares			Value
		Common Stocks (Continued)
	701	Korn/Ferry International*	$	16,523
	879	Labor Ready, Inc.*		19,074
	147	Middleby (The) Corp.*		20,180
	1,671	Nordson Corp.		76,582
	599	Pacer International, Inc.		15,304
	464	Perini Corp.*		19,766
	512	RBC Bearings, Inc.*		19,461
	502	Resources Connection, Inc.*		15,145
	406	Robbins & Myers, Inc.		15,603
	729	Rollins, Inc.		16,818
	5,116	SAIC, Inc.*		93,572
	2,806	TeleTech Holdings, Inc.*		105,870
	726	Tredegar Corp.		16,967
	2,757	Wabtec Corp.		102,423
	3,132	Waste Connections, Inc.*		97,624
	1,935	Watson Wyatt Worldwide, Inc., Class A		91,197
	391	Woodward Governor Co.		19,296
				1,527,218
		Information Technology—16.4%
	4,210	Acxiom Corp.		95,146
	840	Advanced Energy Industries, Inc.*		20,580
	772	Agilysys, Inc.		16,235
	523	Ansoft Corp.*		16,888
	6,111	Arris Group, Inc.*		90,565
	776	Benchmark Electronics, Inc.*		16,436
	2,387	CommScope, Inc.*		111,353
	473	Comtech Telecommunications Corp.*		17,903
	661	Covansys Corp.*		22,077
	674	CSG Systems International, Inc.*		18,050
	915	Emulex Corp.*		19,197
	8,095	Gateway, Inc.*		17,728
	850	Global Imaging Systems, Inc.*		24,557
	386	Imation Corp.		14,247
	2,642	Interdigital Communications Corp.*		86,869
	720	Inter-Tel, Inc.		18,158
	3,816	Jack Henry & Associates, Inc.		90,630
	473	ManTech International Corp., Class A*		14,512
	957	Mentor Graphics Corp.*		15,484
	729	MicroStrategy, Inc., Class A*		82,931
	441	MTS Systems Corp.		18,747
	604	Netgear, Inc.*		20,301
	828	NetRatings, Inc.*		17,231
	753	Paxar Corp.*		22,598
	1,072	Photronics, Inc.*		16,134
	279	Rofin-Sinar Technologies, Inc.*		18,492
	2,462	Skyworks Solutions, Inc.*		16,963
	1,430	SMART Modular Technologies (WWH), Inc. (Cayman Islands)*		19,019
	1,041	Sykes Enterprises, Inc.*		19,217
	445	Syntel, Inc.		15,602
	2,808	THQ, Inc.*		93,703

See Notes to Financial Statements.
52

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	10,102	TIBCO Software, Inc.*	$	92,130
	1,244	United Online, Inc.		17,951
	1,976	WebEx Communications, Inc.*		112,117
				1,309,751
		Materials—1.1%
	314	Innospec, Inc.		16,859
	417	Metal Management, Inc.		20,045
	324	OM Group, Inc.*		17,020
	434	Quanex Corp.		18,675
	669	Sensient Technologies Corp.		17,514
				90,113
		Telecommunication Services—1.1%
	1,585	Golden Telecom, Inc.		92,897
		Utilities—0.4%
	377	Northwest Natural Gas Co.		19,155
	445	UIL Holdings Corp.		15,197
				34,352
		Total Common Stocks (Cost $7,743,960)		8,032,453
		Money Market Fund—0.4%
	29,042	Liquid Assets Portfolio Private Class** (Cost $29,042)		29,042
		Total Investments (Cost $7,773,002)—100.7%		8,061,495
		Liabilities in excess of other assets—(0.7%)		(56,359	)
		Net Assets—100.0%	$	8,005,136

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	7,913,197			98.8	%
Bermuda		111,193			1.4
Cayman Islands		37,105			0.5
Total Investments		8,061,495			100.7
Liabilities in excess of other assets		(56,359	)		(0.7	)
Net Assets	$	8,005,136			100.0	%

See Notes to Financial Statements.
53

Schedule of Investments

PowerShares Dynamic Aggressive Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.4%
		Consumer Discretionary—16.1%
	2,752	Aeropostale, Inc.*	$	113,245
	3,698	Clear Channel Outdoor Holdings, Inc., Class A*		105,578
	2,108	Coach, Inc.*		102,934
	3,638	DeVry, Inc.		120,018
	4,604	DIRECTV (The) Group, Inc.*		109,759
	1,832	Garmin Ltd. (Cayman Islands)		106,604
	2,476	Guess?, Inc.		97,554
	2,674	Gymboree (The) Corp.*		102,093
	1,020	Harman International Industries, Inc.		124,328
	3,276	Hibbett Sports, Inc.*		95,495
	1,280	ITT Educational Services, Inc.*		124,429
	1,452	Kohl's Corp.*		107,506
	1,880	Phillips-Van Heusen Corp.		105,092
	1,203	Polo Ralph Lauren Corp.		110,808
	2,844	Skechers U.S.A., Inc., Class A*		89,302
	5,476	Triarc Cos., Inc., Class B		89,095
				1,703,840
		Consumer Staples—0.6%
	1,712	USANA Health Sciences, Inc.*		68,206
		Energy—2.2%
	1,559	FMC Technologies, Inc.*		110,502
	1,632	Schlumberger Ltd. (Netherlands)		120,490
				230,992
		Financials—5.2%
	648	CBOT Holdings, Inc., Class A*		122,259
	2,282	Cohen & Steers, Inc.		117,089
	964	Jones Lang LaSalle, Inc.		103,620
	1,562	Moody's Corp.		103,279
	1,658	SEI Investments Co.		101,188
				547,435
		Health Care—24.9%
	3,012	AMERIGROUP Corp.*		84,728
	3,722	AMN Healthcare Services, Inc.*		90,631
	1,942	Cerner Corp.*		103,392
	4,826	Conceptus Inc*		99,802
	3,462	Cytyc Corp.*		121,966
	1,650	Dionex Corp.*		113,850
	1,936	Forest Laboratories, Inc.*		103,015
	2,156	Gen-Probe, Inc.*		110,193
	1,210	IDEXX Laboratories, Inc.*		109,106
	15,447	Incyte Corp.*		119,096
	3,495	MedCath Corp.*		103,871
	3,808	Medicines (The) Co.*		86,746
	2,118	Mentor Corp.		82,411
	1,916	Pediatrix Medical Group, Inc.*		109,308
	4,886	PSS World Medical, Inc.*		98,209
	4,422	Schering-Plough Corp.		140,309
	4,506	Sciele Pharma, Inc.*		111,388

Number of Shares			Value
		Common Stocks (Continued)
	1,956	Sepracor, Inc.*	$	104,998
	1,642	Stryker Corp.		106,631
	2,588	Sunrise Senior Living, Inc.*		99,095
	2,718	VCA Antech, Inc.*		107,171
	5,870	ViroPharma, Inc.*		88,520
	1,880	Waters Corp.*		111,728
	1,302	WellCare Health Plans, Inc.*		104,928
	4,730	Wright Medical Group, Inc.*		111,723
				2,622,815
		Industrials—19.0%
	2,802	Administaff, Inc.		92,998
	1,091	AMREP Corp.		65,744
	2,004	Clean Harbors, Inc.*		93,226
	1,968	Corrections Corp. of America*		111,782
	1,790	Foster Wheeler Ltd. (Bermuda)*		123,207
	3,522	Healthcare Services Group, Inc.		98,616
	2,652	Herman Miller, Inc.		91,255
	3,416	Horizon Lines, Inc., Class A		116,178
	3,142	Hub Group, Inc., Class A*		113,112
	2,698	IHS, Inc., Class A*		111,535
	2,262	Jacobs Engineering Group, Inc.*		114,073
	2,058	McDermott International, Inc. (Panama)*		110,432
	894	Middleby (The) Corp.*		122,728
	2,836	Perini Corp.*		120,814
	3,152	RBC Bearings, Inc.*		119,808
	3,084	Resources Connection, Inc.*		93,044
	2,534	Robert Half International, Inc.		84,382
	5,250	Steelcase, Inc., Class A		102,480
	3,164	TeleTech Holdings, Inc.*		119,378
				2,004,792
		Information Technology—28.3%
	5,942	Activision, Inc.*		118,840
	2,594	Adobe Systems, Inc.*		107,807
	1,674	Alliance Data Systems Corp.*		106,567
	4,778	Altera Corp.		107,696
	3,108	Amphenol Corp., Class A		109,122
	3,204	Ansoft Corp.*		103,457
	1,184	Apple, Inc.*		118,163
	18,417	Atmel Corp.*		97,978
	2,480	Autodesk, Inc.*		102,350
	12,542	Brocade Communications Systems, Inc.*		122,536
	7,142	C-COR, Inc.*		87,989
	1,114	Cognizant Technology Solutions Corp., Class A*		99,592
	3,126	Dolby Laboratories, Inc., Class A*		110,723
	1,684	FactSet Research Systems, Inc.		103,583
	2,932	Flir Systems, Inc.*		118,717
	4,736	Gartner, Inc.*		119,489
	2,092	Harris Corp.		107,424
	1,922	MEMC Electronic Materials, Inc.*		105,479
	5,866	Mentor Graphics Corp.*		94,912

See Notes to Financial Statements.
54

Schedule of Investments (Continued)

PowerShares Dynamic Aggressive Growth Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,834	MICROS Systems, Inc.*	$	100,503
	3,840	National Instruments Corp.		106,982
	5,082	NetRatings, Inc.*		105,756
	3,228	NVIDIA Corp.*		106,169
	2,486	Paychex, Inc.		92,231
	3,114	Polycom, Inc.*		103,696
	2,724	Syntel, Inc.		95,503
	3,164	THQ, Inc.*		105,583
	2,230	WebEx Communications, Inc.*		126,531
				2,985,378
		Materials—2.0%
	2,402	Ecolab, Inc.		103,262
	1,933	Innospec, Inc.		103,783
				207,045
		Telecommunication Services—1.0%
	1,478	U.S. Cellular Corp.*		107,155
		Utilities—1.1%
	2,198	Allegheny Energy, Inc.*		117,505
		Total Common Stocks (Cost $9,963,387)		10,595,163
		Money Market Fund—0.1%
	12,057	Liquid Assets Portfolio Private Class** (Cost $12,057)		12,057
		Total Investments (Cost $9,975,444)—100.5%		10,607,220
		Liabilities in excess of other assets—(0.5%)		(55,514	)
		Net Assets—100.0%	$	10,551,706

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	10,146,487			96.2	%
Bermuda		123,207			1.2
Netherlands		120,490			1.1
Panama		110,432			1.0
Cayman Islands		106,604			1.0
Total Investments		10,607,220			100.5
Liabilities in excess of other assets		(55,514	)		(0.5	)
Net Assets	$	10,551,706			100.0	%

See Notes to Financial Statements.
55

Schedule of Investments

PowerShares Dynamic Deep Value Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.5%
		Consumer Discretionary—4.9%
	2,698	Autoliv, Inc.	$	156,889
	6,556	Helen of Troy Ltd. (Bermuda)*		148,821
	2,904	International Speedway Corp., Class A		143,458
	4,936	Newell Rubbermaid, Inc.		151,387
	1,948	VF Corp.		171,054
				771,609
		Consumer Staples—9.3%
	2,446	Altria Group, Inc.		168,578
	3,740	Campbell Soup Co.		146,234
	6,138	ConAgra Foods, Inc.		150,872
	5,002	Dean Foods Co.		182,223
	2,740	General Mills, Inc.		164,126
	3,320	H.J. Heinz Co.		156,405
	3,100	J.M. Smucker (The) Co.		173,042
	2,852	Universal Corp.		178,763
	2,598	UST, Inc.		147,255
				1,467,498
		Energy—1.1%
	2,084	Exxon Mobil Corp.		165,428
		Financials—46.5%
	2,722	ACE Ltd. (Cayman Islands)		161,850
	1,752	AMBAC Financial Group, Inc.		160,834
	4,626	AMCORE Financial, Inc.		132,350
	4,318	American Financial Group, Inc.		152,296
	2,502	Ameriprise Financial, Inc.		148,794
	2,904	Assurant, Inc.		167,067
	2,964	Bank of America Corp.		150,868
	4,932	Chittenden Corp.		143,324
	2,956	Chubb (The) Corp.		159,121
	3,974	City Holding Co.		150,893
	2,486	Comerica, Inc.		153,908
	5,230	Commerce (The) Group, Inc.		170,550
	3,828	Delphi Financial Group, Inc., Class A		163,456
	1,584	Everest Re Group Ltd. (Bermuda)		159,414
	3,906	FBL Financial Group, Inc., Class A		151,318
	4,054	GAMCO Investors, Inc., Class A		184,942
	4,502	Harleysville Group, Inc.		137,491
	1,624	Hartford Financial Services Group (The), Inc.		164,349
	7,394	Horace Mann Educators Corp.		155,570
	5,308	IPC Holdings, Ltd. (Bermuda)		159,134
	3,070	JPMorgan Chase & Co.		159,947
	4,010	KeyCorp		143,077
	2,222	Lincoln National Corp.		158,095
	3,554	Loews Corp.		168,175
	2,400	MetLife, Inc.		157,680
	2,852	Nationwide Financial Services, Inc., Class A		162,935
	5,070	Ohio Casualty Corp.		160,415
	6,846	Old Republic International Corp.		145,614
	2,212	PartnerRe Ltd. (Bermuda)		159,308

Number of Shares			Value
		Common Stocks (Continued)
	3,294	PMI Group (The), Inc.	$	159,660
	2,074	PNC Financial Services Group, Inc.		153,683
	6,730	Progressive (The) Corp.		155,261
	1,694	Prudential Financial, Inc.		160,930
	2,670	Reinsurance Group of America, Inc.		166,368
	2,740	RLI Corp.		152,591
	2,296	Safeco Corp.		153,235
	3,380	Safety Insurance Group, Inc.		135,403
	6,296	Selective Insurance Group		164,200
	4,668	State Auto Financial Corp.		140,273
	1,802	SunTrust Banks, Inc.		152,125
	2,956	Travelers (The) Cos., Inc.		159,920
	6,603	United America Indemnity Ltd., Class A (Cayman Islands)*		164,943
	3,284	Unitrin, Inc.		154,841
	4,398	Wells Fargo & Co.		157,844
	4,618	W.R. Berkley Corp.		150,039
	2,150	XL Capital Ltd., Class A (Cayman Islands)		167,657
	3,112	Zenith National Insurance Corp.		143,930
				7,335,678
		Health Care—5.3%
	1,088	CIGNA Corp.		169,282
	2,602	Hillenbrand Industries, Inc.		159,112
	2,442	Johnson & Johnson		156,825
	3,650	Merck & Co., Inc.		187,757
	6,116	Pfizer, Inc.		161,829
				834,805
		Industrials—9.2%
	2,306	Avery Dennison Corp.		143,433
	2,657	Cascade Corp.		164,654
	2,168	Cummins, Inc.		199,803
	3,090	John H. Harland Co.		162,534
	1,536	Lockheed Martin Corp.		147,671
	2,104	Northrop Grumman Corp.		154,939
	3,266	Pitney Bowes, Inc.		156,768
	4,068	R.R. Donnelley & Sons Co.		163,534
	2,292	Teleflex, Inc.		164,634
				1,457,970
		Information Technology—7.7%
	5,410	Electronic Data Systems Corp.		158,188
	3,904	Fair Isaac Corp.		139,412
	7,730	Ingram Micro, Inc., Class A*		151,663
	1,604	International Business Machines Corp.		163,944
	2,466	Lexmark International, Inc., Class A*		134,397
	3,252	NCR Corp.*		163,901
	9,799	Photronics, Inc.*		147,475
	8,764	Xerox Corp.*		162,134
				1,221,114

See Notes to Financial Statements.
56

Schedule of Investments (Continued)

PowerShares Dynamic Deep Value Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Materials—9.2%
	4,564	Bemis Co., Inc.	$	151,616
	2,658	Cleveland-Cliffs, Inc.		184,173
	2,958	E.I. du Pont de Nemours & Co.		145,445
	4,214	International Paper Co.		158,952
	2,432	Nucor Corp.		154,335
	2,950	OM Group, Inc.*		154,964
	6,122	Sensient Technologies Corp.		160,274
	4,146	Sonoco Products Co.		176,785
	1,682	United States Steel Corp.		170,790
				1,457,334
		Utilities—7.3%
	7,870	Duke Energy Corp.		161,492
	3,336	Edison International		174,640
	3,286	Energen Corp.		184,179
	3,450	Northwest Natural Gas Co.		175,295
	3,280	PG&E Corp.		165,968
	4,051	UIL Holdings Corp.		138,342
	3,202	Wisconsin Energy Corp.		156,226
				1,156,142
		Total Common Stocks (Cost $15,352,764)		15,867,578
		Money Market Fund—0.7%
	111,523	Liquid Assets Portfolio Private Class** (Cost $111,523)		111,523
		Total Investments (Cost $15,464,287)—101.2%		15,979,101
		Liabilities in excess of other assets—(1.2%)		(193,483	)
		Net Assets—100.0%	$	15,785,618

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	14,857,974			94.1	%
Bermuda		626,677			4.0
Cayman Islands		494,450			3.1
Total Investments		15,979,101			101.2
Liabilities in excess of other assets		(193,483	)		(1.2	)
Net Assets	$	15,785,618			100.0	%

See Notes to Financial Statements.
57

Schedule of Investments

PowerShares Zacks Micro Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—18.9%
	25,109	4Kids Entertainment, Inc.*	$	408,523
	22,261	A.C. Moore Arts & Crafts, Inc.*		457,018
	10,300	Ambassadors International, Inc.		421,476
	32,229	Audiovox Corp., Class A*		463,775
	6,645	Avatar Holdings, Inc.*		498,840
	16,755	Benihana, Inc., Class A*		489,916
	42,054	Bluegreen Corp.*		464,697
	33,368	Books-A-Million, Inc.		556,578
	20,458	Carmike Cinemas, Inc.		511,041
	58,715	Carriage Services, Inc. *		479,702
	10,442	Churchill Downs, Inc.		487,537
	45,852	Cobra Electronics Corp.		458,520
	12,673	CSS Industries, Inc.		505,653
	50,646	Cumulus Media, Inc., Class A*		475,566
	27,293	Delta Apparel, Inc.		471,077
	28,574	DG Fastchannel, Inc.*		519,761
	11,582	Duckwall-ALCO Stores, Inc.*		440,695
	17,135	E Com Ventures, Inc.*		538,210
	54,585	Exide Technologies*		513,645
	9,778	Fisher Communications, Inc.*		474,429
	32,324	Fred's, Inc.		466,759
	28,717	FTD Group, Inc.		512,598
	25,631	Fuel Systems Solutions, Inc.*		433,164
	30,188	Gaiam, Inc., Class A*		459,160
	38,874	GameTech International, Inc.*		445,496
	42,577	Gander Mountain Co.*		540,302
	13,955	GenTek, Inc.*		457,166
	24,919	G-III Apparel Group, Ltd.*		440,070
	33,273	Gottschalks, Inc.*		443,862
	45,567	Gray Television, Inc.		486,200
	35,884	Great Wolf Resorts, Inc.*		455,368
	78,745	Harris Interactive, Inc.*		474,045
	64,173	Hartmarx Corp.*		422,258
	33,938	Haverty Furniture Cos., Inc.		433,049
	64,980	Hayes Lemmerz International, Inc.*		370,386
	20,932	Helen of Troy Ltd. (Bermuda)*		475,156
	23,685	Hooker Furniture Corp.		521,781
	75,280	Interstate Hotels & Resorts, Inc.*		389,198
	19,888	JAKKS Pacific, Inc.*		477,909
	17,420	Jo-Ann Stores, Inc.*		521,729
	39,301	K2, Inc.*		593,051
	42,577	Lakes Entertainment, Inc.*		527,103
	16,043	Landry's Restaurants, Inc.		476,477
	33,890	Libbey, Inc.		632,048
	17,325	Lithia Motors, Inc., Class A		466,909
	46,754	LJ International, Inc. (British Virgin Islands)*		458,189
	35,552	Lodgian, Inc.*		491,329
	17,895	M/I Homes, Inc.		532,018
	29,808	Monaco Coach Corp.		456,957
	14,335	Mothers Work, Inc.*		501,725
	16,138	Movado Group, Inc.		531,263

Number of Shares			Value
		Common Stocks (Continued)
	39,919	Multimedia Games, Inc.*	$	447,093
	7,689	National Presto Industries, Inc.		454,343
	126,638	Navarre Corp.*		538,212
	24,635	O'Charleys, Inc.*		520,045
	47,655	PC Mall, Inc.*		505,143
	14,857	Perry Ellis International, Inc.*		493,252
	38,162	Red Lion Hotels Corp.*		486,566
	29,049	Rex Stores Corp.*		484,828
	14,240	Shoe Carnival, Inc.*		447,706
	102,336	Silverleaf Resorts, Inc.*		510,657
	118,759	Spanish Broadcasting System, Inc., Class A*		404,968
	20,458	Spartan Motors, Inc.		582,643
	27,815	Standard Motor Products, Inc.		509,849
	14,714	Steinway Musical Instruments		464,962
	19,508	StoneMor Partners LP		508,183
	45,852	Stoneridge, Inc.*		532,342
	30,853	Stride Rite (The) Corp.		435,027
	35,314	Sturm Ruger & Co., Inc.*		455,904
	22,783	Superior Industries International, Inc.		520,592
	25,489	Syms Corp. *		448,352
	56,531	Syntax-Brillian Corp.*		403,631
	25,347	Systemax, Inc.		431,659
	26,296	Trump Entertainment Resorts, Inc.*		426,784
	17,040	Universal Electronics, Inc.*		482,232
	26,059	West Marine, Inc.*		383,067
				36,407,424
		Consumer Staples—3.0%
	50,598	American Oriental Bioengineering, Inc.*		503,450
	10,680	Andersons (The), Inc.		496,086
	35,314	Cal-Maine Foods, Inc.		477,445
	33,890	Chiquita Brands International, Inc.		502,589
	14,145	Imperial Sugar Co.		420,955
	23,306	MGP Ingredients, Inc.		464,022
	13,765	Nash Finch Co.		536,422
	27,055	National Beverage Corp.*		420,976
	40,061	Prestige Brands Holdings, Inc.*		521,194
	30,900	PriceSmart, Inc.		513,867
	69,110	Schiff Nutrition International, Inc.*		487,225
	17,705	Spartan Stores, Inc.		456,081
				5,800,312
		Energy—4.0%
	12,958	Adams Resources & Energy, Inc.		486,573
	30,141	Allis-Chalmers Energy, Inc.*		583,228
	9,920	Atlas Pipeline Partners, LP		495,504
	13,860	Bolt Technology Corp.*		562,993
	34,982	Callon Petroleum Co.*		482,752
	9,588	Dawson Geophysical Co.*		492,823
	13,243	Global Partners LP		495,818
	17,752	Gulf Island Fabrication, Inc.		533,093
	48,747	Harvest Natural Resources, Inc.*		489,907
	8,212	Hiland Partners LP		447,308

See Notes to Financial Statements.
58

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	12,151	Martin Midstream Partners LP	$	517,147
	30,046	NGP Capital Resources Co.		469,919
	46,659	OMNI Energy Services Corp.*		448,393
	23,590	T-3 Energy Services, Inc.*		601,545
	12,768	Trico Marine Services, Inc.*		494,249
				7,601,252
		Financials—25.0%
	18,132	1st Source Corp.		448,586
	27,435	Affirmative Insurance Holdings, Inc.		445,270
	39,159	Affordable Residential Communities, Inc.*		459,335
	54,538	Alesco Financial, Inc.		478,298
	15,664	American Campus Communities, Inc.		479,632
	11,866	American Physicians Capital, Inc.*		469,182
	24,919	American Safety Insurance Holdings Ltd. (Bermuda)*		517,068
	25,204	Amerisafe, Inc.*		507,357
	48,605	Anworth Mortgage Asset Corp.		466,608
	15,616	Arbor Realty Trust, Inc.		480,817
	28,527	Banco Latinoamericano de Exportaciones, S.A., Class E (Panama)		558,843
	18,274	Bancorp (The), Inc.*		440,952
	29,191	BankFinancial Corp.		464,137
	11,439	Banner Corp.		426,903
	14,097	Berkshire Hills Bancorp, Inc.		454,487
	15,711	BRT Realty Trust		485,941
	44,333	Capital Lease Funding, Inc.		495,200
	3,085	Capital Southwest Corp.		477,558
	47,560	Capstead Mortgage Corp.		477,978
	29,334	Cedar Shopping Centers, Inc.		468,464
	54,918	Centennial Bank Holdings, Inc.*		481,082
	31,707	CFS Bancorp, Inc.		470,849
	20,837	Citizens First Bancorp, Inc.		438,827
	13,100	Community Trust Bancorp, Inc.		435,706
	10,965	Crescent Banking Co.		458,885
	57,433	Delta Financial Corp.		574,903
	35,884	Dime Community Bancshares, Inc.		477,616
	27,957	Donegal Group, Inc., Class A		424,108
	32,134	Education Realty Trust, Inc.		457,588
	18,417	EMC Insurance Group, Inc.		462,267
	32,229	EZCORP, Inc., Class A*		488,269
	39,112	Feldman Mall Properties, Inc.		450,961
	23,685	Financial Institutions, Inc.		455,699
	15,331	First Financial Corp.		437,240
	22,119	First Place Financial Corp.		442,601
	29,286	Flushing Financial Corp.		455,397
	10,632	FPIC Insurance Group, Inc.*		489,710
	26,581	Franklin Bank Corp.*		414,664
	23,685	Gladstone Commercial Corp.		472,516
	31,944	Gladstone Investment Corp.		457,758
	14,002	Greene County Bancshares, Inc.		470,747
	17,752	Heartland Financial USA, Inc.		454,629

Number of Shares			Value
		Common Stocks (Continued)
	34,650	Hercules Technology Growth Capital, Inc.	$	477,131
	40,298	Hersha Hospitality Trust		478,740
	14,524	Independent Bank Corp.		431,363
	21,312	Integra Bank Corp.		484,209
	16,993	International Assets Holding Corp.*		387,610
	16,565	Intervest Bancshares Corp.*		421,745
	44,855	Investors Real Estate Trust		473,220
	25,489	Irwin Financial Corp.		408,589
	9,113	ITLA Capital Corp.		463,943
	15,189	James River Group, Inc.		471,315
	24,967	JER Investors Trust, Inc.		439,669
	23,828	Kite Realty Group Trust		476,560
	32,229	KNBT Bancorp, Inc.		483,757
	18,322	LTC Properties, Inc.		459,333
	53,114	Luminent Mortgage Capital, Inc.		438,722
	27,957	MainSource Financial Group, Inc.		451,506
	28,384	MarketAxess Holdings, Inc.*		464,930
	43,194	Meadowbrook Insurance Group, Inc.*		479,885
	41,532	Medallion Financial Corp.		494,646
	32,324	Medical Properties Trust, Inc.		460,294
	23,875	Mercer Insurance Group, Inc.		445,746
	61,658	MFA Mortgage Investments, Inc.		450,103
	32,846	Mission West Properties		480,209
	47,893	NexCen Brands, Inc.*		609,677
	11,629	NYMAGIC, Inc.		476,208
	16,660	Omega Financial Corp.		467,313
	14,287	Oppenheimer Holdings, Inc., Class A (Canada)		557,192
	40,298	Oriental Financial Group		466,248
	41,532	Partners Trust Financial Group, Inc.		460,175
	33,463	Patriot Capital Funding, Inc.		475,509
	17,942	Peoples Financial Corp.		451,241
	15,569	Pinnacle Financial Partners, Inc.*		455,705
	50,598	PMA Capital Corp., Class A*		474,103
	24,065	Presidential Life Corp.		457,476
	38,637	Primus Guaranty Ltd. (Bermuda)*		467,121
	20,458	ProCentury Corp.		463,169
	33,558	Provident New York Bancorp		456,724
	19,224	Renasant Corp.		447,342
	21,027	Republic Bancorp, Inc., Class A		384,584
	20,078	Resource America, Inc., Class A		443,925
	29,429	Resource Capital Corp.		479,693
	11,819	Safety Insurance Group, Inc.		473,469
	20,932	SCPIE Holdings, Inc.*		456,946
	25,821	SeaBright Insurance Holdings, Inc.*		479,496
	23,590	Security Bank Corp.		466,374
	18,464	Southwest Bancorp, Inc.		452,368
	61,420	Specialty Underwriters' Alliance, Inc.*		501,187
	25,536	Sun Bancorp, Inc.*		481,609
	43,953	Superior Bancorp*		455,793
	62,227	Supertel Hospitality, Inc.		500,305
	19,129	SWS Group, Inc.		497,163

See Notes to Financial Statements.
59

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	13,575	Taylor Capital Group, Inc.	$	403,721
	20,458	United America Indemnity Ltd., Class A (Cayman Islands)*		511,040
	43,004	United Community Financial Corp.		443,801
	19,888	United Western Bancorp, Inc.		467,567
	24,302	Urstadt Biddle Properties, Inc., Class A		440,838
	27,150	Wauwatosa Holdings, Inc.*		475,397
	44,285	Westfield Financial, Inc.		447,279
	36,833	Willow Financial Bancorp, Inc.		422,843
	71,863	Winthrop Realty Trust		476,452
	7,357	WSFS Financial Corp.		474,600
				48,019,516
		Health Care—7.4%
	48,225	Albany Molecular Research, Inc.*		463,442
	21,834	American Dental Partners, Inc.*		466,811
	18,132	Arrhythmia Research Technology		417,943
	24,730	Bradley Pharmaceuticals, Inc.*		485,450
	19,318	Cambrex Corp.		468,655
	27,245	Chindex International, Inc.*		547,352
	27,530	Cholestech Corp.*		533,531
	26,059	Cross Country Healthcare, Inc.*		513,102
	56,484	CryoLife, Inc.*		556,367
	16,471	Cynosure, Inc., Class A*		515,048
	62,512	Cypress Bioscience, Inc.*		569,485
	23,543	Gentiva Health Services, Inc.*		440,725
	18,606	Greatbatch, Inc.*		540,132
	40,678	Hanger Orthopedic Group, Inc.*		484,882
	21,692	HMS Holdings Corp.*		480,695
	120,847	I-trax, Inc.*		537,769
	25,299	Lifecore Biomedical, Inc.*		468,537
	42,577	Maxygen, Inc.*		456,851
	17,420	MedCath Corp.*		517,722
	20,458	Noven Pharmaceuticals, Inc.*		478,922
	62,180	Osteotech, Inc.*		472,568
	18,274	PharmaNet Development Group, Inc.*		498,697
	27,150	Res-Care, Inc.*		485,985
	20,837	Rochester Medical Corp.*		488,628
	39,491	Savient Pharmaceuticals, Inc.*		454,147
	56,199	Sonic Innovations, Inc.*		552,436
	35,124	Synovis Life Technologies, Inc.*		450,641
	75,850	Theragenics Corp.*		456,617
	17,800	Zoll Medical Corp.*		430,226
				14,233,366
		Industrials—14.3%
	32,514	Accuride Corp.*		475,030
	7,215	Ameron International Corp.		498,845
	16,423	Ampco-Pittsburgh Corp.		591,556
	6,171	Amrep Corp.		371,864
	17,230	Angelica Corp.		448,669
	11,297	AZZ, Inc.*		645,059
	30,188	Bowne & Co., Inc.		503,536

Number of Shares			Value
		Common Stocks (Continued)
	16,423	CDI Corp.	$	486,449
	59,569	China Yuchai International Ltd. (Bermuda)		551,013
	13,290	CIRCOR International, Inc.		483,756
	23,068	Commercial Vehicle Group, Inc.*		453,517
	39,634	Comfort Systems USA, Inc.		495,029
	23,875	COMSYS IT Partners, Inc.*		543,395
	23,495	Cornell Cos., Inc.*		562,000
	21,929	Cubic Corp.		441,431
	18,464	Ducommun, Inc.*		526,593
	24,492	Eagle Bulk Shipping, Inc. (Marshall Islands)		551,560
	17,467	Eastern (The) Co.		456,937
	17,752	Ennis, Inc.		434,036
	23,828	Exponent, Inc.*		503,962
	81,308	ExpressJet Holdings, Inc.*		485,409
	52,212	First Consulting Group, Inc.*		519,509
	79,030	Frontier Airlines Holdings, Inc.*		467,858
	14,809	Gorman-Rupp (The) Co.		474,925
	18,132	Hardinge, Inc.		504,251
	43,194	Hi-Shear Technology Corp.		479,885
	11,107	Hurco Cos., Inc.*		489,930
	30,378	Jinpan International Ltd. (British Virgin Islands)		654,342
	18,749	Kadant, Inc.*		514,660
	20,363	Kaman Corp.		505,002
	34,507	Kforce, Inc.*		473,781
	23,021	L.B. Foster Co., Class A*		529,023
	12,626	Ladish Co., Inc.*		513,373
	13,053	Layne Christensen Co.*		494,317
	25,489	LMI Aerospace, Inc.*		496,016
	34,365	LSI Industries, Inc.		541,592
	29,903	Lydall, Inc.*		434,790
	25,631	MFRI, Inc.*		478,787
	64,790	Navios Maritime Holdings, Inc. (Marshall Islands)		566,913
	23,021	P.A.M. Transportation Services, Inc.*		439,010
	41,485	PeopleSupport, Inc.*		521,466
	27,483	Pinnacle Airlines Corp.*		449,897
	14,857	Powell Industries, Inc.*		467,847
	12,721	Robbins & Myers, Inc.		488,868
	24,730	Rush Enterprises, Inc., Class A*		514,384
	53,826	Spherion Corp.*		460,212
	13,718	Superior Essex, Inc.*		489,733
	15,094	Tennant Co.		483,310
	18,749	Titan International, Inc.		528,347
	11,107	Twin Disc, Inc.		672,640
	27,530	U.S. Xpress Enterprises, Inc., Class A*		394,230
	18,132	Volt Information Sciences, Inc.*		463,454
	17,277	Waste Industries USA, Inc.		453,694
	47,798	Waste Services, Inc.*		472,244
	62,512	WCA Waste Corp.*		566,359
				27,514,295

See Notes to Financial Statements.
60

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Information Technology—20.9%
	29,998	Acacia Research - Acacia Technologies*	$	447,570
	28,764	Actel Corp.*		421,105
	94,029	ActivIdentity Corp.*		468,264
	68,350	Agile Software Corp.*		491,437
	249,954	Alliance Fiber Optic Products, Inc.*		499,908
	26,960	Anaren, Inc.*		510,083
	69,110	AsiaInfo Holdings, Inc.*		531,456
	27,008	Authorize.Net Holdings, Inc.*		476,421
	41,580	Avici Systems, Inc.*		330,561
	99,156	AXT, Inc.*		397,616
	74,189	Bell Microproducts, Inc.*		504,485
	90,137	Borland Software Corp.*		502,063
	55,013	CalAmp Corp.*		458,258
	82,020	Captaris, Inc.*		495,401
	92,938	Carrier Access Corp.*		447,032
	34,270	C-COR, Inc.*		422,206
	68,730	ChipMOS TECHNOLOGIES Ltd. (Bermuda)*		475,612
	60,329	Ciber, Inc.*		491,681
	34,460	Cray, Inc.*		429,027
	34,365	CTS Corp.		449,494
	60,661	Datalink Corp.*		380,344
	37,403	Digi International, Inc.*		476,888
	46,991	Digimarc Corp.*		453,463
	58,478	Ditech Networks, Inc.*		508,759
	19,603	DTS, Inc.*		438,715
	45,045	Echelon Corp.*		583,333
	56,294	Edgewater Technology, Inc.*		495,387
	24,635	EMS Technologies, Inc.*		462,645
	49,981	eSpeed, Inc., Class A*		462,824
	35,884	Exar Corp.*		483,716
	76,704	Exfo Electro-Optical Engineering, Inc. (Canada)*		510,082
	16,471	FARO Technologies, Inc.*		526,743
	16,755	Forrester Research, Inc.*		431,944
	44,760	Gerber Scientific, Inc.*		448,048
	28,384	GigaMedia Ltd. (Singapore)*		399,647
	44,380	Globecomm Systems, Inc.*		594,247
	29,856	Greenfield Online, Inc.*		488,444
	20,363	Hutchinson Technology, Inc.*		386,897
	31,944	Infocrossing, Inc.*		510,785
	44,380	Internet Capital Group, Inc.*		531,229
	28,100	Interwoven, Inc.*		429,087
	126,638	Iomega Corp.*		505,286
	31,612	JDA Software Group, Inc.*		562,694
	62,085	KEMET Corp.*		526,481
	35,409	Keynote Systems, Inc.*		481,562
	118,759	Leadis Technology, Inc.*		410,906
	57,766	Merix Corp.*		430,934
	32,134	Methode Electronics, Inc.		484,581
	133,805	MRV Communications, Inc.*		464,303

Number of Shares			Value
		Common Stocks (Continued)
	114,724	Napster, Inc.*	$	465,779
	32,182	NCI, Inc., Class A*		474,041
	37,166	Ness Technologies, Inc.*		495,794
	52,497	Netscout Systems, Inc.*		432,050
	48,984	Network Equipment Technologies, Inc.*		526,578
	29,618	Novatel Wireless, Inc.*		538,751
	45,092	NU Horizons Electronics Corp.*		509,540
	26,438	Oplink Communications, Inc.*		438,078
	35,172	OPNET Technologies, Inc.*		395,685
	17,942	OSI Systems, Inc.*		473,848
	49,791	Pacific Internet Ltd. (Singapore)*		491,437
	33,226	PC Connection, Inc.*		426,290
	46,706	PC-Tel, Inc.*		466,593
	51,358	Pegasystems, Inc.		488,928
	52,782	Perceptron, Inc.*		473,982
	48,557	Pericom Semiconductor Corp.*		486,056
	28,052	Qiao Xing Universal Telephone, Inc. (British Virgin Islands)*		462,858
	50,836	Richardson Electronics, Ltd.		445,832
	27,245	Rudolph Technologies, Inc.*		470,521
	79,173	S1 Corp.*		514,625
	160,434	Safeguard Scientifics, Inc.*		482,906
	58,335	SeaChange International, Inc.*		501,681
	56,816	SonicWALL, Inc.*		463,619
	38,637	Spectrum Control, Inc.*		526,236
	34,080	SRS Labs, Inc.*		449,856
	67,449	STEC, Inc.*		542,290
	64,031	Stratos International, Inc.*		514,169
	59,522	SumTotal Systems, Inc.*		473,795
	84,204	SupportSoft, Inc.*		452,176
	22,356	SYNNEX Corp.*		437,060
	127,682	TeleCommunication Systems, Inc., Class A*		514,558
	24,540	Telvent GIT, S.A. (Spain)*		466,996
	17,467	Tessco Technologies, Inc.*		497,810
	37,830	Tollgrade Communications, Inc.*		452,069
	27,435	Ultra Clean Holdings, Inc.*		401,648
	25,584	Vignette Corp.*		473,816
				40,247,605
		Materials—4.3%
	20,173	A. Schulman, Inc.		467,207
	36,596	Buckeye Technologies, Inc.*		463,671
	31,470	Chesapeake Corp.		464,497
	77,369	ICO, Inc.*		512,956
	8,259	Innospec, Inc.		443,426
	33,511	Landec Corp.*		425,925
	39,729	Mercer International, Inc.*		487,078
	11,914	Northwest Pipe Co.*		425,926
	10,727	Novamerican Steel, Inc. (Canada)*		539,567
	15,331	Olympic Steel, Inc.		510,216
	77,843	PolyOne Corp.*		510,650
	70,344	Pope & Talbot, Inc.*		522,656

See Notes to Financial Statements.
61

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	19,129	Schweitzer-Mauduit International, Inc.	$	525,091
	18,084	Stepan Co.		517,926
	32,989	Tronox, Inc., Class A		466,135
	10,015	Universal Stainless & Alloy Products, Inc.*		446,068
	20,030	Wheeling-Pittsburgh Corp.*		483,524
				8,212,519
		Telecommunication Services—1.3%
	18,179	Atlantic Tele-Network, Inc.		458,838
	19,698	CT Communications, Inc.		480,828
	35,647	D&E Communications, Inc.		519,733
	57,576	Gilat Satellite Networks Ltd. (Israel)*		525,094
	43,573	InPhonic, Inc.*		415,686
				2,400,179
		Utilities—0.7%
	16,471	Central Vermont Public Service Corp.		530,366
	121,464	Star Gas Partners LP*		493,144
	103,475	U.S. Energy Systems, Inc.*		399,413
				1,422,923
		Total Common Stocks(Cost $178,446,306)		191,859,391
		Rights—0.0%
	91,636	Hayes Lemmerz International, Inc. - Rights* (Cost $0)		—
		Money Market Fund—0.1%
	257,574	Liquid Assets Portfolio Private Class** (Cost $257,574)		257,574
		Total Investments (Cost $178,703,880)—99.9%		192,116,965
		Other assets less liabilities—0.1%		193,225
		Net Assets—100.0%	$	192,310,190

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	182,377,235		94.8	%
Bermuda		2,485,970		1.3
Canada		1,606,841		0.8
British Virgin Islands		1,575,389		0.8
Marshall Islands		1,118,473		0.6
Singapore		891,084		0.5
Panama		558,843		0.3
Israel		525,094		0.3
Cayman Islands		511,040		0.3
Spain		466,996		0.2
Total investments		192,116,965		99.9
Other assets less liabilities		193,225		0.1
Net Assets	$	192,310,190		100.0	%

See Notes to Financial Statements.
62

Schedule of Investments

PowerShares Zacks Small Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.7%
		Consumer Discretionary—19.0%
	6,368	Ambassadors International, Inc.	$	260,579
	11,735	American Greetings Corp., Class A		298,656
	6,087	Arbitron, Inc.		299,967
	16,046	Arctic Cat, Inc.		285,619
	18,543	Audiovox Corp., Class A*		266,834
	42,765	Blockbuster, Inc., Class A*		265,143
	21,748	Bluegreen Corp.*		240,315
	15,485	Books-A-Million, Inc.		258,290
	7,786	Brown Shoe Co., Inc.		210,066
	8,485	Buckle (The), Inc.		302,236
	5,680	Buffalo Wild Wings, Inc.*		370,790
	9,510	Build-A-Bear-Workshop, Inc.*		262,000
	14,286	Centerplate, Inc.		255,148
	29,043	China Automotive Systems, Inc.*		218,113
	4,706	Chipotle Mexican Grill, Inc., Class A*		306,972
	4,466	Deckers Outdoor Corp.*		338,210
	27,359	dELiA*s, Inc.*		235,561
	53,102	Denny's Corp.*		249,048
	5,520	Dick's Sporting Goods, Inc.*		309,617
	12,893	Dress Barn (The), Inc.*		256,700
	7,109	DSW, Inc., Class A*		275,545
	15,316	FTD Group, Inc.		273,391
	22,936	Gaiam, Inc., Class A*		348,857
	42,215	Home Solutions of America, Inc.*		200,099
	15,410	iRobot Corp.*		244,248
	7,840	J. Crew Group, Inc.*		317,442
	11,222	Jo-Ann Stores, Inc.*		336,099
	11,665	Kimball International, Inc., Class B		209,970
	8,934	K-Swiss, Inc., Class A		258,014
	22,035	La-Z-Boy, Inc.		257,589
	10,395	LodgeNet Entertainment Corp.*		354,262
	21,599	Lodgian, Inc.*		298,498
	15,532	Martha Stewart Living Omnimedia, Inc., Class A		295,263
	36,599	Mediacom Communications Corp., Class A*		315,849
	10,716	Modine Manufacturing Co.		247,861
	27,631	Multimedia Games, Inc.*		309,467
	12,474	Netflix, Inc.*		276,549
	14,933	Noble International, Ltd.		243,259
	21,485	Outdoor Channel Holdings, Inc.*		221,295
	12,256	Riviera Holdings Corp.*		366,822
	23,715	Sinclair Broadcast Group, Inc., Class A		387,266
	8,823	Stage Stores, Inc.		194,547
	10,150	Standard-Pacific Corp.		211,627
	39,336	Stewart Enterprises, Inc., Class A		295,807
	29,856	Technical Olympic USA, Inc.		130,471
	14,237	Town Sports International Holdings, Inc.*		324,461
	12,014	Tupperware Brands Corp.		337,834
	9,945	Warnaco Group (The), Inc.*		281,245
	17,688	World Wrestling Entertainment, Inc., Class A		300,873
				13,604,374

Number of Shares			Value
		Common Stocks (Continued)
		Consumer Staples—3.6%
	6,936	Andersons (The), Inc.	$	322,177
	14,684	Elizabeth Arden, Inc.*		330,537
	4,855	Green Mountain Coffee Roasters, Inc.*		296,738
	8,896	Imperial Sugar Co.		264,745
	25,911	Pathmark Stores, Inc.*		326,997
	9,368	Sanderson Farms, Inc.		370,317
	28,978	Topps (The) Co., Inc.		287,172
	18,973	Wild Oats Markets, Inc.*		342,083
				2,540,766
		Energy—8.5%
	15,808	Allis-Chalmers Energy, Inc.*		305,885
	9,137	Bill Barrett Corp.*		337,155
	8,792	Copano Energy LLC		343,416
	7,571	Dril-Quip, Inc.*		382,336
	23,939	Exploration Co. of Delaware (The)*		248,247
	7,444	GMX Resources, Inc.*		249,374
	7,826	Goodrich Petroleum Corp.*		274,927
	7,799	Gulf Island Fabrication, Inc.		234,204
	7,914	GulfMark Offshore, Inc.*		379,081
	8,880	Markwest Energy Partners, LP		333,000
	15,253	Matrix Service Co.*		372,173
	7,866	Nordic American Tanker Shipping Ltd. (Bermuda)		302,998
	17,063	Pacific Ethanol, Inc.*		252,532
	14,442	Parallel Petroleum Corp.*		333,755
	3,884	Penn Virginia Corp.		310,914
	8,215	Teekay LNG Partners, LP (Marshall Islands)		316,688
	8,570	Trico Marine Services, Inc.*		331,745
	20,708	USEC, Inc.*		417,680
	6,948	Williams Partners LP		333,018
				6,059,128
		Financials—12.1%
	13,213	21st Century Insurance Group		274,963
	7,253	American Physicians Capital, Inc.*		286,784
	17,743	Amerisafe, Inc.*		357,167
	7,997	Argonaut Group, Inc.*		268,779
	21,446	Brookline Bancorp, Inc.		255,636
	13,788	CNA Surety Corp.*		284,584
	3,982	Downey Financial Corp.		266,595
	16,944	EZCORP, Inc., Class A*		256,702
	21,521	First Commonwealth Financial Corp.		239,529
	36,043	Friedman, Billings, Ramsey Group, Inc., Class A		200,039
	15,387	Knight Capital Group, Inc., Class A*		249,269
	22,307	MarketAxess Holdings, Inc.*		365,389
	14,263	MCG Capital Corp.		251,314
	7,954	MI Developments, Inc., Class A (Cananda)		308,615
	6,060	Navigators Group (The), Inc.*		309,605
	6,936	NYMAGIC, Inc.		284,029
	9,607	Ohio Casualty Corp.		303,965

See Notes to Financial Statements.
63

Schedule of Investments (Continued)

PowerShares Zacks Small Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	24,761	Partners Trust Financial Group, Inc.	$	274,352
	19,353	Phoenix (The) Cos., Inc.		288,360
	4,152	Piper Jaffray Cos., Inc.*		264,939
	5,851	Potlatch Corp.		253,875
	5,603	ProAssurance Corp.*		301,666
	8,043	Provident Bankshares Corp.		257,698
	5,042	RLI Corp.		280,789
	26,133	Sanders Morris Harris Group, Inc.		304,972
	15,527	SeaBright Insurance Holdings, Inc.*		288,336
	9,570	TierOne Corp.		232,455
	22,162	TradeStation Group, Inc.*		269,933
	12,106	United America Indemnity Ltd., Class A (Cayman Islands)*		302,408
	8,406	United Fire & Casualty Co.		308,920
	6,465	World Acceptance Corp.*		277,542
				8,669,209
		Health Care—16.3%
	6,309	Adams Respiratory Therapeutics, Inc.*		236,651
	18,642	Alkermes, Inc.*		306,288
	11,248	AMN Healthcare Services, Inc.*		273,889
	4,792	Analogic Corp.		293,750
	18,064	Applera Corp. - Celera Group*		252,896
	17,470	Aspect Medical Systems, Inc.*		268,339
	15,098	BioMarin Pharmaceuticals, Inc.*		243,984
	13,880	Bradley Pharmaceuticals, Inc.*		272,464
	6,029	CorVel Corp.*		163,928
	34,014	Cypress Bioscience, Inc.*		309,868
	26,156	Dendrite International, Inc.*		415,880
	28,167	Diversa Corp.*		204,774
	13,618	FoxHollow Technologies, Inc.*		303,545
	13,526	Given Imaging Ltd. (Israel)*		331,252
	14,511	HMS Holdings Corp.*		321,564
	7,264	Illumina, Inc.*		237,024
	7,960	inVentiv Health, Inc.*		302,082
	6,875	Inverness Medical Innovations, Inc.*		275,344
	27,123	Isis Pharmaceuticals, Inc.*		277,468
	12,200	Martek Biosciences Corp.*		263,398
	9,729	MedCath Corp.*		289,146
	9,308	Medicines (The) Co.*		212,036
	7,445	Medicis Pharmaceutical Corp., Class A		226,328
	14,289	MGI Pharma, Inc.*		314,644
	11,923	Micrus Endovascular Corp.*		265,048
	22,695	Nektar Therapeutics*		280,737
	8,310	Omrix Biopharmaceuticals, Inc.*		295,005
	34,201	OraSure Technologies, Inc.*		254,797
	31,656	Pain Therapeutics, Inc.*		245,967
	13,918	PharmaNet Development Group, Inc.*		379,822
	8,928	Pharmion Corp.*		270,429
	20,435	Quidel Corp.*		285,681
	19,038	Savient Pharmaceuticals, Inc.*		218,937
	14,632	Somanetics Corp.*		276,545

Number of Shares			Value
		Common Stocks (Continued)
	8,657	SonoSite, Inc.*	$	250,880
	21,700	Trimeris, Inc.*		166,439
	13,668	TriZetto Group (The), Inc.*		266,253
	27,233	Visicu, Inc.*		248,637
	14,234	Volcano Corp.*		287,242
	5,721	WebMD Health Corp., Class A*		297,492
	13,051	Wright Medical Group, Inc.*		308,265
	8,658	Zoll Medical Corp.*		209,264
	17,662	ZymoGenetics, Inc.*		264,224
				11,668,206
		Industrials—11.0%
	9,458	AAR CORP.*		288,847
	10,717	ABM Industries, Inc.		301,576
	8,939	Aircastle Ltd. (Bermuda)		298,563
	5,730	Alexander & Baldwin, Inc.		306,268
	7,497	A.O. Smith Corp.		285,636
	22,595	Casella Waste Systems, Inc., Class A*		210,134
	14,220	Central Parking Corp.		318,244
	17,584	Chart Industries, Inc.*		331,458
	8,231	CLARCOR, Inc.		259,606
	5,054	Copa Holdings SA, Class A (Panama)		307,688
	5,999	CoStar Group, Inc.*		292,811
	9,672	Fuel Tech. Inc.*		243,154
	18,808	GenCorp, Inc.*		250,523
	10,108	Genesee & Wyoming, Inc., Class A*		274,837
	14,686	Hexcel Corp.*		318,686
	12,169	Houston Wire & Cable Co*		358,742
	17,781	Hudson Highland Group, Inc.*		290,008
	8,102	Layne Christensen Co.*		306,823
	9,582	McGrath RentCorp		288,897
	12,227	PeopleSupport, Inc.*		153,693
	8,539	PW Eagle, Inc.		277,005
	9,132	Superior Essex, Inc.*		326,012
	10,366	TeleTech Holdings, Inc.*		391,109
	5,051	Triumph Group, Inc.		307,151
	7,409	Viad Corp.		302,584
	7,914	Volt Information Sciences, Inc.*		202,282
	4,996	Washington Group International, Inc.*		334,332
				7,826,669
		Information Technology—19.5%
	16,002	Actel Corp.*		234,269
	36,387	AsiaInfo Holdings, Inc.*		279,816
	21,460	Bottomline Technologies, Inc.*		266,533
	20,242	C-COR, Inc.*		249,381
	14,474	Cohu, Inc.		297,875
	13,315	Color Kinetics, Inc.*		269,629
	8,687	CommScope, Inc.*		405,249
	12,449	Covansys Corp.*		415,797
	7,984	Daktronics, Inc.		181,876
	8,303	Dolby Laboratories, Inc., Class A*		294,092
	37,354	Echelon Corp.*		483,734

See Notes to Financial Statements.
64

Schedule of Investments (Continued)

PowerShares Zacks Small Cap Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	21,653	Exar Corp.*	$	291,882
	11,337	FARO Technologies, Inc.*		362,557
	9,094	FLIR Systems, Inc.*		368,216
	20,108	Greenfield Online, Inc.*		328,967
	30,950	Harmonic, Inc.*		255,956
	12,694	Hutchinson Technology, Inc.*		241,186
	12,766	i2 Technologies, Inc.*		325,022
	12,079	InfoSpace, Inc.*		309,947
	13,556	Interactive Intelligence, Inc.*		198,867
	43,682	Intervoice, Inc.*		277,818
	13,113	Intevac, Inc.*		318,777
	4,892	Itron, Inc.*		329,427
	9,354	Knot (The), Inc.*		199,521
	29,297	Kulicke & Soffa Industries, Inc.*		292,384
	14,315	Liquidity Services, Inc.*		298,897
	23,297	Marchex, Inc., Class B		297,969
	14,972	Mentor Graphics Corp.*		242,247
	22,040	Mercury Computer Systems, Inc.*		299,083
	57,431	Microtune, Inc.*		247,528
	15,605	NetRatings, Inc.*		324,740
	34,162	NetScout Systems, Inc.*		281,153
	24,649	Nuance Communications, Inc.*		379,841
	21,749	OPNET Technologies, Inc.*		244,676
	16,545	PC Connection, Inc.*		212,272
	16,773	Photronics, Inc.*		252,434
	28,767	SeaChange International, Inc.*		247,396
	25,281	Semitool, Inc.*		262,417
	7,925	SINA Corp. (Cayman Islands)*		273,254
	20,481	Smith Micro Software, Inc.*		325,443
	43,358	SupportSoft, Inc.*		232,833
	7,625	Tech Data Corp.*		270,993
	16,098	Techwell, Inc.*		229,718
	18,444	Tekelec*		264,487
	20,688	Tyler Technologies, Inc.*		247,222
	6,492	VistaPrint Ltd. (Bermuda)*		242,671
	19,687	WebSide Story, Inc.*		219,707
	13,500	Xyratex Ltd. (Bermuda)*		302,130
	18,260	Zygo Corp.*		292,343
				13,970,232
		Materials—6.0%
	16,200	Chesapeake Corp.		239,112
	9,053	Compass Minerals International, Inc.		310,880
	12,450	Headwaters, Inc.*		269,792
	5,420	Innospec, Inc.		291,000
	11,077	Koppers Holdings, Inc.		320,568
	23,111	Landec Corp.*		293,741
	23,053	Mercer International, Inc.*		282,630
	6,746	Metal Management, Inc.		324,280
	5,060	NewMarket Corp.		238,478
	17,095	Olin Corp.		293,008
	8,566	Rock-Tenn Co., Class A		327,735

Number of Shares			Value
		Common Stocks (Continued)
	14,551	Symyx Technologies, Inc.*	$	167,482
	20,374	Terra Industries, Inc.*		359,397
	3,830	Texas Industries, Inc.		291,731
	11,645	Wheeling-Pittsburgh Corp.*		281,110
				4,290,944
		Telecommunication Services—1.6%
	17,578	Alaska Communications Systems Group, Inc.		279,490
	9,452	Atlantic Tele-Network, Inc.		238,569
	9,766	Cbeyond, Inc.*		339,661
	28,937	Dobson Communications Corp., Class A*		263,616
				1,121,336
		Utilities—2.1%
	11,148	Avista Corp.		262,981
	11,564	El Paso Electric Co.*		305,290
	6,208	Nicor, Inc.		318,098
	7,204	Southwest Gas, Corp.		272,960
	7,323	Suburban Propane Partners, L.P.		358,827
				1,518,156
		Total Common Stocks (Cost $68,935,496)		71,269,020
		Money Market Fund—0.0%
	24,193	Liquid Assets Portfolio Private Class** (Cost $24,193)		24,193
		Total Investments (Cost $68,959,689)—99.7%		71,293,213
		Other assets less liabilities—0.3%		236,726
		Net Assets—100.0%	$	71,529,939

*  Non-income producing security.

**  Affiliated Investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	68,306,946		95.5	%
Bermuda		1,146,362		1.6
Cayman Islands		575,662		0.8
Israel		331,252		0.5
Marshall Islands		316,688		0.5
Canada		308,615		0.4
Panama		307,688		0.4
Total investments		71,293,213		99.7
Other assets less liabilities		236,726		0.3
Net Assets	$	71,529,939		100.0	%

See Notes to Financial Statements.
65

Statements of Assets and Liabilities

April 30, 2007

	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 Large Cap Portfolio
ASSETS:
Unaffiliated investment at value	$	277,707,840		$	291,988,288		$	189,550,403		$	108,658,796		$	61,384,120		$	117,685,364		$	10,848,238
Affiliated investment at value		157,501			—			—			191,310			—			—			43,653
Cash		—			48,490			364,941			545,223			13,982			6,008			—
Receivables:
Dividends		39,066			309,188			5,953			42,029			8,296			78,031			7,355
Due from Adviser		25,724			61,118			16,751			15,604			11,838			16,653			5,873
Capital stock sold		—			—			2,153,820			—			—			1,912,120			—
Investments sold		—			—			—			—			—			—			—
Other assets		8,167			8,167			8,168			8,167			8,167			8,168			10,496
Total Assets		277,938,298			292,415,251			192,100,036			109,461,129			61,426,403			119,706,344			10,915,615
LIABILITIES:
Due to custodian		123,652			—			—			—			—			—			64,555
Payables:
Investments purchased		—			—			2,155,704			—			—			1,911,480			—
Accrued advisory fees		111,880			121,447			73,306			43,469			25,189			46,606			5,078
Accrued expenses		105,217			163,906			76,967			61,331			54,483			68,396			47,505
Total Liabilities		340,749			285,353			2,305,977			104,800			79,672			2,026,482			117,138
NET ASSETS	$	277,597,549		$	292,129,898		$	189,794,059		$	109,356,329		$	61,346,731		$	117,679,862		$	10,798,477
NET ASSETS CONSIST OF:
Paid-in capital	$	270,900,675		$	271,074,705		$	182,763,778		$	102,757,546		$	73,181,268		$	119,987,051		$	10,161,099
Undistributed net investment income		—			1,248,210			—			298,057			—			25,537			18,586
Accumulated net realized (loss) on investments		(13,829,057	)		(1,729,259	)		(11,084,493	)		(3,723,275	)		(16,490,906	)		(7,431,615	)		(17,445	)
Net unrealized appreciation on investments		20,525,931			21,536,242			18,114,774			10,024,001			4,656,369			5,098,889			636,237
Net Assets	$	277,597,549		$	292,129,898		$	189,794,059		$	109,356,329		$	61,346,731		$	117,679,862		$	10,798,477
Shares outstanding (unlimited amount authorized, $0.01 par value)		15,900,000			14,100,000			9,000,000			5,400,000			3,300,000			6,300,000			400,000
Net asset value	$	17.46		$	20.72		$	21.09		$	20.25		$	18.59		$	18.68		$	27.00
Unaffiliated investments at cost	$	257,181,909		$	270,452,046		$	171,435,629		$	98,634,795		$	56,727,751		$	112,586,475		$	10,212,001
Affiliated investments at cost	$	157,501			—			—			191,310			—			—			43,653

See Notes to Financial Statements.
66

	PowerShares Dynamic Mid Cap Portfolio			PowerShares Dynamic Small Cap Portfolio			PowerShares Dynamic Aggressive Growth Portfolio			PowerShares Dynamic Deep Value Portfolio			PowerShares Zacks Micro Cap Portfolio			PowerShares Zacks Small Cap Portfolio
ASSETS:
Unaffiliated investment at value	$	11,226,868		$	8,032,453		$	10,595,163		$	15,867,578		$	191,859,391		$	71,269,020
Affiliated investment at value		48,241			29,042			12,057			111,523			257,574			24,193
Cash		—			—			—			—			—			294,882
Receivables:
Dividends		2,895			4,032			1,094			9,764			77,509			18,189
Due from Adviser		5,972			8,195			7,530			7,251			19,966			16,405
Capital stock sold		—			—			—			—			—			—
Investments sold		—			—			—			—			457,769			—
Other assets		11,106			10,494			8,245			9,781			7,152			—
Total Assets		11,295,082			8,084,216			10,624,089			16,005,897			192,679,361			71,622,689
LIABILITIES:
Due to custodian		52,922			27,951			20,859			166,237			188,657			—
Payables:
Investments purchased		—			—			—			—			—			—
Accrued advisory fees		4,558			4,096			4,337			6,430			79,376			29,523
Accrued expenses		47,184			47,033			47,187			47,612			101,138			63,227
Total Liabilities		104,664			79,080			72,383			220,279			369,171			92,750
NET ASSETS	$	11,190,418		$	8,005,136		$	10,551,706		$	15,785,618		$	192,310,190		$	71,529,939
NET ASSETS CONSIST OF:
Paid-in capital	$	10,483,821		$	8,137,235		$	10,121,826		$	15,234,712		$	200,743,714		$	75,969,670
Undistributed net investment income		16,473			193			—			88,918			257,890			—
Accumulated net realized (loss) on investments		(77,148	)		(420,785	)		(201,896	)		(52,826	)		(22,104,499	)		(6,773,255	)
Net unrealized appreciation on investments		767,272			288,493			631,776			514,814			13,413,085			2,333,524
Net Assets	$	11,190,418		$	8,005,136		$	10,551,706		$	15,785,618		$	192,310,190		$	71,529,939
Shares outstanding (unlimited amount authorized, $0.01 par value)		400,000			300,000			400,000			600,000			10,500,000			2,600,000
Net asset value	$	27.98		$	26.68		$	26.38		$	26.31		$	18.32		$	27.51
Unaffiliated investments at cost	$	10,459,596		$	7,743,960		$	9,963,387		$	15,352,764		$	178,446,306		$	68,935,496
Affiliated investments at cost		48,241			29,042			12,057			111,523			257,574			24,193

67

Statements of Operations

	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 Large Cap Portfolio
	Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			For the period December 01, 2006* through April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	1,444,978		$	6,705,962		$	543,334		$	1,577,593		$	209,802		$	1,064,678		$	109,030
Affiliated dividend income		4,208			16,144			18,787			9,109			75			6,982			486
Foreign withholding taxes		—			—			—			—			—			(243	)		—
Total Income		1,449,186			6,722,106			562,121			1,586,702			209,877			1,071,417			109,516
EXPENSES:
Advisory fees		959,057			1,274,562			582,772			349,618			332,868			392,569			30,709
Printing		89,660			148,642			52,076			30,392			31,940			35,405			3,262
Administration fees		59,999			60,051			59,999			59,999			59,999			59,999			921
Licensing		57,543			76,474			34,966			20,977			19,972			23,554			3,071
Accounting		54,999			54,998			54,998			54,998			54,998			54,998			614
Audit		16,500			16,500			16,500			16,500			16,500			16,500			16,500
Custodian & transfer agent fees		15,582			19,185			13,230			11,201			13,681			13,711			1,508
Listing fee and expenses		10,348			10,209			10,238			10,132			10,282			10,154			10,001
Legal		9,162			11,302			5,881			3,515			4,829			3,880			5,000
Trustees		7,492			11,884			4,542			2,648			2,428			3,097			317
Registration & filings		5,644			8,121			3,472			1,961			—			2,137			425
Offering costs		—			—			—			—			—			—			4,526
Other expenses		14,127			18,366			13,335			11,722			14,931			14,181			12,419
Total Expenses		1,300,113			1,710,294			852,009			573,663			562,428			630,185			89,273
Less fees waived:
Advisory		(91,092	)		(97,962	)		(116,666	)		(132,535	)		(142,404	)		(134,256	)		(30,709	)
Other fees assumed by the Adviser		—			—			—			—			—			—			(13,397	)
Net Expenses		1,209,021			1,612,332			735,343			441,128			420,024			495,929			45,167
Net Investment Income (Loss)		240,165			5,109,774			(173,222	)		1,145,574			(210,147	)		575,488			64,349
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(11,183,241	)		(1,507,094	)		(10,112,923	)		(3,017,108	)		(13,877,331	)		(5,655,420	)		(17,445	)
In-kind redemptions		10,897,165			26,157,333			12,789,122			7,709,436			10,521,127			12,251,981			282,942
Net realized gain (loss)		(286,076	)		24,650,239			2,676,199			4,692,328			(3,356,204	)		6,596,561			265,497
Net change in unrealized appreciation/ depreciation on investments		16,420,488			16,864,450			13,821,191			7,757,823			(1,366,638	)		1,084,508			636,237
Net realized and unrealized gain (loss) on investments		16,134,412			41,514,689			16,497,390			12,450,151			(4,722,842	)		7,681,069			901,734
Net increase (decrease) in net assets resulting from operations	$	16,374,577		$	46,624,463		$	16,324,168		$	13,595,725		$	(4,932,989	)	$	8,256,557		$	966,083

*  Commencement of Investment Operations.

See Notes to Financial Statements.
68

	PowerShares Dynamic Mid Cap Portfolio			PowerShares Dynamic Small Cap Portfolio			PowerShares Dynamic Aggressive Growth Portfolio			PowerShares Dynamic Deep Value Portfolio			PowerShares Zacks Micro Cap Portfolio			PowerShares Zacks Small Cap Portfolio
	For the period December 01, 2006* through April 30, 2007			For the period December 01, 2006* through April 30, 2007			For the period December 20, 2006* through April 30, 2007			For the period December 20, 2006* through April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	91,261		$	44,510		$	10,755		$	171,897		$	1,712,452		$	571,618
Affiliated dividend income		402			310			130			811			3,772			1,325
Foreign withholding taxes		—			(23	)		—			—			(1,433	)		(477	)
Total Income		91,663			44,797			10,885			172,708			1,714,791			572,466
EXPENSES:
Advisory fees		27,683			28,828			22,379			27,514			806,124			315,967
Printing		3,346			3,268			3,226			3,194			74,850			34,860
Administration fees		830			865			671			825			59,999			44,939
Licensing		2,768			2,883			2,238			2,752			161,225			63,193
Accounting		554			576			448			550			54,998			40,520
Audit		16,500			16,500			16,500			16,500			16,500			16,500
Custodian & transfer agent fees		1,477			3,670			1,424			1,475			26,465			7,924
Listing fee and expenses		10,001			10,001			10,000			10,000			10,373			10,140
Legal		5,000			5,000			5,000			5,000			6,398			2,369
Trustees		297			317			261			310			6,441			2,486
Registration & filings		422			426			417			420			3,929			2,456
Offering costs		4,558			4,526			3,855			3,928			7,803			6,773
Other expenses		12,234			12,333			12,235			12,884			22,655			15,149
Total Expenses		85,670			89,193			78,654			85,352			1,257,760			563,276
Less fees waived:
Advisory		(27,683	)		(28,828	)		(22,379	)		(27,514	)		(120,775	)		(112,053	)
Other fees assumed by the Adviser		(16,907	)		(17,728	)		(22,792	)		(16,959	)		—			—
Net Expenses		41,080			42,637			33,483			40,879			1,136,985			451,223
Net Investment Income (Loss)		50,583			2,160			(22,598	)		131,829			577,806			121,243
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(77,148	)		(421,666	)		(201,896	)		(52,826	)		(17,555,594	)		(6,727,499	)
In-kind redemptions		671,650			775,063			407,050			286,927			23,844,722			8,342,942
Net realized gain (loss)		594,502			353,397			205,154			234,101			6,289,128			1,615,443
Net change in unrealized appreciation/ depreciation on investments		767,272			288,493			631,776			514,814			1,294,918			(234,214	)
Net realized and unrealized gain (loss) on investments		1,361,774			641,890			836,930			748,915			7,584,046			1,381,229
Net increase (decrease) in net assets resulting from operations	$	1,412,357		$	644,050		$	814,332		$	880,744		$	8,161,852		$	1,502,472

69

Statements of Changes in Net Assets

	PowerShares Dynamic Large Cap Growth Portfolio						PowerShares Dynamic Large Cap Value Portfolio						PowerShares Dynamic Mid Cap Growth Portfolio
	For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2007			For the year ended April 30, 2006
OPERATIONS:
Net investment income (loss)	$	240,165		$	(25,037	)	$	5,109,774		$	706,423		$	(173,222	)	$	711,633
Net realized gain (loss) on investments		(286,076	)		1,512,408			24,650,239			1,817,524			2,676,199			4,852,586
Net change in unrealized appreciation/depreciation of investments		16,420,488			4,485,766			16,864,450			4,964,860			13,821,191			4,866,054
Net increase (decrease) in net assets resulting from operations		16,374,577			5,973,137			46,624,463			7,488,807			16,324,168			10,430,273
Undistributed net investment income (loss) included in the price of units issued and redeemed		32,897			—			339,753			—			117,894			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(240,165	)		(12,532	)		(3,984,387	)		(613,947	)		(711,633	)		—
Tax return of capital		(3,527	)		—			—			—			(9,929	)		—
Total distributions to shareholders		(243,692	)		(12,532	)		(3,984,387	)		(613,947	)		(721,562	)		—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		289,938,897			170,931,671			482,570,049			98,229,981			199,694,174			147,620,675
Value of shares repurchased		(177,221,894	)		(36,609,670	)		(323,612,201	)		(24,738,806	)		(128,827,369	)		(63,075,340	)
Net income equalization		(32,897	)		—			(339,753	)		—			(117,894	)		—
Net increase (decrease) in net assets resulting from share transactions		112,684,106			134,322,001			158,618,095			73,491,175			70,748,911			84,545,335
Increase (Decrease) in Net Assets		128,847,888			140,282,606			201,597,924			80,366,035			86,469,411			94,975,608
NET ASSETS:
Beginning of period		148,749,661			8,467,055			90,531,974			10,165,939			103,324,648			8,349,040
End of period	$	277,597,549		$	148,749,661		$	292,129,898		$	90,531,974		$	189,794,059		$	103,324,648
Undistributed net investment income	$	—		$	—		$	1,248,210		$	117,050		$	—		$	711,633
CHANGES IN SHARES OUTSTANDING:
Shares sold		17,800,000			10,800,000			25,900,000			6,000,000			10,400,000			8,500,000
Shares repurchased		(11,000,000	)		(2,300,000	)		(17,000,000	)		(1,500,000	)		(6,900,000	)		(3,600,000	)
Shares outstanding, beginning of period		9,100,000			600,000			5,200,000			700,000			5,500,000			600,000
Shares outstanding, end of period		15,900,000			9,100,000			14,100,000			5,200,000			9,000,000			5,500,000

* Commencement of Investment Operations.

See Notes to Financial Statements.
70

	PowerShares Dynamic Mid Cap Value Portfolio						PowerShares Dynamic Small Cap Growth Portfolio						PowerShares Dynamic Small Cap Value Portfolio
	For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2007			For the year ended April 30, 2006
OPERATIONS:
Net investment income (loss)	$	1,145,574		$	350,133		$	(210,147	)	$	298,325		$	575,488		$	229,170
Net realized gain (loss) on investments		4,692,328			1,294,587			(3,356,204	)		4,333,954			6,596,561			923,701
Net change in unrealized appreciation/depreciation of investments		7,757,823			2,697,692			(1,366,638	)		6,844,625			1,084,508			4,894,679
Net increase (decrease) in net assets resulting from operations		13,595,725			4,342,412			(4,932,989	)		11,476,904			8,256,557			6,047,550
Undistributed net investment income (loss) included in the price of units issued and redeemed		54,435			—			(92,734	)		—			48,335			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(891,950	)		(398,693	)		—			—			(591,897	)		(190,946	)
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(891,950	)		(398,693	)		—			—			(591,897	)		(190,946	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		136,706,085			60,676,498			98,612,408			161,744,388			136,778,591			74,827,926
Value of shares repurchased		(96,868,606	)		(17,930,961	)		(150,797,541	)		(64,483,667	)		(93,102,785	)		(23,996,062	)
Net income equalization		(54,435	)		—			92,734			—			(48,335	)		—
Net increase (decrease) in net assets resulting from share transactions		39,783,044			42,745,537			(52,092,399	)		97,260,721			43,627,471			50,831,864
Increase (Decrease) in Net Assets		52,541,254			46,689,256			(57,118,122	)		108,737,625			51,340,466			56,688,468
NET ASSETS:
Beginning of period		56,815,075			10,125,819			118,464,853			9,727,228			66,339,396			9,650,928
End of period	$	109,356,329		$	56,815,075		$	61,346,731		$	118,464,853		$	117,679,862		$	66,339,396
Undistributed net investment income	$	298,057		$	44,433		$	—		$	—		$	25,537		$	45,098
CHANGES IN SHARES OUTSTANDING:
Shares sold		7,500,000			3,700,000			5,700,000			9,400,000			7,800,000			4,700,000
Shares repurchased		(5,400,000	)		(1,100,000	)		(8,800,000	)		(3,700,000	)		(5,400,000	)		(1,500,000	)
Shares outstanding, beginning of period		3,300,000			700,000			6,400,000			700,000			3,900,000			700,000
Shares outstanding, end of period		5,400,000			3,300,000			3,300,000			6,400,000			6,300,000			3,900,000

71

Statements of Changes in Net Assets (Continued)

	PowerShares Dynamic Large Cap Portfolio			PowerShares Dynamic Mid Cap Portfolio			PowerShares Dynamic Small Cap Portfolio			PowerShares Dynamic Aggressive Growth Portfolio			PowerShares Dynamic Deep Value Portfolio
	For the period December 01, 2006* through April 30, 2007			For the period December 01, 2006* through April 30, 2007			For the period December 01, 2006* through April 30, 2007			For the period December 20, 2006* through April 30, 2007			For the period December 20, 2006* through April 30, 2007
OPERATIONS:
Net investment income (loss)	$	64,349		$	50,583		$	2,160		$	(22,598	)	$	131,829
Net realized gain (loss) on investments		265,497			594,502			353,397			205,154			234,101
Net change in unrealized appreciation/depreciation of investments		636,237			767,272			288,493			631,776			514,814
Net increase in net assets resulting from operations		966,083			1,412,357			644,050			814,332			880,744
Undistributed net investment income (loss) included in the price of units issued and redeemed		(6,528	)		(1,941	)		(1,680	)		3,814			1,491
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(45,948	)		(34,110	)		(1,164	)		—			(43,560	)
Tax return of capital		—			—			—			—			—
Total distributions to shareholders		(45,948	)		(34,110	)		(1,164	)		—			(43,560	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		20,205,371			23,082,797			20,297,119			19,881,714			19,997,872
Value of shares repurchased		(10,327,029	)		(13,270,626	)		(12,934,869	)		(10,144,340	)		(5,049,438	)
Net income equalization		6,528			1,941			1,680			(3,814	)		(1,491	)
Net increase in net assets resulting from share transactions		9,884,870			9,814,112			7,363,930			9,733,560			14,946,943
Increase in Net Assets		10,798,477			11,190,418			8,005,136			10,551,706			15,785,618
NET ASSETS:
Beginning of period		—			—			—			—			—
End of period	$	10,798,477		$	11,190,418		$	8,005,136		$	10,551,706		$	15,785,618
Undistributed net investment income	$	18,586		$	16,473		$	193		$	—		$	88,918
CHANGES IN SHARES OUTSTANDING:
Shares sold		800,000			900,000			800,000			800,000			800,000
Shares repurchased		(400,000	)		(500,000	)		(500,000	)		(400,000	)		(200,000	)
Shares outstanding, beginning of period		—			—			—			—			—
Shares outstanding, end of period		400,000			400,000			300,000			400,000			600,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
72

	PowerShares Zacks Micro Cap Portfolio						PowerShares Zacks Small Cap Portfolio
	For the year ended April 30, 2007			For the period August 18, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period February 16, 2006* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	577,806		$	5,125		$	121,243		$	26,152
Net realized gain (loss) on investments		6,289,128			5,059,182			1,615,443			(74,085	)
Net change in unrealized appreciation/depreciation of investments		1,294,918			12,118,167			(234,214	)		2,567,738
Net increase in net assets resulting from operations		8,161,852			17,182,474			1,502,472			2,519,805
Undistributed net investment income (loss) included in the price of units issued and redeemed		53,014			—			7,230			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(206,496	)		(50,928	)		(126,531	)		—
Tax return of capital		—			(17,888	)		(10,819	)		—
Total distributions to shareholders		(206,496	)		(68,816	)		(137,350	)		—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		139,710,391			188,141,968			82,223,254			56,346,347
Value of shares repurchased		(114,331,138	)		(46,280,045	)		(70,924,589	)		—
Net income equalization		(53,014	)		—			(7,230	)		—
Net increase in net assets resulting from share transactions		25,326,239			141,861,923			11,291,435			56,346,347
Increase in Net Assets		33,334,609			158,975,581			12,663,787			58,866,152
NET ASSETS:
Beginning of period		158,975,581			—			58,866,152			—
End of period	$	192,310,190		$	158,975,581		$	71,529,939		$	58,866,152
Undistributed net investment income	$	257,890		$	—		$	—		$	26,152
CHANGES IN SHARES OUTSTANDING:
Shares sold		8,100,000			12,000,000			3,100,000			2,200,000
Shares repurchased		(6,700,000	)		(2,900,000	)		(2,700,000	)		—
Shares outstanding, beginning of period		9,100,000			—			2,200,000			—
Shares outstanding, end of period		10,500,000			9,100,000			2,600,000			2,200,000

73

Financial Highlights

PowerShares Dynamic Large Cap Growth Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.35		$	14.11		$	14.83
Net investment income (loss)**		0.02			(0.01	)		—	(a)
Net realized and unrealized gain (loss) on investments		1.11			2.25			(0.72	)
Total from operations		1.13			2.24			(0.72	)
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—			—
Distributions to shareholders from:
Net investment income		(0.02	)		—	(a)		—
Tax return of capital		—	(a)		—			—
Total distributions		(0.02	)		—			—
Net asset value at end of period	$	17.46		$	16.35		$	14.11
TOTAL RETURN***		6.92	%		15.89	%		(4.87	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	277,598		$	148,750		$	8,467
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.64	%		0.63	%†
Expenses, prior to waivers		0.68	%†††		0.80	%		2.45	%†
Net investment income (loss), net of waivers		0.13	%		(0.04	)%		0.13	%†
Portfolio turnover rate ††		57	%		73	%		2	%

PowerShares Dynamic Large Cap Value Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.41		$	14.52		$	15.00
Net investment income**		0.39			0.28			0.05
Net realized and unrealized gain (loss) on investments		3.18			2.85			(0.52	)
Total from operations		3.57			3.13			(0.47	)
Undistributed net investment income included in price of units issued and redeemed**		0.03			—			—
Distributions to shareholders from:
Net investment income		(0.29	)		(0.24	)		(0.01	)
Net asset value at end of period	$	20.72		$	17.41		$	14.52
TOTAL RETURN***		20.85	%		21.71	%		(3.11	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	292,130		$	90,532		$	10,166
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.65	%		0.63	%†
Expenses, prior to waivers		0.67	%†††		0.94	%		2.16	%†
Net investment income, net of waivers		2.00	%		1.75	%		1.99	%†
Portfolio turnover rate ††		16	%		29	%		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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% and 0.02%, for the Large Cap Growth and Large Cap Value Portfolios, respectively, for the year ended April 30, 2007.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
74

Financial Highlights (Continued)

PowerShares Dynamic Mid Cap Growth Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.79		$	13.92		$	15.01
Net investment income (loss)**		(0.03	)		0.28			(0.01	)
Net realized and unrealized gain (loss) on investments		2.42			4.59			(1.08	)
Total from operations		2.39			4.87			(1.09	)
Undistributed net investment income included in price of units issued and redeemed**		0.02			—			—
Distributions to shareholders from:
Net investment income		(0.11	)		—			—
Tax return of capital		—	(a)		—			—
Total distributions		(0.11	)		—			—
Net asset value at end of period	$	21.09		$	18.79		$	13.92
TOTAL RETURN***		12.91	%		34.99	%		(7.30	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	189,794		$	103,325		$	8,349
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.65	%		0.63	%†
Expenses, prior to waivers		0.73	%†††		0.90	%		2.45	%†
Net investment income (loss), net of waivers		(0.15	)%		1.56	%		(0.20	)%†
Portfolio turnover rate ††		69	%		86	%		1	%

PowerShares Dynamic Mid Cap Value Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.22		$	14.47		$	15.10
Net investment income**		0.29			0.22			0.15
Net realized and unrealized gain (loss) on investments		2.96			2.78			(0.76	)
Total from operations		3.25			3.00			(0.61	)
Undistributed net investment income included in price of units issued and redeemed**		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.23	)		(0.25	)		(0.02	)
Net asset value at end of period	$	20.25		$	17.22		$	14.47
TOTAL RETURN***		19.14	%		20.85	%		(4.07	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	109,356		$	56,815		$	10,126
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.67	%		0.63	%†
Expenses, prior to waivers		0.82	%		1.13	%		2.14	%†
Net investment income, net of waivers		1.64	%		1.33	%		6.34	%†
Portfolio turnover rate ††		43	%		117	%		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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the year ended April 30, 2007.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
75

Financial Highlights (Continued)

PowerShares Dynamic Small Cap Growth Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.51		$	13.90		$	15.11
Net investment income (loss)**		(0.05	)		0.11			(0.01	)
Net realized and unrealized gain (loss) on investments		0.15			4.50			(1.20	)
Total from operations		0.10			4.61			(1.21	)
Undistributed net investment loss included in price of units issued and redeemed**		(0.02	)		—			—
Net asset value at end of period	$	18.59		$	18.51		$	13.90
TOTAL RETURN***		0.43	%		33.17	%		(8.02	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	61,347		$	118,465		$	9,727
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.65	%		0.63	%†
Expenses, prior to waivers		0.84	%		0.90	%		2.34	%†
Net investment loss, net of waivers		(0.32	)%		0.65	%		(0.48	)%†
Portfolio turnover rate ††		114	%		120	%		0	%

PowerShares Dynamic Small Cap Value Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.01		$	13.79		$	15.06
Net investment income**		0.13			0.11			0.01
Net realized and unrealized gain (loss) on investments		1.66			3.22			(1.28	)
Total from operations		1.79			3.33			(1.27	)
Undistributed net investment income included in price of units issued and redeemed**		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.13	)		(0.11	)		—
Net asset value at end of period	$	18.68		$	17.01		$	13.79
TOTAL RETURN***		10.64	%		24.20	%		(8.46	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	117,680		$	66,339		$	9,651
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.66	%		0.63	%†
Expenses, prior to waivers		0.80	%		1.06	%		2.36	%†
Net investment income, net of waivers		0.73	%		0.73	%		0.45	%†
Portfolio turnover rate ††		76	%		118	%		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.
76

Financial Highlights (Continued)

PowerShares Dynamic Large Cap Portfolio

	For the period December 01, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.18
Net investment income**		0.12
Net realized and unrealized gain on investments		1.79
Total from operations		1.91
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)
Distributions to shareholders from:
Net investment income		(0.08	)
Net asset value at end of period	$	27.00
TOTAL RETURN***		7.55	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	10,798
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†
Expenses, prior to waivers		1.45	%†
Net investment income, net of waivers		1.05	%†
Portfolio turnover rate ††		3	%

PowerShares Dynamic Mid Cap Portfolio

	For the period December 01, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.26
Net investment income**		0.10
Net realized and unrealized gain on investments		2.68
Total from operations		2.78
Undistributed net investment loss included in price of units issued and redeemed**		—	(a)
Distributions to shareholders from:
Net investment income		(0.06	)
Net asset value at end of period	$	27.98
TOTAL RETURN***		11.04	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	11,190
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†
Expenses, prior to waivers		1.55	%†
Net investment income, net of waivers		0.91	%†
Portfolio turnover rate ††		7	%

*  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 $0.005.

See Notes to Financial Statements.
77

Financial Highlights (Continued)

PowerShares Dynamic Small Cap Portfolio

	For the period December 01, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.17
Net investment income**		—	(a)
Net realized and unrealized gain on investments		1.51
Total from operations		1.51
Undistributed net investment loss included in price of units issued and redeemed**		—	(a)
Distributions to shareholders from:
Net investment income		—	(a)
Net asset value at end of period	$	26.68
TOTAL RETURN***		6.01	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	8,005
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†
Expenses, prior to waivers		1.55	%†
Net investment income, net of waivers		0.04	%†
Portfolio turnover rate ††		52	%

PowerShares Dynamic Aggressive Growth Portfolio

	For the period December 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	24.86
Net investment loss**		(0.05	)
Net realized and unrealized gain on investments		1.56
Total from operations		1.51
Undistributed net investment income included in price of units issued and redeemed**		0.01
Net asset value at end of period	$	26.38
TOTAL RETURN***		6.11	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	10,552
Ratio to average net assets of:
Expenses, net of waivers		0.75	%†
Expenses, prior to waivers		1.76	%†
Net investment loss, net of waivers		(0.50	)%†
Portfolio turnover rate ††		11	%

*  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 $0.005.

See Notes to Financial Statements.
78

Financial Highlights (Continued)

PowerShares Dynamic Deep Value Portfolio

	For the period December 20, 2006* through April 30, 2007
Net asset value at beginning of period	$	24.99
Net investment income**		0.22
Net realized and unrealized gain on investments		1.17
Total from operations		1.39
Undistributed net investment income included in price of units issued and redeemed**		—	(a)
Distributions to shareholders from:
Net investment income		(0.07	)
Net asset value at end of period	$	26.31
TOTAL RETURN***		5.59	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	15,786
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†
Expenses, prior to waivers		1.55	%†
Net investment income, net of waivers		2.40	%†
Portfolio turnover rate ††		7	%

PowerShares Zacks Micro Cap Portfolio

	For the year ended April 30, 2007			For the period August 18, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.47		$	14.79
Net investment income**		0.06			—	(a)
Net realized and unrealized gain on investments		0.80			2.69
Total from operations		0.86			2.69
Undistributed net investment income included in price of units issued and redeemed**		0.01			—
Distributions to shareholders from:
Net investment income		(0.02	)		(0.01	)
Tax return of capital		—			—	(a)
Total distributions		(0.02	)		(0.01	)
Net asset value at end of period	$	18.32		$	17.47
TOTAL RETURN***		4.99	%		18.20	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	192,310		$	158,976
Ratio to average net assets of:
Expenses, net of waivers		0.71	%		0.72	%†
Expenses, prior to waivers		0.78	%		0.82	%†
Net investment income, net of waivers		0.36	%		0.01	%†
Portfolio turnover rate ††		72	%		78	%

*  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 $0.005.

See Notes to Financial Statements.
79

Financial Highlights (Continued)

PowerShares Zacks Small Cap Portfolio

	For the year ended April 30, 2007			For the period February 16, 2006* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	26.76		$	25.41
Net investment income**		0.05			0.02
Net realized and unrealized gain on investments		0.76			1.33
Total from operations		0.81			1.35
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—
Distributions to shareholders from:
Net investment income		(0.06	)		—
Tax return of capital		—	(a)		—
Total distributions		(0.06	)		—
Net asset value at end of period	$	27.51		$	26.76
TOTAL RETURN***		3.03	%		5.31	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	71,530		$	58,866
Ratio to average net assets of:
Expenses, net of waivers		0.71	%		0.75	%†
Expenses, prior to waivers		0.89	%†††		1.17	%†
Net investment income, net of waivers		0.19	%		0.30	%†
Portfolio turnover rate ††		87	%		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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the year ended April 30, 2007.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
80

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

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 Large Cap Portfolio	"Dynamic Large Cap Portfolio"
PowerShares Dynamic Mid Cap Portfolio	"Dynamic Mid Cap Portfolio"
PowerShares Dynamic Small Cap Portfolio	"Dynamic Small Cap Portfolio"
PowerShares Dynamic Aggressive Growth Portfolio	"Dynamic Aggressive Growth Portfolio"
PowerShares Dynamic Deep Value Portfolio	"Dynamic Deep Value Portfolio"
PowerShares Zacks Micro Cap Portfolio	"Zacks Micro Cap Portfolio"
PowerShares Zacks Small Cap Portfolio	"Zacks Small Cap Portfolio"

Dynamic Large Cap Portfolio, Dynamic Mid Cap Portfolio and Dynamic Small Cap Portfolio commenced investment operations on December 1, 2006. Dynamic Aggressive Growth Portfolio and Dynamic Deep Value Portfolio commenced investment operations on December 20, 2006. Each portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on the American Stock Exchange. The Funds' market prices may differ to some degree from the 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, each 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 objec tive of each Fund is to seek investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of the following equity indices:

Fund	Index
Dynamic Large Cap Growth Portfolio	Dynamic Large Cap Growth IntellidexSM Index
Dynamic Large Cap Value Portfolio	Dynamic Large Cap Value IntellidexSM Index
Dynamic Mid Cap Growth Portfolio	Dynamic Mid Cap Growth IntellidexSM Index
Dynamic Mid Cap Value Portfolio	Dynamic Mid Cap Value IntellidexSM Index
Dynamic Small Cap Growth Portfolio	Dynamic Small Cap Growth IntellidexSM Index
Dynamic Small Cap Value Portfolio	Dynamic Small Cap Value IntellidexSM Index
Dynamic Large Cap Portfolio	Dynamic Large Cap IntellidexSM Index
Dynamic Mid Cap Portfolio	Dynamic Mid Cap IntellidexSM Index
Dynamic Small Cap Portfolio	Dynamic Small Cap IntellidexSM Index
Dynamic Aggressive Growth Portfolio	Dynamic Aggressive Growth IntellidexSM Index
Dynamic Deep Value Portfolio	Dynamic Deep Value IntellidexSM Index
Zacks Micro Cap Portfolio	Zacks Micro Cap Index
Zacks Small Cap Portfolio	Zacks Small Cap Index

81

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions 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. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

Beginning May 1, 2006 (or since inception, if later), all Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost

82

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

of repurchases of capital shares is applied to undistributed net investment income. The amount of equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services. The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.50% per annum on each Fund's average daily net assets.

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, offering costs, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchan ge Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dynamic Large Cap Growth Portfolio	$	91,092	$	—
Dynamic Large Cap Value Portfolio		97,962		—
Dynamic Mid Cap Growth Portfolio		116,666		—
Dynamic Mid Cap Value Portfolio		132,535		—
Dynamic Small Cap Growth Portfolio		142,404		—
Dynamic Small Cap Value Portfolio		134,256		—
Dynamic Large Cap Portfolio		30,709		13,397
Dynamic Mid Cap Portfolio		27,683		16,907
Dynamic Small Cap Portfolio		28,828		17,728
Dynamic Aggressive Growth Portfolio		22,379		22,792
Dynamic Deep Value Portfolio		27,514		16,959
Zacks Micro Cap Portfolio		120,775		—
Zacks Small Cap Portfolio		112,053		—

The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which 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 as specified above.

83

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

During the period ended April 30, 2007, the details of expense waivers and reimbursements to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbursements		Net Waivers
Dynamic Large Cap Growth Portfolio	$	(93,963	)	$	2,871	$	(91,092	)
Dynamic Large Cap Value Portfolio		(150,581	)		52,619		(97,962	)
Dynamic Mid Cap Growth Portfolio		(119,729	)		3,063		(116,666	)
Zacks Small Cap Portfolio		(114,733	)		2,680		(112,053	)

The net amount of waivers or reimbursements are also shown on the Statements of Operations.

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dynamic Large Cap Growth Portfolio	$	223,785	$	201,225	$	93,963
Dynamic Large Cap Value Portfolio		238,999		238,999		150,581
Dynamic Mid Cap Growth Portfolio		254,735		232,284		119,729
Dynamic Mid Cap Value Portfolio		279,940		254,617		132,535
Dynamic Small Cap Growth Portfolio		283,057		257,513		142,404
Dynamic Small Cap Value Portfolio		284,741		259,190		134,256
Dynamic Large Cap Portfolio		44,106		44,106		44,106
Dynamic Mid Cap Portfolio		44,590		44,590		44,590
Dynamic Small Cap Portfolio		46,556		46,556		46,556
Dynamic Aggressive Growth Portfolio		45,171		45,171		45,171
Dynamic Deep Value Portfolio		44,473		44,473		44,473
Dynamic Zacks Micro Cap Portfolio		198,807		198,807		120,775
Dynamic Zacks Small Cap Portfolio		148,291		148,291		114,733

Distribution Agreement

Effective September 18, 2006 (or since inception, if later), A I M 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. Prior to September 18, 2006, ALPS Distributors, Inc. served as the distributor.

The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

84

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the following "Licensors":

Fund	Licensor
Dynamic Large Cap Growth Portfolio	American Stock Exchange
Dynamic Large Cap Value Portfolio	American Stock Exchange
Dynamic Mid Cap Growth Portfolio	American Stock Exchange
Dynamic Mid Cap Value Portfolio	American Stock Exchange
Dynamic Small Cap Growth Portfolio	American Stock Exchange
Dynamic Small Cap Value Portfolio	American Stock Exchange
Dynamic Large Cap Portfolio	American Stock Exchange
Dynamic Mid Cap Portfolio	American Stock Exchange
Dynamic Small Cap Portfolio	American Stock Exchange
Dynamic Aggressive Growth Portfolio	American Stock Exchange
Dynamic Deep Value Portfolio	American Stock Exchange
Zacks Micro Cap Portfolio	Zacks Investment Research, Inc.
Zacks Small Cap Value Portfolio	Zacks Investment Research, Inc.

The above trademarks are owned by the respective Licensors. These trademarks have been licensed to the Adviser for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensors and the Licensors make no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the licensing fees, which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

Note 4. INVESCO Transaction and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVECAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO PLC, announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by AIM Advisors, Inc., an affiliate of the Adviser.

85

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax-basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
Dynamic Large Cap Growth Portfolio	$	—	$	(11,107,930	)	$	20,398,165	$	22,504,269	$	(2,106,104	)	$	9,290,235
Dynamic Large Cap Value Portfolio		1,248,210		(1,449,557	)		21,451,096		23,494,556		(2,043,460	)		21,249,749
Dynamic Mid Cap Growth Portfolio		—		(8,478,077	)		18,065,322		19,088,650		(1,023,328	)		9,587,245
Dynamic Mid Cap Value Portfolio		298,057		(2,622,571	)		10,008,064		10,711,193		(703,129	)		7,683,550
Dynamic Small Cap Growth Portfolio		—		(13,917,821	)		4,646,608		6,951,511		(2,304,903	)		(9,271,213	)
Dynamic Small Cap Value Portfolio		25,537		(4,632,871	)		4,870,856		7,910,846		(3,039,990	)		263,522
Dynamic Large Cap Portfolio		18,586		—			636,237		686,709		(50,472	)		654,823
Dynamic Mid Cap Portfolio		16,473		—			767,272		855,164		(87,892	)		783,745
Dynamic Small Cap Portfolio		193		—			279,291		557,738		(278,447	)		279,484
Dynamic Aggressive Growth Portfolio		—		—			631,776		927,079		(295,303	)		631,776
Dynamic Deep Value Portfolio		88,918		—			514,814		832,768		(317,954	)		603,732
Zacks Micro Cap Portfolio		303,896		(17,123,772	)		13,167,092		20,122,429		(6,955,337	)		(3,652,784	)
Zacks Small Cap Portfolio		—		(3,417,527	)		2,125,762		6,684,009		(4,558,247	)		(1,291,765	)

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

Dynamic Large Cap Growth Portfolio	$	257,467,176
Dynamic Large Cap Value Portfolio		270,537,192
Dynamic Mid Cap Growth Portfolio		171,485,081
Dynamic Mid Cap Value Portfolio		98,842,042
Dynamic Small Cap Growth Portfolio		56,737,512
Dynamic Small Cap Value Portfolio		112,814,508
Dynamic Large Cap Portfolio		10,255,654
Dynamic Mid Cap Portfolio		10,507,837
Dynamic Small Cap Portfolio		7,782,204
Dynamic Aggressive Growth Portfolio		9,975,444
Dynamic Deep Value Portfolio		15,464,287
Zacks Micro Cap Portfolio		178,949,873
Zacks Small Cap Portfolio		69,167,451

86

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Distributions to Shareholders:

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
Dynamic Large Cap Growth Portfolio	$	240,165
Dynamic Large Cap Value Portfolio		3,984,387
Dynamic Mid Cap Growth Portfolio		711,633
Dynamic Mid Cap Value Portfolio		891,950
Dynamic Small Cap Value Portfolio		591,897
Dynamic Large Cap Portfolio		45,948
Dynamic Mid Cap Portfolio		34,110
Dynamic Small Cap Portfolio		1,164
Dynamic Deep Value Portfolio		43,560
Zacks Micro Cap Portfolio		206,496
Zacks Small Cap Portfolio		126,531
	Distributions paid from Return of Capital
Dynamic Large Cap Growth Portfolio	$	3,527
Dynamic Mid Cap Growth Portfolio		9,929
Zacks Small Cap Portfolio		10,819

The tax character of distributions paid during the year ended April 30, 2006 was as follows:

	Distributions paid from Ordinary Income
Dynamic Large Cap Growth Portfolio	$	12,532
Dynamic Large Cap Value Portfolio		613,947
Dynamic Mid Cap Value Portfolio		398,693
Dynamic Small Cap Value Portfolio		190,946
Zacks Micro Cap Portfolio		50,928
	Distributions paid from Return of Capital
Zacks Micro Cap Portfolio	$	17,888

87

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

At April 30, 2007, 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.

	Capital Loss Available Through				Total
	2014		2015		Amount
Dynamic Large Cap Growth Portfolio	$	191,864	$	10,916,066	$	11,107,930
Dynamic Large Cap Value Portfolio		70,814		1,378,743		1,449,557
Dynamic Mid Cap Growth Portfolio		422,220		8,055,857		8,478,077
Dynamic Mid Cap Value Portfolio		237,806		2,384,765		2,622,571
Dynamic Small Cap Growth Portfolio		823,782		13,094,039		13,917,821
Dynamic Small Cap Value Portfolio		703,862		3,929,009		4,632,871
Zacks Micro Cap Portfolio		1,951,245		15,172,527		17,123,772
Zacks Small Cap Portfolio		—		3,417,527		3,417,527

Capital losses incurred after October 31 ("post-October losses") within the taxable year deemed to arise on the first business day of each Fund's next taxable year.

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
Dynamic Large Cap Growth Portfolio	$	2,593,361
Dynamic Large Cap Value Portfolio		194,556
Dynamic Mid Cap Growth Portfolio		2,556,964
Dynamic Mid Cap Value Portfolio		1,084,767
Dynamic Small Cap Growth Portfolio		2,563,324
Dynamic Small Cap Value Portfolio		2,570,711
Dynamic Large Cap Portfolio		17,445
Dynamic Mid Cap Portfolio		77,148
Dynamic Small Cap Portfolio		411,583
Dynamic Aggressive Growth Portfolio		201,896
Dynamic Deep Value Portfolio		52,826
Zacks Micro Cap Portfolio		4,734,734
Zacks Small Cap Portfolio		3,147,966

88

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in real estate investment trusts, investments in partnerships, wash sales from redemption in-kind transactions, redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			Undistributed Capital Gains/ (Accumulated Losses)			Paid in Capital
Dynamic Large Cap Growth Portfolio	$	(29,370	)	$	(10,863,504	)	$	10,892,874
Dynamic Large Cap Value Portfolio		(333,980	)		(26,125,923	)		26,459,903
Dynamic Mid Cap Growth Portfolio		65,257			(12,750,214	)		12,684,957
Dynamic Mid Cap Value Portfolio		(54,435	)		(7,700,152	)		7,754,587
Dynamic Small Cap Growth Portfolio		302,881			(10,460,800	)		10,157,919
Dynamic Small Cap Value Portfolio		(51,487	)		(12,187,046	)		12,238,533
Dynamic Large Cap Portfolio		6,713			(282,942	)		276,229
Dynamic Mid Cap Portfolio		1,941			(671,650	)		669,709
Dynamic Small Cap Portfolio		877			(774,182	)		773,305
Dynamic Aggressive Growth Portfolio		18,784			(407,050	)		388,266
Dynamic Deep Value Portfolio		(842	)		(286,927	)		287,769
Zacks Micro Cap Portfolio		(166,434	)		(23,630,645	)		23,797,079
Zacks Small Cap Portfolio		(17,275	)		(8,314,613	)		8,331,888

Note 6. Investment Transactions

For the period ended April 30, 2007, 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 Large Cap Growth Portfolio	$	113,415,415	$	110,419,047
Dynamic Large Cap Value Portfolio		39,959,827		39,318,058
Dynamic Mid Cap Growth Portfolio		82,731,328		83,871,284
Dynamic Mid Cap Value Portfolio		30,981,146		31,099,869
Dynamic Small Cap Growth Portfolio		78,354,579		79,612,452
Dynamic Small Cap Value Portfolio		60,826,637		63,013,811
Dynamic Large Cap Portfolio		555,493		488,166
Dynamic Mid Cap Portfolio		1,014,245		1,051,407
Dynamic Small Cap Portfolio		7,592,907		7,074,469
Dynamic Aggressive Growth Portfolio		1,314,921		1,354,937
Dynamic Deep Value Portfolio		1,201,271		1,031,183
Zacks Micro Cap Portfolio		116,221,483		116,681,614
Zacks Small Cap Value Portfolio		55,608,442		56,035,570

89

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

For the period ended April 30, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Large Cap Growth Portfolio	$	288,006,950	$	178,034,600
Dynamic Large Cap Value Portfolio		481,910,735		322,514,174
Dynamic Mid Cap Growth Portfolio		200,994,260		129,379,665
Dynamic Mid Cap Value Portfolio		134,468,919		94,622,733
Dynamic Small Cap Growth Portfolio		99,604,479		150,690,125
Dynamic Small Cap Value Portfolio		139,842,501		93,869,051
Dynamic Large Cap Portfolio		18,891,121		9,011,944
Dynamic Mid Cap Portfolio		22,968,898		13,066,642
Dynamic Small Cap Portfolio		19,409,619		12,537,494
Dynamic Aggressive Growth Portfolio		19,034,228		9,235,979
Dynamic Deep Value Portfolio		20,746,048		5,797,473
Zacks Micro Cap Portfolio		139,132,828		113,017,598
Zacks Small Cap Value Portfolio		81,907,301		70,411,287

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. 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 9. Risk of Concentration

The Funds concentrate their investments in certain industries, subjecting them to greater risk than funds that invest in a wider range of industries.

Note 10. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

90

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 11. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of FIN 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of FIN 48, if any, on the Funds' financial statements.

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

91

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust:

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

92

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
Dynamic Large Cap Growth Portfolio		100	%		100	%
Dynamic Large Cap Value Portfolio		100	%		100	%
Dynamic Mid Cap Growth Portfolio		100	%		100	%
Dynamic Mid Cap Value Portfolio		100	%		100	%
Dynamic Small Cap Growth Portfolio		0	%		0	%
Dynamic Small Cap Value Portfolio		100	%		100	%
Dynamic Large Cap Portfolio		100	%		100	%
Dynamic Mid Cap Portfolio		100	%		100	%
Dynamic Small Cap Portfolio		100	%		100	%
Dynamic Aggressive Growth Portfolio		0	%		0	%
Dynamic Deep Value Portfolio		100	%		100	%
Zacks Micro Cap Portfolio		100	%		100	%
Zacks Small Cap Portfolio		100	%		100	%

93

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989-Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

94

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994-1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

95

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002-Present); Manager, Nuveen Investments (April 1998-August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)(19) of the 1940 Act.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

96

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001-2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

97

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the

98

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

Funds, information describing the Adviser's current organization, including operations assistance provided by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

99

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

100

PowerShares    Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (EFT). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com

This page contains advertising materials and should not be viewed as part of the Annual Report.
101

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market  

PWO  -  Dynamic OTC  

PIQ  -  Dynamic MagniQuant  

PJF  -  Dynamic Large Cap  

PJG  -  Dynamic Mid Cap  

PJM  -  Dynamic Small Cap  

PWB  -  Dynamic Large Cap Growth  

PWV  -  Dynamic Large Cap Value  

PWJ  -  Dynamic Mid Cap Growth  

PWP  -  Dynamic Mid Cap Value  

PWT  -  Dynamic Small Cap Growth  

PWY  -  Dynamic Small Cap Value  

PGZ  -  Dynamic Aggressive Growth  

PVM  -  Dynamic Deep Value  

PYZ  -  Dynamic Basic Materials Sector  

PEZ  -  Dynamic Consumer Discretionary Sector  

PSL  -  Dynamic Consumer Staples Sector  

PXI  -  Dynamic Energy Sector  

PFI  -  Dynamic Financials Sector  

PTH  -  Dynamic Healthcare Sector  

PRN  -  Dynamic Industrials Sector  

PTF  -  Dynamic Technology Sector  

PTE  -  Dynamic Telecommunications & Wireless  

PUI  -  Dynamic Utilities  

PJB  -  Dynamic Banking  

PBE  -  Dynamic Biotechnology & Genome  

PKB  -  Dynamic Building & Construction  

PXE  -  Dynamic Energy Exploration & Production  

PBJ  -  Dynamic Food & Beverage  

PHW  -  Dynamic Hardware & Consumer Electronics  

PTJ  -  Dynamic Healthcare Services  

PIC  -  Dynamic Insurance  

PEJ  -  Dynamic Leisure and Entertainment  

PBS  -  Dynamic Media  

PXQ  -  Dynamic Networking  

PXJ  -  Dynamic Oil & Gas Services  

PJP  -  Dynamic Pharmaceuticals  

PMR  -  Dynamic Retail  

PSI  -  Dynamic Semiconductors  

PSJ  -  Dynamic Software  

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

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102

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000  

PRFZ  -  FTSE RAFI US 1500 Small-Mid  

PRFM  -  FTSE RAFI Basic Materials Sector  

PRFG  -  FTSE RAFI Consumer Goods Sector  

PRFS  -  FTSE RAFI Consumer Services Sector  

PRFE  -  FTSE RAFI Energy Sector  

PRFF  -  FTSE RAFI Financials Sector  

PRFH  -  FTSE RAFI Health Care Sector  

PRFN  -  FTSE RAFI Industrials Sector  

PRFQ  -  FTSE RAFI Telecom & Technology Sector  

PRFU  -  FTSE RAFI Utilities Sector  

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense  

ADRA  -  BLDRS Asia 50 ADR Index Fund  

ADRD  -  BLDRS Developed Markets 100 ADR Index Fund  

ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund  

ADRU  -  BLDRS Europe 100 ADR Index Fund  

PKW  -  Buyback Achievers  

PZD  -  Cleantech  

PFM  -  Dividend Achievers  

PDP  -  DWA Technical Lenders  

PGF  -  Financial Preferred  

PGJ  -  Golden Dragon Halter USX China  

PHJ  -  High Growth Rate Dividend Achievers  

PEY  -  High Yield Equity Dividend Achievers  

PID  -  International Dividend Achievers  

PSP  -  Listed Private Equity  

PXN  -  Lux Nanotech  

QQQQ  -  PowerShares QQQ  

PYH  -  Value Line Industry Rotation  

PIV  -  Value Line Timeliness Select  

PHO  -  Water Resources  

PBW  -  WilderHill Clean Energy  

PUW  -  WilderHill Progressive Energy  

PZI  -  Zacks Micro Cap  

PZJ  -  Zacks Small Cap  

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103

PowerShares    Asset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFG  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

This page contains advertising materials and should not be viewed as part of the Annual Report.
104

PowerShares  Risk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 ADR Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

This page contains advertising materials and should not be viewed as part of the Annual Report.
105

Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

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106

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs area not closed-end funds and trade at or near net asset values.

This page contains advertising materials and should not be viewed as part of the Annual Report.
107

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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) 337-4246. 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) 337-4246; 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.

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 ETFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares ETFs 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.

AI M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares ETFs call AI M Distributors, Inc. at (800)337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-5

2007 Annual Report to Shareholders

30 April 2007

PowerShares Dividend Achievers^TM Portfolio

PowerShares High Yield Equity Dividend
Achievers^TM Portfolio

PowerShares High Growth Rate Dividend
Achievers^TM Portfolio

PowerShares International Dividend
Achievers^TM Portfolio

PowerShares Buyback Achievers^TM Portfolio

PowerShares Financial Preferred Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	16
Frequency Distribution of Discounts & Premiums	18
Fees and Expenses	20
Dividend Income Portfolios
Schedules of Investments
PowerShares Dividend AchieversTM Portfolio	22
PowerShares High Yield Equity Dividend AchieversTM Portfolio	26
PowerShares High Growth Rate Dividend AchieversTM Portfolio	27
PowerShares International Dividend AchieversTM Portfolio	29
PowerShares Buyback AchieversTM Portfolio	31
PowerShares Financial Preferred Portfolio	34
Statements of Assets and Liabilities	36
Statements of Operations	38
Statements of Changes in Net Assets	40
Financial Highlights	42
Notes to Financial Statements	45
Report of Independent Registered Public Accounting Firm	53
Supplemental Information (Unaudited)	54
Information about Advisory Agreement (Unaudited)	59

To My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing Investors with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P 500^® Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the end of summer 2006, energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

PowerShares Dividend Achievers^TM Portfolio (ticker: PFM)

The PowerShares Dividend Achievers^TM Portfolio is based on the Broad Dividend Achievers^TM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The Broad Dividend Achievers^TM Index is designed to track the performance of companies that meet the requirements to be classified as "Dividend Achievers^TM." To become eligible for inclusion in the Broad Dividend Achievers^TM Index, a company must be incorporated in the United States or territories, trade on the New York Stock Exchange ("NYSE"), American Stock Exchange ("AMEX") or NASDAQ, and must have raised its annual regular cash dividend payments for at least each of the last ten consecutive fiscal years.

Over the past year the portfolio had a solid return of 14.26% compared with the broad S&P 500^® Index which returned 15.24%. The Fund distributions during that same time period totaled $0.31 per share. Much of the Fund's performance came from large cap companies. The consumer staples, healthcare, financials and energy sectors were the leading contributors to performance of the Fund over the year. All sectors showed positive contribution to return with materials and utilities lagging the rest.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	30.2
Consumer Staples	18.4
Industrials	12.1
Health Care	11.9
Energy	8.3
Consumer Discretionary	7.0
Telecommunication Services	4.3
Information Technology	3.6
Materials	2.4
Utilities	1.8
Money Market Fund	0.0
Other	0.0

Style Allocation (%)

Large-Cap Value	68.1
Large-Cap Growth	15.2
Mid-Cap Value	10.1
Mid-Cap Growth	4.1
Small-Cap Value	2.2
Small-Cap Growth	0.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
General Electric Co.	5.2
Exxon Mobil Corp.	5.0
Citigroup, Inc.	4.6
AT&T, Inc.	4.2
Bank of America Corp.	3.9
Procter & Gamble (The) Co.	3.5
Wal-Mart Stores, Inc.	3.4
Pfizer, Inc.	3.3
Johnson & Johnson	3.2
American International Group, Inc.	3.2
Total	39.5

4

Manager's Analysis (Continued)

PowerShares Dividend Achievers^TM Portfolio (ticker: PFM)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Broad Dividend AchieversTM Index		14.88		13.47		22.75
S&P 500® Index		15.24		14.42		24.41
Dow Jones Industrial Average Index		17.60		16.70		28.47

Fund

NAV Return	14.26	12.83	21.62
Share Price Return	14.28	12.91	21.77

Fund Inception: 15 September 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.02%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.60% while the Fund's gross annualized total operating expense ratio was 0.92%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and Dow Jones Industrial Average Index are unmanaged indices based on the average performance of approximately 500 and 30 common stocks, respectively.

^† Average annualized.

5

Manager's Analysis

PowerShares High Yield Equity Dividend Achievers^TM Portfolio (ticker: PEY)

The PowerShares High Yield Equity Dividend Achievers^TM Portfolio is based on the Mergent Dividend Achievers^TM 50 Index. The Mergent 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 Index's high dividend yield approach provides exposure to deep value companies while the long-term dividend growth requirement attempts to minimize exposure to distressed value companies. The yield weighted portfolio is rebalanced quarterly and reconstituted annually.

During the reporting period the Fund returned 9.28% underperforming the broad S&P 500^® Index which returned 15.24%. The Fund distributions during that same time period ending April 30, 2007 totaled $0.63 per share.

The utilities sector contributed the greatest to the Fund's performance followed by consumer staples. Utilities were lead by gas and electric utility stocks which continued to outpace the overall market. Peoples Energy and FPL Group lead the way in the utilities sectors while Universal Corp. lead the way in consumer staples. Much of the Fund's underperformance to the broader market came from an over-allocation to the financials sector. Within the financials sector commercial banks underperformed the market due in part to the uncertainty of interest rates and the sub-prime crisis which cast a shadow over those that had large exposure to these types of loans.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	64.8
Utilities	21.9
Consumer Discretionary	3.3
Consumer Staples	3.3
Health Care	2.2
Telecommunication Services	1.8
Materials	1.5
Industrials	1.2
Other	(0.0	)

Style Allocation (%)

Small-Cap Value	49.0
Mid-Cap Value	28.9
Large-Cap Value	22.1

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Corus Bankshares, Inc.	2.8
First Commonwealth Financial Corp.	2.8
FirstMerit Corp.	2.7
F.N.B. Corp.	2.7
Washington Mutual, Inc.	2.6
Progress Energy, Inc.	2.3
Old National Bancorp	2.3
U.S. Bancorp	2.2
Pfizer, Inc.	2.2
Consolidated Edison, Inc.	2.2
Total	24.8

6

Manager's Analysis (Continued)

PowerShares High Yield Equity Dividend Achievers^TM Portfolio (ticker: PEY)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Mergent Dividend AchieversTM 50 Index		8.78		6.00		14.93
S&P 500® Index		15.24		11.68		30.21
S&P Citigroup Large Cap Value Index		15.63		14.64		38.61

Fund

NAV Return	9.28	6.50	16.23
Share Price Return	8.47	6.15	15.33

Fund Inception: 9 December 2004

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.65%. In the Financial Highlights section of this Annual Report, the Fund's annualized total operating expense ratio (prior to net reimbursements to the Adviser) was determined to be 0.60% while the Fund's annualized total operating expense ratio (after net reimbursements to the Adviser) was 0.60%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actua lly paid by investors. This waiver extends through April 30, 2008. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the S&P Citigroup Large Cap Value Index are unmanaged indices based on the average performance of approximately 500 and 350 common stocks, respectively.

^† Average annualized.

7

Manager's Analysis

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 and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The High Growth Rate Dividend Achievers^TM Index is designed to track the performance of the 100 companies with the highest annual dividend growth rate over the last 10 years that meet the requirements to be classified as "High Growth Rate Dividend Achievers^TM." To become eligible for inclusion in the High Growth Rate Dividend Achievers^TM Index, a company must be incorporated in the United States or its territories, trade on the NYSE, NASDAQ or AMEX, and its aggregate annual regular dividend payments must have increased consistently over the course of the last 10 or more fiscal years.

During the reporting period the Fund returned 7.11% underperforming the Dow Jones Industrials Index which returned 17.60%. The Fund distributions during that same time period ending April 30, 2007 totaled $0.30 per share.

The financials sector, which makes up nearly one half of the portfolio, contributed the most to performance followed by health care and consumer discretionary. Within financials, diversified financial services and insurance were the leaders with Citigroup, Inc. and AIG being the top performers. Industrials were the lone sector which showed a small negative contribution to return for the portfolio driven mainly by aerospace & defense along with commercial services & supplies companies.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	45.3
Health Care	17.4
Consumer Discretionary	14.2
Industrials	9.2
Consumer Staples	5.4
Information Technology	3.7
Materials	3.4
Energy	1.2
Money Market	0.0
Other	0.2

Style Allocation (%)

Large-Cap Value	60.5
Large-Cap Growth	22.1
Mid-Cap Value	7.5
Mid-Cap Growth	7.3
Small-Cap Value	2.2
Small-Cap Growth	0.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Bank of America Corp.	4.1
American International Group, Inc.	4.0
Johnson & Johnson	4.0
Wells Fargo & Co.	4.0
U.S. Bancorp	4.0
United Technologies Corp.	4.0
Pfizer, Inc.	4.0
Wal-Mart Stores, Inc.	4.0
McDonald's Corp.	4.0
Medtronic, Inc.	4.0
Total	40.1

8

Manager's Analysis (Continued)

PowerShares High Growth Rate Dividend Achievers^TM Portfolio (ticker: PHJ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
High Growth Rate Dividend AchieversTM Index		8.19		11.13		18.67
Dow Jones Industrials Index		17.60		16.70		28.47
S&P 500® Index		15.24		14.42		24.41

Fund

NAV Return	7.11	10.26	17.17
Share Price Return	7.21	10.30	17.24

Fund Inception: 15 September 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.00%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.61% while the Fund's gross annualized total operating expense ratio was 1.04%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones Industrials Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 30 and 500 common stocks, respectively.

^† Average annualized.

9

Manager's Analysis

PowerShares International Dividend Achievers^TM Portfolio (ticker: PID)

The PowerShares International Dividend Achievers^TM Portfolio is based on the International Dividend Achievers^TM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The International Dividend Achievers^TM Index is designed to track the performance of dividend paying American Depositary Receipts and non-U.S. common or ordinary stocks trading on the NYSE, NASDAQ or AMEX. To become eligible for inclusion in the International Dividend Achievers^TM Index, a company's aggregate annual regular dividend payments must have increased consistently over the course of the last five calendar or fiscal years.

During the reporting period the Fund returned 22.56% outperforming the broad S&P 500^® Index which returned 15.24%. The Fund distributions during that same time period ending April 30, 2007 totaled $0.53 per share.

The financials, utilities and consumer staples sectors were the strongest contributors to the Fund's performance. Commercial banks and insurance were the leaders within the financials sector while electric utilities and multi-utilities were leaders in the utilities sector. The information technology sector was the lone laggard on performance for the year. Electronic equipment & instruments were the biggest drag on performance within information technology, specifically Nam Tai Electronics, Inc. From a geographical perspective, the United Kingdom, Netherlands, Spain and Canada contributed the most to Fund performance while Chile, South Africa and the British Virgin Islands lagged.

Sector Breakdown (% of the Fund's

Net Assets)

Financials	38.1
Energy	11.3
Consumer Staples	10.4
Utilities	8.4
Consumer Discretionary	8.0
Information Technology	7.8
Industrials	6.0
Materials	4.9
Telecommunication Services	3.4
Health Care	1.9
Other	(0.2	)

Style Allocation (%)

Large-Cap Value	51.0
Large-Cap Growth	22.1
Mid-Cap Value	17.8
Small-Cap Value	5.9
Mid-Cap Growth	2.6
Small-Cap Growth	0.6

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Nam Tai Electronics, Inc.	5.4
Endesa SA ADR	2.9
Tomkins PLC ADR	2.7
HSBC Holdings PLC ADR	2.5
Barclays PLC ADR	2.4
Westpac Banking Corp. ADR	2.3
National Australia Bank Ltd. ADR	2.2
Australia and New Zealand Banking Group Ltd. ADR	2.2
Bank of Montreal	2.0
BP PLC ADR	2.0
Total	26.6

10

Manager's Analysis (Continued)

PowerShares International Dividend Achievers^TM Portfolio (ticker: PID)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
International Dividend AchieversTM Index		22.06		22.88		39.68
MSCI EAFE Index		20.32		26.33		46.10
S&P 500® Index		15.24		14.42		24.41

Fund

NAV Return	22.56	23.24	40.34
Share Price Return	22.59	23.25	40.37

Fund Inception: 15 September 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.69%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.60% while the Fund's gross annualized total operating expense ratio was 0.62%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The MSCI EAFE Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 1,000 widely held stocks traded on exchanges outside the U.S. and 500 common stocks on U.S. exchanges, respectively.

^† Average annualized.

11

Manager's Analysis

PowerShares Buyback Achievers^TM Portfolio (ticker: PKW)

The PowerShares Buyback Achievers^TM Portfolio is based on the Share BuyBack Achievers^TM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. To become eligible for inclusion in the Index, a company must be incorporated in the U.S., trade on a U.S. exchange and must have repurchased at least 5% or more of its outstanding shares for the trailing 12 months.

Since its December 20, 2006 inception date, the portfolio returned 4.13% compared with the S&P 500^® Index which returned 4.78%. The information technology sector, led by semiconductors & semiconductor equipment, was the strongest contributor to the Fund's return. The energy and financials sectors were also strong contributors to return. The consumer discretionary sector was the laggard, due mostly to unfavorable stock selection within the household durables and automobile industries.

Sector Breakdown (% of the Fund's

Net Assets)

Consumer Discretionary	27.6
Information Technology	21.4
Health Care	15.2
Financials	13.3
Energy	8.4
Industrials	5.9
Consumer Staples	3.2
Materials	2.8
Utilities	1.2
Telecommunication Services	1.0
Other	(0.0	)

Style Allocation (%)

Large-Cap Growth	33.1
Large-Cap Value	27.9
Mid-Cap Value	21.2
Mid-Cap Growth	11.0
Small-Cap Value	5.4
Small-Cap Growth	1.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Microsoft Corp.	5.2
Exxon Mobil Corp.	5.0
Time Warner, Inc.	5.0
Amgen, Inc.	4.8
Goldman Sachs Group (The), Inc.	4.6
Texas Instruments, Inc.	3.2
Prudential Financial, Inc.	2.9
EMC Corp.	2.0
DIRECTV Group (The), Inc.	1.9
Viacom, Inc., Class B	1.8
Total	36.4

12

Manager's Analysis (Continued)

PowerShares Buyback Achievers^TM Portfolio (ticker: PKW)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Share BuyBack AchieversTM Index		4.45
S&P 500® Index		4.78
Russell 1000® Growth Index		5.15

Fund

NAV Return	4.13
Share Price Return	4.33

Fund Inception: 20 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.73% while the Fund's gross annualized total operating expense ratio was 1.04%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 1000^® Growth Index are unmanaged indices that are broad-measurements of change in stock market conditions based on the average performance of approximately 500 and 671 common stocks, respectively, widely held stocks.

13

Manager's Analysis

PowerShares Financial Preferred Portfolio (ticker: PGF)

The PowerShares Financial Preferred Portfolio is based on the Wachovia Hybrid & Preferred Securities Financial Index (WHPS^SM Financial Index). The Index tracks the performance of U.S. listed preferred stocks issued in the U.S. market by financial institutions and currently includes approximately 30 securities selected by Wachovia pursuant to a proprietary selection methodology.

Since its December 1, 2006 inception date, the portfolio returned 1.18% compared with the S&P 500^® Index which returned 6.87%. The Fund distributions during that same time period ending April 30, 2007 totaled $0.63 per share.

This Fund's policy is to invest in financial institutions with strong credit ratings and a history of paying dividends over a long period of time. Many investors view the underlying securities as income paying vehicles rather than appreciating assets.

Industry Breakdown (% of the Fund's

Net Assets)

Insurance	42.3
Banks	37.2
Diversified Financial Services	20.7
Money Market	0.2
Other	(0.4	)

Style Allocation (%)

Large-Cap Value	83.6
Mid-Cap Value	13.9
Large-Cap Growth	2.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
HSBC Holdings PLC, 6.20%, Series A (United Kingdom)	6.9
ING Groep NV, 7.20% (Netherlands)	5.2
Metlife, Inc., 6.50%, Series B	4.9
Royal Bank of Scotland Group PLC, 6.35%, Series N (United Kingdom)	4.8
Bank of America Corp., 6.20%, Series D	4.5
Barclays Bank PLC, 6.63%, Series 2 (United Kingdom)	4.5
Lehman Brothers Holdings, 6.50%	4.5
ACE Ltd., 7.80%, Series C (Cayman Islands)	4.5
Goldman Sachs Group, Inc., 6.20%, Series B	4.5
Merrill Lynch & Co., Inc., 6.38%, Series 3	4.5
Total	48.8

14

Manager's Analysis (Continued)

PowerShares Financial Preferred Portfolio (ticker: PGF)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Wachovia Hybrid & Preferred Securities Financial Index		1.47
Dow Jones Corporate Bond Index		1.21
S&P 500® Index		6.87

Fund

NAV Return	1.18
Share Price Return	-0.09

Fund Inception: 01 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.72% while the Fund's gross annualized total operating expense ratio was 0.89%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones Corporate Bond Index and S&P 500^® Index are unmanaged indices used as a measurement of change in market conditions based on the average performance of approximately 96 bonds and 500 common stocks, respectively.

15

Funds' Distribution History

	Ex-Dividend	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06
	Record	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06
	Payable	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06
Fund	Ticker
PowerShares Dividend AchieversTM Portfolio	PFM		—		0.07520		—		—		—		0.11050		—
PowerShares High Yield Equity Dividend AchieversTM Portfolio	PEY		0.05003		—		0.05020		0.05006		0.05012		0.06648		0.05501
PowerShares High Growth Rate Dividend AchieversTM Portfolio	PHJ		—		0.07020		—		—		—		0.13210		—
PowerShares International Dividend AchieversTM Portfolio	PID		—		0.11020		—		—		—		0.16748		—
PowerShares Buyback AchieversTM Portfolio	PKW		—		0.02102		—		—		—		—		—
PowerShares Financial Preferred Portfolio	PGF		0.11205		—		0.11020		0.11250		0.11260		0.18568		—

	Ex-Dividend	12/30/05		12/16/05		9/16/05		6/17/05
	Record	1/4/06		12/20/05		9/20/05		6/21/05
	Payable	1/31/06		12/30/05		9/30/05		6/30/05
Fund	Ticker
PowerShares Dividend AchieversTM Portfolio	PFM		—		0.08740		—		—
PowerShares High Yield Equity Dividend AchieversTM Portfolio	PEY		—		0.11320		0.11490		0.12828
PowerShares High Growth Rate Dividend AchieversTM Portfolio	PHJ		—		0.08594		—		—
PowerShares International Dividend AchieversTM Portfolio	PID		—		0.07747		—		—
PowerShares Buyback AchieversTM Portfolio	PKW		—		—		—		—
PowerShares Financial Preferred Portfolio	PGF		—		—		—		—

16

	10/13/06		9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	10/17/06		9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	10/31/06		9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund
PowerShares Dividend AchieversTM Portfolio		—		0.05029		—		—		0.07671		—		—		0.07660
PowerShares High Yield Equity Dividend AchieversTM Portfolio		0.05529		0.05518		0.05512		0.05523		—		0.04512		0.03950		0.12300
PowerShares High Growth Rate Dividend AchieversTM Portfolio		—		0.03428		—		—		0.06068		—		—		0.05916
PowerShares International Dividend AchieversTM Portfolio		—		0.12589		—		—		0.12567		—		—		0.11910
PowerShares Buyback AchieversTM Portfolio		—		—		—		—		—		—		—		—
PowerShares Financial Preferred Portfolio		—		—		—		—		—		—		—		—

	4/1/05		3/18/05		12/31/04		12/17/04
	4/5/05		3/22/05		1/4/05		12/21/04
	4/29/05		4/29/05		1/31/05		1/31/05
Fund
PowerShares Dividend AchieversTM Portfolio		—		—		—		—
PowerShares High Yield Equity Dividend AchieversTM Portfolio		0.03688		0.09700		0.00859		0.02742
PowerShares High Growth Rate Dividend AchieversTM Portfolio		—		—		—		—
PowerShares International Dividend AchieversTM Portfolio		—		—		—		—
PowerShares Buyback AchieversTM Portfolio		—		—		—		—
PowerShares Financial Preferred Portfolio		—		—		—		—

17

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PFM	PowerShares Dividend AchieversTM Portfolio	9/15/05		407		274		20		0		0		0		0
PEY	PowerShares High Yield Equity Dividend AchieversTM Portfolio	12/9/04		600		278		19		0		0		0		0
PHJ	PowerShares High Growth Rate Dividend AchieversTM Portfolio	9/15/05		407		260		11		0		0		0		0
PID	PowerShares International Dividend AchieversTM Portfolio	9/15/05		407		296		21		2		0		0		0
PKW	PowerShares Buyback AchieversTM Portfolio	12/20/06		88		53		17		0		0		0		0
PGF	PowerShares Financial Preferred Portfolio	12/1/06		101		60		35		3		0		0		0

18

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PFM		112		1		0		0		0		0
PEY		270		31		2		0		0		0
PHJ		134		2		0		0		0		0
PID		87		1		0		0		0		0
PKW		17		1		0		0		0		0
PGF		3		0		0		0		0		0

19

Fees and Expenses

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 April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dividend AchieversTM Portfolio Actual	$	1,000.00	$	1,060.70		0.59	%	$	3.01
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.87		0.59	%	$	2.96
PowerShares High Yield Equity Dividend AchieversTM Portfolio Actual	$	1,000.00	$	1,015.66		0.60	%	$	3.00
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.60	%	$	3.01
PowerShares High Growth Rate Dividend
AchieversTM Portfolio
Actual	$	1,000.00	$	1,024.99		0.60	%	$	3.01
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.60	%	$	3.01
PowerShares International Dividend AchieversTM Portfolio Actual	$	1,000.00	$	1,145.98		0.60	%	$	3.19
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.60	%	$	3.01

20

Fees and Expenses (Continued)

	Beginning Account Value December 20, 2006 (Commencement of Investment Operations)		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on Number of Days in the Period			Expenses Paid During Period (2) December 20, 2006 (Commencement of Investment Operations) to April 30, 2007
PowerShares Buyback AchieversTM Portfolio Actual	$	1,000.00	$	1,041.33		0.73	%	$	2.67
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.17		0.73	%	$	3.66
	Beginning Account Value December 1, 2006 (Commencement of Investment Operations)		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on Number of Days in the Period			Expenses Paid During Period (3) December 1, 2006 (Commencement of Investment Operations) to April 30, 2007
PowerShares Financial Preferred Portfolio Actual	$	1,000.00	$	1,011.80		0.72	%	$	2.98
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.22		0.72	%	$	3.61

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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 December 20, 2006 (commencement of investment operations) to April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 132 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 December 1, 2006 (commencement of investment operations) to April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 151 and then dividing the result by 365.

21

Schedule of Investments

PowerShares Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—7.0%
	903	Applebee's International, Inc.	$	24,544
	247	Bandag, Inc.		12,459
	658	Cedar Fair, L.P.		19,154
	152	Courier Corp.		6,050
	1,832	Family Dollar Stores, Inc.		58,331
	2,853	Gannett Co., Inc.		162,792
	2,071	Genuine Parts Co.		102,328
	3,128	Harley-Davidson, Inc.		198,065
	906	Harte-Hanks, Inc.		23,647
	276	Haverty Furniture Cos., Inc.		3,522
	33,121	Home Depot (The), Inc.		1,254,291
	697	John Wiley & Sons, Inc., Class A		26,103
	2,386	Johnson Controls, Inc.		244,159
	624	La-Z-Boy, Inc.		7,295
	2,155	Leggett & Platt, Inc.		50,686
	6,586	Lowe's Cos., Inc.		201,268
	398	Matthews International Corp., Class A		16,780
	14,506	McDonald's Corp.		700,349
	4,267	McGraw-Hill (The) Cos., Inc.		279,616
	293	Media General, Inc., Class A		10,765
	584	Meredith Corp.		33,825
	1,748	New York Times (The) Co., Class A		40,903
	3,130	Nordstrom, Inc.		171,900
	431	Polaris Industries, Inc.		21,778
	1,688	Ross Stores, Inc.		55,957
	3,543	ServiceMaster (The) Co.		54,527
	1,602	Sherwin-Williams (The) Co.		102,160
	1,006	Stanley Works (The)		58,630
	323	Superior Industries International, Inc.		7,381
	661	Talbots (The), Inc.		15,534
	10,428	Target Corp.		619,109
	5,510	TJX (The) Cos., Inc.		153,674
	1,367	VF Corp.		120,036
	675	Wolverine World Wide, Inc.		19,292
				4,876,910
		Consumer Staples—18.4%
	25,504	Altria Group, Inc.		1,757,736
	9,265	Anheuser-Busch Cos., Inc.		455,745
	7,928	Archer-Daniels-Midland Co.		306,814
	5,341	Avon Products, Inc.		212,572
	1,495	Brown-Forman Corp., Class B		95,575
	798	Church & Dwight Co., Inc.		40,483
	1,837	Clorox Co.		123,226
	28,054	Coca-Cola (The) Co.		1,464,138
	6,212	Colgate-Palmolive Co.		420,801
	2,803	Hershey (The) Co.		154,053
	1,675	Hormel Foods Corp.		63,801
	5,544	Kimberly-Clark Corp.		394,566
	384	Lancaster Colony Corp.		16,216
	1,587	McCormick & Co., Inc.		58,909

Number of Shares			Value
		Common Stocks (Continued)
	19,784	PepsiCo, Inc.	$	1,307,525
	38,323	Procter & Gamble (The) Co.		2,464,551
	2,552	SUPERVALU, Inc.		117,137
	7,493	Sysco Corp.		245,321
	672	Tootsie Roll Industries, Inc.		19,481
	315	Universal Corp.		19,744
	12,114	Walgreen Co.		531,805
	50,093	Wal-Mart Stores, Inc.		2,400,457
	3,354	Wm. Wrigley Jr. Co.		197,484
				12,868,140
		Energy—8.3%
	498	Buckeye Partners L.P.		26,832
	26,207	Chevron Corp.		2,038,643
	43,717	Exxon Mobil Corp.		3,470,255
	1,254	Helmerich & Payne, Inc.		40,492
	672	Holly Corp.		42,739
	2,746	Kinder Morgan Energy Partners, L.P.		152,266
	1,091	TEPPCO Partners, L.P.		49,695
				5,820,922
		Financials—30.2%
	273	1st Source Corp.		6,754
	5,962	AFLAC, Inc.		306,089
	250	Alabama National BanCorp.		15,655
	977	Alfa Corp.		17,527
	10,690	Allstate (The) Corp.		666,201
	1,236	AMBAC Financial Group, Inc.		113,465
	31,597	American International Group, Inc.		2,208,946
	266	Anchor BanCorp Wisconsin, Inc.		7,161
	1,201	Arthur J. Gallagher & Co.		33,580
	1,548	Associated Banc-Corp.		50,124
	1,184	Astoria Financial Corp.		31,447
	191	BancFirst Corp.		8,177
	960	BancorpSouth, Inc.		23,587
	53,914	Bank of America Corp.		2,744,224
	603	Bank of Hawaii Corp.		31,899
	727	BankAtlantic Bancorp, Inc., Class A		7,008
	154	Banner Corp.		5,747
	6,586	BB&T Corp.		274,109
	1,706	Brown & Brown, Inc.		43,930
	223	Capital City Bank Group, Inc.		6,648
	796	CBL & Associates Properties, Inc.		36,178
	302	Chemical Financial Corp.		8,072
	542	Chittenden Corp.		15,751
	4,962	Chubb (The) Corp.		267,104
	2,094	Cincinnati Financial Corp.		94,733
	59,542	Citigroup, Inc.		3,192,643
	590	City National Corp.		43,200
	1,856	Colonial BancGroup (The), Inc.		44,655
	563	Colonial Properties Trust		27,930
	1,915	Comerica, Inc.		118,558
	2,319	Commerce Bancorp, Inc.		77,547

See Notes to Financial Statements.
22

Schedule of Investments (Continued)

PowerShares Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	842	Commerce Bancshares, Inc.	$	39,860
	809	Commerce Group (The), Inc.		26,381
	366	Community Bank System, Inc.		7,503
	286	Community Banks, Inc.		6,758
	185	Community Trust Bancorp, Inc.		6,153
	1,583	Compass Bancshares, Inc.		107,929
	683	Corus Bankshares, Inc.		11,481
	729	Cullen/Frost Bankers, Inc.		37,303
	1,015	CVB Financial Corp.		12,048
	1,662	Duke Realty Corp.		71,649
	288	EastGroup Properties, Inc.		14,432
	1,535	Eaton Vance Corp.		58,668
	664	Erie Indemnity Co., Class A		34,893
	294	Essex Property Trust, Inc.		37,885
	734	F.N.B. Corp.		12,317
	673	Federal Realty Investment Trust		60,684
	6,681	Fifth Third Bancorp		271,182
	175	First BanCorp.		3,645
	261	First Busey Corp.		5,249
	426	First Charter Corp.		9,346
	898	First Commonwealth Financial Corp.		9,995
	137	First Community Bancshares, Inc.		4,503
	252	First Financial Bankshares, Inc.		9,752
	161	First Financial Corp.		4,592
	145	First Financial Holdings, Inc.		4,911
	201	First Indiana Corp.		3,903
	608	First Midwest Bancorp, Inc.		21,852
	253	First State Bancorp.		5,290
	973	FirstMerit Corp.		20,316
	256	Flushing Financial Corp.		3,981
	1,247	Forest City Enterprises, Inc., Class A		83,312
	3,081	Franklin Resources, Inc.		404,566
	12,031	Freddie Mac		779,368
	2,102	Fulton Financial Corp.		30,941
	2,961	General Growth Properties, Inc.		189,060
	640	Glacier Bancorp, Inc.		13,747
	620	Greater Bay Bancorp		15,990
	387	Harleysville Group, Inc.		11,819
	352	Harleysville National Corp.		5,942
	3,846	Hartford Financial Services Group (The), Inc.		389,215
	1,359	HCC Insurance Holdings, Inc.		41,667
	2,495	Health Care Property Investors, Inc.		88,298
	581	Healthcare Realty Trust, Inc.		19,789
	200	Heartland Financial USA, Inc.		5,122
	444	Hilb Rogal & Hobbs Co.		19,292
	403	Home Properties, Inc.		22,447
	149	Horizon Financial Corp.		3,130
	156	IBERIABANK Corp.		8,188
	274	Independent Bank Corp.		4,521
	811	Investors Financial Services Corp.		50,185
	362	Irwin Financial Corp.		5,803
	4,791	KeyCorp		170,943

Number of Shares			Value
		Common Stocks (Continued)
	3,057	Kimco Realty Corp.	$	146,950
	6,323	Legg Mason, Inc.		627,178
	331	Lehman Brothers Holdings, Inc.		24,918
	853	Lexington Realty Trust		17,819
	1,112	Liberty Property Trust		53,810
	3,362	Lincoln National Corp.		239,206
	1,325	M&T Bank Corp.		147,526
	874	Macerich (The) Co.		83,135
	400	MAF Bancorp, Inc.		16,060
	228	Mainsource Financial Group, Inc.		3,682
	3,117	Marshall & Ilsley Corp.		149,678
	1,623	MBIA, Inc.		112,896
	664	Mercury General Corp.		35,956
	234	Midland (The) Co.		10,270
	7,963	National City Corp.		291,048
	579	National Penn Bancshares, Inc.		10,735
	793	National Retail Properties, Inc.		18,992
	2,665	Northern Trust Corp.		167,762
	964	Nuveen Investments, Inc., Class A		51,381
	808	Old National Bancorp		14,447
	2,808	Old Republic International Corp.		59,726
	159	Old Second Bancorp, Inc.		4,652
	154	Omega Financial Corp.		4,320
	571	Pacific Capital Bancorp		15,377
	169	Park National Corp.		15,002
	128	Peoples Bancorp, Inc.		3,206
	3,654	People's United Financial, Inc.		72,751
	248	Progressive (The) Corp.		5,721
	3,112	ProLogis		201,658
	850	Protective Life Corp.		39,865
	391	Provident Bankshares Corp.		12,528
	1,227	Realty Income Corp.		34,233
	841	Regency Centers Corp.		69,298
	189	Renasant Corp.		4,398
	293	RLI Corp.		16,317
	302	S&T Bancorp, Inc.		9,833
	191	Sandy Spring Bancorp, Inc.		6,162
	232	Seacoast Banking Corp. of Florida		5,310
	1,200	SEI Investments Co.		73,236
	172	Simmons First National Corp., Class A		4,529
	1,427	Sky Financial Group, Inc.		38,886
	4,985	SLM Corp.		268,343
	907	South Financial Group (The), Inc.		20,525
	173	Southwest Bancorp, Inc.		4,239
	249	Sovran Self Storage, Inc.		13,760
	499	State Auto Financial Corp.		14,995
	4,078	State Street Corp.		280,852
	227	Sterling Bancorp		3,929
	875	Sterling Bancshares, Inc.		10,001
	361	Sterling Financial Corp.		6,011
	222	Sun Communities, Inc.		6,607
	4,330	SunTrust Banks, Inc.		365,539

See Notes to Financial Statements.
23

Schedule of Investments (Continued)

PowerShares Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	633	Susquehanna Bancshares, Inc.	$	14,103
	175	SY Bancorp, Inc.		4,123
	3,970	Synovus Financial Corp.		125,293
	3,226	T. Rowe Price Group, Inc.		160,268
	380	Tanger Factory Outlet Centers, Inc.		15,405
	638	Taubman Centers, Inc.		35,760
	1,584	TCF Financial Corp.		42,895
	802	Transatlantic Holdings, Inc.		55,731
	707	Trustmark Corp.		18,813
	21,157	U.S. Bancorp		726,743
	1,646	UDR, Inc.		49,446
	511	UMB Financial Corp.		19,990
	498	United Bankshares, Inc.		16,683
	143	Universal Health Realty Income Trust		5,036
	1,399	Valley National Bancorp		35,493
	1,841	Vornado Realty Trust		218,398
	1,062	Washington Federal, Inc.		25,180
	3,911	Washington Mutual, Inc.		164,184
	547	Washington Real Estate Investment Trust		20,709
	163	Washington Trust Bancorp, Inc.		4,187
	687	Webster Financial Corp.		30,537
	1,050	Weingarten Realty Investors		50,253
	41,034	Wells Fargo & Co.		1,472,710
	257	WesBanco, Inc.		7,538
	86	Wesco Financial Corp.		38,270
	190	West Coast Bancorp.		5,903
	366	Westamerica Bancorp.		17,140
	801	Whitney Holding Corp.		24,647
	831	Wilmington Trust Corp.		33,622
				21,170,773
		Health Care—11.9%
	18,741	Abbott Laboratories		1,061,115
	548	Arrow International, Inc.		17,448
	749	Beckman Coulter, Inc.		47,045
	2,971	Becton, Dickinson & Co.		233,788
	1,257	C.R. Bard, Inc.		104,494
	4,862	Cardinal Health, Inc.		340,097
	1,848	DENTSPLY International, Inc.		61,742
	13,773	Eli Lilly & Co.		814,397
	747	Hillenbrand Industries, Inc.		45,679
	35,160	Johnson & Johnson		2,257,975
	13,986	Medtronic, Inc.		740,279
	319	Meridian Bioscience, Inc.		9,484
	86,073	Pfizer, Inc.		2,277,492
	4,965	Stryker Corp.		322,427
	401	West Pharmaceutical Services, Inc.		19,958
				8,353,420
		Industrials—12.1%
	8,747	3M Co.		723,989
	373	A.O. Smith Corp.		14,211
	595	ABM Industries, Inc.		16,743

Number of Shares			Value
		Common Stocks (Continued)
	1,294	Avery Dennison Corp.	$	80,487
	173	Badger Meter, Inc.		4,152
	655	Brady Corp., Class A		21,523
	600	Briggs & Stratton Corp.		17,802
	754	Carlisle Cos., Inc.		31,050
	7,844	Caterpillar, Inc.		569,631
	1,927	Cintas Corp.		72,205
	623	Clarcor, Inc.		19,649
	3,755	Danaher Corp.		267,318
	962	Donaldson Co., Inc.		34,555
	2,483	Dover Corp.		119,482
	9,691	Emerson Electric Co.		455,380
	2,600	Expeditors International of Washington, Inc.		108,680
	281	Franklin Electric Co., Inc.		11,968
	4,913	General Dynamics Corp.		385,671
	98,254	General Electric Co.		3,621,643
	162	Gorman-Rupp (The) Co.		5,195
	1,021	Harsco Corp.		52,071
	582	HNI Corp.		24,293
	6,787	Illinois Tool Works, Inc.		348,241
	261	LSI Industries, Inc.		4,113
	4,756	Masco Corp.		129,411
	306	McGrath Rentcorp		9,226
	437	Mine Safety Appliances Co.		18,420
	100	NACCO Industries, Inc., Class A		15,938
	409	Nordson Corp.		18,744
	1,406	Parker Hannifin Corp.		129,549
	1,213	Pentair, Inc.		38,986
	2,676	Pitney Bowes, Inc.		128,448
	219	Raven Industries, Inc.		6,327
	1,072	Roper Industries, Inc.		60,096
	475	Teleflex, Inc.		34,119
	229	Tennant Co.		7,333
	12,078	United Technologies Corp.		810,797
	229	Universal Forest Products, Inc.		10,639
	1,015	W.W. Grainger, Inc.		83,859
				8,511,944
		Information Technology—3.6%
	6,683	Automatic Data Processing, Inc.		299,131
	798	Diebold, Inc.		38,041
	18,034	International Business Machines Corp.		1,843,255
	1,091	Jack Henry & Associates, Inc.		25,911
	3,635	Linear Technology Corp.		136,022
	4,639	Paychex, Inc.		172,107
				2,514,467
		Materials—2.4%
	2,629	Air Products & Chemicals, Inc.		201,119
	1,153	Albemarle Corp.		48,945
	421	AptarGroup, Inc.		30,838
	1,270	Bemis Co., Inc.		42,189
	3,044	Ecolab, Inc.		130,862

See Notes to Financial Statements.
24

Schedule of Investments (Continued)

PowerShares Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	737	H.B. Fuller Co.	$	18,845
	547	Martin Marietta Materials, Inc.		79,764
	426	Myers Industries, Inc.		9,564
	3,662	Nucor Corp.		232,391
	1,992	PPG Industries, Inc.		146,571
	3,871	Praxair, Inc.		249,872
	2,632	Rohm & Haas Co.		134,679
	1,468	RPM International, Inc.		31,224
	1,595	Sigma-Aldrich Corp.		67,118
	1,208	Sonoco Products Co.		51,509
	1,245	Valspar (The) Corp.		33,665
	1,154	Vulcan Materials Co.		142,715
				1,651,870
		Telecommunication Services—4.3%
	75,837	AT&T, Inc.		2,936,408
	1,353	CenturyTel, Inc.		62,306
				2,998,714
		Utilities—1.8%
	207	American States Water Co.		7,377
	1,610	Aqua America, Inc.		35,597
	1,076	Atmos Energy Corp.		34,131
	457	Black Hills Corp.		18,193
	251	California Water Service Group		9,756
	3,146	Consolidated Edison, Inc.		161,264
	871	Energen Corp.		48,820
	4,936	FPL Group, Inc.		317,730
	916	Integrys Energy Group, Inc.		51,388
	2,200	MDU Resources Group, Inc.		66,660
	255	MGE Energy, Inc.		9,211
	1,005	National Fuel Gas Co.		47,245
	339	New Jersey Resources Corp.		18,204
	359	Otter Tail Corp.		12,278
	906	Piedmont Natural Gas Co., Inc.		23,909
	1,215	Pinnacle West Capital Corp.		58,672
	3,123	Progress Energy, Inc.		157,868
	1,045	Questar Corp.		101,501
	222	SJW Corp.		7,695
	290	Southwest Water Co.		3,941
	1,288	UGI Corp.		36,528
	982	Vectren Corp.		28,547
	597	WGL Holdings, Inc.		20,202
				1,276,717
		Total Common Stocks (Cost $64,063,398)		70,043,877

Money Market Fund—0.0%

27,578	Liquid Assets Portfolio Private Class* (Cost $27,578)		27,578
	Total Investments (Cost $64,090,976)—100.0%		70,071,455
	Other assets less liabilities—0.0%		7,480
	Net Assets—100.0%	$	70,078,935

*  Affiliated investment.

See Notes to Financial Statements.
25

Schedule of Investments

PowerShares High Yield Equity Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—3.3%
	688,652	La-Z-Boy, Inc.	$	8,050,342
	436,852	ServiceMaster (The) Co.		6,723,152
				14,773,494
		Consumer Staples—3.3%
	122,043	Altria Group, Inc.		8,411,204
	96,040	Universal Corp.		6,019,787
				14,430,991
		Financials—64.8%
	340,173	Arthur J. Gallagher & Co.		9,511,237
	226,433	Associated Banc-Corp.		7,331,901
	186,962	Bank of America Corp.		9,516,366
	211,214	BB&T Corp.		8,790,727
	169,659	Citigroup, Inc.		9,097,116
	148,755	Comerica, Inc.		9,209,422
	255,555	Commerce Group (The), Inc.		8,333,649
	407,062	Community Bank System, Inc.		8,344,771
	737,767	Corus Bankshares, Inc.		12,401,862
	694,851	F.N.B. Corp.		11,659,600
	230,593	Fifth Third Bancorp		9,359,770
	368,049	First BanCorp.		7,666,461
	1,108,091	First Commonwealth Financial Corp.		12,333,052
	559,827	FirstMerit Corp.		11,689,188
	591,761	Fulton Financial Corp.		8,710,722
	567,686	Harleysville National Corp.		9,582,540
	233,242	KeyCorp		8,322,075
	154,558	Mercury General Corp.		8,369,316
	238,978	National City Corp.		8,734,646
	569,420	Old National Bancorp		10,181,230
	333,585	Omega Financial Corp.		9,357,059
	94,914	Park National Corp.		8,425,516
	242,912	Provident Bankshares Corp.		7,782,900
	237,777	S&T Bancorp, Inc.		7,742,019
	295,183	Sky Financial Group, Inc.		8,043,737
	508,335	Sterling Bancorp		8,799,279
	406,348	Susquehanna Bancshares, Inc.		9,053,433
	291,343	TCF Financial Corp.		7,889,568
	286,015	U.S. Bancorp		9,824,615
	317,597	Washington Federal, Inc.		7,530,225
	273,446	Washington Mutual, Inc.		11,479,263
				285,073,265
		Health Care—2.2%
	371,198	Pfizer, Inc.		9,821,899
		Industrials—1.2%
	110,865	Emerson Electric Co.		5,209,546
		Materials—1.5%
	303,279	RPM International, Inc.		6,450,744
		Telecommunication Services—1.8%
	199,641	AT&T, Inc.		7,730,100

Number of Shares			Value
		Common Stocks (Continued)
		Utilities—21.9%
	274,734	Atmos Energy Corp.	$	8,714,562
	204,626	Black Hills Corp.		8,146,161
	187,918	Consolidated Edison, Inc.		9,632,677
	159,596	Integrys Energy Group, Inc.		8,953,336
	230,353	MGE Energy, Inc.		8,320,350
	201,584	Otter Tail Corp.		6,894,173
	301,443	Piedmont Natural Gas Co., Inc.		7,955,081
	187,821	Pinnacle West Capital Corp.		9,069,876
	202,086	Progress Energy, Inc.		10,215,446
	318,665	Vectren Corp.		9,263,592
	273,384	WGL Holdings, Inc.		9,251,315
				96,416,569
		Total Investments (Cost $446,695,792)—100.0%		439,906,608
		Liabilities in excess of other assets—(0.0%)		(86,239	)
		Net Assets—100.0%	$	439,820,369

See Notes to Financial Statements.
26

Schedule of Investments

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—14.2%
	2,238	Applebee's International, Inc.	$	60,829
	376	Courier Corp.		14,965
	7,756	Harley-Davidson, Inc.		491,110
	2,247	Harte-Hanks, Inc.		58,647
	42,024	Home Depot (The), Inc.		1,591,449
	1,729	John Wiley & Sons, Inc., Class A		64,751
	45,483	Lowe's Cos., Inc.		1,389,960
	34,589	McDonald's Corp.		1,669,957
	1,068	Polaris Industries, Inc.		53,966
	4,187	Ross Stores, Inc.		138,799
	13,662	TJX Cos. (The), Inc.		381,033
	1,673	Wolverine World Wide, Inc.		47,814
				5,963,280
		Consumer Staples—5.4%
	18,580	Sysco Corp.		608,309
	34,965	Wal-Mart Stores, Inc.		1,675,523
				2,283,832
		Energy—1.2%
	1,667	Holly Corp.		106,021
	6,808	Kinder Morgan Energy Partners, L.P.		377,504
				483,525
		Financials—45.3%
	14,782	AFLAC, Inc.		758,908
	619	Alabama National BanCorp.		38,762
	24,399	American International Group, Inc.		1,705,733
	659	Anchor BanCorp Wisconsin, Inc.		17,740
	2,978	Arthur J. Gallagher & Co.		83,265
	2,936	Astoria Financial Corp.		77,980
	473	BancFirst Corp.		20,249
	33,573	Bank of America Corp.		1,708,865
	383	Banner Corp.		14,294
	4,231	Brown & Brown, Inc.		108,948
	31,023	Citigroup, Inc.		1,663,453
	1,464	City National Corp.		107,194
	5,750	Commerce Bancorp, Inc.		192,280
	1,694	Corus Bankshares, Inc.		28,476
	2,516	CVB Financial Corp.		29,865
	3,806	Eaton Vance Corp.		145,465
	1,648	Erie Indemnity Co., Class A		86,602
	16,565	Fifth Third Bancorp		672,373
	433	First Bancorp.		9,019
	627	First State Bancorp.		13,111
	636	Flushing Financial Corp.		9,890
	3,091	Forest City Enterprises, Inc., Class A		206,510
	19,914	Freddie Mac		1,290,029
	1,586	Glacier Bancorp, Inc.		34,067
	1,537	Greater Bay Bancorp		39,639
	3,370	HCC Insurance Holdings, Inc.		103,324
	388	IBERIABANK Corp.		20,366

Number of Shares			Value
		Common Stocks (Continued)
	680	Independent Bank Corp.	$	11,220
	2,011	Investors Financial Services Corp.		124,441
	898	Irwin Financial Corp.		14,395
	4,023	Legg Mason, Inc.		399,041
	16,040	Lehman Brothers Holdings, Inc.		1,207,491
	3,285	M&T Bank Corp.		365,752
	992	MAF Bancorp, Inc.		39,829
	1,647	Mercury General Corp.		89,185
	2,391	Nuveen Investments, Inc., Class A		127,440
	6,962	Old Republic International Corp.		148,082
	395	Old Second Bancorp, Inc.		11,558
	1,415	Pacific Capital Bancorp		38,106
	9,059	People's United Financial, Inc.		180,365
	969	Provident Bankshares Corp.		31,047
	433	S.Y. Bancorp, Inc.		10,201
	2,976	SEI Investments Co.		181,625
	3,539	Sky Financial Group, Inc.		96,438
	12,361	SLM Corp.		665,393
	430	Southwest Bancorp, Inc.		10,535
	1,237	State Auto Financial Corp.		37,172
	10,111	State Street Corp.		696,345
	562	Sterling Bancorp		9,728
	9,843	Synovus Financial Corp.		310,645
	7,999	T. Rowe Price Group, Inc.		397,390
	3,895	TCF Financial Corp.		105,477
	49,285	U.S. Bancorp		1,692,940
	26,775	Washington Mutual, Inc.		1,124,015
	47,208	Wells Fargo & Co.		1,694,295
	471	West Coast Bancorp		14,634
	908	Westamerica Bancorp		42,522
				19,063,714
		Health Care—17.4%
	1,359	Arrow International, Inc.		43,271
	7,366	Becton, Dickinson & Co.		579,631
	12,055	Cardinal Health, Inc.		843,247
	26,507	Johnson & Johnson		1,702,280
	31,493	Medtronic, Inc.		1,666,924
	792	Meridian Bioscience, Inc.		23,546
	63,728	Pfizer, Inc.		1,686,243
	12,312	Stryker Corp.		799,541
				7,344,683
		Industrials—9.2%
	4,778	Cintas Corp.		179,032
	9,311	Danaher Corp.		662,850
	2,385	Donaldson Co., Inc.		85,669
	6,447	Expeditors International of Washington, Inc.		269,485
	696	Franklin Electric Co., Inc.		29,643
	16,829	Illinois Tool Works, Inc.		863,496
	647	LSI Industries, Inc.		10,197
	758	McGrath Rentcorp		22,854
	1,085	Mine Safety Appliances Co.		45,733

See Notes to Financial Statements.
27

Schedule of Investments (Continued)

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	543	Raven Industries, Inc.	$	15,687
	25,171	United Technologies Corp.		1,689,728
				3,874,374
		Information Technology—3.7%
	16,572	Automatic Data Processing, Inc.		741,763
	2,705	Jack Henry & Associates, Inc.		64,244
	9,013	Linear Technology Corp.		337,266
	11,502	Paychex, Inc.		426,724
				1,569,997
		Materials—3.4%
	1,045	AptarGroup, Inc.		76,546
	9,081	Nucor Corp.		576,280
	9,598	Praxair, Inc.		619,552
	3,954	Sigma-Aldrich Corp.		166,384
				1,438,762
		Total Common Stocks (Cost $39,913,828)		42,022,167

Money Market Fund—0.0%

6,625	Liquid Assets Portfolio Private Class* (Cost $6,625)		6,625
	Total Investments (Cost $39,920,453)—99.8%		42,028,792
	Other assets less liabilities—0.2%		98,738
	Net Assets—100.0%	$	42,127,530

*  Affiliated investment.

See Notes to Financial Statements.
28

Schedule of Investments

PowerShares International Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Consumer Discretionary—8.0%
	138,422	Honda Motor Co. Ltd. ADR	$	4,765,869
	73,839	Luxottica Group SpA ADR		2,557,783
	537,760	Pearson PLC ADR		9,174,187
	50,977	Publicis Groupe ADR		2,426,505
	194,753	Reed Elsevier NVADR		7,330,503
	142,213	Reed Elsevier PLC ADR		7,187,445
	164,288	Thomson (The) Corp.		7,236,886
	49,924	WPP Group PLC ADR		3,707,356
				44,386,534
		Consumer Staples—10.4%
	168,331	British American Tobacco PLC ADR		10,480,288
	30,250	Bunge Ltd.		2,291,740
	105,968	Cadbury Schweppes PLC ADR		5,621,602
	109,823	Diageo PLC ADR		9,269,061
	113,720	Groupe Danone ADR		3,773,230
	96,005	Imperial Tobacco Group PLC ADR		8,391,797
	290,615	Unilever NV		8,863,758
	275,467	Unilever PLC ADR		8,624,872
				57,316,348
		Energy—11.3%
	39,022	BG Group PLC ADR		2,806,852
	164,632	BP PLC ADR		11,083,027
	27,535	Canadian Natural Resources Ltd.		1,641,361
	301,701	Enbridge, Inc.		9,956,133
	59,876	Imperial Oil Ltd.		2,277,084
	163,364	Norsk Hydro ASA ADR		5,644,226
	272,097	Sasol Ltd. ADR		9,297,554
	305,076	TransCanada Corp.		10,906,468
	168,996	Yanzhou Coal Mining Co. Ltd. ADR		8,693,154
				62,305,859
		Financials—38.1%
	212,596	ABN AMRO Holding NV ADR		10,300,276
	89,667	ACE Ltd.		5,331,600
	132,290	Allianz SE ADR		2,939,484
	153,780	Allied Irish Banks PLC ADR		9,332,908
	94,656	Australia and New Zealand Banking Group Ltd. ADR		11,988,182
	314,687	Banco Bilbao Vizcaya Argentaria SA ADR		7,533,607
	469,443	Banco Santander Central Hispanic SA ADR		8,304,447
	113,443	Bank of Ireland ADR		9,825,298
	179,951	Bank of Montreal		11,279,329
	201,341	Bank of Nova Scotia		9,700,609
	225,975	Barclays PLC ADR		13,115,589
	141,293	Brookfield Properties Corp.		5,802,904
	107,590	Canadian Imperial Bank of Commerce		9,514,184
	132,052	Credicorp Ltd.		6,890,473
	30,066	Everest Re Group Ltd.		3,025,842
	152,759	HSBC Holdings PLC ADR		14,108,820
	172,871	Manulife Financial Corp.		6,242,372

Number of Shares			Value
		Common Stocks (Continued)
	117,455	Max Capital Group Ltd.	$	3,147,794
	67,643	National Australia Bank Ltd. ADR		12,026,925
	6,978	ORIX Corp. ADR		943,984
	99,907	PartnerRe Ltd.		7,195,302
	95,509	RenaissanceRe Holdings Ltd.		5,171,812
	163,021	Royal Bank of Canada		8,486,873
	157,730	Sun Life Financial, Inc.		7,468,516
	139,124	Toronto-Dominion (The) Bank		8,503,259
	112,755	Westpac Banking Corp. ADR		12,549,632
				210,730,021
		Health Care—1.9%
	52,044	Fresenius Medical Care AG ADR		2,606,884
	30,682	Novo-Nordisk A/S ADR		3,019,416
	39,384	Smith & Nephew PLC ADR		2,455,592
	56,923	Teva Pharmaceutical Industries Ltd. ADR		2,180,720
				10,262,612
		Industrials—6.0%
	100,444	Canadian National Railway Co.		5,046,307
	124,493	TNT NV ADR		5,619,614
	691,621	Tomkins PLC ADR		14,724,611
	83,597	Volvo AB ADR		8,131,480
				33,522,012
		Information Technology—7.8%
	70,780	Canon, Inc. ADR		3,977,836
	41,578	Dassault Systemes SA ADR		2,469,733
	30,944	KYOCERA Corp. ADR		3,017,040
	2,289,869	Nam Tai Electronics, Inc.		29,676,702
	51,071	SAP AG ADR		2,451,408
	71,645	Satyam Computer Services Ltd. ADR		1,782,528
				43,375,247
		Materials—4.9%
	77,161	Akzo Nobel NV ADR		6,142,016
	96,563	BHP Billiton Ltd. ADR		4,716,137
	140,561	Compania de Minas Buenaventura SA ADR		4,579,477
	107,184	CRH PLC ADR		4,788,981
	84,155	Hanson PLC ADR		7,143,076
				27,369,687
		Telecommunication Services—3.4%
	21,672	America Movil SAB de CV ADR		1,138,430
	310,616	NTT DoCoMo, Inc. ADR		5,283,578
	27,702	Rostelecom ADR		1,464,051
	98,790	Telenor ASA ADR		5,558,914
	184,228	Vodafone Group PLC ADR		5,292,870
				18,737,843
		Utilities—8.4%
	122,238	Consolidated Water Co., Inc.		3,167,187
	127,849	E.ON AG ADR		6,409,070
	291,111	Endesa SA ADR		15,900,483
	264,885	Huaneng Power International, Inc. ADR		10,751,682

See Notes to Financial Statements.
29

Schedule of Investments (Continued)

PowerShares International Dividend Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	126,545	National Grid PLC ADR	$	9,967,950
				46,196,372
		Total Investments (Cost $511,348,641)—100.2%		554,202,535
		Liabilities in excess of other assets—(0.2%)		(1,002,540	)
		Net Assets—100.0%	$	553,199,995

ADR American Depositary Receipt.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United Kingdom	$	143,154,995			25.9	%
Canada		104,062,285			18.8
Australia		41,280,876			7.5
Netherlands		38,256,167			6.9
Spain		31,738,537			5.7
British Virgin Islands		29,676,702			5.4
Bermuda		27,722,963			5.0
Ireland		23,947,187			4.3
China		19,444,836			3.5
Japan		17,988,307			3.3
Germany		14,406,846			2.6
Norway		11,203,140			2.0
South Africa		9,297,554			1.7
France		8,669,468			1.6
Cayman Islands		8,498,787			1.5
Sweden		8,131,480			1.5
Peru		4,579,477			0.8
Denmark		3,019,416			0.5
Italy		2,557,783			0.5
Israel		2,180,720			0.4
India		1,782,528			0.3
Russia		1,464,051			0.3
Mexico		1,138,430			0.2
Total investments		554,202,535			100.2
Liabilities in excess of other assets		(1,002,540	)		(0.2	)
Net Assets	$	553,199,995			100.0	%

See Notes to Financial Statements.
30

Schedule of Investments

PowerShares Buyback Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks —100.0%
		Consumer Discretionary—27.6%
	2,272	American Greetings Corp., Class A	$	57,822
	895	Audiovox Corp., Class A*		12,879
	3,194	Autoliv, Inc.		185,731
	8,386	AutoNation, Inc.*		171,410
	2,796	AutoZone, Inc.*		371,980
	11,325	Bed Bath & Beyond, Inc.*		461,381
	4,090	Belo Corp., Class A		78,814
	2,621	Black & Decker Corp.		237,777
	630	Blue Nile, Inc.*		29,648
	2,341	Borders Group, Inc.		49,419
	1,064	Brookfield Homes Corp.		36,133
	1,007	CBRL Group, Inc.		44,892
	4,774	Centex Corp.		213,732
	3,720	Claire's Stores, Inc.		121,160
	19,830	Clear Channel Communications, Inc.		702,577
	1,450	Columbia Sportswear Co.		90,770
	3,453	Corinthian Colleges, Inc.*		47,755
	254	CPI Corp.		14,608
	1,701	Cumulus Media, Inc., Class A*		15,972
	423	Cutter & Buck, Inc.		5,994
	48,961	DIRECTV Group (The), Inc.*		1,167,229
	1,305	Dover Downs Gaming & Entertainment, Inc.		16,978
	152	Duckwall-ALCO Stores, Inc.*		5,784
	1,623	Entercom Communications Corp., Class A		45,022
	4,154	Entravision Communications Corp., Class A*		40,751
	1,932	Furniture Brands International, Inc.		31,067
	32,598	Gap (The), Inc.		585,134
	5,708	Gentex Corp.		101,602
	10,293	Harley-Davidson, Inc.		651,753
	2,981	Harte-Hanks, Inc.		77,804
	6,429	Hasbro, Inc.		203,221
	1,264	Hibbett Sports, Inc.*		36,846
	715	IHOP Corp.		42,128
	1,627	ITT Educational Services, Inc.*		158,161
	1,292	Jackson Hewitt Tax Service, Inc.		35,633
	4,336	Jones Apparel Group, Inc.		144,779
	3,570	KB Home		157,473
	1,036	Kellwood Co.		29,194
	12,834	Kohl's Corp.*		950,229
	15,440	Marriott International, Inc., Class A		698,042
	3,391	Marvel Entertainment, Inc.*		100,136
	15,766	Mattel, Inc.		446,178
	14,042	McGraw-Hill (The) Cos., Inc.		920,172
	4,392	Mediacom Communications Corp., Class A*		37,903
	590	Midas, Inc.*		12,892
	133	Mity Enterprises, Inc.*		2,664
	1,261	Nautilus, Inc.		17,414
	227	NVR, Inc.*		187,048
	10,982	Office Depot, Inc.*		369,215
	6,678	Omnicom Group, Inc.		699,253
	2,793	Pacific Sunwear Of California*		58,457

Number of Shares			Value
		Common Stocks (Continued)
	1,417	Polaris Industries, Inc.	$	71,601
	533	Pre-Paid Legal Services, Inc.		30,408
	1,392	Progressive Gaming International Corp.*		6,069
	3,945	Radio One, Inc., Class D*		27,852
	2,170	Ruby Tuesday, Inc.		58,069
	1,702	Ryland Group, Inc.		75,399
	953	Salem Communications Corp., Class A*		10,979
	344	Smith & Wollensky Restaurant Group (The), Inc.*		3,440
	2,668	Sonic Corp.*		59,870
	747	Standard Motor Products, Inc.		13,693
	2,587	Standard-Pacific Corp.		53,939
	437	Stanley Furniture Co., Inc.		9,457
	2,288	Station Casinos, Inc.		199,056
	4,217	Stewart Enterprises, Inc., Class A		31,712
	905	Sturm Ruger & Co., Inc.*		11,684
	3,206	Sun-Times Media Group, Inc., Class A		19,557
	265	Superior Uniform Group, Inc.		3,434
	3,353	Tempur-Pedic International, Inc.		87,077
	2,479	Timberland Co., Class A*		63,983
	151,008	Time Warner, Inc.		3,115,294
	9,599	Tribune Co.		314,847
	27,624	Viacom, Inc., Class B*		1,139,490
	1,677	WCI Communities, Inc.*		36,626
	3,142	Weight Watchers International, Inc.		150,785
	10,536	Yum! Brands, Inc.		651,757
				17,226,694
		Consumer Staples—3.2%
	15,587	Campbell Soup Co.		609,453
	759	Chattem, Inc.*		43,369
	2,243	Energizer Holdings, Inc.*		217,975
	8,258	Estee Lauder (The) Cos., Inc., Class A		424,626
	9,223	Hershey (The) Co.		506,896
	1,263	Lancaster Colony Corp.		53,336
	1,405	Performance Food Group Co.*		43,906
	1,072	Ralcorp Holdings, Inc.*		70,548
				1,970,109
		Energy—8.4%
	12,799	Baker Hughes, Inc.		1,028,912
	11,719	BJ Services Co.		335,867
	39,331	Exxon Mobil Corp.		3,122,094
	2,212	Holly Corp.		140,683
	6,256	Patterson-UTI Energy, Inc.		152,584
	590	Petroleum Development Corp.*		30,680
	4,849	Sunoco, Inc.		366,245
	1,204	Universal Compression Holdings, Inc.*		80,150
				5,257,215
		Financials—13.3%
	1,197	Affiliated Managers Group, Inc.*		140,803
	238	American Bank, Inc.		1,964
	456	American Physicians Capital, Inc.*		18,030

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares Buyback Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	4,693	AmeriCredit Corp.*	$	118,404
	1,387	Asset Acceptance Capital Corp.*		25,549
	699	Associated Estates Realty Corp.		10,611
	4,862	Assurant, Inc.		279,711
	3,896	Astoria Financial Corp.		103,478
	748	Beverly Hills Bancorp, Inc.		4,989
	265	Camden National Corp.		10,497
	2,187	Erie Indemnity Co., Class A		114,927
	417	Federal Agricultural Mortgage Corp., Class C		11,417
	136	First Federal Bankshares Inc.		2,568
	1,559	First Financial Bancorp		23,229
	1,128	GAMCO Investors, Inc., Class A		51,459
	17,616	Genworth Financial, Inc., Class A		642,808
	13,090	Goldman Sachs Group (The), Inc.		2,861,604
	2,049	Hanover Insurance Group (The), Inc.		94,172
	976	Housevalues, Inc.*		4,743
	22,190	Hudson City Bancorp, Inc.		295,571
	7,583	Janus Capital Group, Inc.		189,727
	1,105	KNBT Bancorp, Inc.		16,586
	52	MFB Corp.		1,781
	3,319	MGIC Investment Corp.		204,484
	101	Monarch Community Bancorp, Inc.		1,202
	11,130	Moody's Corp.		735,915
	55	North Central Bancshares, Inc.		2,236
	3,173	Nuveen Investments, Inc., Class A		169,121
	214	Oak Hill Financial, Inc.		4,926
	1,748	Partners Trust Financial Group, Inc.		19,368
	738	Piper Jaffray Cos.*		47,092
	73	Provident Community Bancshares, Inc.		1,460
	2,663	Provident Financial Services, Inc.		45,644
	18,784	Prudential Financial, Inc.		1,784,479
	783	QC Holdings, Inc.		10,281
	143	Team Financial, Inc.		2,162
	3,902	Torchmark Corp.		266,507
				8,319,505
		Health Care—15.2%
	2,391	Advanced Medical Optics, Inc.*		96,668
	20,475	Aetna, Inc.		959,868
	402	America Service Group, Inc.*		6,553
	7,572	AmerisourceBergen Corp.		378,524
	46,645	Amgen, Inc.*		2,991,809
	1,781	AMICAS, Inc.*		5,254
	7,336	Applera Corp. - Applied Biosystems Group		229,177
	1,731	Apria Healthcare Group, Inc.*		54,942
	640	Biosite, Inc.*		59,200
	15,998	Cardinal Health, Inc.		1,119,060
	2,675	Charles River Laboratories International, Inc.*		126,688
	3,895	CIGNA Corp.		606,023
	1,120	Conmed Corp.*		33,958
	6,774	Emdeon Corp.*		109,332
	5,444	Express Scripts, Inc.*		520,174

Number of Shares			Value
		Common Stocks (Continued)
	12,703	Forest Laboratories, Inc.*	$	675,927
	7,841	IMS Health, Inc.		229,977
	1,881	Invitrogen Corp.*		123,149
	4,701	Laboratory Corp. of America Holdings*		371,097
	2,912	Manor Care, Inc.		188,960
	4,859	PerkinElmer, Inc.		117,588
	903	PolyMedica Corp.		36,517
	2,116	Savient Pharmaceuticals, Inc.*		24,334
	2,592	STERIS Corp.		66,252
	4,032	Waters Corp.*		239,622
	4,096	Watson Pharmaceuticals, Inc.*		111,821
				9,482,474
		Industrials—5.9%
	143	Aerosonic Corp.*		1,115
	1,169	Albany International Corp., Class A		44,773
	1,318	Alliant Techsystems, Inc.*		122,745
	1,120	Bowne & Co., Inc.		18,682
	1,938	Brink's (The) Co.		123,063
	2,664	CBIZ, Inc.*		18,541
	1,289	Central Parking Corp.		28,848
	1,861	Con-way, Inc.		101,666
	1,424	Diamond Management & Technology Consultants, Inc.		16,148
	947	Dollar Thrifty Automotive Group*		44,395
	2,376	Dun & Bradstreet (The) Corp.		214,553
	591	Exponent, Inc.*		12,500
	656	GP Strategies Corp.*		6,284
	719	Heidrick & Struggles International, Inc.*		33,922
	2,538	Herman Miller, Inc.		87,333
	1,915	HNI Corp.		79,932
	674	Innovative Solutions & Support, Inc.*		18,292
	5,711	JB Hunt Transport Services, Inc.		154,540
	1,031	John H. Harland Co.		54,231
	4,373	Joy Global, Inc.		221,405
	3,066	Kansas City Southern*		113,902
	1,972	Knoll, Inc.		45,790
	340	Lawson Products		12,155
	15,650	Masco Corp.		425,837
	806	NCI Building Systems, Inc.*		40,276
	1,346	Nordson Corp.		61,687
	112	Paragon Technologies, Inc.*		626
	214	Preformed Line Products Co.		9,031
	7,740	Republic Services, Inc.		216,178
	6,621	Rockwell Automation, Inc.		394,214
	2,444	Ryder System, Inc.		128,652
	2,262	Spherion Corp.*		19,340
	2,386	SPX Corp.		169,120
	4,992	Textron, Inc.		507,536
	1,611	Toro (The) Co.		80,953
	608	U.S. Xpress Enterprises, Inc., Class A*		8,707
	1,186	United Stationers, Inc.*		70,591
				3,707,563

See Notes to Financial Statements.
32

Schedule of Investments (Continued)

PowerShares Buyback Achievers^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Information Technology—21.4%
	3,131	Acxiom Corp.	$	70,761
	2,767	ADTRAN, Inc.		70,420
	1,098	Advent Software, Inc.*		36,849
	16,132	Agilent Technologies, Inc.*		554,457
	13,337	Analog Devices, Inc.		515,075
	55,827	Applied Materials, Inc.		1,072,994
	1,379	ATMI, Inc.*		42,652
	15,666	BEA Systems, Inc.*		184,702
	249	Blonder Tongue Laboratories, Inc.*		433
	8,152	BMC Software, Inc.*		263,880
	21,076	CA, Inc.		574,532
	1,777	Cognex Corp.		38,294
	6,923	Computer Sciences Corp.*		384,503
	12,959	Compuware Corp.*		127,905
	356	Cyberoptics Corp.*		4,678
	2,626	Diebold, Inc.		125,181
	2,633	DST Systems, Inc.*		205,506
	4,925	EarthLink, Inc.*		37,726
	83,890	EMC Corp.		1,273,449
	2,283	Fair Isaac Corp.		81,526
	6,774	Fiserv, Inc.*		360,174
	2,648	Flir Systems, Inc.*		107,218
	977	Gevity HR, Inc.		18,221
	5,419	Intersil Corp., Class A		161,432
	3,837	Lexmark International, Inc., Class A*		209,117
	3,104	Micrel, Inc.		38,955
	108,870	Microsoft Corp.		3,259,567
	496	MicroStrategy, Inc., Class A*		56,425
	730	MTS Systems Corp.		31,032
	12,529	National Semiconductor Corp.		329,513
	1,816	NMS Communications Corp*		3,269
	13,549	Novell, Inc.*		98,908
	5,037	Novellus Systems, Inc.*		163,048
	522	Numerex Corp., Class A*		5,873
	509	Overland Storage, Inc.*		1,899
	318	Perceptron, Inc.*		2,856
	3,632	Polycom, Inc.*		120,946
	1,160	Renaissance Learning, Inc.		14,152
	1,221	Selectica, Inc.*		2,418
	1,420	Sigmatel, Inc.*		5,467
	735	SM&A*		5,461
	36,951	Symantec Corp.*		650,338
	212	TESSCO Technologies, Inc.*		6,042
	57,688	Texas Instruments, Inc.		1,982,736
	609	Travelzoo, Inc.*		16,906
	1,795	Websense, Inc.*		44,354
				13,361,850
		Materials—2.8%
	1,078	A. Schulman, Inc.		24,966
	318	AEP Industries, Inc.*		13,534

Number of Shares			Value
		Common Stocks (Continued)
	2,503	Ashland, Inc.	$	150,055
	1,646	Cleveland-Cliffs, Inc.		114,051
	1,931	Eagle Materials, Inc.		86,142
	268	Friedman Industries, Inc.		2,640
	17,917	International Paper Co.		675,830
	5,311	Pactiv Corp.*		183,654
	3,797	Vulcan Materials Co.		469,575
				1,720,447
		Telecommunication Services—1.0%
	4,451	CenturyTel, Inc.		204,969
	11,302	Crown Castle International Corp.*		388,110
	3,281	IDT Corp., Class B		36,255
				629,334
		Utilities—1.2%
	405	Central Vermont Public Service Corp.		13,041
	14,021	PG&E Corp.		709,463
				722,504
		Total Investments (Cost $61,009,146)—100.0%		62,397,695
		Liabilities in excess of other assets—(0.0%)		(14,555	)
		Net Assets—100.0%	$	62,383,140

*  Non-income producing security.

See Notes to Financial Statements.
33

Schedule of Investments

PowerShares Financial Preferred Portfolio

April 30, 2007

Number of Shares			Value
		Preferred Stocks—100.2%
		Banks—37.2%
	92,482	Abbey National PLC, 7.38%, Series C (United Kingdom)	$	2,346,268
	171,573	Bank of America Corp., 6.20%, Series D		4,503,791
	171,500	Barclays Bank PLC, 6.63%, Series 2 (United Kingdom)		4,503,590
	268,137	HSBC Holdings PLC, 6.20%, Series A (United Kingdom)		6,794,592
	158,092	Royal Bank of Scotland Group PLC, 5.75%, Series L (United Kingdom)		3,797,370
	102,171	Royal Bank of Scotland Group PLC, 6.25%, Series P (United Kingdom)		2,602,295
	186,207	Royal Bank of Scotland Group PLC, 6.35%, Series N (United Kingdom)		4,725,934
	171,896	Royal Bank of Scotland Group PLC, 6.40%, Series M (United Kingdom)		4,390,224
	124,514	Royal Bank of Scotland Group PLC, 6.75%, Series Q (United Kingdom)		3,244,835
				36,908,899
		Diversified Financial Services—20.7%
	169,903	CIT Group, Inc., 6.35%, Series A		4,415,779
	172,656	Goldman Sachs Group, Inc., 6.20%, Series B		4,430,353
	106,811	HSBC Finance Corp., 6.36%		2,766,405
	171,459	Lehman Brothers Holdings, 6.50%		4,464,792
	169,226	Merrill Lynch & Co., Inc., 6.38%, Series 3		4,423,568
				20,500,897
		Insurance—42.3%
	172,775	ACE Ltd., 7.80%, Series C (Cayman Islands)		4,452,412
	129,291	Aegon NV, 6.38% (Netherlands)		3,357,687
	54,548	Aegon NV, 6.50% (Netherlands)		1,396,429
	170,305	Axis Capital Holdings Ltd., 7.25%, Series A (Bermuda)		4,419,415
	129,742	ING Groep NV, 6.13% (Netherlands)		3,263,011
	92,650	ING Groep NV, 6.20% (Netherlands)		2,329,221
	147,878	ING Groep NV, 7.05% (Netherlands)		3,753,144
	203,663	ING Groep NV, 7.20% (Netherlands)		5,179,149
	183,293	Metlife, Inc., 6.50%, Series B		4,824,271
	171,459	PartnerRe Ltd., 6.75%, Series C (Bermuda)		4,360,202
	55,991	Prudential PLC, 6.50% (United Kingdom)		1,439,529
	123,836	Prudential PLC, 6.75% (United Kingdom)		3,183,824
				41,958,294
		Total Preferred Stocks (Cost $99,862,311)		99,368,090

Money Market Fund—0.2%

150,774	Liquid Assets Portfolio Private Class* (Cost $150,774)		150,774
	Total Investments (Cost $100,013,085)—100.4%		99,518,864
	Liabilities in excess of other assets—(0.4%)		(400,624	)
	Net Assets—100.0%	$	99,118,240

*  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United Kingdom	$	37,028,461			37.3	%
United States		29,979,733			30.2
Netherlands		19,278,641			19.5
Bermuda		8,779,617			8.9
Cayman Islands		4,452,412			4.5
Total Investments		99,518,864			100.4
Liabilities in excess of other assets		(400,624	)		(0.4	)
Net Assets	$	99,118,240			100.0	%

See Notes to Financial Statements.
34

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Statements of Assets and Liabilities

April 30, 2007

	PowerShares Dividend AchieversTM Portfolio			PowerShares High Yield Equity Dividend AchieversTM Portfolio			PowerShares High Growth Rate Dividend AchieversTM Portfolio
ASSETS:
Unaffiliated investments at value	$	70,043,877		$	439,906,608		$	42,022,167
Affiliated investments at value		27,578			—			6,625
Cash		—			—			87,491
Receivables:
Investments sold		3,459,752			29,861,348			883,778
Capital stock sold		1,751,973			25,313,403			1,685,101
Dividends		78,209			1,021,460			35,471
Due from Adviser		18,281			30,955			13,694
Total Assets		75,379,670			496,133,774			44,734,327
LIABILITIES:
Due to custodian		206,594			1,589,382			—
Payables:
Investments purchased		3,268,137			29,054,701			867,114
Capital stock purchased		1,751,973			25,313,403			1,685,101
Accrued advisory fees		22,412			145,476			13,259
Accrued expenses		51,619			210,443			41,323
Total Liabilities		5,300,735			56,313,405			2,606,797
NET ASSETS	$	70,078,935		$	439,820,369		$	42,127,530
NET ASSETS CONSIST OF:
Paid-in capital	$	64,215,859		$	457,269,226		$	40,262,598
Undistributed net investment income		14,002			—			15,907
Accumulated net realized loss on investments		(131,405	)		(10,659,673	)		(259,314	)
Net unrealized appreciation/depreciation on investments		5,980,479			(6,789,184	)		2,108,339
Net Assets	$	70,078,935		$	439,820,369		$	42,127,530
Shares outstanding (unlimited amount authorized, $0.01 par value)		4,000,000			27,800,000			2,500,000
Net asset value	$	17.52		$	15.82		$	16.85
Unaffiliated investments at cost	$	64,063,398		$	446,695,792		$	39,913,828
Affiliated investments at cost	$	27,578		$	—		$	6,625

See Notes to Financial Statements.
36

	PowerShares International Dividend AchieversTM Portfolio			PowerShares Buyback AchieversTM Portfolio			PowerShares Financial Preferred Portfolio
ASSETS:
Unaffiliated investments at value	$	554,202,535		$	62,397,695		$	99,368,090
Affiliated investments at value		—			—			150,774
Cash		—			23,413			—
Receivables:
Investments sold		43,593,623			2,149,676			—
Capital stock sold		38,268,821			2,599,298			—
Dividends		3,057,313			20,164			65,680
Due from Adviser		42,138			6,079			2,683
Total Assets		639,164,430			67,196,325			99,587,227
LIABILITIES:
Due to custodian		230,259			—			369,349
Payables:
Investments purchased		53,184,355			2,141,819			—
Capital stock purchased		32,186,182			2,599,298			—
Accrued advisory fees		169,439			23,643			38,305
Accrued expenses		194,200			48,425			61,333
Total Liabilities		85,964,435			4,813,185			468,987
NET ASSETS	$	553,199,995		$	62,383,140		$	99,118,240
NET ASSETS CONSIST OF:
Paid-in capital	$	515,223,090		$	61,295,512		$	99,612,461
Undistributed net investment income		678,573			—			—
Accumulated net realized loss on investments		(5,555,562	)		(300,921	)		—
Net unrealized appreciation/depreciation on investments		42,853,894			1,388,549			(494,221	)
Net Assets	$	553,199,995		$	62,383,140		$	99,118,240
Shares outstanding (unlimited amount authorized, $0.01 par value)		27,500,000			2,400,000			4,000,000
Net asset value	$	20.12		$	25.99		$	24.78
Unaffiliated investments at cost	$	511,348,641		$	61,009,146		$	99,862,311
Affiliated investments at cost	$	—		$	—		$	150,774

37

Statements of Operations

	PowerShares Dividend AchieversTM Portfolio			PowerShares High Yield Equity Dividend AchieversTM Portfolio			PowerShares High Growth Rate Dividend AchieversTM Portfolio
	Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	1,161,193		$	17,771,067		$	829,839
Affiliated dividend income		2,882			16,255			2,091
Foreign withholding taxes		(105	)		—			(437	)
Total Income		1,163,970			17,787,322			831,493
EXPENSES:
Advisory fees		183,332			1,746,064			134,649
Administration fees		59,999			65,479			59,999
Accounting		54,998			54,998			54,998
Licensing		41,162			436,515			33,662
Printing		22,042			187,884			14,726
Audit		16,500			16,500			16,500
Custodian & transfer agent fees		14,001			27,327			7,202
Listing fee and expenses		10,056			11,060			10,063
Offering costs		1,877			—			3,474
Trustees		1,865			16,182			1,367
Registration & filings		1,531			—			1,603
Legal		934			18,225			1,084
Other expenses		15,249			24,038			10,994
Total Expenses		423,546			2,604,272			350,321
Expenses reimbursed to the Adviser under the Expense Agreement		—			15,435			—
Less fees waived:
Advisory		(150,733	)		—			(134,649	)
Other fees assumed by Adviser		—			—			(9,614	)
Net Expenses		272,813			2,619,707			206,058
Net Investment Income		891,157			15,167,615			625,435
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(92,413	)		(4,614,514	)		(207,727	)
In-kind redemptions		945,228			26,581,454			1,356,887
Net realized gain		852,815			21,966,940			1,149,160
Net change in unrealized appreciation/ depreciation on investments		4,770,653			594,916			643,486
Net realized and unrealized gain (loss) on investments		5,623,468			22,561,856			1,792,646
Net increase in net assets resulting from operations	$	6,514,625		$	37,729,471		$	2,418,081

*  Commencement of Investment Operations.

See Notes to Financial Statements.
38

	PowerShares International Dividend AchieversTM Portfolio			PowerShares Buyback AchieversTM Portfolio			PowerShares Financial Preferred Portfolio
	Year Ended April 30, 2007			For the period December 20, 2006* through April 30, 2007			For the period December 01, 2006* through April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	12,518,016		$	121,962		$	1,230,486
Affiliated dividend income		8,288			—			864
Foreign withholding taxes		(871,494	)		—			—
Total Income		11,654,810			121,962			1,231,350
EXPENSES:
Advisory fees		1,302,547			69,278			114,962
Administration fees		63,706			2,078			3,449
Accounting		54,999			1,386			2,299
Licensing		325,637			13,856			22,993
Printing		153,512			7,427			11,371
Audit		16,500			12,500			12,500
Custodian & transfer agent fees		22,282			4,169			2,350
Listing fee and expenses		10,388			10,000			10,001
Offering costs		8,591			3,887			4,237
Trustees		13,306			586			869
Registration & filings		9,616			1,490			2,462
Legal		13,218			5,000			5,000
Other expenses		17,158			12,359			12,234
Total Expenses		2,011,460			144,016			204,727
Expenses reimbursed to the Adviser under the Expense Agreement		—			—			—
Less fees waived:
Advisory		(48,441	)		(42,482	)		(39,008	)
Other fees assumed by Adviser		—			—			—
Net Expenses		1,963,019			101,534			165,719
Net Investment Income		9,691,791			20,428			1,065,631
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(5,371,094	)		(300,921	)		—
In-kind redemptions		36,316,615			703,967			38,292
Net realized gain		30,945,521			403,046			38,292
Net change in unrealized appreciation/ depreciation on investments		34,368,081			1,388,549			(494,221	)
Net realized and unrealized gain (loss) on investments		65,313,602			1,791,595			(455,929	)
Net increase in net assets resulting from operations	$	75,005,393		$	1,812,023		$	609,702

39

Statements of Changes in Net Assets

	PowerShares Dividend AchieversTM Portfolio						PowerShares High Yield Equity Dividend AchieversTM Portfolio						PowerShares High Growth Rate Dividend AchieversTM Portfolio
	For the year ended April 30, 2007			For the period September 15, 2005* through April 30, 2006			For the year ended April 30, 2007			For the year ended April 30, 2006			For the year ended April 30, 2007			For the period September 15, 2005* through April 30, 2006
OPERATIONS:
Net investment income	$	891,157		$	290,043		$	15,167,615		$	15,812,670		$	625,435		$	275,802
Net realized gain on investments		852,815			187,718			21,966,940			11,949,376			1,149,160			894,796
Net change in unrealized appreciation/ depreciation on investments		4,770,653			1,209,826			594,916			955,503			643,486			1,464,853
Net increase in net assets resulting from operations		6,514,625			1,687,587			37,729,471			28,717,549			2,418,081			2,635,451
Undistributed net investment income included in price of units issued and redeemed		70,102			(770	)		(112,827	)		522,910			14,460			4,850
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(892,954	)		(272,220	)		(16,754,893	)		(14,376,272	)		(627,388	)		(257,942	)
Tax return of capital		—			—			(788,801	)		—			—			—
Total distributions to shareholders		(892,954	)		(272,220	)		(17,543,694	)		(14,376,272	)		(627,388	)		(257,942	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		49,447,993			28,151,565			191,978,674			315,767,012			26,475,751			37,416,728
Value of shares repurchased		(8,439,931	)		(6,117,730	)		(232,033,594	)		(184,663,966	)		(13,366,288	)		(12,566,863	)
Net income equalization		(70,102	)		770			112,827			(522,910	)		(14,460	)		(4,850	)
Net increase (decrease) in net assets resulting from share transactions		40,937,960			22,034,605			(39,942,093	)		130,580,136			13,095,003			24,845,015
Increase (Decrease) in Net Assets		46,629,733			23,449,202			(19,869,143	)		145,444,323			14,900,156			27,227,374
NET ASSETS:
Beginning of period		23,449,202			—			459,689,512			314,245,189			27,227,374			—
End of period	$	70,078,935		$	23,449,202		$	439,820,369		$	459,689,512		$	42,127,530		$	27,227,374
Undistributed net investment income	$	14,002		$	16,670		$	—		$	1,587,278		$	15,907		$	17,860
CHANGES IN SHARES OUTSTANDING:
Shares sold		3,000,000			1,900,000			12,000,000			20,900,000			1,600,000			2,500,000
Shares repurchased		(500,000	)		(400,000	)		(14,700,000	)		(12,200,000	)		(800,000	)		(800,000	)
Shares outstanding, beginning of period		1,500,000			—			30,500,000			21,800,000			1,700,000			—
Shares outstanding, end of period		4,000,000			1,500,000			27,800,000			30,500,000			2,500,000			1,700,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
40

	PowerShares International Dividend AchieversTM Portfolio						PowerShares Buyback AchieversTM Portfolio			PowerShares Financial Preferred Portfolio
	For the year ended April 30, 2007			For the period September 15, 2005* through April 30, 2006			For the period December 20, 2006* through April 30, 2007			For the period December 01, 2006* through April 30, 2007
OPERATIONS:
Net investment income	$	9,691,791		$	1,849,152		$	20,428		$	1,065,631
Net realized gain on investments		30,945,521			5,624,937			403,046			38,292
Net change in unrealized appreciation/ depreciation on investments		34,368,081			8,485,813			1,388,549			(494,221	)
Net increase in net assets resulting from operations		75,005,393			15,959,902			1,812,023			609,702
Undistributed net investment income included in price of units issued and redeemed		2,016,764			(246,561	)		19,385			193,038
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(9,485,475	)		(1,377,038	)		(39,938	)		(1,336,352	)
Tax return of capital		—			—			—			—
Total distributions to shareholders		(9,485,475	)		(1,377,038	)		(39,938	)		(1,336,352	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		518,438,866			211,304,049			78,476,709			104,833,729
Value of shares repurchased		(201,601,419	)		(55,044,283	)		(17,865,654	)		(4,988,839	)
Net income equalization		(2,016,764	)		246,561			(19,385	)		(193,038	)
Net increase (decrease) in net assets resulting from share transactions		314,820,683			156,506,327			60,591,670			99,651,852
Increase (Decrease) in Net Assets		382,357,365			170,842,630			62,383,140			99,118,240
NET ASSETS:
Beginning of period		170,842,630			—			—			—
End of period	$	553,199,995		$	170,842,630		$	62,383,140		$	99,118,240
Undistributed net investment income	$	678,573		$	472,257		$	—		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		28,200,000			13,500,000			3,100,000			4,200,000
Shares repurchased		(10,800,000	)		(3,400,000	)		(700,000	)		(200,000	)
Shares outstanding, beginning of period		10,100,000			—			—			—
Shares outstanding, end of period		27,500,000			10,100,000			2,400,000			4,000,000

41

Financial Highlights

PowerShares Dividend Achievers^TM Portfolio

	For the year ended April 30, 2007			For the period September 15, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	15.63		$	14.84
Net investment income**		0.32			0.17
Net realized and unrealized gain on investments		1.85			0.78
Total from operations		2.17			0.95
Undistributed net investment income included in price of units issued and redeemed**		0.03			—	(a)
Distributions to shareholders from:
Net investment income		(0.31	)		(0.16	)
Net asset value at end of period	$	17.52		$	15.63
TOTAL RETURN***		14.26	%		6.45	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	70,079		$	23,449
Ratio to average net assets of:
Expenses, net of waivers		0.60	%		0.67	%†
Expenses, prior to waivers		0.92	%		1.02	%†
Net investment income, net of waivers		1.94	%		1.81	%†
Portfolio turnover rate ††		9	%		8	%

PowerShares High Yield Equity Dividend Achievers^TM Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period December 9, 2004* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	15.07		$	14.41		$	14.79
Net investment income**		0.54			0.53			0.18
Net realized and unrealized gain (loss) on investments		0.84			0.59			(0.39	)
Total from operations		1.38			1.12			(0.21	)
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.02			—
Distributions to shareholders from:
Net investment income		(0.60	)		(0.48	)		(0.17	)
Tax return of capital		(0.03	)		—			—
Total distributions		(0.63	)		(0.48	)		(0.17	)
Net asset value at end of period	$	15.82		$	15.07		$	14.41
TOTAL RETURN***		9.28	%		7.92	%		(1.44	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	439,820		$	459,690		$	314,245
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.60	%		0.61	%		0.60	%†
Expenses, prior to waivers and reimbursements		0.60	%†††		0.65	%		0.66	%†
Net investment income, net of waivers and reimbursements		3.47	%		3.49	%		3.57	%†
Portfolio turnover rate ††		20	%		9	%		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.

†††  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the year ended April 30, 2007.

(a)  Amount represents less than $0.01.

See Notes to Financial Statements.
42

Financial Highlights (Continued)

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

	For the year ended April 30, 2007			For the period September 15, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.02		$	14.78
Net investment income**		0.30			0.15
Net realized and unrealized gain on investments		0.82			1.24
Total from operations		1.12			1.39
Undistributed net investment income included in price of units issued and redeemed**		0.01			—	(a)
Distributions to shareholders from:
Net investment income		(0.30	)		(0.15	)
Net asset value at end of period		16.85		$	16.02
TOTAL RETURN***		7.11	%		9.39	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	42,128		$	27,227
Ratio to average net assets of:
Expenses, net of waivers		0.61	%		0.66	%†
Expenses, prior to waivers		1.04	%		1.00	%†
Net investment income, net of waivers		1.86	%		1.59	%†
Portfolio turnover rate ††		12	%		20	%

PowerShares International Dividend Achievers^TM Portfolio

	For the year ended April 30, 2007			For the period September 15, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.92		$	14.96
Net investment income**		0.53			0.28
Net realized and unrealized gain on investments		3.09			1.84
Total from operations		3.62			2.12
Undistributed net investment income included in price of units issued and redeemed**		0.11			0.04
Distributions to shareholders from:
Net investment income		(0.53	)		(0.20	)
Net asset value at end of period		20.12		$	16.92
TOTAL RETURN***		22.56	%		14.50	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	553,200		$	170,843
Ratio to average net assets of:
Expenses, net of waivers		0.60	%		0.62	%†
Expenses, prior to waivers		0.62	%†††		0.69	%†
Net investment income, net of waivers		2.98	%		3.06	%†
Portfolio turnover rate ††		22	%		8	%

*  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.

†††  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the year ended April 30, 2007.

(a)  Amount represents less than $0.01.

See Notes to Financial Statements.
43

Financial Highlights (Continued)

PowerShares Buyback Achievers^TM Portfolio

	For the period December 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	24.98
Net investment income**		0.01
Net realized and unrealized gain on investments		1.01
Total from operations		1.02
Undistributed net investment income included in price of units issued and redeemed**		0.01
Distributions to shareholders from:
Net investment income		(0.02	)
Net asset value at end of period		25.99
TOTAL RETURN***		4.13	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	62,383
Ratio to average net assets of:
Expenses, net of waivers		0.73	%†
Expenses, prior to waivers		1.04	%†
Net investment income, net of waivers		0.15	%†
Portfolio turnover rate ††		38	%

PowerShares Financial Preferred Portfolio

	For the period December 1, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.12
Net investment income**		0.41
Net realized and unrealized loss on investments		(0.19	)
Total from operations		0.22
Undistributed net investment income included in price of units issued and redeemed**		0.07
Distributions to shareholders from:
Net investment income		(0.63	)
Net asset value at end of period		24.78
TOTAL RETURN***		1.18	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	99,118
Ratio to average net assets of:
Expenses, net of waivers		0.72	%†
Expenses, prior to waivers		0.89	%†
Net investment income, net of waivers		4.63	%†
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.

See Notes to Financial Statements.
44

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

PowerShares Dividend AchieversTM Portfolio	"Dividend AchieversTM Portfolio"
PowerShares High Yield Equity Dividend AchieversTM Portfolio	"High Yield Equity Dividend AchieversTM Portfolio"
PowerShares High Growth Rate Dividend AchieversTM Portfolio	"High Growth Rate Dividend AchieversTM Portfolio"
PowerShares International Dividend AchieversTM Portfolio	"International Dividend AchieversTM Portfolio"
PowerShares Buyback AchieversTM Portfolio	"Buyback AchieversTM Portfolio"
PowerShares Financial Preferred Portfolio	"Financial Preferred Portfolio"

Buyback Achievers^TM Portfolio commenced investment operations on December 20, 2006. Financial Preferred Portfolio commenced investment operations on December 1, 2006. Each portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on the American Stock Exchange. The Funds' market prices may differ to some degree from the 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, each 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 pric e and yield (before the Fund's fees and expenses) of the following equity indices:

Fund	Index
Dividend AchieversTM Portfolio	Broad Dividend AchieversTM Index
High Yield Equity Dividend AchieversTM Portfolio	Mergent Dividend AchieversTM 50 Index
High Growth Rate Dividend AchieversTM Portfolio	High Growth Rate Dividend AchieversTM Index
International Dividend AchieversTM Portfolio	International Dividend AchieversTM Index
Buyback AchieversTM Portfolio	Share BuyBack AchieversTM Index
Financial Preferred Portfolio	Wachovia Hybrid & Preferred Securities Financial Index

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

45

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

official closing price. Preferred securities for which current market quotations are readily available are valued at the closing price. Other portfolio securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions to Shareholders

Each Fund (except for the High Yield Equity Dividend Achievers^TM Portfolio and Financial Preferred Portfolio, which declare and pay dividends monthly) declares and pays dividends from net investment income to its shareholders quarterly and distributes net realized taxable capital gains, if any, annually. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

All Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost of repurchases of capital shares is applied to undistributed net investment income. The amount of equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

46

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services.

The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.40% per annum on each Fund's average daily net assets except for the Buyback Achievers^TM Portfolio and Financial Preferred Portfolio, which pay 0.50% per annum on the Funds' average daily net assets.

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, offering costs, taxes and extraordinary expenses) from exceeding 0.50% (0.60% for the Buyback Achievers^TM Portfolio and Financial Preferred Portfolio) of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dividend AchieversTM Portfolio	$	150,733	$	—
High Growth Rate Dividend AchieversTM Portfolio		134,649		9,614
International Dividend AchieversTM Portfolio		48,441		—
Buyback AchieversTM Portfolio		42,482		—
Financial Preferred Portfolio		39,008		—

The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which 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 as specified above.

During the period ended April 30, 2007, the details of expense waivers and reimbursements to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbursements		Net (Waivers)/ Reimbursements
High Yield Equity Dividend AchieversTM Portfolio	$	(67,568	)	$	83,003	$	15,435
International Dividend AchieversTM Portfolio		(100,872	)		52,431		(48,441	)

The net amounts of waivers or reimbursements are also shown on the Statements of Operations.

47

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dividend AchieversTM Portfolio	$	207,937	$	207,937	$	150,733
High Yield Equity Dividend AchieversTM Portfolio		177,851		177,851		67,569
High Growth Rate Dividend AchieversTM Portfolio		203,239		203,239		144,263
International Dividend AchieversTM Portfolio		91,555		91,555		91,555
Buyback AchieversTM Portfolio		42,482		42,482		42,482
Financial Preferred Portfolio		39,008		39,008		39,008

Distribution Agreement

Effective September 18, 2006 (or since inception, if later), A I M 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. Prior to September 18, 2006, ALPS Distributors, Inc. served as the distributor.

The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the following Licensors:

Fund	Licensor
Dividend AchieversTM Portfolio	Mergent, Inc.
High Yield Equity Dividend AchieversTM Portfolio	Mergent, Inc.
High Growth Rate Dividend AchieversTM Portfolio	Mergent, Inc.
International Dividend AchieversTM Portfolio	Mergent, Inc.
Buyback AchieversTM Portfolio	Mergent, Inc.
Financial Preferred Portfolio	Wachovia Capital Markets, LLC

The above trademarks are owned by the respective Licensors. These trademarks have been licensed to the Adviser for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensors and the Licensors make no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the licensing fees which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

Note 4. INVESCO Transactions and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVESCAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO PLC, announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the

48

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by A I M Advisors, Inc., an affiliate of the Adviser.

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax-basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
Dividend AchieversTM Portfolio	$	14,002	$	(7,896	)	$	5,914,488		$	6,149,529	$	(235,041	)	$	5,920,594
High Yield Equity Dividend AchieversTM Portfolio		—		(9,622,631	)		(7,826,226	)		19,632,682		(27,458,908	)		(17,448,857	)
High Growth Rate Dividend AchieversTM Portfolio		15,907		(17,498	)		2,036,611			2,559,881		(523,270	)		2,035,020
International Dividend AchieversTM Portfolio		678,573		(404,939	)		39,756,200			48,849,481		(9,093,281	)		40,029,834
Buyback AchieversTM Portfolio(1)		—		—			1,310,718			2,344,182		(1,033,464	)		1,310,718
Financial Preferred Portfolio(1)		—		—			(494,221	)		18,428		(512,649	)		(494,221	)

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

Dividend AchieversTM Portfolio	$	64,156,967
High Yield Equity Dividend AchieversTM Portfolio		447,732,834
High Growth Rate Dividend AchieversTM Portfolio		39,992,181
International Dividend AchieversTM Portfolio		514,446,335
Buyback AchieversTM Portfolio(1)		61,086,977
Financial Preferred Portfolio(1)		100,013,085

Distributions to Shareholders:

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
Dividend AchieversTM Portfolio	$	892,954
High Yield Equity Dividend AchieversTM Portfolio		16,754,893
High Growth Rate Dividend AchieversTM Portfolio		627,388
International Dividend AchieversTM Portfolio		9,485,475
Buyback AchieversTM Portfolio(1)		39,938
Financial Preferred Portfolio(1)		1,336,352
	Distributions paid from Return of Capital
High Yield Equity Dividend AchieversTM Portfolio	$	788,801

49

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

The tax character of distributions paid during the year ended April 30, 2006 was as follows:

	Distributions paid from Ordinary Income
Dividend AchieversTM Portfolio	$	272,220
High Yield Equity Dividend AchieversTM Portfolio		14,376,272
High Growth Rate Dividend AchieversTM Portfolio		257,942
International Dividend AchieversTM Portfolio		1,377,038

At April 30, 2007, 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.

	Capital Loss Available Through				Total
	2014		2015		Amount
Dividend AchieversTM Portfolio	$	7,896	$	—	$	7,896
High Yield Equity Dividend AchieversTM Portfolio		2,613,033		7,009,598		9,622,631
High Growth Rate Dividend AchieversTM Portfolio		1,847		15,651		17,498
International Dividend AchieversTM Portfolio		183,478		221,461		404,939

During the fiscal year ended April 30, 2007, the Dividend Achievers^TM Portfolio utilized capital loss carryforwards of $15,673.

Capital losses incurred after October 31 ("post-October losses") within the taxable year are deemed to arise on the first business day of each Fund's next taxable year.

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
Dividend AchieversTM Portfolio	$	57,518
High Growth Rate Dividend AchieversTM Portfolio		170,088
International Dividend AchieversTM Portfolio		2,052,929
Buyback AchieversTM Portfolio(1)		223,090

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in real estate investment trusts, investments in partnerships, wash sales from redemption in-kind

50

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

transactions, redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			Undistributed Capital Gains/ (Accumulated Losses)			Paid-in Capital
Dividend AchieversTM Portfolio	$	(70,973	)	$	(941,037	)	$	1,012,010
High Yield Equity Dividend AchieversTM Portfolio		901,628			(25,660,068	)		24,758,440
High Growth Rate Dividend AchieversTM Portfolio		(14,460	)		(1,344,638	)		1,359,098
International Dividend AchieversTM Portfolio		(2,016,764	)		(36,105,278	)		38,122,042
Buyback AchieversTM Portfolio(1)		125			(703,967	)		703,842
Financial Preferred Portfolio(1)		77,683			(38,292	)		(39,391	)

Note 6. Investment Transactions

For the period ended April 30, 2007, the cost of securities purchased and proceeds from sales of securities, excluding short-term securities and in-kind transactions, were as follows:

	Purchases		Sales
Dividend AchieversTM Portfolio	$	4,238,564	$	3,940,741
High Yield Equity Dividend AchieversTM Portfolio		88,758,184		85,522,073
High Growth Rate Dividend AchieversTM Portfolio		4,310,676		3,941,585
International Dividend AchieversTM Portfolio		85,583,214		74,149,741
Buyback AchieversTM Portfolio(1)		15,602,159		15,707,780
Financial Preferred Portfolio(1)		—		26

For the period ended April 30, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dividend AchieversTM Portfolio	$	45,801,226	$	5,068,367
High Yield Equity Dividend AchieversTM Portfolio		179,240,506		224,781,075
High Growth Rate Dividend AchieversTM Portfolio		22,013,238		9,367,644
International Dividend AchieversTM Portfolio		504,640,396		198,148,637
Buyback AchieversTM Portfolio(1)		76,623,757		15,912,036
Financial Preferred Portfolio(1)		103,844,521		4,020,476

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

⁽¹⁾ First tax year-end will be August 31, 2007.

51

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Transaction fees at scheduled amounts ranging from $500 to $1,600 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 9. Risk of Concentration

The Buyback Achievers^TM Portfolio and Financial Preferred Portfolio concentrate their investments in certain industries or companies, subjecting them to greater risk than funds that invest in a wider range of industries.

Note 10. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

Note 11. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of FIN 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of FIN 48, if any, on the Funds' financial statements.

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

52

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

53

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
PowerShares Dividend AchieversTM Portfolio		100	%		100	%
PowerShares High Yield Equity Dividend AchieversTM Portfolio		100	%		100	%
PowerShares High Growth Rate Dividend AchieversTM Portfolio		100	%		100	%
PowerShares International Dividend AchieversTM Portfolio		100	%		0	%
Buyback AchieversTM Portfolio		100	%		100	%
Financial Preferred Portfolio		100	%		91	%

54

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Management Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989- Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

55

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994-1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

56

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002- Present); Manager, Nuveen Investments (April 1998- August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)(19) of the 1940 Act.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

57

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001-2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

58

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration and Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil and Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

59

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the Funds, information describing the Adviser's current organization, including operations assistance provided by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

60

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

61

PowerShares        Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (ETF). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com

This page contains advertising materials and should not be viewed as part of the Annual Report.

62

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market  
PWO  -  Dynamic OTC  
PIQ  -  Dynamic MagniQuant  
PJF  -  Dynamic Large Cap  
PJG  -  Dynamic Mid Cap  
PJM  -  Dynamic Small Cap  
PWB  -  Dynamic Large Cap Growth  
PWV   ;-  Dynamic Large Cap Value  
PWJ  -  Dynamic Mid Cap Growth  
PWP  -  Dynamic Mid Cap Value  
PWT  -  Dynamic Small Cap Growth  
PWY  -  Dynamic Small Cap Value  
PGZ  -  Dynamic Aggressive Growth  
PVM  -  Dynamic Deep Value  
PYZ  -  Dynamic Basic Materials Sector   ;
PEZ  -  Dynamic Consumer Discretionary Sector  
PSL  -  Dynamic Consumer Staples Sector  
PXI  -  Dynamic Energy Sector  
PFI  -  Dynamic Financials Sector  
PTH  -  Dynamic Healthcare Sector  
PRN  -  Dynamic Industrials Sector  
PTF  -  Dynamic Technology Sector  
PTE  -  Dynamic Telecommunications & Wireless  
PUI  -  Dynamic Utilities  
PJB  -  Dynamic Banking  
PBE  -  Dynamic Biotechnology & Genome  
PKB  -  Dynamic Building & Construction  
PXE  -  Dynamic Energy Exploration & Production  
PBJ  -  Dynamic Food & Beverage  
PHW  -  Dynamic Hardware & Consumer Electronics  
PTJ  -  Dynamic Healthcare Services  
PIC  -  Dynamic Insurance  
PEJ  -  Dynamic Leisure and Entertainment  
PBS  -  Dynamic Media  
PXQ  -  Dynamic Networking  
PXJ  -  Dynamic Oil & Gas Services  
PJP  -  Dynamic Pharmaceuticals  
PMR  -  Dynamic Retail  
PSI  -  Dynamic Semiconductors  
PSJ  -  Dynamic Software  

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

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63

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000  
PRFZ  -  FTSE RAFI US 1500 Small-Mid  
PRFM  -  FTSE RAFI Basic Materials Sector  
PRFG  -  FTSE RAFI Consumer Goods Sector  
PRFS  -  FTSE RAFI Consumer Services Sector  
PRFE  -  FTSE RAFI Energy Sector  
PRFF  -  FTSE RAFI Financials Sector  
PRFH  -  FTSE RAFI Health Care Sector  
PRFN  -  FTSE RAFI Industrials Sector  
PRFQ  -  FTSE RAFI Telecom & Technology Sector  
PRFU  -  FTSE RAFI Utilities Sector  

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense  
ADRA  -  BLDRS Asia 50 ADR Index Fund  
ADRD  -  BLDRS Developed Markets 100 ADR Index Fund  
ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund  
ADRU  -  BLDRS Europe 100 ADR Index Fund  
PKW  -  Buyback Achievers  
PZD  -  Cleantech  
< font face="Times New Roman PS, Times New Roman, Times" size="1">PFM  -  Dividend Achievers  
PDP  -  DWA Technical Lenders  
PGF  -  Financial Preferred  
PGJ  -  Golden Dragon Halter USX China  
PHJ  -  High Growth Rate Dividend Achievers  
PEY  -  High Yield Equity Dividend Achievers  
PID  -  International Dividend Achievers  
PSP  -  Listed Private Equity  
PXN  -  Lux Nanotech  
QQQQ  -  PowerShares QQQ  
PYH  -  Value Line Industry Rotation  
PIV  -  Value Line Timeliness Select  
PHO  -  Water Resources  
PBW  -  WilderHill Clean Energy  
PUW  - &n bsp;WilderHill Progressive Energy  
PZI  -  Zacks Micro Cap  
PZJ  -  Zacks Small Cap  

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64

PowerSharesAsset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFG  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

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65

PowerSharesRisk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 ADR Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

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66

Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

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67

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs are not closed-end funds and trade at or near net asset values.

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68

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) 337-4246. 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) 337-4246; 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.

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 FTFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares FTFs 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.

A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares FTFs call A I M Distributors, Inc. at (800) 337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-1

2007 Annual Report to Shareholders

30 April 2007

PowerShares Aerospace & Defense Portfolio

PowerShares Cleantech^TM Portfolio

PowerShares Golden Dragon Halter USX China Portfolio

PowerShares Listed Private Equity Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares Value Line Timeliness^TM Select Portfolio

PowerShares Value Line Industry Rotation Portfolio

PowerShares Water Resources Portfolio

PowerShares WilderHill Clean Energy Portfolio

PowerShares WilderHill Progressive Energy Portfolio

PowerShares DWA Technical Leaders^TM Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	28
Frequency Distribution of Discounts & Premiums	30
Fees and Expenses	32
Specialty Portfolios
Schedules of Investments
PowerShares Aerospace & Defense Portfolio	35
PowerShares CleantechTM Portfolio	37
PowerShares Golden Dragon Halter USX China Portfolio	39
PowerShares Listed Private Equity Portfolio	41
PowerShares Lux Nanotech Portfolio	42
PowerShares Value Line TimelinessTM Select Portfolio	43
PowerShares Value Line Industry Rotation Portfolio	44
PowerShares Water Resources Portfolio	46
PowerShares WilderHill Clean Energy Portfolio	47
PowerShares WilderHill Progressive Energy Portfolio	48
PowerShares DWA Technical LeadersTM Portfolio	50
Statements of Assets and Liabilities	52
Statements of Operations	54
Statements of Changes in Net Assets	56
Financial Highlights	60
Notes to Financial Statements	66
Report of Independent Registered Public Accounting Firm	76
Supplemental Information (Unaudited)	77
Information about Advisory Agreement (Unaudited)	82

To My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US 1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing investors with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P^® 500 Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the end of summer 2006 energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

PowerShares Aerospace & Defense Portfolio (ticker: PPA)

The PowerShares Aerospace & Defense Portfolio continues to provide investors with a means to participate in a sector that has now beaten the S&P 500^® Index for seven consecutive years returning 19.33% in 2006 and is outperforming the broad market YTD in 2007 by more than 5%. During the period of this report, the fund gained 16.66%.

The period began with a decline in the Fund of nearly 10% from May to mid-August, ultimately hitting a low of $15.64 on June 13 and remaining relatively flat through mid-August when the Fund began a steady rise to the $20.19 level it reached on April 30, 2007. This run-up was only interrupted in late-February when a global sell-off due to concerns about U.S. real estate and Chinese stocks saw the Fund decline by 5%. The sell-off was short-lived and the Fund price rebounded to previous levels on April 16th.

Performance in the sector continues to be driven by several factors including government support for defense and homeland security activities along with recent U.S. successes in capturing greater market share for manufacturing commercial aircraft. With a portfolio defined by the underlying SPADE Defense Index, constituents represent a diversified offering of large, mid, and small cap companies as well as enabling the Fund to capture current and future spending in areas such as armor for vehicles and soldiers, night vision systems, border security, defense IT, and secure communications.

With the core defense budget forecast to grow through 2011 and additional appropriations anticipated to continue funding the wars in Iraq and Afghanistan, replenish and repair military systems, and develop new border security initiatives, increased funding for the sector over the next several years is anticipated. The primary risk to the sector remains politics.

Industry Breakdown (% of the Fund's

Net Assets)

Aerospace/Defense	49.0
Miscellaneous Manufacturing	10.6
Media	9.2
Electronics	9.2
Computers	5.8
Metal/Fabricate Hardware	4.1
Telecommunications	3.9
Auto Manufacturers	2.7
Packaging & Containers	2.5
Commercial Services	1.3
Engineering & Construction	1.2
Software	0.5
Other	0.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Boeing Co.	5.8
Honeywell International, Inc.	5.8
United Technologies Corp.	5.7
Lockheed Martin Corp.	5.4
EchoStar Communications Corp., Class A	4.7
DIRECTV Group (The), Inc.	4.5
Raytheon Co.	4.4
General Dynamics Corp.	4.4
Northrop Grumman Corp.	4.3
Garmin Ltd. (Cayman Islands)	4.1
Total	49.1

Style Allocation (%)

Large-Cap Value	25.4
Mid-Cap Value	20.8
Mid-Cap Growth	19.5
Large-Cap Growth	19.4
Small-Cap Value	8.9
Small-Cap Growth	6.0

4

Manager's Analysis (Continued)

PowerShares Aerospace & Defense Portfolio (ticker: PPA)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg Ann†		Fund Inception
	1 Year		Avg Ann†		Cumulative
SPADETM Defense Index		16.29		22.24		35.41
S&P 500® Index		15.24		17.78		28.03
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	16.66	22.65	36.10
Share Price Return	16.60	22.67	36.12

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.80%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.66% while the Fund's gross annualized total operating expense ratio was 0.77%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 3000^® Index are unmanaged indices based on the average performance of approximately 500 and 3,000 common stocks, respectively.

^† Average annualized.

5

Manager's Analysis

PowerShares Cleantech^TM Portfolio (ticker: PZD)

The PowerShares Cleantech^TM Portfolio is based on the Cleantech^TM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. The index focuses on companies with products & services that are considered to be truly "clean" – hence the Cleantech^TM Index's minimal exposure to grain ethanol and clean-coal. The index screens for companies that have businesses based on significant technology and expertise instead of more general commodity producers, regulated utilities, and scrap recyclers. The index strives to contain the best cleantech companies that would most likely reflect the growth of the sector.

Since its October 24, 2006 inception date, the Fund has shown solid performance returning 9.64% outpacing the NASDAQ Composite Index, which returned 7.69%, and the S&P 500^® Index, which returned 8.66%.

In addition to the rise of most broad equity markets, a significant factor in the strong performance was the meteoric rise of the larger solar photovoltaic ("PV") companies. Most major solar PV stocks rose 40%-200% and the winter saw four major solar PV company IPOs in the U.S. alone. In fact, three of them were from China and more Chinese PV IPOs are on the way. While the PV market is indeed frothy, demand for solar PV systems is being driven primarily by government incentive programs around the world. The performance of solar stocks is in stark contrast to many ethanol, clean-coal, and fuel-cell stocks which continue to perform poorly despite massive new government incentives for grain-based ethanol, biofuels, and clean coal.

Industry Breakdown (% of the Fund's

Net Assets)

Miscellaneous Manufacturing	24.5
Electronics	14.1
Energy-Alternate Sources	10.8
Environmental Control	10.1
Semiconductors	8.9
Electrical Components & Equipment	6.0
Water	3.3
Hand/Machine Tools	3.1
Telecommunications	3.0
Machinery-Diversified	3.0
Chemicals	2.9
Office Funishings	2.5
Biotechnology	2.4
Engineering & Construction	1.4
Building Materials	1.4
Electric	1.4
Computers	1.2
Oil & Gas Services	0.7
Money Market	0.0
Other	(0.7	)

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Cree, Inc.	3.6
Woodward Governor Co.	3.6
Veolia Environnement ADR (France)	3.3
Siemens AG ADR (Germany)	3.3
Hexcel Corp.	3.2
Nalco Holding Co.	3.2
Pall Corp.	3.2
First Solar, Inc.	3.2
Trimble Navigation Ltd.	3.1
Baldor Electric Co.	3.1
Total	32.8

Style Allocation (%)

Small-Cap Growth	44.5
Mid-Cap Growth	26.1
Small-Cap Value	13.9
Large-Cap Growth	6.3
Mid-Cap Value	5.9
Large-Cap Value	3.3

6

Manager's Analysis (Continued)

PowerShares Cleantech^TM Portfolio (ticker: PZD)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
CleantechTM Index		9.80
NASDAQ Composite Index		7.69
S&P 500® Index		8.66

Fund

NAV Return	9.64
Share Price Return	9.68

Fund Inception: 24 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 1.06%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The NASDAQ Composite Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 3,300 and 500 common stocks, respectively.

7

Manager's Analysis

PowerShares Golden Dragon Halter USX China Portfolio (ticker: PGJ)

The PowerShares Golden Dragon Halter USX China Portfolio is based on the Halter USX China Index^SM. The Halter USX China Index^SM is comprised of companies whose common stock is publicly traded in the United States and the majority of whose business is conducted within the People's Republic of China. It was created by the Halter Financial Group in response to the unique economic opportunities taking place in China, as well as the current dynamics in the United States capital markets. While there is strong demand for Chinese equity, U.S. investors still seek and prefer the transparency offered with a U.S. listing. The listing of Chinese companies in the U.S. is a growing trend and this index is intended to provide a valuable tracking and information tool for the investment community.

Over the past year the portfolio had a solid return of 28.53% compared with the broad S&P 500^® Index which returned 15.24%. Telecommunication services, financials and energy sectors led the way contributing to the strong performance. Within telecommunications, the wireless telecommunication services industry led the way via strong returns from China Mobile and China Unicom. China Life Insurance was the biggest contributor from the financials sector. The consumer staples and healthcare sectors lagged, while the semiconductor and chemical industries underperformed, contributing to some drag on performance for the year.

Sector Breakdown (% of the Fund's

Net Assets)

Telecommunication Services	19.1
Information Technology	18.8
Energy	18.7
Industrials	13.3
Consumer Discretionary	8.6
Materials	8.4
Utilities	4.8
Financials	4.7
Health Care	2.8
Consumer Staples	0.5
Other	0.3

Style Allocation (%)

Large-Cap Growth	30.4
Small-Cap Growth	20.9
Mid-Cap Growth	17.8
Mid-Cap Value	17.5
Large-Cap Value	8.7
Small-Cap Value	4.7

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
China Mobile Ltd. ADR	5.8
PetroChina Co. Ltd. ADR	5.6
Aluminum Corp. of China Ltd. ADR	4.9
Huaneng Power International, Inc. ADR	4.8
China Life Insurance Co. Ltd. ADR	4.7
China Unicom Ltd. ADR	4.7
China Petroleum and Chemical Corp. ADR	4.5
China Netcom Group Corp. Ltd. ADR	4.5
Suntech Power Holdings Co. Ltd. ADR	4.4
CNOOC Ltd. ADR	4.4
Total	48.3

8

Manager's Analysis (Continued)

PowerShares Golden Dragon Halter USX China Portfolio (ticker: PGJ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg Ann†		Fund Inception
	1 Year		Avg Ann†		Cumulative
Halter USX China IndexSM		29.46		19.71		53.69
MSCI EAFE Index		20.32		23.57		65.80
S&P 500® Index		15.24		11.68		30.21

Fund

NAV Return	28.53	18.84	51.04
Share Price Return	28.37	18.71	50.66

Fund Inception: 9 December 2004

*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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.88%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.70% while the Fund's gross annualized total operating expense ratio was 0.72%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 20 08. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The MSCI EAFE Index and the S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 1,000 and 500 common stocks, respectively.

^† Average annualized.

9

Manager's Analysis

PowerShares Listed Private Equity Portfolio (ticker: PSP)

The PowerShares Listed Private Equity Portfolio is based on the Red Rocks Listed Private Equity Index^SM and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index. The index was rebalanced at the end of March 2007 to reflect changes in the available companies within the domestic listed private equity universe.

The PowerShares Listed Private Equity Portfolio, and the Red Rocks Capital Listed Private Equity Index^SM that it is based on, has performed well since the Fund's inception on October 24, 2006. The index has outperformed almost all relevant indices (Dow Jones Industrials, S&P 500^®, NASDAQ Composite, Russell 2000^®) during this period of time. The Fund continues to be the only vehicle that provides investors with diversified access to the private equity asset class.

A current trend seems to be brand name private equity firms which continue to explore coming to market with public offerings. The consensus is that the future of listed private equity continues to remain good as the cumulative market capitalization is approaching $250 billion and represents over 200 companies worldwide.

Industry Breakdown (% of the Fund's

Net Assets)

Investment Companies	42.8
Diversified Financial Services	19.3
REITS	11.3
Holding Companies-Diversified	8.5
Banks	6.2
Commercial Services	6.0
Internet	5.7
Money Market Fund	0.1
Other	0.1

Style Allocation (%)

Mid-Cap Value	33.3
Small-Cap Value	27.5
Mid-Cap Growth	27.3
Small-Cap Growth	11.9

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
American Capital Strategies Ltd.	9.2
Fortress Investment Group LLC, Class A	8.6
Leucadia National Corp.	8.5
CapitalSource, Inc.	6.7
Allied Capital Corp.	6.4
SVB Financial Group	6.2
CIT Group, Inc.	4.8
Apollo Investment Corp.	4.8
Macquarie Infrastructure Co. Trust	4.7
KKR Financial Holdings LLC	4.6
Total	64.5

10

Manager's Analysis (Continued)

PowerShares Listed Private Equity Portfolio (ticker: PSP)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Red Rocks Listed Private Equity Index		13.47
S&P 500 Pure Growth Index		14.93
Russell 2000® Index		7.51

Fund

NAV Return	12.18
Share Price Return	12.16

Fund Inception: 24 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 0.82%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500 Pure Growth Index and the Russell 2000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 151 and 2,000 common stocks, respectively.

11

Manager's Analysis

PowerShares Lux Nanotech Portfolio (ticker: PXN)

The PowerShares Lux Nanotech Portfolio is based on the Lux Nanotech^TM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Although the portfolio had negative performance for the period, the portfolio's outlook remains promising based on the strong results from its constituent companies. The portfolio continued to grow throughout 2006 and benefited from Fortune 500 corporations' increased interest in nanotechnology development. IBM and Hewlett-Packard recently announced landmark nanotechnology breakthroughs in semiconductors, while instrumentation providers like FEI Company report record orders and revenues due to rising nanotech R&D investment. Since inception in October 2005, the portfolio has shown a positive annualized return for investors.

Industry Breakdown (% of the Fund's

Net Assets)

Pharmaceuticals	17.9
Chemicals	11.8
Miscellaneous Manufacturing	11.5
Commercial Services	11.3
Computers	9.7
Electronics	9.5
Semiconductors	7.7
Investment Companies	4.9
Software	4.8
Energy-Alternate Sources	4.6
Healthcare-Products	3.7
Auto Manufacturers	2.6
Other	0.0

Style Allocation (%)

Small-Cap Growth	47.1
Large-Cap Value	21.5
Small-Cap Value	14.1
Mid-Cap Growth	10.8
Large-Cap Growth	6.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Arrowhead Research Corp.	6.7
Nanophase Technologies Corp.	5.5
Flamel Technologies ADR (France)	5.3
Abraxis BioScience, Inc.	5.1
Harris & Harris Group, Inc.	4.9
Elan Corp. PLC ADR (Ireland)	4.9
FEI Co.	4.9
Accelrys, Inc.	4.8
Headwaters, Inc.	4.6
NVE Corp.	4.6
Total	51.3

12

Manager's Analysis (Continued)

PowerShares Lux Nanotech Portfolio (ticker: PXN)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg Ann†		Fund Inception
	1 Year		Avg Ann†		Cumulative
Lux Nanotech IndexTM		-10.31		7.66		11.79
Merrill Lynch Nanotech Index		-11.93		1.99		3.01
S&P 500® Index		15.24		17.78		28.03

Fund

NAV Return	-8.24	9.47	14.64
Share Price Return	-7.97	9.78	15.12

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.83%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 0.79%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Merrill Lynch Nanotech Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 27 and 500 common stocks, respectively.

^† Average annualized.

13

Manager's Analysis

PowerShares Value Line Timeliness^TM Select Portfolio (ticker: PIV)

The PowerShares Value Line Timeliness^TM Select Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Value Line Timeliness^TM Select Index. The Value Line Index is comprised of the 50 domestic stocks with the greatest capital appreciation potential as identified by the Value Line Timeliness Select Methodology. The Value Line Index seeks to provide market out-performance and reduce risk by incorporating Value Line's Safety Ranking into the investment process.

The objective of the Value Line Index is to represent a group of U.S. common stocks that have the potential to outperform the U.S. equity market. Stocks are selected using a proprietary rules-based discipline, which selects stocks with the greatest potential for capital appreciation based on the three core Value Line Ranking Systems.

Over the past year the portfolio posted a 2.93% return. The Fund lagged the broader market due to higher allocations in the small and mid cap names. The Fund did benefit from strong performance in the consumer discretionary and telecommunication services sectors which each contributed positively to performance. Multi-line retail and household durables such as Big Lots and Tempur-Pedic helped with positive contribution to return. Energy, materials and industrials sectors had a negative contribution to return which caused a drag on performance for the year. Stock selection in the energy sector caused most of the underperformance when compared to the overall market.

Sector Breakdown (% of the Fund's

Net Assets)

Consumer Discretionary	25.9
Information Technology	24.1
Health Care	16.3
Industrials	8.1
Financials	8.0
Materials	7.8
Consumer Staples	5.7
Telecommunication Services	4.1
Other	0.0

Style Allocation (%)

Mid-Cap Growth	29.1
Large-Cap Growth	25.9
Small-Cap Growth	14.8
Large-Cap Value	14.0
Mid-Cap Value	12.2
Small-Cap Value	4.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Varian Semiconductor Equipment Associates, Inc.	2.7
Schering-Plough Corp.	2.6
Big Lots, Inc.	2.4
Cytyc Corp.	2.3
Gartner, Inc.	2.2
DeVry, Inc.	2.2
Flir Systems, Inc.	2.2
TeleTech Holdings, Inc.	2.2
Honeywell International, Inc.	2.2
Rock-Tenn Co., Class A	2.1
Total	23.1

14

Manager's Analysis (Continued)

PowerShares Value Line Timeliness^TM Select Portfolio (ticker: PIV)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg Ann†		Fund Inception
	1 Year		Avg Ann†		Cumulative
Value Line TimelinessTM Select Index		2.55		9.09		12.93
S&P 500® Index		15.24		14.18		20.36
Russell 2000® Index		7.83		14.24		20.44

Fund

NAV Return	2.93	9.37	13.34
Share Price Return	2.78	9.00	12.80

Fund Inception: 6 December 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.78%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.70% while the Fund's gross annualized total operating expense ratio was 0.75%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 2000^® Index are unmanaged indices based on the average performance of approximately 500 and 2,000 common stocks, respectively.

^† Average annualized.

15

Manager's Analysis

PowerShares Value Line Industry Rotation Portfolio (ticker: PYH)

The PowerShares Value Line Industry Rotation Portfolio is based on the Value Line Industry Rotation Index. The Index is comprised of 75 stocks chosen based on both their Timeliness^TM rank and their industry Timeliness^TM rank.

Since its December 1, 2006 inception date, the Fund has shown strong performance returning 11.36%. Over that short time, the portfolio outperformed the S&P 500^® Index which returned 6.87%. The Fund has outperformed the broad market due to strong performances within the consumer discretionary, information technology and industrial sectors. Big Lots, Priceline.com and Mattel were the biggest performers within the consumer discretionary sector while Varian Semiconductor Equipment was the top contributor for information technology. Industrials were lead by Teletech Holdings.

16

Manager's Analysis (Continued)

PowerShares Value Line Industry Rotation Portfolio (ticker: PYH)

Industry Breakdown (% of the Fund's

Net Assets)

Media	9.6
Commercial Services	8.3
Retail	7.8
Chemicals	6.7
Internet	5.5
Electronics	5.4
Insurance	4.3
Semiconductors	4.2
Telecommunications	4.1
Computers	2.9
Mining	2.8
Diversified Financial Services	2.7
Advertising	2.7
Airlines	2.1
Pharmaceuticals	1.8
Agriculture	1.5
Oil & Gas Services	1.5
Miscellaneous Manufacturing	1.5
Forest Products & Paper	1.5
Transportation	1.5
Toys/Games/Hobbies	1.4
Leisure Time	1.4
Office/Business Equipment	1.4
Closed-end Funds	1.4
Home Furnishings	1.4
Iron/Steel	1.4
Healthcare-Products	1.4
Metal Fabricate/Hardware	1.4
Packaging & Containers	1.3
Biotechnology	1.3
Healthcare-Services	1.3
Real Estate	1.3
Lodging	1.3
Apparel	1.3
Aerospace/Defense	1.3
Software	1.2
Money Market Fund	0.1
Other	0.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Varian Semiconductor Equipment Associates, Inc.	1.8
Schering-Plough Corp.	1.8
Reuters Group PLC ADR (United Kingdom)	1.5
Universal Corp.	1.5
DeVry, Inc.	1.5
Core Laboratories N.V. (Netherlands)	1.5
Honeywell International, Inc.	1.5
Gartner, Inc.	1.5
TeleTech Holdings, Inc.	1.5
Apple, Inc.	1.5
Total	15.6

Style Allocation (%)

Mid-Cap Growth	25.6
Large-Cap Growth	23.0
Small-Cap Growth	18.1
Mid-Cap Value	14.4
Large-Cap Value	11.6
Small-Cap Value	7.3

17

Manager's Analysis (Continued)

PowerShares Value Line Industry Rotation Portfolio (ticker: PYH)

  Growth of a $10,000 Investment Since Inception

  

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Value Line Industry Rotation Index		11.33
S&P 500® Index		6.87
Russell 2000® Index		4.78

Fund

NAV Return	11.36
Share Price Return	11.36

Fund Inception: 1 December 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.75% while the Fund's gross annualized total operating expense ratio was 1.21%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are based upon a hypothetical investment in its constituent securities. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and Russell 2000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 2,000 common stocks, respectively.

18

Manager's Analysis

PowerShares Water Resources Portfolio (ticker: PHO)

The PowerShares Water Resources Portfolio, launched in December 2005, has experienced exceptional interest since inception. The Fund filled the demand by investors to participate in the growth of an industry focused on one of the most vital resources on earth: water. Virtually every country in the world is presented with some combination of water quality and quantity issues that require significant expenditures to resolve.

The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Palisades Water Index. The Palisades Water Index includes water companies drawn from the following sectors: water utilities, treatment, analytical and monitoring, infrastructure and distribution, water resource management, and conglomerate water companies.

During the reporting period the Fund has returned 6.26% and since inception it has returned 26.85%. Multi-Utilities and Commercial Services and Supplies, which make up about 15% of the Fund, had strong performance during the reporting period. The Fund allocated its largest percentage to machinery which has lagged the overall market. Within that industry Badger Meter and Mueller Water Products had the largest drag on the fund's performance.

Industry Breakdown (% of the Fund's

Net Assets)

Water	21.2
Miscellaneous Manufacturing	20.8
Electronics	11.7
Engineering & Construction	9.7
Environmental Control	9.0
Machinery-Diversified	8.3
Metal Fabricate/Hardware	7.5
Hand/Machine Tools	2.7
Biotechnology	2.5
Electrical Components & Equipment	1.7
Electric	1.7
Healthcare-Products	1.6
Chemicals	1.4
Money Market Fund	0.0
Other	0.2

Style Allocation (%)

Small-Cap Value	32.0
Mid-Cap Growth	20.2
Small-Cap Growth	19.1
Mid-Cap Value	14.6
Large-Cap Growth	8.9
Large-Cap Value	5.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Tetra Tech, Inc.	4.5
Valmont Industries, Inc.	4.4
Veolia Environnement ADR (France)	4.2
Itron, Inc.	3.8
URS Corp.	3.8
Layne Christensen Co.	3.4
Watts Water Technologies, Inc., Class A	3.2
IDEXX Laboratories, Inc.	3.1
Roper Industries, Inc.	3.1
Mueller Water Products, Inc., Class B	3.1
Total	36.6

19

Manager's Analysis (Continued)

PowerShares Water Resources Portfolio (ticker: PHO)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg Ann†		Fund Inception
	1 Year		Avg Ann†		Cumulative
Palisades Water Index		6.90		19.16		27.75
S&P 500® Index		15.24		14.18		20.36
Dow Jones Utility Index		30.64		19.66		28.51

Fund

NAV Return	6.26	18.56	26.85
Share Price Return	5.94	17.65	25.50

Fund Inception: 6 December 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.66% while the Fund's gross annualized total operating expense ratio was 0.67%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Dow Jones Utility Index are unmanaged indices based on the average performance of approximately 500 and 15 common stocks, respectively.

^† Average annualized.

20

Manager's Analysis

PowerShares WilderHill Clean Energy Portfolio (ticker: PBW)

The PowerShares WilderHill Clean Energy Portfolio is based on the WilderHill Clean Energy Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Over the past year, the portfolio has returned -13.58%. The past 12 months began, coincidentally, at a recent high in clean energy valuations which peaked in May 2006. The summer of 2006 was afterwards marked by a significant downturn in ethanol, followed by an unusually long period of sideways movement for the remainder of the year.

Since the beginning of 2007, there has been greater attention paid to clean energy technologies with renewed interest in solar power, especially new thin film and the China-based solar PV makers. Other areas of interest include using better energy efficiency tools, a growth in the demand for wind power, as well as the potential for advanced cellulosic biofuels. This is led in part by prospects for ongoing lofty oil prices, concern for energy security, ongoing fuel diversification, and lately an increasing look at major opportunities possibly found in climate change.

Industry Breakdown (% of the Fund's

Net Assets)

Energy-Alternate Sources	27.4
Semiconductors	18.2
Electrical Components & Equipment	15.1
Chemicals	10.9
Electric	7.8
Electronics	6.6
Computers	6.0
Auto Parts & Equipment	2.7
Biotechnology	2.7
Agriculture	2.5
Other	0.1

Style Allocation (%)

Small-Cap Growth	56.4
Mid-Cap Growth	16.4
Small-Cap Value	10.6
Large-Cap Growth	8.8
Mid-Cap Value	5.3
Large-Cap Value	2.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
SunPower Corp., Class A	4.0
Echelon Corp.	3.8
Cypress Semiconductor Corp.	3.6
Cree, Inc.	3.6
First Solar, Inc.	3.2
OM Group, Inc.	3.2
Universal Display Corp.	3.2
KYOCERA Corp. ADR (Japan)	3.1
Suntech Power Holdings Co., Ltd. ADR (Cayman Islands)	3.1
Applied Materials, Inc.	3.1
Total	33.9

21

Manager's Analysis (Continued)

PowerShares WilderHill Clean Energy Portfolio (ticker: PBW)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg Ann†		Fund Inception
	1 Year		Avg Ann†		Cumulative
WilderHill Clean Energy Index		-15.53		9.46		21.54
NASDAQ Composite Index		8.72		9.93		22.67
S&P 500® Index		15.24		11.86		27.38

Fund

NAV Return	-13.58	10.44	23.90
Share Price Return	-13.51	10.54	24.15

Fund Inception: 3 March 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's annualized total operating expense ratio (prior to net reimbursements to the Adviser) was determined to be 0.69% while the Fund's annualized total operating expense ratio (after net reimbursements to the Adviser) was 0.70%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actua lly paid by investors. This waiver extends through April 30, 2008. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The NASDAQ Composite Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 3,300 and 500 common stocks, respectively.

^† Average annualized.

22

Manager's Analysis

PowerShares WilderHill Progressive Energy Portfolio (ticker: PUW)

The PowerShares WilderHill Progressive Energy Portfolio is based on the WilderHill Progressive Energy Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 24, 2006 inception date, the Fund has shown a strong performance returning 15.01%. Over that short time, the portfolio outpaced the overall NASDAQ Composite Index which returned 7.69%. Since a run-up in valuations that had reached a brief peak in Spring 2006, alternative energy stocks and hence the portfolio slowly declined to a low by the Fall.

Following a brief correction in the broader stock market, the outlook changed rather significantly in early 2007. Attention was sharply drawn to the possible regulation of carbon dioxide due in part to growing attention to climate change as markets renewed a search for stocks that could benefit from opportunities from reduced carbon. Uranium stocks saw some significant movement upwards as did those involved with pollution controls. New breakthroughs in energy efficiency likewise enabled the portfolio to turn in a strong performance since its inception.

Industry Breakdown (% of the Fund's

Net Assets)

Electrical Components & Equipment	11.3
Semiconductors	10.1
Electric	9.9
Auto Parts & Equipment	8.5
Oil & Gas	8.3
Energy-Alternate Sources	7.9
Miscellaneous Manufacturing	6.9
Mining	6.4
Gas	5.9
Chemicals	5.5
Environmental Control	4.9
Auto Manufacturers	4.0
Food	2.8
Telecommunications	2.2
Hand/Machine Tools	2.2
Aerospace/Defense	2.1
Investment Companies	0.5
Oil & Gas Services	0.4
Electronics	0.4
Money Market Fund	0.3
Other	(0.5	)

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Tenneco, Inc.	3.3
USEC, Inc.	3.3
Cameco Corp. (Canada)	3.1
Energizer Holdings, Inc.	2.9
Fuel Tech, Inc.	2.9
Chesapeake Energy Corp.	2.9
Exide Technologies	2.9
Aventine Renewable Energy Holdings, Inc.	2.9
Methanex Corp. (Canada)	2.8
SunOpta, Inc. (Canada)	2.8
Total	29.8

Style Allocation (%)

Small-Cap Growth	30.1
Small-Cap Value	18.3
Mid-Cap Value	15.1
Large-Cap Growth	13.4
Large-Cap Value	13.2
Mid-Cap Growth	9.9

23

Manager's Analysis (Continued)

PowerShares WilderHill Progressive Energy Portfolio (ticker: PUW)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
WilderHill Progressive Energy Index		14.71
NASDAQ Composite Index		7.69
S&P 500® Index		8.66

Fund

NAV Return	15.01
Share Price Return	15.12

Fund Inception: 24 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.74% while the Fund's gross annualized total operating expense ratio was 1.09%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The NASDAQ Composite Index and the S&P 500^® Index are unmanaged indices based on the average performance of approximately 3,300 and 500 common stocks, respectively.

24

Manager's Analysis

PowerShares DWA Technical Leaders^TM Portfolio (ticker: PDP)

The PowerShares DWA Technical Leaders^TM Portfolio is based on the Dorsey Wright Technical Leaders^TM Index which includes approximately 100 U.S.-listed companies that demonstrate strong relative strength characteristics. The Index is constructed pursuant to Dorsey Wright proprietary methodology, which takes into account, among other factors, the performance of each of the 3,000 largest U.S.-listed companies as compared to a benchmark index, and the relative performance of industry sectors and sub-sectors. Stocks that are selected receive a modified equal weighting.

This is a new portfolio launched on March 1, 2007, and since its inception, the Fund has had a positive return of 6.81%. The Fund has outperformed the S&P 500^® Index since its inception.

Industry Breakdown (% of the Fund's

Net Assets)

Financials	17.1
Industrials	17.0
Materials	14.5
Consumer Discretionary	12.8
Energy	9.0
Telecommunication Services	8.5
Health Care	8.0
Utilities	4.9
Information Technology	4.7
Consumer Staples	3.3
Other	0.2

Style Allocation (%)

Mid-Cap Growth	55.5
Large-Cap Growth	19.4
Mid-Cap Value	19.2
Large-Cap Value	4.3
Small-Cap Value	1.6

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Holly Corp.	5.6
Titanium Metals Corp.	5.0
NII Holdings, Inc.	4.6
American Tower Corp., Class A	3.3
Allegheny Technologies, Inc.	2.5
Energizer Holdings, Inc.	2.2
Covanta Holding Corp.	2.2
Williams (The) Cos., Inc.	2.0
Jarden Corp.	1.8
Pediatrix Medical Group, Inc.	1.8
Total	31.0

25

Manager's Analysis (Continued)

PowerShares DWA Technical Leaders^TM Portfolio (ticker: PDP)

  Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dorsey Wright Technical LeadersTM Index		6.77
S&P 500® Index		5.87
Russell 3000® Index		5.35

Fund

NAV	6.81
Share Price Return	6.85

Fund Inception: 1 March 2007

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.72% while the Fund's gross annualized total operating expense ratio was 1.78%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are based upon a hypothetical investment in its constituent securities. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P 500^® Index and the Russell 3000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 3,000 common stocks, respectively.

26

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Funds' Distribution History

	Ex-Dividend	4/16/07		3/16/07		3/15/07		2/15/07		1/15/07		12/15/06		11/15/06
	Record	4/18/07		3/20/07		3/20/07		2/20/07		1/17/07		12/19/06		11/17/06
	Payable	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06
Fund	Ticker
PowerShares Aerospace & Defense Portfolio	PPA		—		0.01223		—		—		—		0.00968		—
PowerShares CleantechTM Portfolio	PZD		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio	PGJ		—		—		—		—		—		0.00598		—
PowerShares Listed Private Equity Portfolio	PSP		—		0.07235		—		—		—		0.26528		—
PowerShares Lux Nanotech Portfolio	PXN		—		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio	PIV		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio	PYH		—		—		—		—		—		0.01016		—
PowerShares Water Resources Portfolio	PHO		—		0.02358		—		—		—		0.07779		—
PowerShares WilderHill Clean Energy Portfolio	PBW		—		—		—		—		—		0.03675		—
PowerShares WilderHill Progressive Energy Portfolio	PUW		—		0.01250		—		—		—		0.00451		—
PowerShares DWA Technical LeadersTM Portfolio	PDP		—		—		—		—		—		—		—
	Ex-Dividend			12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05
	Record			1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05
	Payable			1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05
Fund	Ticker
PowerShares Aerospace & Defense Portfolio	PPA			—		0.02191		—		—		—		—
PowerShares CleantechTM Portfolio	PZD			—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio	PGJ			—		0.00132		0.11161		0.04962		—		—
PowerShares Listed Private Equity Portfolio	PSP			—		—		—		—		—		—
PowerShares Lux Nanotech Portfolio	PXN			0.06725		0.01063		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio	PIV			—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio	PYH			—		—		—		—		—		—
PowerShares Water Resources Portfolio	PHO			0.02682		0.00627		—		—		—		—
PowerShares WilderHill Clean Energy Portfolio	PBW			—		—		—		—		—		—
PowerShares WilderHill Progressive Energy Portfolio	PUW			—		—		—		—		—		—
PowerShares DWA Technical LeadersTM Portfolio	PDP			—		—		—		—		—		—

28

	10/16/06		9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	10/18/06		9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	10/31/06		9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund
PowerShares Aerospace & Defense Portfolio		—		0.02002		—		—		0.02120		—		—		—
PowerShares CleantechTM Portfolio		—		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio		—		0.08011		—		—		0.12430		—		—		—
PowerShares Listed Private Equity Portfolio		—		—		—		—		—		—		—		—
PowerShares Lux Nanotech Portfolio		—		—		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio		—		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio		—		—		—		—		—		—		—		—
PowerShares Water Resources Portfolio		—		0.03621		—		—		0.03737		—		—		—
PowerShares WilderHill Clean Energy Portfolio		—		—		—		—		0.01037		—		—		—
PowerShares WilderHill Progressive Energy Portfolio		—		—		—		—		—		—		—		—
PowerShares DWA Technical LeadersTM Portfolio		—		—		—		—		—		—		—		—
	12/17/04		12/31/04		9/17/04		6/18/04		3/19/04		12/24/03		9/19/03		6/20/03
	12/21/04		1/4/05		9/21/04		6/22/04		3/23/04		12/29/03		9/23/03		6/24/03
	1/31/05		1/31/05		10/29/04		7/30/04		4/30/04		1/30/04		10/31/03		7/31/03
Fund
PowerShares Aerospace & Defense Portfolio	—		—		—		—		—		—		—		—
PowerShares CleantechTM Portfolio	—		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio	—		—		—		—		—		—		—		—
PowerShares Listed Private Equity Portfolio	—		—		—		—		—		—		—		—
PowerShares Lux Nanotech Portfolio	—		—		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio	—		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio	—		—		—		—		—		—		—		—
PowerShares Water Resources Portfolio	—		—		—		—		—		—		—		—
PowerShares WilderHill Clean Energy Portfolio	—		—		—		—		—		—		—		—
PowerShares WilderHill Progressive Energy Portfolio	—		—		—		—		—		—		—		—
PowerShares DWA Technical LeadersTM Portfolio	—		—		—		—		—		—		—		—

29

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PPA	PowerShares Aerospace & Defense Portfolio	10/26/05		378		203		8		1		0		0		0
PZD	PowerShares CleantechTM Portfolio	10/24/06		128		31		2		0		0		0		0
PGJ	PowerShares Golden Dragon Halter USX China Portfolio	12/9/04		600		323		85		17		0		0		0
PSP	PowerShares Listed Private Equity Portfolio	10/24/06		128		85		0		0		0		0		0
PXN	PowerShares Lux Nanotech Portfolio	10/26/05		378		196		33		9		5		1		0
PIV	PowerShares Value Line TimelinessTM Select Portfolio	12/6/05		350		188		10		1		0		0		0
PYH	PowerShares Value Line Industry Rotation Portfolio	12/1/06		101		47		0		1		0		0		0
PHO	PowerShares Water Resources Portfolio	12/6/05		350		168		73		11		1		0		0
PBW	PowerShares WilderHill Clean Energy Portfolio	3/3/05		543		256		82		10		2		0		0
PUW	PowerShares WilderHill Progressive Energy Portfolio	10/24/06		128		35		1		0		0		0		0
PDP	PowerShares DWA Technical LeadersTM Portfolio	3/1/07		42		24		0		0		0		0		0

30

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PPA		164		2		0		0		0		0
PZD		91		4		0		0		0		0
PGJ		160		12		3		0		0		0
PSP		41		2		0		0		0		0
PXN		128		5		0		0		1		0
PIV		148		3		0		0		0		0
PYH		51		2		0		0		0		0
PHO		91		6		0		0		0		0
PBW		172		20		1		0		0		0
PUW		90		2		0		0		0		0
PDP		18		0		0		0		0		0

31

Fees and Expenses

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 April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Aerospace & Defense Portfolio Actual	$	1,000.00	$	1,150.45		0.66	%	$	3.52
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.52		0.66	%	$	3.31
PowerShares CleantechTM Portfolio Actual	$	1,000.00	$	1,082.77		0.71	%	$	3.67
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.27		0.71	%	$	3.56
PowerShares Golden Dragon Halter USX China Portfolio Actual	$	1,000.00	$	1,278.27		0.70	%	$	3.95
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.32		0.70	%	$	3.51
PowerShares Listed Private Equity Portfolio Actual	$	1,000.00	$	1,097.78		0.71	%	$	3.69
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.27		0.71	%	$	3.56

32

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Lux Nanotech Portfolio Actual	$	1,000.00	$	945.38		0.70	%	$	3.38
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.32		0.70	%	$	3.51
PowerShares Value Line TimelinessTM Select Portfolio Actual	$	1,000.00	$	1,127.56		0.70	%	$	3.69
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.32		0.70	%	$	3.51
	Beginning Account Value December 1, 2006 (Commencement of Investment Operations)		Ending Account Value April 30, 2007		Annualized Expense Ratio based on number of days in the period			Expenses Paid During Period (2) December 1, 2006 (Commencement of Investment Operations) to April 30, 2007
PowerShares Value Line Industry Rotation Portfolio Actual	$	1,000.00	$	1,113.57		0.75	%	$	3.26
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.08		0.75	%	$	3.76
	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Water Resource Portfolio Actual	$	1,000.00	$	1,082.77		0.65	%	$	3.36
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.57		0.65	%	$	3.26
PowerShares WilderHill Clean Energy Portfolio Actual	$	1,000.00	$	1,081.69		0.69	%	$	3.56
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.37		0.69	%	$	3.46
PowerShares WilderHill Progressive Energy Portfolio Actual	$	1,000.00	$	1,138.66		0.74	%	$	3.92
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.12		0.74	%	$	3.71

33

Fees and Expenses (Continued)

	Beginning Account Value March 1, 2007 (Commencement of Investment Operations)		Ending Account Value April 30, 2007		Annualized Expense Ratio based on number of days in the period			Expenses Paid During Period (3) March 1, 2007 (Commencement of Investment Operations) to April 30, 2007
PowerShares DWA Technical LeadersTM Portfolio Actual	$	1,000.00	$	1,067.61		0.72	%	$	1.26
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.22		0.72	%	$	3.61

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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 December 1, 2006 (commencement of investment operations) to April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 151 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 March 1, 2007 (commencement of investment operations) to April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 61 and then dividing the result by 365.

34

Schedule of Investments

PowerShares Aerospace and Defense Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Aerospace/Defense—49.0%
	18,224	Aerovironment, Inc.*	$	389,994
	31,834	Alliant Techsystems, Inc.*		2,964,700
	21,522	Argon ST, Inc.*		564,092
	34,321	Armor Holdings, Inc.*		2,453,952
	125,271	Boeing Co.		11,650,203
	39,124	DRS Technologies, Inc.		1,968,328
	20,354	EDO Corp.		559,735
	24,696	Esterline Technologies Corp.*		1,030,564
	53,969	GenCorp, Inc.*		718,867
	113,029	General Dynamics Corp.		8,872,777
	121,043	Goodrich Corp.		6,880,084
	13,481	Herley Industries, Inc.*		208,281
	89,239	L-3 Communications Holdings, Inc.		8,025,263
	113,298	Lockheed Martin Corp.		10,892,470
	40,971	Moog, Inc., Class A*		1,742,087
	14,693	MTC Technologies, Inc.*		303,557
	117,122	Northrop Grumman Corp.		8,624,864
	57,073	Orbital Sciences Corp.*		1,191,114
	166,075	Raytheon Co.		8,891,656
	115,174	Rockwell Collins, Inc.		7,563,477
	33,643	Teledyne Technologies, Inc.*		1,483,993
	10,770	United Industrial Corp.		526,868
	171,525	United Technologies Corp.		11,514,473
				99,021,399
		Auto Manufacturers—2.7%
	65,474	Force Protection, Inc.*		1,420,786
	71,375	Oshkosh Truck Corp.		3,992,717
				5,413,503
		Commercial Services—1.3%
	55,031	DynCorp International, Inc., Class A*		825,465
	94,811	SAIC, Inc.*		1,734,093
				2,559,558
		Computers—5.8%
	29,702	CACI International, Inc., Class A*		1,358,272
	149,377	Computer Sciences Corp.*		8,296,399
	21,463	Mercury Computer Systems, Inc.*		291,253
	12,528	SI International, Inc.*		331,491
	54,693	SRA International, Inc., Class A*		1,336,150
				11,613,565
		Electronics—9.2%
	8,860	American Science & Engineering, Inc.*		416,420
	91,285	Cogent, Inc.*		1,281,641
	25,797	Cubic Corp.		519,294
	63,968	FLIR Systems, Inc.*		2,590,064
	143,384	Garmin Ltd. (Cayman Islands)		8,343,516
	70,070	L-1 Identity Solutions, Inc.*		1,346,745
	16,276	OSI Systems, Inc.*		429,849
	59,911	Taser International, Inc.*		517,032
	107,383	Trimble Navigation Ltd.*		3,079,744
				18,524,305

Number of Shares			Value
		Common Stocks (Continued)
		Engineering & Construction—1.2%
	20,696	Stanley, Inc.*	$	312,717
	50,691	URS Corp.*		2,215,196
				2,527,913
		Media—9.2%
	385,972	DIRECTV Group (The), Inc.*		9,201,573
	203,233	EchoStar Communications Corp., Class A*		9,456,432
				18,658,005
		Metal Fabricate/Hardware—4.1%
	14,002	Ladish Co., Inc.*		569,321
	74,346	Precision Castparts Corp.		7,740,162
				8,309,483
		Miscellaneous Manufacturing—10.6%
	26,204	Ceradyne, Inc.*		1,542,105
	214,519	Honeywell International, Inc.		11,622,640
	128,107	ITT Corp.		8,174,508
				21,339,253
		Packaging & Containers—2.5%
	99,612	Ball Corp.		5,049,332
		Software—0.5%
	32,659	ManTech International Corp., Class A*		1,001,978
		Telecommunications—3.9%
	11,719	Applied Signal Technology, Inc.		195,356
	129,456	Harris Corp.		6,647,565
	14,435	KVH Industries, Inc.*		134,967
	27,973	ViaSat, Inc.*		959,474
				7,937,362
		Total Common Stocks (Cost $181,276,150)		201,955,656
		Money Market Fund—0.0%
	42,459	Liquid Assets Portfolio Private Class** (Cost $42,459)		42,459
		Total Investments (Cost $181,318,609)—100.0%		201,998,115
		Liabilities in excess of other assets—(0.0%)		(111,994	)
		Net Assets—100.0%	$	201,886,121

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
35

Schedule of Investments (Continued)

PowerShares Aerospace and Defense Portfolio

April 30, 2007

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	193,654,599			95.9	%
Cayman Islands		8,343,516			4.1
Total investments		201,998,115			100.0
Liabilities in excess of other assets		(111,994	)		(0.0	)
Net Assets	$	201,886,121			100.0	%

See Notes to Financial Statements.
36

Schedule of Investments

PowerShares Cleantech^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.7%
		Biotechnology—2.4%
	17,478	Diversa Corp.*	$	127,065
	18,565	Martek Biosciences Corp.*		400,818
				527,883
		Building Materials—1.4%
	14,395	Trex Co., Inc.*		293,514
		Chemicals—2.9%
	22,613	Landec Corp.*		287,411
	11,305	Zoltek Cos., Inc.*		344,124
				631,535
		Computers—1.2%
	11,622	Echelon Corp.*		150,505
	8,775	Maxwell Technologies, Inc.*		106,616
				257,121
		Electric—1.4%
	7,990	Ormat Technologies, Inc.		291,555
		Electrical Components & Equipment—6.0%
	10,846	American Superconductor Corp.*		156,616
	16,189	Color Kinetics, Inc.*		327,827
	5,051	Energy Conversion Devices, Inc.*		178,856
	22,099	EnerSys*		359,993
	65,187	Power-One, Inc.*		277,697
				1,300,989
		Electronics—14.1%
	11,464	Badger Meter, Inc.		275,136
	9,558	Dionex Corp.*		659,502
	9,824	Itron, Inc.*		661,548
	23,830	Trimble Navigation Ltd.*		683,444
	15,658	Woodward Governor Co.		772,723
				3,052,353
		Energy - Alternate Sources—10.8%
	11,464	First Solar, Inc.*		687,726
	22,826	Headwaters, Inc.*		494,639
	8,353	SunPower Corp., Class A*		506,860
	17,943	Suntech Power Holdings Co., Ltd. ADR (Cayman Islands)*		650,972
				2,340,197
		Engineering & Construction—1.4%
	15,272	Insituform Technologies, Inc., Class A*		311,549
		Environmental Control—10.1%
	10,905	Clean Harbors, Inc.*		507,301
	15,100	Fuel Tech, Inc.*		379,614
	26,196	Nalco Holding Co.		696,290
	29,471	Tetra Tech, Inc.*		613,586
				2,196,791

Number of Shares			Value
		Common Stocks (Continued)
		Hand/Machine Tools—3.1%
	17,098	Baldor Electric Co.	$	673,490
		Machinery - Diversified—3.0%
	12,415	Kadant, Inc.*		340,791
	10,130	Lindsay Corp.		309,472
				650,263
		Miscellaneous Manufacturing—24.5%
	20,040	Clarcor, Inc.		632,062
	17,807	Donaldson Co., Inc.		639,627
	13,830	ESCO Technologies, Inc.*		630,095
	32,190	Hexcel Corp.*		698,523
	16,431	Pall Corp.		689,280
	11,809	Roper Industries, Inc.		662,013
	5,856	Siemens AG ADR (Germany)		708,401
	9,037	SPX Corp.		640,543
				5,300,544
		Office Furnishings—2.5%
	31,888	Interface, Inc., Class A		537,313
		Oil & Gas Services—0.7%
	12,798	Metretek Technologies, Inc.*		158,055
		Semiconductors—8.9%
	38,629	Cree, Inc.*		788,032
	16,390	International Rectifier Corp.*		578,239
	10,231	MEMC Electronic Materials, Inc.*		561,477
				1,927,748
		Telecommunications—3.0%
	27,558	Corning, Inc.*		653,676
		Water—3.3%
	8,611	Veolia Environnement ADR (France)		710,321
		Total Common Stocks (Cost $20,809,234)		21,814,897
		Money Market Fund—0.0%
	7,092	Liquid Assets Portfolio Private Class** (Cost $7,092)		7,092
		Total Investments (Cost $20,816,326)—100.7%		21,821,989
		Liabilities in excess of other assets—(0.7%)		(159,169	)
		Net Assets—100.0%	$	21,662,820

ADR American Depositary Receipt.

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
37

Schedule of Investments (Continued)

PowerShares Cleantech^TM Portfolio

April 30, 2007

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	19,752,295			91.2	%
France		710,321			3.3
Germany		708,401			3.2
Cayman Islands		650,972			3.0
Total investments		21,821,989			100.7
Liabilities in excess of other assets		(159,169	)		(0.7	)
Net Assets	$	21,662,820			100.0	%

See Notes to Financial Statements.
38

Schedule of Investments

PowerShares Golden Dragon Halter USX China Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.7%
		Consumer Discretionary—8.6%
	120,271	Brilliance China Automotive Holdings Ltd. ADR*	$	2,567,786
	76,355	China Automotive Systems, Inc.*		573,426
	105,629	Ctrip.com International Ltd. ADR		7,491,209
	82,364	eLong, Inc. ADR*		801,402
	365,645	Focus Media Holding Ltd. ADR*		13,528,864
	105,685	Home Inns & Hotels Management, Inc. ADR*		3,621,825
	115,661	New Oriental Education & Technology Group, Inc. ADR*		5,060,169
	57,808	SORL Auto Parts, Inc.*		497,149
				34,141,830
		Consumer Staples—0.5%
	171,905	New Dragon Asia Corp.*		235,510
	76,918	Origin Agritech Ltd.*		665,341
	233,873	Tiens Biotech Group USA, Inc.*		975,250
				1,876,101
		Energy—18.7%
	201,804	China Petroleum and Chemical Corp. ADR		17,599,327
	202,574	CNOOC Ltd. ADR		17,334,257
	197,494	PetroChina Co. Ltd. ADR		22,146,977
	322,506	Yanzhou Coal Mining Co. Ltd. ADR		16,589,709
				73,670,270
		Financials—4.7%
	400,611	China Life Insurance Co. Ltd. ADR		18,564,314
		Health Care—2.8%
	89,702	China Medical Technologies, Inc. ADR*		2,167,200
	23,075	Chindex International, Inc.*		463,577
	346,636	Mindray Medical International Ltd. ADR		7,976,094
	128,048	Sinovac Biotech Ltd.*		391,827
				10,998,698
		Industrials—13.3%
	89,957	51job, Inc. ADR*		1,448,308
	89,407	Canadian Solar, Inc.*		952,185
	160,289	China Bak Battery, Inc.*		573,835
	159,566	China Eastern Airlines Corp. Ltd. ADR*		4,715,175
	286,821	China Southern Airlines Co. Ltd. ADR*		6,338,744
	122,186	China Yuchai International Ltd.		1,130,220
	49,224	Deswell Industries, Inc.		604,963
	464,477	Guangshen Railway Co. Ltd. ADR		16,995,213
	157,368	Solarfun Power Holdings Co. Ltd. ADR*		2,245,641
	479,377	Suntech Power Holdings Co. Ltd. ADR*		17,391,798
				52,396,082
		Information Technology—18.8%
	281,957	Actions Semiconductor Co. Ltd. ADR*		2,035,730
	143,536	AsiaInfo Holdings, Inc.*		1,103,792
	110,288	Baidu.com ADR*		13,408,814
	366,072	CDC Corp., Class A*		3,276,344

Number of Shares			Value
		Common Stocks (Continued)
	66,443	China Finance Online Co. Ltd. ADR*	$	449,155
	143,870	China Techfaith Wireless Communication Technology Ltd. ADR*		1,165,347
	108,540	Comtech Group, Inc.*		1,914,646
	73,105	Hurray! Holding Co. Ltd. ADR*		374,298
	75,214	INTAC International, Inc.*		535,524
	115,242	KongZhong Corp. ADR*		768,664
	146,893	Nam Tai Electronics, Inc.		1,903,733
	427,984	Netease.com, Inc. ADR*		7,737,950
	114,724	Ninetowns Internet Technology Group Co. Ltd. ADR*		491,019
	96,485	Qiao Xing Universal Telephone, Inc.*		1,592,003
	1,210,122	Semiconductor Manufacturing International Corp. ADR*		9,051,712
	232,749	Shanda Interactive Entertainment Ltd. ADR*		5,828,035
	178,810	SINA Corp.*		6,165,369
	120,268	Sohu.com, Inc.*		3,045,186
	29,261	Telestone Technologies Corp.*		220,921
	79,387	The9 Ltd. ADR*		3,247,722
	174,571	Tom Online, Inc. ADR*		2,615,074
	69,555	Trina Solar Ltd. ADR*		3,716,324
	396,182	UTStarcom, Inc.*		2,828,739
	141,765	Webzen, Inc. ADR*		593,995
				74,070,096
		Materials—8.4%
	658,934	Aluminum Corp. of China Ltd. ADR		19,142,032
	42,828	Fuwei Films Holdings Co. Ltd.*		426,995
	236,057	Sinopec Shanghai Petrochemical Co. Ltd. ADR		13,408,038
				32,977,065
		Telecommunication Services—19.1%
	505,320	China Mobile Ltd. ADR		22,744,453
	358,521	China Netcom Group Corp. Ltd. ADR		17,589,040
	346,885	China Telecom Corp. Ltd. ADR		16,386,847
	1,273,905	China Unicom Ltd. ADR		18,458,884
	84,341	Linktone Ltd. ADR*		298,567
				75,477,791
		Utilities—4.8%
	468,280	Huaneng Power International, Inc. ADR		19,007,485
		Total Investments (Cost $360,111,785)—99.7%		393,179,732
		Other assets less liabilities—0.3%		1,140,639
		Net Assets—100.0%	$	394,320,371

ADR American Depositary Receipt.

*  Non-income producing security.

See Notes to Financial Statements.
39

Schedule of Investments (Continued)

PowerShares Golden Dragon Halter USX China Portfolio

April 30, 2007

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
China	$	173,510,217		44.0	%
Cayman Islands		120,173,275		30.5
Hong Kong		76,126,634		19.3
United States		12,967,553		3.3
British Virgin Islands		4,766,040		1.2
Bermuda		3,698,006		0.9
Canada		952,185		0.2
South Korea		593,995		0.2
Antigua		391,827		0.1
Total investments		393,179,732		99.7
Other assets less liabilities		1,140,639		0.3
Net Assets	$	394,320,371		100.0	%

See Notes to Financial Statements.
40

Schedule of Investments

PowerShares Listed Private Equity Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Banks—6.2%
	182,345	SVB Financial Group*	$	9,339,711
		Commercial Services—6.0%
	128,168	Compass Diversified Trust		2,026,336
	164,242	Macquarie Infrastructure Co. Trust		6,993,424
				9,019,760
		Diversified Financial Services—19.3%
	41,133	Affiliated Managers Group, Inc.*		4,838,475
	120,826	CIT Group, Inc.		7,207,271
	141,274	Evercore Partners, Inc., Class A		4,088,470
	444,455	Fortress Investment Group LLC, Class A		12,893,639
				29,027,855
		Holding Companies - Diversified—8.5%
	420,931	Leucadia National Corp.		12,686,860
		Internet—5.7%
	1,832,490	CMGI, Inc.*		3,848,229
	201,390	Internet Capital Group, Inc.*		2,410,638
	759,354	Safeguard Scientifics, Inc.*		2,285,656
				8,544,523
		Investment Companies—42.8%
	331,322	Allied Capital Corp.		9,575,206
	282,735	American Capital Strategies Ltd.		13,763,539
	327,953	Apollo Investment Corp.		7,205,127
	237,020	Ares Capital Corp.		4,256,879
	19,041	Capital Southwest Corp.		2,947,547
	78,999	Gladstone Capital Corp.		1,880,176
	124,260	Gladstone Investment Corp.		1,780,646
	43,246	H&Q Healthcare Investors		767,184
	26,227	H&Q Life Sciences Investors		379,505
	143,127	Harris & Harris Group, Inc.*		1,915,039
	136,871	Hercules Technology Growth Capital, Inc.		1,884,714
	114,765	Kohlberg Capital Corp.		2,058,884
	236,640	MCG Capital Corp.		4,169,597
	138,668	MVC Capital, Inc.		2,436,397
	116,485	NGP Capital Resources Co.		1,821,825
	132,456	Patriot Capital Funding, Inc.		1,882,200
	110,500	Prospect Energy Corp.		1,895,075
	129,058	Technology Investment Capital Corp.		2,182,371
	83,045	UTEK Corp.		1,403,460
				64,205,371
		REITS—11.3%
	388,688	CapitalSource, Inc.		10,016,490
	258,142	KKR Financial Holdings LLC		6,894,973
				16,911,463
		Total Common Stocks (Cost $144,981,833)		149,735,543

Number of Shares			Value
		Money Market Fund—0.1%
	240,589	Liquid Assets Portfolio Private Class** (Cost $240,589)	$	240,589
		Total Investments (Cost $145,222,422)—99.9%		149,976,132
		Other assets less liabilities—0.1%		102,226
		Net Assets—100.0%	$	150,078,358

REITS Real Estate Investment Trusts.

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
41

Schedule of Investments

PowerShares Lux Nanotech Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Auto Manufacturers—2.6%
	34,223	Toyota Motor Corp. ADR (Japan)	$	4,155,357
		Chemicals—11.8%
	59,814	Air Products & Chemicals, Inc.		4,575,771
	41,231	BASF AG ADR (Germany)		4,898,655
	90,182	E.I. du Pont de Nemours & Co.		4,434,249
	417,415	Symyx Technologies*		4,804,447
				18,713,122
		Commercial Services—11.3%
	2,297,049	Altair Nanotechnologies, Inc. (Canada)*		7,212,734
	1,655,079	Arrowhead Research Corp.*		10,658,709
				17,871,443
		Computers—9.7%
	1,166,183	Cambridge Display Technology, Inc.*		5,900,886
	111,658	Hewlett-Packard Co.		4,705,268
	47,420	International Business Machines Corp.		4,846,798
				15,452,952
		Electronics—9.5%
	210,388	FEI Co.*		7,826,433
	277,157	NVE Corp.*		7,239,341
				15,065,774
		Energy - Alternate Sources—4.6%
	339,769	Headwaters, Inc.*		7,362,794
		Healthcare - Products—3.7%
	2,144,249	Immunicon Corp.*		5,789,472
		Investment Companies—4.9%
	587,162	Harris & Harris Group, Inc.*		7,856,228
		Miscellaneous Manufacturing—11.5%
	58,209	3M Co.		4,817,959
	125,510	General Electric Co.		4,626,299
	1,318,307	Nanophase Technologies Corp.*		8,793,107
				18,237,365
		Pharmaceuticals—17.9%
	297,148	Abraxis BioScience, Inc.*		8,174,542
	565,269	Elan Corp. PLC ADR (Ireland)*		7,845,934
	290,542	Flamel Technologies ADR (France)*		8,399,569
	1,324,476	NUCRYST Pharmaceuticals Corp. (Canada)*		4,092,631
				28,512,676
		Semiconductors—7.7%
	235,678	Intel Corp.		5,067,077
	395,422	Veeco Instruments, Inc.*		7,228,314
				12,295,391

Number of Shares			Value
		Common Stocks (Continued)
		Software—4.8%
	1,177,060	Accelrys, Inc.*	$	7,674,431
		Total Investments (Cost $163,571,016)—100.0%		158,987,005
		Other assets less liabilities—0.0%		65,315
		Net Assets—100.0%	$	159,052,320

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	122,382,125		77.0	%
Canada		11,305,365		7.1
France		8,399,569		5.3
Ireland		7,845,934		4.9
Germany		4,898,655		3.1
Japan		4,155,357		2.6
Total investments		158,987,005		100.0
Other assets less liabilities		65,315		0.0
Net Assets	$	159,052,320		100.0	%

See Notes to Financial Statements.
42

Schedule of Investments

PowerShares Value Line Timeliness Select^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—25.9%
	168,070	American Eagle Outfitters, Inc.	$	4,953,023
	199,911	Big Lots, Inc.*		6,437,133
	106,769	Coach, Inc.*		5,213,530
	183,400	DeVry, Inc.		6,050,366
	229,552	DIRECTV Group (The), Inc.*		5,472,520
	179,068	Hasbro, Inc.		5,660,339
	197,965	Mattel, Inc.		5,602,410
	88,993	Nordstrom, Inc.		4,887,496
	93,774	Phillips-Van Heusen Corp.		5,241,967
	99,023	Priceline.com, Inc.*		5,509,640
	84,123	Target Corp.		4,994,383
	151,006	Walt Disney (The) Co.		5,282,190
	189,757	Warnaco Group (The), Inc.*		5,366,328
				70,671,325
		Consumer Staples—5.7%
	103,077	NBTY, Inc.*		5,093,035
	149,140	Safeway, Inc.		5,413,781
	116,411	Walgreen Co.		5,110,443
				15,617,259
		Financials—8.0%
	76,573	American International Group, Inc.		5,353,218
	125,024	CNA Financial Corp.*		5,834,870
	42,293	Franklin Resources, Inc.		5,553,494
	159,016	Synovus Financial Corp.		5,018,545
				21,760,127
		Health Care—16.3%
	79,551	Amgen, Inc.*		5,102,401
	193,226	AMN Healthcare Services, Inc.*		4,705,053
	174,131	Cytyc Corp.*		6,134,635
	162,318	Immucor, Inc.*		5,296,436
	221,786	Schering-Plough Corp.		7,037,270
	98,744	Sepracor, Inc.*		5,300,578
	83,683	Stryker Corp.		5,434,374
	61,752	Zimmer Holdings, Inc.*		5,587,321
				44,598,068
		Industrials—8.1%
	238,846	Apogee Enterprises, Inc.		5,751,412
	110,182	Honeywell International, Inc.		5,969,661
	159,747	II-VI, Inc.*		4,327,546
	158,358	TeleTech Holdings, Inc.*		5,974,847
				22,023,466
		Information Technology—24.1%
	193,776	Cisco Systems, Inc.*		5,181,570
	129,983	Cognos, Inc. (Canada)*		5,603,567
	148,058	Flir Systems, Inc.*		5,994,868
	241,129	Gartner, Inc.*		6,083,685
	162,229	NVIDIA Corp.*		5,335,712
	286,079	PC Connection, Inc.*		3,670,394

Number of Shares			Value
		Common Stocks (Continued)
	155,794	Polycom, Inc.*	$	5,187,940
	37,841	Research In Motion Ltd. (Canada)*		4,979,119
	145,990	Telefonaktiebolaget LM Ericsson ADR (Sweden)		5,572,438
	579,027	TIBCO Software, Inc.*		5,280,726
	109,547	Varian Semiconductor Equipment Associates, Inc.*		7,269,540
	295,135	Xerox Corp.*		5,459,998
				65,619,557
		Materials—7.8%
	100,869	E.I. du Pont de Nemours & Co.		4,959,729
	109,075	International Flavors & Fragrances, Inc.		5,308,680
	152,741	Rock-Tenn Co., Class A		5,843,870
	158,154	Sealed Air Corp.		5,203,267
				21,315,546
		Telecommunication Services—4.1%
	143,313	AT&T, Inc.		5,549,079
	88,560	BT Group PLC ADR (United Kingdom)		5,574,852
				11,123,931
		Total Investments (Cost $248,844,632)—100.0%		272,729,279
		Liabilities in excess of other assets—0.0%		(121,700	)
		Net Assets—100.0%	$	272,607,579

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	250,999,303			92.1	%
Canada		10,582,686			3.9
United Kingdom		5,574,852			2.0
Sweden		5,572,438			2.0
Total investments		272,729,279			100.0
Liabilities in excess of other assets		(121,700	)		0.0
Net Assets	$	272,607,579			100.0	%

See Notes to Financial Statements.
43

Schedule of Investments

PowerShares Value Line Industry Rotation Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.9%
		Advertising—2.7%
	4,280	Omnicom Group, Inc.	$	448,159
	5,958	WPP Group PLC ADR (United Kingdom)		442,441
				890,600
		Aerospace/Defense—1.3%
	8,351	DRS Technologies, Inc.		420,139
		Agriculture—1.5%
	8,282	Universal Corp.		519,116
		Airlines—2.1%
	12,224	AMR Corp.*		318,924
	10,572	Continental Airlines, Inc., Class B*		386,512
				705,436
		Apparel—1.3%
	10,692	Guess?, Inc.		421,265
		Biotechnology—1.3%
	6,870	Amgen, Inc.*		440,642
		Chemicals—6.7%
	10,655	Albemarle Corp.		452,305
	9,621	Cabot Corp.		435,831
	8,590	E.I. du Pont de Nemours and Co.		422,370
	9,434	International Flavors & Fragrances, Inc.		459,153
	2,722	Potash Corp. of Saskatchewan (Canada)		488,654
				2,258,313
		Closed-end Funds—1.4%
	41,599	DNP Select Income Fund, Inc.		468,821
		Commercial Services—8.3%
	16,079	AMN Healthcare Services, Inc.*		391,524
	15,722	DeVry, Inc.		518,668
	20,466	Gartner, Inc.*		516,357
	34,217	On Assignment, Inc.*		382,546
	3,704	Strayer Education, Inc.		460,555
	13,665	TeleTech Holdings, Inc.*		515,580
				2,785,230
		Computers—2.9%
	5,108	Apple, Inc.*		509,779
	15,710	Electronic Data Systems Corp.		459,360
				969,139
		Diversified Financial Services—2.7%
	23,667	Charles Schwab (The) Corp.		452,513
	5,621	Morgan Stanley		472,220
				924,733
		Electronics—5.4%
	12,376	Avnet, Inc.*		506,179
	13,251	FEI Co.*		492,937
	7,918	Garmin Ltd. (Cayman Islands)		460,748

Number of Shares			Value
		Common Stocks (Continued)
	13,628	II-VI, Inc.*	$	369,183
				1,829,047
		Forest Products & Paper—1.5%
	13,111	Rock-Tenn Co., Class A		501,627
		Healthcare - Products—1.4%
	7,096	Stryker Corp.		460,814
		Healthcare - Services—1.3%
	12,058	LifePoint Hospitals, Inc.*		440,238
		Home Furnishings—1.4%
	8,709	Sony Corp. ADR (Japan)		463,841
		Insurance—4.3%
	6,616	American International Group, Inc.		462,525
	10,835	CNA Financial Corp.		505,669
	6,243	XL Capital Ltd., Class A (Cayman Islands)		486,829
				1,455,023
		Internet—5.5%
	58,274	1-800-FLOWERS.COM, Inc., Class A*		471,437
	29,729	Emdeon Corp.*		479,826
	27,937	Interwoven, Inc.*		426,598
	8,427	Priceline.com, Inc.*		468,878
				1,846,739
		Iron/Steel—1.4%
	4,220	Allegheny Technologies, Inc.		462,428
		Leisure Time—1.4%
	11,957	WMS Industries, Inc.*		476,606
		Lodging—1.3%
	6,269	MGM MIRAGE*		421,590
		Media—9.6%
	16,874	Comcast Corp., Class A*		445,474
	19,892	DIRECTV Group (The), Inc.*		474,225
	33,840	Journal Communications, Inc., Class A		456,502
	7,634	Meredith Corp.		442,161
	18,322	News Corp., Class B		439,728
	9,082	Reuters Group PLC ADR (United Kingdom)		520,216
	12,953	Walt Disney (The) Co.		453,096
				3,231,402
		Metal Fabricate/Hardware—1.4%
	4,636	Precision Castparts Corp.		482,654
		Mining—2.8%
	9,552	Brush Engineered Materials, Inc.*		458,687
	3,798	Vulcan Materials Co.		469,699
				928,386

See Notes to Financial Statements.
44

Schedule of Investments (Continued)

PowerShares Value Line Industry Rotation Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Miscellaneous Manufacturing—1.5%
	9,542	Honeywell International, Inc.	$	516,986
		Office/Business Equipment—1.4%
	25,454	Xerox Corp.*		470,899
		Oil & Gas Services—1.5%
	5,695	Core Laboratories N.V. (Netherlands)*		517,789
		Packaging & Containers—1.3%
	13,623	Sealed Air Corp.		448,197
		Pharmaceuticals—1.8%
	19,105	Schering-Plough Corp.		606,202
		Real Estate—1.3%
	12,583	CB Richard Ellis Group, Inc., Class A*		425,935
		Retail—7.8%
	3,475	AutoZone, Inc.*		462,313
	16,043	Carmax, Inc.*		399,792
	6,268	Kohl's Corp.*		464,082
	7,816	Nordstrom, Inc.		429,255
	8,615	OfficeMax, Inc.		424,030
	10,042	Walgreen Co.		440,844
				2,620,316
		Semiconductors—4.2%
	13,134	ATMI, Inc.*		406,235
	26,677	Integrated Device Technology, Inc.*		399,621
	9,229	Varian Semiconductor Equipment Associates, Inc.*		612,437
				1,418,293
		Software—1.2%
	7,887	Infosys Technologies Ltd. ADR (India)		412,884
		Telecommunications—4.1%
	12,298	AT&T, Inc.		476,179
	7,523	BT Group PLC ADR (United Kingdom)		473,573
	16,541	Cisco Systems, Inc.*		442,306
				1,392,058
		Toys/Games/Hobbies—1.4%
	16,899	Mattel, Inc.		478,242
		Transportation—1.5%
	13,372	Kansas City Southern*		496,770
		Total Common Stocks (Cost $31,869,464)		33,608,400

Number of Shares			Value
		Money Market Fund—0.1%
	31,821	Liquid Assets Portfolio Private Class** (Cost $31,821)	$	31,821
		Total Investments (Cost $31,901,285)—100.0%		33,640,221
		Other assets less liabilities—0.0%		9,598
		Net Assets—100.0%	$	33,649,819

ADR American Depositary Receipt.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	29,373,246		87.3	%
United Kingdom		1,436,230		4.3
Cayman Islands		947,577		2.8
Netherlands		517,789		1.5
Canada		488,654		1.5
Japan		463,841		1.4
India		412,884		1.2
Total investments		33,640,221		100.0
Other assets less liabilities		9,598		0.0
Net Assets	$	33,649,819		100.0	%

See Notes to Financial Statements.
45

Schedule of Investments

PowerShares Water Resources Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Biotechnology—2.5%
	540,751	Millipore Corp.*	$	39,923,646
		Chemicals—1.4%
	380,411	Ashland, Inc.		22,805,639
		Electric—1.7%
	474,801	Suez SA ADR (France)		27,111,137
		Electrical Components & Equipment—1.7%
	585,555	Emerson Electric Co.		27,515,229
		Electronics—11.7%
	1,245,236	Agilent Technologies, Inc.*		42,798,761
	1,339,422	Badger Meter, Inc.		32,146,128
	917,975	Itron, Inc.*		61,816,437
	1,263,486	Watts Water Technologies, Inc., Class A		51,171,183
				187,932,509
		Engineering & Construction—9.7%
	1,964,730	Insituform Technologies, Inc., Class A*		40,080,492
	1,446,668	Layne Christensen Co.*		54,785,317
	1,386,763	URS Corp.*		60,601,543
				155,467,352
		Environmental Control—9.0%
	3,850,728	Calgon Carbon Corp.*		30,459,259
	1,609,784	Nalco Holding Co.		42,788,059
	3,457,891	Tetra Tech, Inc.*		71,993,291
				145,240,609
		Hand/Machine Tools—2.7%
	1,022,205	Franklin Electric Co., Inc.		43,535,711
		Healthcare - Products—1.6%
	290,039	IDEXX Laboratories, Inc.*		26,152,817
		Machinery - Diversified—8.3%
	439,038	Flowserve Corp.		26,785,708
	686,959	Gorman-Rupp (The) Co.		22,030,775
	963,008	IDEX Corp.		50,529,031
	1,093,226	Lindsay Corp.		33,398,054
				132,743,568
		Metal Fabricate/Hardware—7.5%
	3,463,190	Mueller Water Products, Inc., Class B		49,627,513
	1,118,421	Valmont Industries, Inc.		70,326,312
				119,953,825
		Miscellaneous Manufacturing—20.8%
	385,373	Ameron International Corp.		26,644,689
	584,391	Danaher Corp.		41,602,795
	702,050	General Electric Co.		25,877,563
	642,639	ITT Corp.		41,006,795

Number of Shares			Value
		Common Stocks (Continued)
	1,009,696	Pall Corp.	$	42,356,747
	1,275,214	Pentair, Inc.		40,985,378
	1,149,115	PW Eagle, Inc.		37,277,291
	898,477	Roper Industries, Inc.		50,368,620
	231,350	Siemens AG ADR (Germany)		27,986,410
				334,106,288
		Water—21.2%
	979,458	American States Water Co.		34,907,883
	1,670,625	Aqua America, Inc.		36,937,519
	936,153	California Water Service Group		36,388,267
	1,083,030	Companhia de Saneamento Basico do Estado de Sao Paulo ADR (Brazil)		37,418,687
	1,140,438	Consolidated Water Co., Ltd. (Cayman Islands)		29,548,749
	842,916	SJW Corp.		29,215,469
	2,295,164	Southwest Water Co.		31,191,279
	1,280,643	United Utilities PLC ADR (United Kingdom)		38,432,096
	809,970	Veolia Environnement ADR (France)		66,814,424
				340,854,373
		Total Common Stocks (Cost $1,479,589,297)		1,603,342,703
		Money Market Fund—0.0%
	182,440	Liquid Assets Portfolio Private Class** (Cost $182,440)		182,440
		Total Investments (Cost $1,479,771,737)—99.8%		1,603,525,143
		Other assets less liabilities—0.2%		3,256,540
		Net Assets—100.0%	$	1,606,781,683

ADR American Depositary Receipt.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	1,376,213,640		85.7	%
France		93,925,561		5.9
United Kingdom		38,432,096		2.4
Brazil		37,418,687		2.3
Cayman Islands		29,548,749		1.8
Germany		27,986,410		1.7
Total investments		1,603,525,143		99.8
Other assets less liabilities		3,256,540		0.2
Net Assets	$	1,606,781,683		100.0	%

See Notes to Financial Statements.
46

Schedule of Investments

PowerShares WilderHill Clean Energy Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.9%
		Agriculture—2.5%
	501,880	Andersons (The), Inc.	$	23,312,326
		Auto Parts & Equipment—2.7%
	1,456,571	Fuel Systems Solutions, Inc.*		24,616,050
		Biotechnology—2.7%
	3,346,375	Diversa Corp.*		24,328,146
		Chemicals—10.9%
	296,316	Air Products & Chemicals, Inc.		22,668,174
	562,471	OM Group, Inc.*		29,546,601
	348,964	Praxair, Inc.		22,525,626
	826,006	Zoltek Cos., Inc.*		25,143,623
				99,884,024
		Computers—6.0%
	2,684,280	Echelon Corp.*		34,761,426
	1,611,374	Maxwell Technologies, Inc.*		19,578,194
				54,339,620
		Electric—7.8%
	676,346	IDACORP, Inc.		23,300,120
	683,820	Ormat Technologies, Inc.		24,952,591
	895,890	Puget Energy, Inc.		23,131,880
				71,384,591
		Electrical Components & Equipment—15.1%
	2,512,359	Active Power, Inc.*		4,446,875
	1,837,196	American Superconductor Corp.*		26,529,110
	4,627,859	Capstone Turbine Corp.*		4,627,859
	1,356,936	Color Kinetics, Inc.*		27,477,954
	708,626	Energy Conversion Devices, Inc.*		25,092,447
	1,099,476	Medis Technologies Ltd.*		16,788,999
	446,186	Ultralife Batteries, Inc.*		4,185,225
	1,849,413	Universal Display Corp.*		28,813,854
				137,962,323
		Electronics—6.6%
	411,642	Itron, Inc.*		27,719,972
	290,125	KYOCERA Corp. ADR (Japan)		28,287,188
	1,025,084	UQM Technologies, Inc.*		4,336,105
				60,343,265
		Energy - Alternate Sources—27.4%
	3,310,155	Ballard Power Systems, Inc. (Canada)*		16,550,775
	625,314	EuroTrust A/S ADR (Denmark)*		10,442,744
	2,726,014	Evergreen Solar, Inc.*		26,633,157
	495,334	First Solar, Inc.*		29,715,087
	2,236,067	FuelCell Energy, Inc.*		15,741,912
	1,165,708	MGP Ingredients, Inc.		23,209,246
	1,383,919	Pacific Ethanol, Inc.*		20,482,001
	6,066,802	Plug Power, Inc.*		19,171,094
	610,219	SunPower Corp., Class A*		37,028,090

Number of Shares			Value
		Common Stocks (Continued)
	775,444	Suntech Power Holdings Co., Ltd. ADR (Cayman Islands)*	$	28,133,108
	1,166,931	VeraSun Energy Corp.*		23,256,935
				250,364,149
		Semiconductors—18.2%
	1,459,102	Applied Materials, Inc.		28,043,940
	1,624,392	Cree, Inc.*		33,137,597
	1,456,959	Cypress Semiconductor Corp.*		33,247,804
	4,825,665	Emcore Corp.*		23,887,042
	691,446	International Rectifier Corp.*		24,394,215
	439,135	MEMC Electronic Materials, Inc.*		24,099,729
				166,810,327
		Total Investments (Cost $884,874,304)—99.9%		913,344,821
		Other assets less liabilities—0.1%		999,972
		Net Assets—100.0%	$	914,344,793

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	829,931,006		90.8	%
Japan		28,287,188		3.1
Cayman Islands		28,133,108		3.1
Canada		16,550,775		1.8
Denmark		10,442,744		1.1
Total investments		913,344,821		99.9
Other assets less liabilities		999,972		0.1
Net Assets	$	914,344,793		100.0	%

See Notes to Financial Statements.
47

Schedule of Investments

PowerShares WilderHill Progressive Energy Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Aerospace/Defense—2.1%
	7,072	United Technologies Corp.	$	474,743
		Auto Manufacturers—4.0%
	13,577	Honda Motor Co. Ltd. ADR (Japan)		467,456
	3,703	Toyota Motor Corp. ADR (Japan)		449,618
				917,074
		Auto Parts & Equipment—8.5%
	69,595	Exide Technologies*		654,889
	5,145	Johnson Controls, Inc.		526,488
	25,568	Tenneco, Inc.*		765,761
				1,947,138
		Chemicals—5.5%
	27,104	Methanex Corp. (Canada)		649,954
	45,974	SGL Carbon AG ADR (Germany)*		604,098
				1,254,052
		Electric—9.9%
	9,656	Alliant Energy Corp.		422,933
	9,570	CPFL Energia S.A. ADR (Brazil)		452,757
	26,853	Enersis S.A. ADR (Chile)		508,595
	7,067	FPL Group, Inc.		454,903
	8,886	Wisconsin Energy Corp.		433,548
				2,272,736
		Electrical Components & Equipment—11.3%
	6,831	Energizer Holdings, Inc.*		663,838
	34,184	EnerSys*		556,857
	52,365	GrafTech International Ltd.*		522,603
	81,028	Power-One, Inc.*		345,179
	45,837	Vicor Corp.		491,373
				2,579,850
		Electronics—0.4%
	3,946	Badger Meter, Inc.		94,704
		Energy - Alternate Sources—7.9%
	34,068	Aventine Renewable Energy Holdings, Inc.*		654,447
	21,341	Covanta Holding Corp.*		523,708
	29,338	Headwaters, Inc.*		635,754
				1,813,909
		Environmental Control—4.9%
	26,276	Fuel Tech, Inc.*		660,579
	194,250	Rentech, Inc.*		466,200
				1,126,779
		Food—2.8%
	49,963	SunOpta, Inc. (Canada)*		646,521

Number of Shares			Value
		Common Stocks (Continued)
		Gas—5.9%
	10,609	KeySpan Corp.	$	439,319
	9,497	Northwest Natural Gas Co.		482,542
	16,362	Piedmont Natural Gas Co., Inc.		431,793
				1,353,654
		Hand/Machine Tools—2.2%
	12,568	Baldor Electric Co.		495,054
		Investment Companies—0.5%
	8,450	Harris & Harris Group, Inc.*		113,061
		Mining—6.4%
	15,220	Cameco Corp. (Canada)		709,556
	37,597	USEC, Inc.*		758,332
				1,467,888
		Miscellaneous Manufacturing—6.9%
	5,782	Eaton Corp.		515,812
	24,432	Hexcel Corp.*		530,174
	4,475	Siemens AG ADR (Germany)		541,341
				1,587,327
		Oil & Gas—8.3%
	8,512	BG Group PLC ADR (United Kingdom)		612,268
	19,500	Chesapeake Energy Corp.		658,125
	18,365	Sasol Ltd. ADR (South Africa)		627,532
				1,897,925
		Oil & Gas Services—0.4%
	8,258	Metretek Technologies, Inc.*		101,986
		Semiconductors—10.1%
	45,416	Entegris, Inc.*		532,276
	27,151	Fairchild Semiconductor International, Inc.*		477,858
	10,449	IXYS Corp.*		95,713
	14,324	Linear Technology Corp.		536,003
	14,430	O2Micro International Ltd. ADR (Cayman Islands)*		149,495
	48,701	ON Semiconductor Corp.*		521,588
				2,312,933
		Telecommunications—2.2%
	21,055	Corning, Inc.*		499,425
		Total Common Stocks (Cost $21,119,496)		22,956,759

See Notes to Financial Statements.
48

Schedule of Investments (Continued)

PowerShares WilderHill Progressive Energy Portfolio

April 30, 2007

Number of Shares			Value
		Money Market Fund—0.3%
	57,665	Liquid Assets Portfolio Private Class** (Cost $57,665)	$	57,665
		Total Investments (Cost $21,177,161)—100.5%		23,014,424
		Liabilities in excess of other assets—(0.5%)		(109,767	)
		Net Assets—100.0%	$	22,904,657

ADR American Depositary Receipt.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	16,595,233			72.4	%
Canada		2,006,031			8.8
Germany		1,145,439			5.0
Japan		917,074			4.0
South Africa		627,532			2.7
United Kingdom		612,268			2.7
Chile		508,595			2.2
Brazil		452,757			2.0
Cayman Islands		149,495			0.7
Total investments		23,014,424			100.5
Liabilities in excess of other assets		(109,767	)		(0.5	)
Net Assets	$	22,904,657			100.0	%

See Notes to Financial Statements.
49

Schedule of Investments

PowerShares DWA Technical Leaders^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—12.8%
	6,058	BorgWarner, Inc.	$	471,979
	27,419	Coach, Inc.*		1,338,870
	8,676	Dick's Sporting Goods, Inc.*		486,637
	13,814	GameStop Corp., Class A*		458,210
	10,076	Harman International Industries, Inc.		1,228,164
	13,571	Hilton Hotels Corp.		461,414
	23,638	International Game Technology		901,553
	39,322	Jarden Corp.*		1,657,028
	11,915	KB Home		525,571
	7,302	MGM MIRAGE*		491,060
	7,230	Polo Ralph Lauren Corp.		665,955
	6,519	R.H. Donnelley Corp.*		509,069
	4,389	Sears Holdings Corp.*		837,904
	25,455	Urban Outfitters, Inc.*		655,721
	5,441	Wynn Resorts Ltd.		556,125
	8,277	Yum! Brands, Inc.		512,015
				11,757,275
		Consumer Staples—3.3%
	9,758	Church & Dwight Co., Inc.		495,023
	12,779	Dean Foods Co.*		465,539
	21,020	Energizer Holdings, Inc.*		2,042,724
				3,003,286
		Energy—9.0%
	80,666	Holly Corp.		5,130,357
	9,997	Noble Energy, Inc.		587,924
	61,316	Williams (The) Cos., Inc.		1,808,822
	13,522	XTO Energy, Inc.		733,839
				8,260,942
		Financials—17.1%
	5,579	Affiliated Managers Group, Inc.*		656,258
	8,139	Bank of Hawaii Corp.		430,553
	6,058	BlackRock, Inc.		906,883
	1,409	Chicago Mercantile Exchange Holdings, Inc., Class A		728,101
	8,206	Developers Diversified Realty Corp.		534,211
	25,230	Eaton Vance Corp.		964,291
	5,472	Federal Realty Investment Trust		493,410
	8,886	First American Corp.		457,629
	11,653	Forest City Enterprises, Inc., Class A		778,537
	3,633	Franklin Resources, Inc.		477,049
	11,182	General Growth Properties, Inc.		713,971
	47,794	Hudson City Bancorp, Inc.		636,616
	9,881	Jones Lang LaSalle, Inc.		1,062,108
	8,783	Kimco Realty Corp.		422,199
	5,186	Macerich (The) Co.		493,292
	13,678	Marshall & Ilsley Corp.		656,818
	24,922	People's United Financial, Inc.		496,197
	21,185	Philadelphia Consolidated Holding Corp.*		919,429
	4,632	Public Storage, Inc.		432,258

Number of Shares			Value
		Common Stocks (Continued)
	5,181	Regency Centers Corp.	$	426,914
	4,313	Simon Property Group, Inc.		497,203
	4,864	SL Green Realty Corp.		685,338
	9,018	Taubman Centers, Inc.		505,459
	32,843	Ventas, Inc.		1,384,660
				15,759,384
		Health Care—8.0%
	14,740	Aetna, Inc.		691,011
	21,298	Celgene Corp.*		1,302,585
	13,379	Covance, Inc.*		809,430
	5,289	C.R. Bard, Inc.		439,675
	12,480	Gilead Sciences, Inc.*		1,019,866
	13,794	Health Net, Inc.*		745,704
	14,179	Henry Schein, Inc.*		739,151
	28,819	Pediatrix Medical Group, Inc.*		1,644,123
				7,391,545
		Industrials—17.0%
	6,081	Alliant Techsystems, Inc.*		566,324
	8,779	American Standard Cos., Inc.		483,372
	17,482	AMETEK, Inc.		634,247
	8,568	Brink's (The) Co.		544,068
	17,666	C.H. Robinson Worldwide, Inc.		944,424
	19,449	Corrections Corp. of America*		1,104,703
	81,143	Covanta Holding Corp.*		1,991,248
	5,221	Dun & Bradstreet (The) Corp.		471,456
	33,315	J.B. Hunt Transport Services, Inc.		901,504
	15,398	Kansas City Southern*		572,036
	19,929	Landstar System, Inc.		962,770
	6,049	Lockheed Martin Corp.		581,551
	9,723	Manitowoc (The) Co., Inc.		663,400
	8,671	PACCAR, Inc.		728,191
	6,832	Precision Castparts Corp.		711,280
	9,104	Roper Industries, Inc.		510,370
	17,454	Stericycle, Inc.*		1,520,942
	11,820	Terex Corp.*		920,187
	16,313	Toro (The) Co.		819,728
				15,631,801
		Information Technology—4.7%
	13,071	Apple, Inc.*		1,304,486
	19,863	Autodesk, Inc.*		819,746
	7,132	Cognizant Technology Solutions Corp., Class A*		637,601
	9,161	Harris Corp.		470,417
	10,219	MEMC Electronic Materials, Inc.*		560,819
	19,678	Trimble Navigation Ltd.*		564,365
				4,357,434
		Materials—14.5%
	20,793	Airgas, Inc.		926,328
	12,850	Albemarle Corp.		545,483
	21,104	Allegheny Technologies, Inc.		2,312,576

See Notes to Financial Statements.
50

Schedule of Investments (Continued)

PowerShares DWA Technical Leaders^TM Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	5,674	Carpenter Technology Corp.	$	688,653
	34,036	Commercial Metals Co.		1,141,227
	13,616	Eagle Materials, Inc.		607,410
	8,120	Monsanto Co.		478,999
	12,837	Nucor Corp.		814,636
	10,024	Reliance Steel & Aluminum Co.		595,426
	134,163	Titanium Metals Corp.*		4,632,648
	5,567	United States Steel Corp.		565,273
				13,308,659
		Telecommunication Services—8.5%
	79,142	American Tower Corp., Class A*		3,007,396
	54,658	NII Holdings, Inc.*		4,195,001
	22,233	SBA Communications Corp., Class A*		654,095
				7,856,492
		Utilities—4.9%
	58,254	AES (The) Corp.*		1,281,006
	11,275	Allegheny Energy, Inc.*		602,762
	12,788	Energen Corp.		716,767
	5,602	Entergy Corp.		633,810
	15,011	Equitable Resources, Inc.		780,722
	10,682	PG&E Corp.		540,509
				4,555,576
		Total Investments (Cost $89,893,209)—99.8%		91,882,394
		Other assets less liabilities—0.2%		207,902
		Net Assets—100.0%	$	92,090,296

*  Non-income producing security.

See Notes to Financial Statements.
51

Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

April 30, 2007

	PowerShares Aerospace & Defense Portfolio			PowerShares CleantechTM Portfolio			PowerShares Golden Dragon Halter USX China Portfolio			PowerShares Listed Private Equity Portfolio			PowerShares Lux Nanotech Portfolio			PowerShares Value Line TimelinessTM Select Portfolio
ASSETS:
Unaffiliated investments at value	$	201,955,656		$	21,814,897		$	393,179,732		$	149,735,543		$	158,987,005		$	272,729,279
Affiliated investments at value		42,459			7,092			—			240,589			—			—
Cash		—			—			—			—			29,220			—
Receivables:
Investments sold		226,686			—			785,056			239,528			—			—
Dividends		67,842			2,008			1,410,229			1,031			159,309			168,838
Due from Adviser		17,768			9,815			36,881			9,046			17,790			17,950
Capital stock sold		—			—			—			5,593,123			3,495,655			—
Other assets		6,542			5,047			5,897			10,720			6,542			16,001
Total Assets		202,316,953			21,838,859			395,417,795			155,829,580			162,695,521			272,932,068
LIABILITIES:
Due to custodian		267,440			112,356			789,801			44,348			—			89,964
Payables:
Investments purchased		4,713			—			—			5,569,217			3,498,416			—
Accrued advisory fees		76,386			8,028			157,350			57,426			63,806			105,082
Accrued expenses		82,293			55,655			150,273			80,231			80,979			129,443
Total Liabilities		430,832			176,039			1,097,424			5,751,222			3,643,201			324,489
NET ASSETS	$	201,886,121		$	21,662,820		$	394,320,371		$	150,078,358		$	159,052,320		$	272,607,579
NET ASSETS CONSIST OF:
Paid-in capital	$	184,643,111		$	21,809,750		$	371,292,863		$	145,680,524		$	171,527,744		$	283,922,664
Undistributed net investment income		—			—			588,109			624,862			—			—
Accumulated net realized loss on investments		(3,436,496	)		(1,152,593	)		(10,628,548	)		(980,738	)		(7,891,413	)		(35,199,732	)
Net unrealized appreciation / depreciation on investments		20,679,506			1,005,663			33,067,947			4,753,710			(4,584,011	)		23,884,647
Net Assets	$	201,886,121		$	21,662,820		$	394,320,371		$	150,078,358		$	159,052,320		$	272,607,579
Shares outstanding (unlimited amount authorized, $0.01 par value)		10,000,000			800,000			18,400,000			5,400,000			9,100,000			15,500,000
Net asset value	$	20.19		$	27.08		$	21.43		$	27.79		$	17.48		$	17.59
Unaffiliated investments at cost	$	181,276,150		$	20,809,234		$	360,111,785		$	144,981,833		$	163,571,016		$	248,844,632
Affiliated investments at cost	$	42,459		$	7,092		$	—		$	240,589		$	—		$	—

See Notes to Financial Statements.
52

	PowerShares Value Line Industry Rotation Portfolio			PowerShares Water Resources Portfolio			PowerShares WilderHill Clean Energy Portfolio			PowerShares WilderHill Progressive Energy Portfolio			PowerShares DWA Technical LeadersTM Portfolio
ASSETS:
Unaffiliated investments at value	$	33,608,400		$	1,603,342,703		$	913,344,821		$	22,956,759		$	91,882,394
Affiliated investments at value		31,821			182,440			—			57,665			—
Cash		47,162			1,796,142			770,201			—			268,920
Receivables:
Investments sold		—			—			—			—			—
Dividends		15,406			1,953,478			451,680			38,154			14,660
Due from Adviser		2,084			96,548			36,786			9,333			33,001
Capital stock sold		—			5,830,654			7,826,625			—			5,210,529
Other assets		8,214			6,001			8,167			6,134			—
Total Assets		33,713,087			1,613,207,966			922,438,280			23,068,045			97,409,504
LIABILITIES:
Due to custodian		—			—			—			98,480			—
Payables:
Investments purchased		—			4,927,265			7,453,038			—			5,204,101
Accrued advisory fees		12,824			646,140			373,553			8,607			27,277
Accrued expenses		50,444			852,878			266,896			56,301			87,830
Total Liabilities		63,268			6,426,283			8,093,487			163,388			5,319,208
NET ASSETS	$	33,649,819		$	1,606,781,683		$	914,344,793		$	22,904,657		$	92,090,296
NET ASSETS CONSIST OF:
Paid-in capital	$	32,294,112		$	1,516,173,780		$	1,019,796,842		$	21,300,872		$	90,114,840
Undistributed net investment income		—			152,360			—			46,410			105,514
Accumulated net realized loss on investments		(383,229	)		(33,297,863	)		(133,922,566	)		(279,888	)		(119,243	)
Net unrealized appreciation / depreciation on investments		1,738,936			123,753,406			28,470,517			1,837,263			1,989,185
Net Assets	$	33,649,819		$	1,606,781,683		$	914,344,793		$	22,904,657		$	92,090,296
Shares outstanding (unlimited amount authorized, $0.01 par value)		1,200,000			83,700,000			47,400,000			800,000			3,600,000
Net asset value	$	28.04		$	19.20		$	19.29		$	28.63		$	25.58
Unaffiliated investments at cost	$	31,869,464		$	1,479,589,297		$	884,874,304		$	21,119,496		$	89,893,209
Affiliated investments at cost	$	31,821		$	182,440		$	—		$	57,665		$	—

53

Statements of Operations

	PowerShares Aerospace & Defense Portfolio			PowerShares CleantechTM Portfolio			PowerShares Golden Dragon Halter USX China Portfolio			PowerShares Listed Private Equity Portfolio			PowerShares Lux Nanotech Portfolio			PowerShares Value Line TimelinessTM Select Portfolio
	For the year ended April 30, 2007			For the period October 24, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period October 24, 2006* through April 30, 2007			For the year ended April 30, 2007			For the year ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	1,111,500		$	56,663		$	5,243,788		$	1,590,308		$	837,654		$	1,296,960
Affiliated dividend income		1,772			74			16,435			1,797			1			—
Foreign withholding taxes		—			—			(7,987	)		—			(42,132	)		(7,402	)
Total Income		1,113,272			56,737			5,252,236			1,592,105			795,523			1,289,558
EXPENSES:
Advisory fees		589,182			68,193			1,483,381			194,749			647,239			997,000
Licensing		70,702			10,229			297,646			38,950			129,448			199,400
Administration fees		59,999			3,133			60,622			6,572			59,999			56,817
Printing		56,809			12,174			136,048			21,334			57,314			94,397
Accounting		54,998			2,376			54,998			4,669			54,998			51,356
Audit		16,500			16,500			16,500			16,500			16,500			16,500
Custodian & transfer agent fees		11,288			1,947			20,397			3,165			10,674			20,023
Listing fee and expenses		10,202			10,000			10,560			10,000			10,260			10,432
Trustees		4,595			556			10,723			1,555			5,102			7,541
Registration & filings		4,428			914			9,185			3,576			3,377			5,338
Offering costs		4,325			3,973			—			4,328			8,562			8,548
Legal		3,482			2,501			17,228			2,500			6,303			7,410
Other expenses		15,210			12,236			18,856			12,236			11,568			16,644
Total Expenses		901,720			144,732			2,136,144			320,134			1,021,344			1,491,406
Expenses reimbursed to the Adviser under the Expense Agreement		—			—			—			—			—			—
Less fees waived:
Advisory		(118,441	)		(48,163	)		(56,468	)		(42,623	)		(106,037	)		(86,448	)
Other fees assumed by the Adviser		—			—			—			—			—			—
Net Expenses		783,279			96,569			2,079,676			277,511			915,307			1,404,958
Net Investment Income (Loss)		329,993			(39,832	)		3,172,560			1,314,594			(119,784	)		(115,400	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(3,319,816	)		(1,152,593	)		(8,992,084	)		(980,738	)		(7,759,188	)		(32,589,754	)
In-kind redemptions		11,911,867			2,240,254			57,668,468			2,121,560			10,196,890			26,523,153
Net realized gain (loss)		8,592,051			1,087,661			48,676,384			1,140,822			2,437,702			(6,066,601	)
Net change in unrealized appreciation/ depreciation on investments		12,375,809			1,005,663			13,246,066			4,753,710			(12,992,856	)		13,228,112
Net realized and unrealized gain (loss) on investments		20,967,860			2,093,324			61,922,450			5,894,532			(10,555,154	)		7,161,511
Net increase (decrease) in net assets resulting from operations	$	21,297,853		$	2,053,492		$	65,095,010		$	7,209,126		$	(10,674,938	)	$	7,046,111

*  Commencement of investment operations.

See Notes to Financial Statements.
54

	PowerShares Value Line Industry Rotation Portfolio			PowerShares Water Resources Portfolio			PowerShares WilderHill Clean Energy Portfolio			PowerShares WilderHill Progressive Energy Portfolio			PowerShares DWA Technical LeadersTM Portfolio
	For the period December 1, 2006* through April 30, 2007			For the year ended April 30, 2007			For the year ended April 30, 2007			For the period October 24, 2006* through April 30, 2007			For the period March 1, 2007* through April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	67,185		$	19,714,410		$	6,657,581		$	163,713		$	156,345
Affiliated dividend income		260			54,451			35,897			574			—
Foreign withholding taxes		(296	)		(230,966	)		(8,235	)		(4,838	)		—
Total Income		67,149			19,537,895			6,685,243			159,449			156,345
EXPENSES:
Advisory fees		43,161			6,033,534			3,585,302			67,358			35,114
Licensing		8,632			905,031			717,060			13,472			7,023
Administration fees		1,295			181,009			107,561			3,105			1,053
Printing		3,890			569,431			294,678			11,325			50,000
Accounting		863			120,672			71,707			2,358			702
Audit		12,500			16,500			16,500			16,500			12,500
Custodian & transfer agent fees		1,632			63,542			42,609			1,937			1,551
Listing fee and expenses		10,001			12,217			11,709			10,000			3,000
Trustees		379			48,110			27,693			565			90
Registration & filings		654			41,233			28,145			847			1,095
Offering costs		4,340			8,313			—			4,041			1,671
Legal		5,000			38,172			27,226			2,500			2,500
Other expenses		12,286			61,673			29,175			12,400			9,011
Total Expenses		104,633			8,099,437			4,959,365			146,408			125,310
Expenses reimbursed to the Adviser under the Expense Agreement		—			—			34,877			—			—
Less fees waived:
Advisory		(40,101	)		(175,648	)		—			(47,367	)		(35,114	)
Other fees assumed by the Adviser		—			—			—			—			(39,365	)
Net Expenses		64,532			7,923,789			4,994,242			99,041			50,831
Net Investment Income (Loss)		2,617			11,614,106			1,691,001			60,408			105,514
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(383,229	)		(32,163,257	)		(130,207,317	)		(279,888	)		(119,243	)
In-kind redemptions		720,690			49,558,259			72,566,396			1,927,839			185,521
Net realized gain (loss)		337,461			17,395,002			(57,640,921	)		1,647,951			66,278
Net change in unrealized appreciation/ depreciation on investments		1,738,936			62,772,486			(51,974,247	)		1,837,263			1,989,185
Net realized and unrealized gain (loss) on investments		2,076,397			80,167,488			(109,615,168	)		3,485,214			2,055,463
Net increase (decrease) in net assets resulting from operations	$	2,079,014		$	91,781,594		$	(107,924,167	)	$	3,545,622		$	2,160,977

55

Statements of Changes in Net Assets

	PowerShares Aerospace & Defense Portfolio						PowerShares CleantechTM Portfolio			PowerShares Golden Dragon Halter USX China Portfolio
	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006			For the period October 24, 2006* through April 30, 2007			For the year ended April 30, 2007			For the year ended April 30, 2006
OPERATIONS:
Net investment income (loss)	$	329,993		$	91,022		$	(39,832	)	$	3,172,560		$	1,067,194
Net realized gain (loss) on investments		8,592,051			159,769			1,087,661			48,676,384			1,538,875
Net change in unrealized appreciation/depreciation on investments		12,375,809			8,303,697			1,005,663			13,246,066			23,738,694
Net increase (decrease) in net assets resulting from operations		21,297,853			8,554,488			2,053,492			65,095,010			26,344,763
Undistributed net investment income (loss) included in the price of units issued and redeemed		13,857			—			6,280			111,037			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(362,663	)		(59,157	)		—			(3,191,113	)		(741,732	)
Tax return of capital		(25,620	)		—			—			—			—
Total distributions to shareholders		(388,283	)		(59,157	)		—			(3,191,113	)		(741,732	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		149,636,041			79,923,553			48,140,438			286,475,511			182,731,681
Value of shares repurchased		(53,795,021	)		(3,283,353	)		(28,531,110	)		(192,389,311	)		(19,388,492	)
Net income equalization		(13,857	)		—			(6,280	)		(111,037	)		—
Net increase in net assets resulting from shares transactions		95,827,163			76,640,200			19,603,048			93,975,163			163,343,189
Increase in Net Assets		116,750,590			85,135,531			21,662,820			155,990,097			188,946,220
NET ASSETS:
Beginning of period		85,135,531			—			—			238,330,274			49,384,054
End of period	$	201,886,121		$	85,135,531		$	21,662,820		$	394,320,371		$	238,330,274
Undistributed net investment income at end of period	$	—		$	32,046		$	—		$	588,109		$	606,662
CHANGES IN SHARES OUTSTANDING:
Shares sold		8,100,000			5,100,000			1,900,000			14,400,000			11,600,000
Shares repurchased		(3,000,000	)		(200,000	)		(1,100,000	)		(10,100,000	)		(1,300,000	)
Shares outstanding, beginning of period		4,900,000			—			—			14,100,000			3,800,000
Shares outstanding, end of period		10,000,000			4,900,000			800,000			18,400,000			14,100,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
56

	PowerShares Listed Private Equity Portfolio			PowerShares Lux Nanotech Portfolio						PowerShares Value Line TimelinessTM Select Portfolio
	For the period October 24, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	1,314,594		$	(119,784	)	$	56,369		$	(115,400	)	$	(125,631	)
Net realized gain (loss) on investments		1,140,822			2,437,702			4,225,042			(6,066,601	)		73,298
Net change in unrealized appreciation/depreciation on investments		4,753,710			(12,992,856	)		8,408,845			13,228,112			10,656,535
Net increase (decrease) in net assets resulting from operations		7,209,126			(10,674,938	)		12,690,256			7,046,111			10,604,202
Undistributed net investment income (loss) included in the price of units issued and redeemed		242,577			(40,198	)		—			(29,370	)		—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(689,732	)		—			(22,920	)		—			—
Tax return of capital		—			—			(147,353	)		—			—
Total distributions to shareholders		(689,732	)		—			(170,273	)		—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		162,455,219			91,815,890			117,694,691			461,154,401			206,285,386
Value of shares repurchased		(18,896,255	)		(34,505,044	)		(17,798,262	)		(378,402,470	)		(34,080,051	)
Net income equalization		(242,577	)		40,198			—			29,370			—
Net increase in net assets resulting from shares transactions		143,316,387			57,351,044			99,896,429			82,781,301			172,205,335
Increase in Net Assets		150,078,358			46,635,908			112,416,412			89,798,042			182,809,537
NET ASSETS:
Beginning of period		—			112,416,412			—			182,809,537			—
End of period	$	150,078,358		$	159,052,320		$	112,416,412		$	272,607,579		$	182,809,537
Undistributed net investment income at end of period	$	624,862		$	—		$	—		$	—		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		6,100,000			5,200,000			6,900,000			29,200,000			12,800,000
Shares repurchased		(700,000	)		(2,000,000	)		(1,000,000	)		(24,400,000	)		(2,100,000	)
Shares outstanding, beginning of period		—			5,900,000			—			10,700,000			—
Shares outstanding, end of period		5,400,000			9,100,000			5,900,000			15,500,000			10,700,000

57

Statements of Changes in Net Assets (Continued)

	PowerShares Value Line Industry Rotation Portfolio			PowerShares Water Resources Portfolio
	For the period December 1, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	2,617		$	11,614,106		$	713,009
Net realized gain (loss) on investments		337,461			17,395,002			3,680,611
Net change in unrealized appreciation/depreciation on investments		1,738,936			62,772,486			60,980,920
Net increase (decrease) in net assets resulting from operations		2,079,014			91,781,594			65,374,540
Undistributed net investment income (loss) included in the price of units issued and redeemed		2,011			1,052,528			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(2,669	)		(11,901,149	)		(291,087	)
Tax return of capital		(4,445	)		—			—
Total distributions to shareholders		(7,114	)		(11,901,149	)		(291,087	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		39,530,660			875,926,807			963,167,470
Value of shares repurchased		(7,952,741	)		(340,233,615	)		(37,042,877	)
Net income equalization		(2,011	)		(1,052,528	)		—
Net increase in net assets resulting from shares transactions		31,575,908			534,640,664			926,124,593
Increase in Net Assets		33,649,819			615,573,637			991,208,046
NET ASSETS:
Beginning of period		—			991,208,046			—
End of period	$	33,649,819		$	1,606,781,683		$	991,208,046
Undistributed net investment income at end of period	$	—		$	152,360		$	421,922
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,500,000			48,400,000			56,400,000
Shares repurchased		(300,000	)		(19,000,000	)		(2,100,000	)
Shares outstanding, beginning of period		—			54,300,000			—
Shares outstanding, end of period		1,200,000			83,700,000			54,300,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
58

	PowerShares WilderHill Clean Energy Portfolio						PowerShares WilderHill Progressive Energy Portfolio			PowerShares DWA Technical LeadersTM Portfolio
	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period October 24, 2006* through April 30, 2007			For the period March 1, 2007* through April 30, 2007
OPERATIONS:
Net investment income (loss)	$	1,691,001		$	(782,921	)	$	60,408		$	105,514
Net realized gain (loss) on investments		(57,640,921	)		19,308,968			1,647,951			66,278
Net change in unrealized appreciation/depreciation on investments		(51,974,247	)		84,680,554			1,837,263			1,989,185
Net increase (decrease) in net assets resulting from operations		(107,924,167	)		103,206,601			3,545,622			2,160,977
Undistributed net investment income (loss) included in the price of units issued and redeemed		188,257			—			(2,980	)		177,364
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(1,691,001	)		—			(14,162	)		—
Tax return of capital		(160,324	)		—			—			—
Total distributions to shareholders		(1,851,325	)		—			(14,162	)		—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		602,781,817			667,646,977			40,867,799			92,402,327
Value of shares repurchased		(301,601,160	)		(74,926,387	)		(21,494,602	)		(2,473,008	)
Net income equalization		(188,257	)		—			2,980			(177,364	)
Net increase in net assets resulting from shares transactions		300,992,400			592,720,590			19,376,177			89,751,955
Increase in Net Assets		191,405,165			695,927,191			22,904,657			92,090,296
NET ASSETS:
Beginning of period		722,939,628			27,012,437			—			—
End of period	$	914,344,793		$	722,939,628		$	22,904,657		$	92,090,296
Undistributed net investment income at end of period	$	—		$	—		$	46,410		$	105,514
CHANGES IN SHARES OUTSTANDING:
Shares sold		31,600,000			34,200,000			1,600,000			3,700,000
Shares repurchased		(16,500,000	)		(4,000,000	)		(800,000	)		(100,000	)
Shares outstanding, beginning of period		32,300,000			2,100,000			—			—
Shares outstanding, end of period		47,400,000			32,300,000			800,000			3,600,000

59

Financial Highlights

PowerShares Aerospace & Defense Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.37		$	14.91
Net investment income**		0.05			0.03
Net realized and unrealized gain on investments		2.83			2.45
Total from operations		2.88			2.48
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—
Distributions to shareholders from:
Net investment income		(0.06	)		(0.02	)
Tax return of capital		—	(a)		—
Total distributions		(0.06	)		(0.02	)
Net asset value at end of period	$	20.19		$	17.37
TOTAL RETURN***		16.66	%		16.66	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	201,886		$	85,136
Ratio to average net assets of:
Expenses, net of waivers		0.66	%		0.68	%†
Expenses, prior to waivers		0.77	%		0.80	%†
Net investment income, net of waivers		0.28	%		0.31	%†
Portfolio turnover rate ††		16	%		1	%

PowerShares Cleantech^TM Portfolio

	For the period October 24, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	24.70
Net investment loss**		(0.04	)
Net realized and unrealized gain on investments		2.41
Total from operations		2.37
Undistributed net investment income included in price of units issued and redeemed**		0.01
Net asset value at end of period	$	27.08
TOTAL RETURN***		9.64	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	21,663
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		1.06	%†
Net investment loss, net of waivers		(0.29	)%†
Portfolio turnover rate ††		22	%

*  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 $0.005.

See Notes to Financial Statements.
60

Financial Highlights (Continued)

PowerShares Golden Dragon Halter USX China Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period December 9, 2004* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.90		$	13.00		$	14.55
Net investment income**		0.20			0.17			0.06
Net realized and unrealized gain (loss) on investments		4.53			3.89			(1.61	)
Total from operations		4.73			4.06			(1.55	)
Undistributed net investment income included in price of units issued and redeemed**		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.21	)		(0.16	)		—
Net asset value at end of period	$	21.43		$	16.90		$	13.00
TOTAL RETURN***		28.53	%		31.52	%		(10.68	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	394,320		$	238,330		$	49,384
Ratio to average net assets of:
Expenses, net of waivers		0.70	%		0.71	%		0.70	%†
Expenses, prior to waivers		0.72	%†††		0.88	%		0.97	%†
Net investment income, net of waivers		1.06	%		1.18	%		1.24	%†
Portfolio turnover rate ††		17	%		21	%		9	%

PowerShares Listed Private Equity Portfolio

	For the period October 24, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.09
Net investment income**		0.44
Net realized and unrealized gain on investments		2.52
Total from operations		2.96
Undistributed net investment income included in price of units issued and redeemed**		0.08
Distributions to shareholders from:
Net investment income		(0.34	)
Net asset value at end of period	$	27.79
TOTAL RETURN***		12.18	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	150,078
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		0.82	%†
Net investment income, net of waivers		3.38	%†
Portfolio turnover rate ††		19	%

*  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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the year ended April 30, 2007.

See Notes to Financial Statements.
61

Financial Highlights (Continued)

PowerShares Lux Nanotech Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	19.05		$	15.32
Net investment income (loss)**		(0.02	)		0.02
Net realized and unrealized gain (loss) on investments		(1.54	)		3.79
Total from operations		(1.56	)		3.81
Undistributed net investment income included in price of units issued and redeemed**		(0.01	)		—
Distributions to shareholders from:
Net investment income		—			(0.01	)
Tax return of capital		—			(0.07	)
Total distributions		—			(0.08	)
Net asset value at end of period	$	17.48		$	19.05
TOTAL RETURN***		(8.24	)%		24.94	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	159,052		$	112,416
Ratio to average net assets of:
Expenses, net of waivers		0.71	%		0.73	%†
Expenses, prior to waivers		0.79	%		0.83	%†
Net investment income (loss), net of waivers		(0.09	)%		0.17	%†
Portfolio turnover rate ††		16	%		6	%

PowerShares Value Line Timeliness^TM Select Portfolio

	For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.09		$	15.52
Net investment loss**		(0.01	)		(0.02	)
Net realized and unrealized gain on investments		0.51			1.59
Total from operations		0.50			1.57
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—
Net asset value at end of period	$	17.59		$	17.09
TOTAL RETURN***		2.93	%		10.12	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	272,608		$	182,810
Ratio to average net assets of:
Expenses, net of waivers		0.70	%		0.71	%†
Expenses, prior to waivers		0.75	%†††		0.78	%†
Net investment loss, net of waivers		(0.06	)%		(0.30	)%†
Portfolio turnover rate ††		113	%		39	%

*  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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the year ended April 30, 2007.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
62

Financial Highlights (Continued)

PowerShares Value Line Industry Rotation Portfolio

	For the period December 1, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.19
Net investment income**		—	(a)
Net realized and unrealized gain on investments		2.86
Total from operations		2.86
Undistributed net investment income included in price of units issued and redeemed**		—	(a)
Distributions to shareholders from:
Net investment income		—	(a)
Tax return of capital		(0.01	)
Total distributions		(0.01	)
Net asset value at end of period	$	28.04
TOTAL RETURN***		11.36	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	33,650
Ratio to average net assets of:
Expenses, net of waivers		0.75	%†
Expenses, prior to waivers		1.21	%†
Net investment income, net of waivers		0.03	%†
Portfolio turnover rate ††		13	%

PowerShares Water Resources Portfolio

	For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.25		$	15.32
Net investment income**		0.17			0.02
Net realized and unrealized gain on investments		0.93			2.94
Total from operations		1.10			2.96
Undistributed net investment income included in price of units issued and redeemed**		0.02			—
Distributions to shareholders from:
Net investment income		(0.17	)		(0.03	)
Net asset value at end of period	$	19.20		$	18.25
TOTAL RETURN***		6.26	%		19.38	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	1,606,782		$	991,208
Ratio to average net assets of:
Expenses, net of waivers		0.66	%		0.67	%†
Expenses, prior to waivers		0.67	%†††		0.70	%†
Net investment income, net of waivers		0.96	%		0.40	%†
Portfolio turnover rate ††		27	%		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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the year ended April 30, 2007.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
63

Financial Highlights (Continued)

PowerShares WilderHill Clean Energy Portfolio

	For the year ended April 30, 2007			For the year ended April 30, 2006			For the period March 3, 2005* through April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	22.38		$	12.86		$	15.61
Net investment income**		0.04			(0.07	)		(0.01	)
Net realized and unrealized gain (loss) on investments		(3.09	)		9.59			(2.74	)
Total from operations		(3.05	)		9.52			(2.75	)
Undistributed net investment income included in price of units issued and redeemed**		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.05	)		—			—
Tax return of capital		—	(a)		—			—
Total distributions		(0.05	)		—			—
Net asset value at end of period	$	19.29		$	22.38		$	12.86
TOTAL RETURN***		(13.58	)%		74.03	%		(17.59	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	914,345		$	722,940		$	27,012
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.70	%		0.71	%		0.70	%†
Expenses, prior to waivers and reimbursements		0.69	%†††		0.75	%		1.35	%†
Net investment income (loss), net of waivers and reimbursements		0.24	%††††		(0.39	)%		(0.31	)%†
Portfolio turnover rate ††		41	%		6	%		9	%

PowerShares WilderHill Progressive Energy Portfolio

	For the period October 24, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	24.91
Net investment income**		0.06
Net realized and unrealized gain on investments		3.68
Total from operations		3.74
Undistributed net investment income (loss) included in price of units issued and redeemed**		—	(a)
Distributions to shareholders from:
Net investment income		(0.02	)
Net asset value at end of period	$	28.63
TOTAL RETURN***		15.01	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	22,905
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†
Expenses, prior to waivers		1.09	%†
Net investment income, net of waivers		0.45	%†
Portfolio turnover rate ††		12	%

*  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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the year ended April 30, 2007.

††††  Net investment income per share and the ratio of net investment income to average net assets include a special cash dividend received of $6.72 per share owned of Scottish Power Plc ADR on May 18, 2006. Net investment loss per share and the ratio of net investment loss to average net assets excluding the special dividend were $(0.04) and (0.23)%, respectively, for the year ended April 30, 2007.

(a)  Amount represents less than $0.005.

See Notes to Financial Statements.
64

Financial Highlights (Continued)

PowerShares DWA Technical Leaders^TM Portfolio

	For the period March 1, 2007* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	23.95
Net investment income**		0.04
Net realized and unrealized gain on investments		1.52
Total from operations		1.56
Undistributed net investment income (loss) included in price of units issued and redeemed**		0.07
Net asset value at end of period	$	25.58
TOTAL RETURN***		6.81	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	92,090
Ratio to average net assets of:
Expenses, net of waivers		0.72	%†
Expenses, prior to waivers		1.78	%†
Net investment income, net of waivers†††		1.50	%†
Portfolio turnover rate ††		9	%

*  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.

†††  Net investment income per share and the ratio of net investment income to average net assets include a special cash dividend received of $15.00 per share owned of Dean Foods Co. on April 2, 2007. Net investment loss per share and the ratio of net investment loss to average net assets excluding the special dividend were less than $0.005 and (0.11)%, respectively, for the year ended April 30, 2007.

See Notes to Financial Statements.
65

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

PowerShares Aerospace & Defense Portfolio - "Aerospace & Defense Portfolio"

PowerShares Cleantech^TM Portfolio - "Cleantech^TM Portfolio"

PowerShares Golden Dragon Halter USX China Portfolio - "Golden Dragon Halter USX China Porfolio"

PowerShares Listed Private Equity Portfolio - "Listed Private Equity Portfolio"

PowerShares Lux Nanotech Portfolio - "Lux Nanotech Portfolio"

PowerShares Value Line Timeliness^TM Select Portfolio - "Value Line Timeliness^TM Select Portfolio"

PowerShares Value Line Industry Rotation Portfolio - "Value Line Industry Rotation Portfolio"

PowerShares Water Resources Portfolio - "Water Resources Portfolio"

PowerShares WilderHill Clean Energy Portfolio - "WilderHill Clean Energy Portfolio"

PowerShares WilderHill Progressive Energy Portfolio - "WilderHill Progressive Energy Portfolio"

PowerShares DWA Technical Leaders^TM Portfolio - "DWA Technical Leaders^TM Portfolio"

The Value Line Industry Rotation Portfolio and the DWA Technical Leaders^TM Portfolio commenced investment operations on December 1, 2006 and March 1, 2007, respectively. Each portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on the American Stock Exchange except for shares of the DWA Technical Leaders^TM Portfolio. The shares of DWA Technical Leaders^TM Portfolio are traded on the New York Stock Exchange. The Funds' market prices may differ to some degree from the 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, each 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 U nits, 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 the Fund's fees and expenses) of the following equity indices:

Fund	Index
Aerospace & Defense Portfolio	SPADETM Defense Index
CleantechTM Portfolio	CleantechTM Index
Golden Dragon Halter USX China Portfolio	USX China IndexSM
Listed Private Equity Portfolio	Red Rocks Listed Private Equity Index
Lux Nanotech Portfolio	Lux Nanotech IndexTM
Value Line TimelinessTM Select Portfolio	Value Line TimelinessTM Select Index
Value Line Industry Rotation Portfolio	Value Line Industry Rotation Index
Water Resources Portfolio	Palisades Water Index
WilderHill Clean Energy Portfolio	WilderHill Clean Energy Index
WilderHill Progressive Energy Portfolio	Progressive Energy Index
DWA Technical LeadersTM Portfolio	Dorsey Wright Technical LeadersTM Index

66

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions to Shareholders

Each Fund declares and pays dividends from net investment income, if any, to its shareholders quarterly and distributes net realized taxable capital gains, if any, annually. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

Beginning May 1, 2006 (or since inception, if later), all Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost of repurchases of capital shares is applied to undistributed net investment income. The amount of

67

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services. The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.50% per annum on each Fund's average daily net assets.

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, offering costs, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchan ge Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived			Expenses Assumed
Aerospace & Defense Portfolio	$	118,441		$	—
CleantechTM Portfolio		48,163			—
Golden Dragon Halter USX China Portfolio		56,468			—
Listed Private Equity Portfolio		42,623			—
Lux Nanotech Portfolio		106,037			—
Value Line TimelinessTM Select Portfolio		86,448			—
Value Line Industry Rotation Portfolio		40,101			—
Water Resources Portfolio		175,648			—
WilderHill Clean Energy Portfolio		(34,877	)		—
WilderHill Progressive Energy Portfolio		47,367			—
DWA Technical LeadersTM Portfolio		35,114			39,365

The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which 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 as specified above.

68

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

During the period ended April 30, 2007, the details of expense waivers and reimbursements to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbursements		Net (Waivers)/ Reimbursements
Golden Dragon Halter USX China Portfolio	$	(85,394	)	$	28,926	$	(56,468	)
Value Line TimelinessTM Select Portfolio		(86,482	)		34		(86,448	)
Water Resources Portfolio		(214,855	)		39,207		(175,648	)
WilderHill Clean Energy Portfolio		(92,363	)		127,240		34,877

The net amounts of waivers or reimbursements are also shown on the Statements of Operations.

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ended:
	04/30/08		04/30/09		04/30/10
Aerospace & Defense Portfolio	$	153,499	$	153,499	$	118,441
CleantechTM Portfolio		48,163		48,163		48,163
Golden Dragon Halter USX China Portfolio		245,699		245,699		85,394
Listed Private Equity Portfolio		42,623		42,623		42,623
Lux Nanotech Portfolio		139,117		139,117		106,037
Value Line TimelinessTM Select Portfolio		115,504		115,504		86,482
Value Line Industry Rotation Portfolio		40,101		40,101		40,101
Water Resources Portfolio		214,854		214,854		214,855
WilderHill Clean Energy Portfolio		83,653		83,653		83,653
WilderHill Progressive Energy Portfolio		47,367		47,367		47,367
DWA Technical LeadersTM Portfolio		74,479		74,479		74,479

Distribution Agreement

Effective September 18, 2006 (or since inception, if later), A I M 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. Prior to September 18, 2007, ALPS Distributors, Inc. served as the distributor.

The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the following "Licensors":

Fund	Licensor
Aerospace & Defense Portfolio	International Space Business Council
CleantechTM Portfolio	Cleantech Capital Indices, LLC
Golden Dragon Halter USX China Portfolio	Halter Financial Group
Listed Private Equity Portfolio	Red Rocks Capital Partners, LLC
Lux Nanotech Portfolio	Lux Research, Inc.

69

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Fund	Licensor
Value Line TimelinessTM Select Portfolio	Value Line Publishing, Inc.
Value Line Industry Rotation Portfolio	Value Line Publishing, Inc.
Water Resources Portfolio	Palisades Water Index Associates, LLC
WilderHill Clean Energy Portfolio	WilderShares, LLC
WilderHill Progressive Energy Portfolio	WilderShares, LLC
DWA Technical LeadersTM Portfolio	Dorsey, Wright & Associates, Inc.

The above trademarks are trademarks owned by the respective Licensors. These trademarks have been licensed to the Advisor for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensors and the Licensors make no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the licensing fees, which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

Note 4. INVESCO Transaction and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVESCAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO PLC, announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by AIM Advisors, Inc., an affiliate of the Adviser.

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax-basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
Aerospace & Defense Portfolio	$	—	$	(104,662	)	$	20,242,829		$	21,422,833	$	(1,180,004	)	$	20,138,167
CleantechTM Portfolio		—		—			969,297			1,601,544		(632,247	)		969,297
Golden Dragon Halter USX China Portfolio		588,109		(4,146,823	)		27,610,073			42,069,391		(14,459,318	)		24,051,359
Listed Private Equity Portfolio		624,862		—			4,463,705			6,830,565		(2,366,860	)		5,088,567
Lux Nanotech Portfolio		—		(3,986,980	)		(7,299,490	)		13,099,355		(20,398,845	)		(11,286,470	)
Value Line TimelinessTM Select Portfolio		—		(28,753,751	)		23,837,184			26,254,954		(2,417,770	)		(4,916,567	)
Value Line Industry Rotation Portfolio		—		—			1,738,936			2,133,020		(394,084	)		1,738,936
Water Resources Portfolio		152,360		(11,876,489	)		104,906,849			157,620,457		(52,713,608	)		93,182,720
WilderHill Clean Energy Portfolio		—		(91,631,944	)		12,375,260			97,982,596		(85,607,336	)		(79,256,684	)
WilderHill Progressive Energy Portfolio		46,410		—			1,826,709			2,767,811		(941,102	)		1,873,119
DWA Technical LeadersTM Portfolio		105,514		—			1,948,508			2,880,946		(932,438	)		2,054,022

70

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

Aerospace & Defense Portfolio	$	181,755,286
CleantechTM Portfolio		20,852,691
Golden Dragon Halter USX China Portfolio		365,569,659
Listed Private Equity Portfolio		145,512,427
Lux Nanotech Portfolio		166,286,495
Value Line TimelinessTM Select Portfolio		248,892,095
Value Line Industry Rotation Portfolio		31,901,285
Water Resources Portfolio		1,498,618,294
WilderHill Clean Energy Portfolio		900,969,561
WilderHill Progressive Energy Portfolio		21,187,715
DWA Technical LeadersTM Portfolio		89,933,886

Distributions to Shareholders

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
Aerospace & Defense Portfolio	$	362,663
Golden Dragon Halter USX China Portfolio		3,191,113
Listed Private Equity Portfolio		689,732
Value Line Industry Rotation Portfolio		2,669
Water Resources Portfolio		11,901,149
WilderHill Clean Energy Portfolio		1,691,001
WilderHill Progressive Energy Portfolio		14,162
	Distributions paid from Return of Capital
Aerospace & Defense Portfolio	$	25,620
Value Line Industry Rotation Portfolio		4,445
WilderHill Clean Energy Portfolio		160,324

The tax character of distributions paid during the period ended April 30, 2006 was as follows:

	Distributions paid from Ordinary Income
Aerospace & Defense Portfolio	$	59,157
Golden Dragon Halter USX China Portfolio		741,732
Lux Nanotech Portfolio		22,920
Water Resources Portfolio		291,087

71

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

At April 30, 2007, 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.

	Capital Loss Available Through										Total
	2011		2012		2013		2014		2015		Amount
Aerospace & Defense Portfolio		—		—		—		—	$	104,662	$	104,662
Golden Dragon Halter USX China Portfolio		—		—		—	$	1,018,146		3,128,677		4,146,823
Lux Nanotech Portfolio		—		—		—		—		3,986,980		3,986,980
Value Line TimelinessTM Select Portfolio		—		—		—		—		28,753,751		28,753,751
Water Resources Portfolio		—		—		—		—		11,876,489		11,876,489
WilderHill Clean Energy Portfolio		—		—		—		2,098,368		89,533,576		91,631,944

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
Aerospace & Defense Portfolio	$	2,895,157
CleantechTM Portfolio		1,116,227
Golden Dragon Halter USX China Portfolio		1,023,851
Listed Private Equity Portfolio		690,733
Lux Nanotech Portfolio		1,188,954
Value Line TimelinessTM Select Portfolio		6,398,518
Value Line Industry Rotation Portfolio		383,229
Water Resources Portfolio		2,574,817
WilderHill Clean Energy Portfolio		26,195,365
WilderHill Progressive Energy Portfolio		269,334
DWA Technical LeadersTM Portfolio		78,566

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in real estate investment trusts, investments in partnerships, wash sales from redemption in-kind transactions,

72

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			Undistributed Capital Gains/ (Accumulated Losses)			Paid in Capital
Aerospace & Defense Portfolio	$	12,387		$	(11,896,499	)	$	11,884,112
CleantechTM Portfolio		33,552			(2,240,254	)		2,206,702
Golden Dragon Halter USX China Portfolio		(111,037	)		(54,584,958	)		54,695,995
Listed Private Equity Portfolio		(242,577	)		(2,121,560	)		2,364,137
Lux Nanotech Portfolio		159,982			(10,063,576	)		9,903,594
Value Line TimelinessTM Select Portfolio		144,770			(26,480,023	)		26,335,253
Value Line Industry Rotation Portfolio		2,486			(720,690	)		718,204
Water Resources Portfolio		(1,035,047	)		(48,790,388	)		49,825,435
WilderHill Clean Energy Portfolio		(27,933	)		(71,268,087	)		71,296,020
WilderHill Progressive Energy Portfolio		3,144			(1,927,839	)		1,924,695
DWA Technical LeadersTM Portfolio		(177,364	)		(185,521	)		362,885

Note 6. Investment Transactions

For the period ended April 30, 2007, the cost of securities purchased and proceeds from sales of securities, excluding short-term securities and in-kind transactions, were as follows:

	Purchases		Sales
Aerospace & Defense Portfolio	$	19,479,601	$	19,680,199
CleantechTM Portfolio		6,828,394		5,914,997
Golden Dragon Halter USX China Portfolio		49,946,633		54,352,642
Listed Private Equity Portfolio		15,571,174		15,751,654
Lux Nanotech Portfolio		27,704,989		20,422,728
Value Line TimelinessTM Select Portfolio		234,359,363		227,910,002
Value Line Industry Rotation Portfolio		3,006,675		2,837,779
Water Resources Portfolio		396,198,468		328,604,791
WilderHill Clean Energy Portfolio		313,312,800		297,149,472
WilderHill Progressive Energy Portfolio		3,639,278		3,165,375
DWA Technical LeadersTM Portfolio		4,256,014		4,203,584

For the period ended April 30, 2007, in-kind transactions were as follows:

	Purchases		Sales
Aerospace & Defense Portfolio	$	150,589,982	$	54,513,558
CleantechTM Portfolio		48,014,060		29,205,884
Golden Dragon Halter USX China Portfolio		289,697,318		191,546,762
Listed Private Equity Portfolio		160,963,994		16,942,503
Lux Nanotech Portfolio		83,410,466		33,574,516
Value Line TimelinessTM Select Portfolio		455,194,731		378,899,393
Value Line Industry Rotation Portfolio		38,179,488		6,816,382

73

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

	Purchases		Sales
Water Resources Portfolio	$	732,888,932	$	268,302,798
WilderHill Clean Energy Portfolio		578,512,908		294,712,311
WilderHill Progressive Energy Portfolio		38,237,548		19,239,907
DWA Technical LeadersTM Portfolio		93,181,839		3,407,338

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Transaction fees at scheduled amounts of $500 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 9. Risk of Concentration

The Funds concentrate their investments in certain industries, subjecting them to greater risk than funds that invest in a wider range of industries.

Note 10. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

Note 11. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of FIN 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of FIN 48, if any, on the Funds' financial statements.

74

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

75

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust:

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

76

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
Aerospace & Defense Portfolio		100	%		100	%
CleantechTM Portfolio		0	%		0	%
Golden Dragon Halter USX China Portfolio		100	%		0	%
Listed Private Equity Portfolio		100	%		100	%
Lux Nanotech Portfolio		0	%		0	%
Value Line TimelinessTM Select Portfolio		0	%		0	%
Value Line Industry Rotation Portfolio		100	%		100	%
Water Resources Portfolio		100	%		100	%
WilderHill Clean Energy Portfolio		100	%		100	%
WilderHill Progressive Energy Portfolio		100	%		100	%
DWA Technical LeadersTM Portfolio		0	%		0	%

77

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989- Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

78

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994- 1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

79

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002-Present); Manager, Nuveen Investments (April 1998-August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)(19) of the 1940 Act.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

80

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001- 2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

81

Board Considerations Regarding Continuation of Investment
Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the

82

Board Considerations Regarding Continuation of Investment
Advisory Agreement (Unaudited) (Continued)

Funds, information describing the Adviser's current organization, including operations assistance provided by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

83

Board Considerations Regarding Continuation of Investment
Advisory Agreement (Unaudited) (Continued)

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

84

PowerShares   Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (EFT). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com.

This page contains advertising materials and should not be viewed as part of the Annual Report.
85

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market  

PWO  -  Dynamic OTC  

PIQ  -  Dynamic MagniQuant  

PJF  -  Dynamic Large Cap  

PJG  -  Dynamic Mid Cap  

PJM  -  Dynamic Small Cap  

PWB  -  Dynamic Large Cap Growth  

PWV  -  Dynamic Large Cap Value  

PWJ  -  Dynamic Mid Cap Growth  

PWP  -  Dynamic Mid Cap Value  

PWT  -  Dynamic Small Cap Growth  

PWY  -  Dynamic Small Cap Value  

PGZ  -  Dynamic Aggressive Growth  

PVM  -  Dynamic Deep Value  

PYZ  -  Dynamic Basic Materials Sector  

PEZ  -  Dynamic Consumer Discretionary Sector  

PSL  -  Dynamic Consumer Staples Sector  

PXI  -  Dynamic Energy Sector  

PFI  -  Dynamic Financials Sector  

PTH  -  Dynamic Healthcare Sector  

PRN  -  Dynamic Industrials Sector  

PTF  -  Dynamic Technology Sector  

PTE  -  Dynamic Telecommunications & Wireless  

PUI  -  Dynamic Utilities  

PJB  -  Dynamic Banking  

PBE  -  Dynamic Biotechnology & Genome  

PKB  -  Dynamic Building & Construction  

PXE  -  Dynamic Energy Exploration & Production  

PBJ  -  Dynamic Food & Beverage  

PHW  -  Dynamic Hardware & Consumer Electronics  

PTJ  -  Dynamic Healthcare Services  

PIC  -  Dynamic Insurance  

PEJ  -  Dynamic Leisure and Entertainment  

PBS  -  Dynamic Media  

PXQ  -  Dynamic Networking  

PXJ  -  Dynamic Oil & Gas Services  

PJP  -  Dynamic Pharmaceuticals  

PMR  -  Dynamic Retail  

PSI  -  Dynamic Semiconductors  

PSJ  -  Dynamic Software  

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

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86

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000  

PRFZ  -  FTSE RAFI US 1500 Small-Mid  

PRFM  -  FTSE RAFI Basic Materials Sector  

PRFG  -  FTSE RAFI Consumer Goods Sector  

PRFS  -  FTSE RAFI Consumer Services Sector  

PRFE  -  FTSE RAFI Energy Sector  

PRFF  -  FTSE RAFI Financials Sector  

PRFH  -  FTSE RAFI Health Care Sector  

PRFN  -  FTSE RAFI Industrials Sector  

PRFQ  -  FTSE RAFI Telecom & Technology Sector  

PRFU  -  FTSE RAFI Utilities Sector  

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense  

ADRA  -  BLDRS Asia 50 ADR Index Fund  

ADRD  -  BLDRS Developed Markets 100 ADR Index Fund  

ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund  

ADRU  -  BLDRS Europe 100 ADR Index Fund  

PKW  -  Buyback Achievers  

PZD  -  Cleantech  

PFM  -  Dividend Achievers  

PDP  -  DWA Technical Lenders  

PGF  -  Financial Preferred  

PGJ  -  Golden Dragon Halter USX China  

PHJ  -  High Growth Rate Dividend Achievers  

PEY  -  High Yield Equity Dividend Achievers  

PID  -  International Dividend Achievers  

PSP  -  Listed Private Equity  

PXN  -  Lux Nanotech  

QQQQ  -  PowerShares QQQ  

PYH  -  Value Line Industry Rotation  

PIV  -  Value Line Timeliness Select  

PHO  -  Water Resources  

PBW  -  WilderHill Clean Energy  

PUW  -  WilderHill Progressive Energy  

PZI  -  Zacks Micro Cap  

PZJ  -  Zacks Small Cap  

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PowerShares Asset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFQ  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

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PowerSharesRisk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 ADR Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

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Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

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90

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs are not closed-end funds and trade at or near net asset values.

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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) 337-4246. 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) 337-4246; 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.

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 ETFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares ETFs 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.

A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares ETFs call A I M Distributors, Inc. at (800) 337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-4

2007 Annual Report to Shareholders

30 April 2007

PowerShares Dynamic Basic Materials Sector Portfolio

PowerShares Dynamic Consumer Discretionary Sector Portfolio

PowerShares Dynamic Consumer Staples Sector Portfolio

PowerShares Dynamic Energy Sector Portfolio

PowerShares Dynamic Financial Sector Portfolio

PowerShares Dynamic Healthcare Sector Portfolio

PowerShares Dynamic Industrials Sector Portfolio

PowerShares Dynamic Technology Sector Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Dynamic Utilities Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	24
Frequency Distribution of Discounts & Premiums	26
Fees and Expenses	28
Sector Portfolios
Schedules of Investments
PowerShares Dynamic Basic Materials Sector Portfolio	30
PowerShares Dynamic Consumer Discretionary Sector Portfolio	31
PowerShares Dynamic Consumer Staples Sector Portfolio	33
PowerShares Dynamic Energy Sector Portfolio	34
PowerShares Dynamic Financial Sector Portfolio	35
PowerShares Dynamic Healthcare Sector Portfolio	36
PowerShares Dynamic Industrials Sector Portfolio	37
PowerShares Dynamic Technology Sector Portfolio	39
PowerShares Dynamic Telecommunications & Wireless Portfolio	40
PowerShares Dynamic Utilities Portfolio	41
Statements of Assets and Liabilities	42
Statements of Operations	44
Statements of Changes in Net Assets	46
Financial Highlights	48
Notes to Financial Statements	53
Report of Independent Registered Public Accounting Firm	62
Supplemental Information (Unaudited)	63
Information about Advisory Agreement (Unaudited)	68

To My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US 1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing investors with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P 500 Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the end of summer2006, energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

PowerShares Dynamic Basic Materials Sector Portfolio (ticker: PYZ)

The PowerShares Dynamic Basic Materials Sector Portfolio is based on the Dynamic Basic Materials Sector Intellidex^SM index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the Fund has shown strong performance, returning 24.69%. Over that short time, the portfolio outperformed the overall S&P Materials Index which had a positive return of 20.74%. Metals & mining, chemicals, and containers & packaging led the way with the largest percent of contribution to return. All industries within basic materials performed well with none of them showing a negative return for the period.

Industry Breakdown (% of the Fund's

Net Assets)

Chemicals	47.2
Iron/Steel	14.1
Packaging & Containers	12.5
Mining	12.1
Forest Products & Paper	6.7
Miscellaneous Manufacturing	3.2
Environmental Control	1.6
Metal Fabricate/Hardware	1.5
Energy-Alternate Sources	1.2
Money Market	0.2
Other	(0.3	)

Style Allocation (%)

Mid-Cap Value	40.6
Large-Cap Value	17.5
Small-Cap Value	16.7
Mid-Cap Growth	12.8
Small-Cap Growth	7.0
Large-Cap Growth	5.4

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Freeport-McMoRan Copper & Gold, Inc., Class B	2.8
United States Steel Corp.	2.7
PPG Industries, Inc.	2.7
Southern Copper Corp.	2.7
Dow Chemical (The) Co.	2.6
Allegheny Technologies, Inc.	2.6
International Paper Co.	2.5
Alcoa, Inc.	2.5
Praxair, Inc.	2.5
Nucor Corp.	2.5
Total	26.1

4

Manager's Analysis (Continued)

PowerShares Dynamic Basic Materials Sector Portfolio (ticker: PYZ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Basic Materials Sector IntellidexSM Index		25.36
S&P Materials Index		20.74
Dow Jones Basic Materials Index		20.21

Fund

NAV Return	24.69
Share Price Return	24.86

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 1.32%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Materials Index and the Dow Jones Basic Materials Index are unmanaged indices based on the average performance of approximately 30 and 90 common stocks, respectively.

5

Manager's Analysis

PowerShares Dynamic Consumer Discretionary Sector Portfolio (ticker: PEZ)

The PowerShares Dynamic Consumer Discretionary Sector Portfolio is based on the Dynamic Consumer Discretionary Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the Fund has shown strong performance, returning 13.11%. Over that short time, the portfolio outperformed the S&P Consumer Discretionary Index, which returned 6.77%. Specialty retail, textiles, apparel & luxury goods and household materials led the way with the largest percent of contribution to return.

All industries within the consumer discretionary sector performed well for the year. Asbury Automotive Group and Aeropostale were leading the way in the specialty retail, with Polo Ralph Lauren and Deckers Outdoor posting strong results in the textiles, apparel & luxury goods space. Tempur-Pedic International and ITT Educational Services also contributed positively to the overall return of the portfolio.

Industry Breakdown (% of the Fund's

Net Assets)

Retail	38.3
Apparel	18.7
Media	6.7
Commercial Services	5.9
Household Products/Wares	5.9
Lodging	4.8
Toys/Games/Hobbies	4.1
Home Furnishings	3.0
Auto Parts & Equipment	2.7
Advertising	2.5
Distribution/Wholesale	2.4
Housewares	2.4
Home Builders	1.6
Entertainment	1.2
Money Market	0.3
Other	(0.5	)

Style Allocation (%)

Mid-Cap Value	27.4
Small-Cap Value	27.2
Mid-Cap Growth	16.3
Large-Cap Growth	11.9
Small-Cap Growth	9.7
Large-Cap Value	7.5

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
VF Corp.	2.7
Polo Ralph Lauren Corp.	2.6
Mattel, Inc.	2.6
Yum! Brands, Inc.	2.6
NIKE, Inc., Class B	2.5
Walt Disney (The) Co.	2.5
Starwood Hotels & Resorts Worldwide, Inc.	2.5
Omnicom Group, Inc.	2.5
TJX Cos., Inc.	2.5
Coach, Inc.	2.4
Total	25.4

6

Manager's Analysis (Continued)

PowerShares Dynamic Consumer Discretionary Sector Portfolio (ticker: PEZ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Consumer Discretionary Sector IntellidexSM Index		13.54
S&P Consumer Discretionary Index		6.77
Dow Jones Consumer Services Index		7.17

Fund

NAV Return	13.11
Share Price Return	13.19

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.72% while the Fund's gross annualized total operating expense ratio was 1.41%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Consumer Discretionary Index and the Dow Jones Consumer Services Index are unmanaged indices based on the average performance of approximately 86 and 250 common stocks, respectively.

7

Manager's Analysis

PowerShares Dynamic Consumer Staples Sector Portfolio (ticker: PSL)

The PowerShares Dynamic Consumer Staples Sector Portfolio is based on the Dynamic Consumer Staples Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the Fund has shown strong performance with a positive 12.69% return for the period. Over that short time, the portfolio outperformed the S&P Consumer Staples Index which returned 9.42%. Food products and food & staples retailing led the way with the largest percent of contribution to return. All industries within consumer staples performed well during this time with none showing negative returns. Seaboard Corp., a food products company, was the largest contributor to returns while Kroger, a food & staples retailing company, and NVTY Inc., categorized in the personal products industry, also contributed to the positive results. Brown-Forman and WE-40 were the biggest drags on performance.

Industry Breakdown (% of the Fund's

Net Assets)

Food	38.7
Agriculture	13.2
Beverages	13.1
Retail	11.5
Cosmetic/Personal Care	10.3
Household Products/Wares	6.7
Pharmaceuticals	2.1
Electrical Components & Equipment	1.5
Distribution/Wholesale	1.4
Miscellaneous Manufacturing	1.2
Money Market	0.8
Other	(0.5	)

Style Allocation (%)

Large-Cap Value	29.1
Mid-Cap Value	25.0
Small-Cap Value	18.3
Large-Cap Growth	17.5
Small-Cap Growth	6.1
Mid-Cap Growth	4.0

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Kroger (The) Co.	2.8
CVS Corp.	2.7
Coca-Cola (The) Co.	2.7
Altria Group, Inc.	2.6
Kellogg Co.	2.6
General Mills, Inc.	2.5
PepsiCo, Inc.	2.5
Kimberly-Clark Corp.	2.5
Reynolds American, Inc.	2.5
Kraft Foods, Inc., Class A	2.4
Total	25.8

8

Manager's Analysis (Continued)

PowerShares Dynamic Consumer Staples Sector Portfolio (ticker: PSL)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Consumer Staples Sector IntellidexSM Index		13.10
S&P Consumer Staples Index		9.42
Dow Jones Consumer Goods Index		9.85

Fund

NAV Return	12.69
Share Price Return	12.75

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.73% while the Fund's gross annualized total operating expense ratio was 1.46%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Consumer Staples Index and the Dow Jones Consumer Goods Index are unmanaged indices based on the average performance of approximately 39 and 160 common stocks, respectively.

9

Manager's Analysis

PowerShares Dynamic Energy Sector Portfolio (ticker: PXI)

The PowerShares Dynamic Energy Sector Portfolio is based on the Dynamic Energy Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the portfolio has performed very well returning 23.78% compared to the overall S&P Energy Index which returned 20.21% for the time period. Tesoro, USEC and Valero Energy led the way in the oil gas & consumable fuels industry while TODOCO and Schlumberger led the way in energy equipment & services industry. Swift Energy and Hercules Offshore were two of the recent laggards, but overall the energy sector showed strong performance due to global demand in energy products and uncertainty of the supply of those products.

Industry Breakdown (% of the Fund's

Net Assets)

Oil & Gas	46.3
Oil & Gas Services	25.6
Gas	12.8
Pipelines	5.6
Coal	2.8
Mining	1.6
Transportation	1.6
Electric	1.4
Energy-Alternate Sources	1.3
Retail	1.2
Money Market	0.2
Other	(0.4	)

Style Allocation (%)

Mid-Cap Growth	20.0
Large-Cap Value	19.1
Large-Cap Growth	18.0
Mid-Cap Value	17.5
Small-Cap Value	15.9
Small-Cap Growth	9.5

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Baker Hughes, Inc.	2.8
National Oilwell Varco, Inc.	2.7
Valero Energy Corp.	2.7
Schlumberger Ltd. (Netherlands)	2.6
Devon Energy Corp.	2.5
Marathon Oil Corp.	2.5
Chevron Corp.	2.5
Transocean, Inc. (Cayman Islands)	2.5
Exxon Mobil Corp.	2.4
Occidental Petroleum Corp.	2.4
Total	25.6

10

Manager's Analysis (Continued)

PowerShares Dynamic Energy Sector Portfolio (ticker: PXI)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Energy Sector IntellidexSM Index		24.18
S&P Energy Index		20.21
Dow Jones Oil & Gas Index		20.64

Fund

NAV Return	23.78
Share Price Return	23.92

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 1.22%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Energy Index and the Dow Jones Oil & Gas Index are unmanaged indices based on the average performance of approximately 29 and 70 common stocks, respectively.

11

Manager's Analysis

PowerShares Dynamic Financial Sector Portfolio (ticker: PFI)

The PowerShares Dynamic Financial Sector Portfolio is based on the Dynamic Financial Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the portfolio, after fees and expenses, has returned 5.72% compared to the S&P Financials Index which returned 6.06%. Insurance and capital markets companies were the largest contributors to performance. Loews Corp., Hartford Financial Services and Principal Financial Group were the largest contributors to performance in the insurance industry. Franklin Resources and Goldman Sachs were the leaders in the capital markets industry. The financial sector has been relatively uneasy for months due to sub-prime and inflation concerns.

Industry Breakdown (% of the Fund's

Net Assets)

Banks	11.1
Commercial Services	2.5
Diversified Financial Services	12.2
Insurance	72.0
Real Estate	1.3
Software	1.3
Money Market	0.6
Other	(1.0	)

Style Allocation (%)

Mid-Cap Value	35.1
Large-Cap Value	28.0
Small-Cap Value	25.4
Large-Cap Growth	7.6
Mid-Cap Growth	3.9

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Loews Corp.	2.7
XL Capital Ltd., Class A (Cayman Islands)	2.7
Franklin Resources, Inc.	2.7
Hartford Financial Services Group (The), Inc.	2.6
ACE Ltd. (Cayman Islands)	2.6
Prudential Financial, Inc.	2.6
Travelers Cos. (The), Inc.	2.6
Chubb Corp.	2.5
Principal Financial Group, Inc.	2.5
Goldman Sachs Group (The), Inc.	2.5
Total	26.0

12

Manager's Analysis (Continued)

PowerShares Dynamic Financial Sector Portfolio (ticker: PFI)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Financial Sector IntellidexSM Index		6.06
S&P Financials Index		6.06
Dow Jones Financials Index		4.31

Fund

NAV Return	5.72
Share Price Return	5.86

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.72% while the Fund's gross annualized total operating expense ratio was 1.38%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Financials Index and the Dow Jones Financials Index are unmanaged indices based on the average performance of approximately 89 and 300 common stocks, respectively.

13

Manager's Analysis

PowerShares Dynamic Healthcare Sector Portfolio (ticker: PTH)

The PowerShares Dynamic Healthcare Sector Portfolio is based on the Dynamic Healthcare Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the portfolio had a solid return of 14.31% compared with the S&P Health Care Index which returned 9.59%. The two industries which led the way were health care providers & services and health care equipment & supplies. CIGNA and Humana led the way in the health care providers & services industry while Caremark Rx lagged. Biosite was the strongest performer for the portfolio along with Kinetic Concepts and Baxter.

Industry Breakdown (% of the Fund's

Net Assets)

Healthcare-Products	32.8
Healthcare-Services	25.8
Pharmaceuticals	17.7
Electronics	9.1
Commercial Services	8.2
Biotechnology	2.7
Insurance	2.6
Software	1.3
Money Market	0.0
Other	(0.2	)

Style Allocation (%)

Mid-Cap Growth	27.3
Small-Cap Growth	18.8
Large-Cap Growth	17.6
Small-Cap Value	13.5
Mid-Cap Value	12.3
Large-Cap Value	10.5

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Merck & Co., Inc.	2.9
Baxter International, Inc.	2.8
Cigna Corp.	2.6
Waters Corp.	2.6
Zimmer Holdings, Inc.	2.6
Humana, Inc.	2.5
Coventry Health Care, Inc.	2.5
Pfizer, Inc.	2.5
McKesson Corp.	2.5
Aetna, Inc.	2.5
Total	26.0

14

Manager's Analysis (Continued)

PowerShares Dynamic Healthcare Sector Portfolio (ticker: PTH)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Healthcare Sector IntellidexSM Index		14.78
S&P Health Care Index		9.59
Dow Jones Healthcare Index		8.19

Fund

NAV Return	14.31
Share Price Return	14.35

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 1.20%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Health Care Index and the Dow Jones Healthcare Index are unmanaged indices based on the average performance of approximately 56 and 180 common stocks, respectively.

15

Manager's Analysis

PowerShares Dynamic Industrials Sector Portfolio (ticker: PRN)

The PowerShares Dynamic Industrials Sector Portfolio is based on the Dynamic Industrials Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the portfolio returned 14.28% compared with the S&P Industrials Index which returned 8.21%. Machinery, commercial services & supplies and aerospace & defense were the top performing industries. Cummins, Terex and JLG Industries led the way in the machinery industry. Also contributing to the Fund's positive performance were Manpower, within the commercial services & supplies industry, and Precision CastParts, within the aerospace & defense industry. Due to rising prices in most markets in April, very few stocks contributed negatively to performance.

Industry Breakdown (% of the Fund's

Net Assets)

Commercial Services	22.9
Aerospace/Defense	17.1
Miscellaneous Manufacturing	15.9
Machinery-Diversified	8.6
Engineering & Construction	7.6
Household Products/Wares	5.0
Transportation	4.2
Office/Business Equipment	3.9
Electronics	2.9
Office Furnishings	2.5
Hand/Machine Tools	1.5
Machinery-Construction & Mining	1.5
Metal Fabricate/Hardware	1.5
Building Materials	1.3
Environmental Control	1.3
Retail	1.3
Home Furnishings	1.1
Money Market	0.1
Other	(0.2	)

Style Allocation (%)

Small-Cap Value	22.7
Mid-Cap Value	21.6
Small-Cap Growth	18.8
Mid-Cap Growth	16.8
Large-Cap Value	12.7
Large-Cap Growth	7.4

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Cummins, Inc.	3.2
Honeywell International, Inc.	2.8
ITT Corp.	2.6
R.R. Donnelley & Sons Co.	2.6
Cooper Industries Ltd., Class A (Bermuda)	2.6
Boeing Co.	2.5
Manpower, Inc.	2.5
Pitney Bowes, Inc.	2.5
United Technologies Corp.	2.5
General Dynamics Corp.	2.5
Total	26.3

16

Manager's Analysis (Continued)

PowerShares Dynamic Industrials Sector Portfolio (ticker: PRN)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Industrials Sector IntellidexSM Index		14.70
S&P Industrials Index		8.21
Dow Jones Industrials Index		10.07

Fund

NAV Return	14.28
Share Price Return	14.37

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 1.19%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Industrials Index and the Dow Jones Industrials Index are unmanaged indices based on the average performance of approximately 52 and 270 common stocks, respectively.

17

Manager's Analysis

PowerShares Dynamic Technology Sector Portfolio (ticker: PTF)

The PowerShares Dynamic Technology Sector Portfolio is based on the Dynamic Technology Sector Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Since its October 12, 2006 inception date, the portfolio returned 8.69% while the S&P Information Technology Index returned 7.19%. IT services was the strongest industry followed by semiconductors & semiconductor equipment and computers & peripherals. MEMC Electronic Materials was the largest contributor to returns for the period. Covansys and Cognizant Technology Solutions in IT services along with NCR in the computers & peripherals industries added to the positive returns for the portfolio.

Industry Breakdown (% of the Fund's

Net Assets)

Computers	35.9
Software	21.2
Telecommunications	12.0
Electronics	9.7
Semiconductors	5.7
Office/Business Equipment	4.5
Commercial Services	4.2
Internet	4.1
Electrical Components & Equipment	1.6
Distribution/Wholesale	1.3
Other	(0.2	)

Style Allocation (%)

Mid-Cap Growth	28.5
Mid-Cap Value	21.4
Small-Cap Value	19.4
Small-Cap Growth	12.9
Large-Cap Growth	12.8
Large-Cap Value	5.0

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Apple, Inc.	2.8
International Business Machines Corp.	2.6
NCR Corp.	2.6
Microsoft Corp.	2.6
Amphenol Corp., Class A	2.6
Xerox Corp.	2.6
Agilent Technologies, Inc.	2.6
Hewlett-Packard Co.	2.5
BMC Software, Inc.	2.5
Electronic Data Systems Corp.	2.5
Total	25.9

18

Manager's Analysis (Continued)

PowerShares Dynamic Technology Sector Portfolio (ticker: PTF)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Technology Sector IntellidexSM Index		9.11
S&P Information Technology Index		7.19
Dow Jones Technology Index		6.79

Fund

NAV Return	8.69
Share Price Return	8.77

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.71% while the Fund's gross annualized total operating expense ratio was 1.25%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Information Technology Index and the Dow Jones Technology Index are unmanaged indices based on the average performance of approximately 88 and 252 common stocks, respectively.

19

Manager's Analysis

PowerShares Dynamic Telecommunications & Wireless Portfolio (ticker: PTE)

The PowerShares Dynamic Telecommunications & Wireless Portfolio is based on the Dynamic Telecommunications & Wireless Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Over the past year, the portfolio has returned 19.93% benefiting from strong returns in AT&T, Qwest Communications, Golden Telecom and BellSouth which led the way in the diversified telecommunications industry. DIRECTV and Liberty Global added positively to the portfolio within the media industry. Cisco was another strong performer within the communications equipment group, while the laggards for the portfolio were Broadwing and Covad Communications Group in diversified telecommunication as well as Syniverse Holdings in wireless telecommunication services.

Industry Breakdown (% of the Fund's

Net Assets)

Telecommunications	69.9
Media	19.4
Internet	2.8
Software	2.8
Electronics	2.7
Commercial Services	2.5
Other	(0.1	)

Style Allocation (%)

Small-Cap Value	27.4
Large-Cap Growth	19.9
Mid-Cap Growth	16.5
Mid-Cap Value	16.1
Large-Cap Value	15.1
Small-Cap Growth	5.0

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
Liberty Global, Inc., Class A	5.9
EchoStar Communications Corp., Class A	5.4
AT&T, Inc.	5.2
DIRECTV Group (The), Inc.	5.1
ALLTEL Corp.	4.9
Verizon Communications, Inc.	4.9
Cisco Systems, Inc.	4.8
American Tower Corp., Class A	4.6
Plantronics, Inc.	3.2
Mediacom Communications Corp., Class A	2.9
Total	46.9

20

Manager's Analysis (Continued)

PowerShares Dynamic Telecommunications & Wireless Portfolio (ticker: PTE)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Telecommunications and Wireless IntellidexSM Index		20.80		24.56		35.92
S&P SuperComposite Telecommunications Services Index		32.11		28.81		42.44
Russell 3000® Index		14.48		14.31		20.55

Fund

NAV Return	19.93	23.31	34.01
Share Price Return	19.93	23.36	34.09

Fund Inception: 6 December 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.97%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.66% while the Fund's gross annualized total operating expense ratio was 1.12%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Telecommunications Services Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 13 and 3,000 common stocks, respectively.

† Average annualized.

21

Manager's Analysis

PowerShares Dynamic Utilities Portfolio (ticker: PUI)

The PowerShares Dynamic Utilities Portfolio is based on the Dynamic Utilities Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Over the past year, the portfolio has returned a solid 28.48% for investors. Multi-line and electric utilities companies made up a vast majority of the portfolios holdings and contributed the largest contribution to return. Gas utilities and independent power producers had significantly less representation in the portfolio but they did have strong positive returns for the year.

Public Services Enterprise Group, Sempra Energy and PG&E Corp. were the best performing multi-line utility companies while PPL Corp. and FirstEnergy Corp. were the top performing electric utilities within the portfolio. AES Corp. within independent power producers industry and Northwest Natural Gas within gas utilities also added to the strong performance for the year.

Industry Breakdown (% of the Fund's

Net Assets)

Electric	86.4
Energy-Alternate Sources	2.7
Gas	10.7
Other	0.2

Style Allocation (%)

Large-Cap Value	36.7
Mid-Cap Value	34.4
Small-Cap Value	18.7
Mid-Cap Growth	5.5
Large-Cap Growth	4.7

Top Ten Fund Holdings

(% of the Fund's Net Assets)

Security
PPL Corp.	5.5
Public Service Enterprise Group, Inc.	5.5
Edison International	5.3
TXU Corp.	5.2
FirstEnergy Corp.	5.2
PG&E Corp.	5.1
Duke Energy Corp.	4.9
AES (The) Corp.	4.7
Northwest Natural Gas Co.	2.9
Allegheny Energy, Inc.	2.9
Total	47.2

22

Manager's Analysis (Continued)

PowerShares Dynamic Utilities Portfolio (ticker: PUI)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Utilities IntellidexSM Index		29.26		24.95		39.96
S&P SuperComposite Utilities Index		34.97		25.36		40.66
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	28.48	24.10	38.53
Share Price Return	28.60	24.20	38.70

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.89%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.92%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Utilities Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 82 and 3,000 common stocks, respectively.

† Average annualized.

23

Funds' Distribution History

	Ex-Dividend	04/16/07		03/16/07		03/15/07		02/15/07		01/15/07		12/15/06		11/15/06
	Record	04/18/07		03/20/07		03/20/07		02/20/07		01/17/07		12/19/06		11/17/06
	Payable	04/30/07		03/30/07		03/30/07		02/28/07		01/31/07		12/29/06		11/30/06
Fund	Ticker
PowerShares Dynamic Basic Materials Sector Portfolio	PYZ		—		0.03850		—		—		—		0.15875		—
PowerShares Dynamic Consumer Discretionary Sector Portfolio	PEZ		—		—		—		—		—		0.16398		—
PowerShares Dynamic Consumer Staples Sector Portfolio	PSL		—		0.03510		—		—		—		0.23925		—
PowerShares Dynamic Energy Sector Portfolio	PXI		—		0.00830		—		—		—		0.02386		—
PowerShares Dynamic Financial Sector Portfolio	PFI		—		0.01860		—		—		—		0.06758		—
PowerShares Dynamic Healthcare Sector Portfolio	PTH		—		—		—		—		—		—		—
PowerShares Dynamic Industrials Sector Portfolio	PRN		—		0.03620		—		—		—		0.01397		—
PowerShares Dynamic Technology Sector Portfolio	PTF		—		—		—		—		—		—		—
PowerShares Dynamic Telecommunications & Wireless Portfolio	PTE		—		—		—		—		—		0.14163		—
PowerShares Dynamic Utilities Portfolio	PUI		—		0.08250		—		—		—		0.13668		—
	Ex-Dividend			12/30/05		12/16/05		09/16/05		06/17/05		04/01/05		03/18/05
	Record			01/04/06		12/20/05		09/20/05		06/21/05		04/05/05		03/22/05
	Payable			01/31/06		12/30/05		09/30/05		06/30/05		04/29/05		04/29/05
Fund	Ticker
PowerShares Dynamic Basic Materials Sector Portfolio	PYZ			—		—		—		—		—		—
PowerShares Dynamic Consumer Discretionary Sector Portfolio	PEZ			—		—		—		—		—		—
PowerShares Dynamic Consumer Staples Sector Portfolio	PSL			—		—		—		—		—		—
PowerShares Dynamic Energy Sector Portfolio	PXI			—		—		—		—		—		—
PowerShares Dynamic Financial Sector Portfolio	PFI			—		—		—		—		—		—
PowerShares Dynamic Healthcare Sector Portfolio	PTH			—		—		—		—		—		—
PowerShares Dynamic Industrials Sector Portfolio	PRN			—		—		—		—		—		—
PowerShares Dynamic Technology Sector Portfolio	PTF			—		—		—		—		—		—
PowerShares Dynamic Telecommunications & Wireless Portfolio	PTE			—		0.00158		—		—		—		—
PowerShares Dynamic Utilities Portfolio	PUI			—		0.10928		—		—		—		—

24

	10/16/06		09/15/06		08/15/06		07/14/06		06/16/06		06/15/06		05/15/06		03/17/06
	10/18/06		09/16/06		08/17/06		07/18/06		06/20/06		06/19/06		05/17/06		03/21/06
	10/31/06		09/29/06		08/31/06		07/31/06		06/30/06		06/30/06		05/31/06		03/30/06
Fund
PowerShares Dynamic Basic Materials Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Consumer Discretionary Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Consumer Staples Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Energy Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Financial Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Industrials Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Technology Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Telecommunications & Wireless Portfolio		—		0.03081		—		—		0.03188		—		—		0.03180
PowerShares Dynamic Utilities Portfolio		—		0.06053		—		—		0.10547		—		—		0.07089
	12/17/04		12/31/04		09/17/04		06/18/04		03/19/04		12/24/03		09/19/03		06/20/03
	12/21/04		01/04/05		09/21/04		06/22/04		03/23/04		12/29/03		09/23/03		06/24/03
	01/31/05		01/31/05		10/29/04		07/30/04		04/30/04		01/30/04		10/31/03		07/31/03
Fund
PowerShares Dynamic Basic Materials Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Consumer Discretionary Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Consumer Staples Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Energy Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Financial Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Industrials Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Technology Sector Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Telecommunications & Wireless Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Utilities Portfolio	—		—		—		—		—		—		—		—

25

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PYZ	PowerShares Dynamic Basic Materials Sector Portfolio	10/12/06		136		56		1		0		0		0		0
PEZ	PowerShares Dynamic Consumer Discretionary Sector Portfolio	10/12/06		136		47		5		0		0		0		0
PSL	PowerShares Dynamic Consumer Staples Sector Portfolio	10/12/06		136		33		5		0		0		0		0
PXI	PowerShares Dynamic Energy Sector Portfolio	10/12/06		136		27		1		0		0		0		0
PFI	PowerShares Dynamic Financial Sector Portfolio	10/12/06		136		38		0		0		0		0		0
PTH	PowerShares Dynamic Healthcare Sector Portfolio	10/12/06		136		29		1		0		0		0		0
PRN	PowerShares Dynamic Industrials Sector Portfolio	10/12/06		136		55		2		0		0		0		0
PTF	PowerShares Dynamic Technology Sector Portfolio	10/12/06		136		51		9		0		0		0		0
PTE	PowerShares Dynamic Telecommunications & Wireless Portfolio	12/06/05		350		137		21		2		0		0		0
PUI	PowerShares Dynamic Utilities Portfolio	10/26/05		378		147		3		2		0		0		0

26

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PYZ		79		0		0		0		0		0
PEZ		83		1		0		0		0		0
PSL		96		2		0		0		0		0
PXI		108		0		0		0		0		0
PFI		98		0		0		0		0		0
PTH		105		1		0		0		0		0
PRN		77		2		0		0		0		0
PTF		76		0		0		0		0		0
PTE		179		9		2		0		0		0
PUI		222		4		0		0		0		0

27

Fees and Expenses

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 period ended April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Basic Materials Sector Portfolio Actual	$	1,000.00	$	1,208.59		0.71	%	$	3.91
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.26		0.71	%	$	3.58
PowerShares Dynamic Consumer Discretionary Sector Portfolio Actual	$	1,000.00	$	1,108.40		0.72	%	$	3.78
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.26		0.72	%	$	3.58
PowerShares Dynamic Consumer Staples Sector Portfolio Actual	$	1,000.00	$	1,118.50		0.73	%	$	3.82
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.19		0.73	%	$	3.79

28

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Energy Sector Portfolio Actual	$	1,000.00	$	1,171.10		0.70	%	$	3.79
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.30		0.70	%	$	3.53
PowerShares Dynamic Financial Sector Portfolio Actual	$	1,000.00	$	1,064.00		0.72	%	$	3.68
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.23		0.72	%	$	3.60
PowerShares Dynamic Healthcare Sector Portfolio Actual	$	1,000.00	$	1,141.80		0.70	%	$	3.68
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.30		0.70	%	$	3.53
PowerShares Dynamic Industrials Sector Portfolio Actual	$	1,000.00	$	1,147.80		0.71	%	$	3.77
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.28		0.71	%	$	3.55
PowerShares Dynamic Technology Sector Portfolio Actual	$	1,000.00	$	1,088.20		0.71	%	$	3.66
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.29		0.71	%	$	3.54
PowerShares Dynamic Telecommunications & Wireless Portfolio Actual	$	1,000.00	$	1,084.80		0.64	%	$	3.32
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.61		0.64	%	$	3.22
PowerShares Dynamic Utilities Portfolio Actual	$	1,000.00	$	1,112.80		0.62	%	$	3.26
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.71		0.62	%	$	3.12

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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.

29

Schedule of Investments

PowerShares Dynamic Basic Materials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Chemicals—47.2%
	6,138	Air Products & Chemicals, Inc.	$	469,557
	6,229	Airgas, Inc.		277,502
	6,087	Albemarle Corp.		258,393
	5,496	Cabot Corp.		248,969
	8,775	Celanese Corp., Series A		291,067
	4,274	Cytec Industries, Inc.		234,643
	10,971	Dow Chemical (The) Co.		489,416
	8,996	E.I. du Pont de Nemours and Co.		442,333
	4,289	Eastman Chemical Co.		290,365
	10,872	Ecolab, Inc.		467,387
	3,381	FMC Corp.		260,100
	10,031	H.B. Fuller Co.		256,493
	12,370	Hercules, Inc.*		233,051
	12,150	Huntsman Corp.		238,140
	4,770	Innospec, Inc.		256,101
	4,830	Lubrizol Corp.		289,510
	14,925	Lyondell Chemical Co.		464,466
	4,181	Minerals Technologies, Inc.		265,995
	4,896	OM Group, Inc.*		257,187
	7,037	PPG Industries, Inc.		517,782
	7,365	Praxair, Inc.		475,411
	8,671	Rohm & Haas Co.		443,695
	10,799	RPM International, Inc.		229,695
	10,157	Sensient Technologies Corp.		265,910
	6,122	Sigma-Aldrich Corp.		257,614
	9,613	Spartech Corp.		269,741
	9,330	Valspar Corp.		252,283
	9,898	W.R. Grace & Co.*		263,287
				8,966,093
		Energy - Alternate Sources—1.2%
	10,409	Headwaters, Inc.*		225,563
		Environmental Control—1.6%
	6,327	Metal Management, Inc.		304,139
		Forest Products & Paper—6.7%
	12,821	International Paper Co.		483,608
	7,492	Rock-Tenn Co., Class A		286,644
	4,732	Temple-Inland, Inc.		280,324
	17,118	Wausau Paper Corp.		230,408
				1,280,984
		Iron/Steel—14.1%
	4,421	Allegheny Technologies, Inc.		484,453
	2,110	Carpenter Technology Corp.		256,091
	5,038	Chaparral Steel Co.		355,179
	4,409	Cleveland-Cliffs, Inc.		305,500
	7,402	Nucor Corp.		469,731
	6,480	Steel Dynamics, Inc.		287,129
	5,121	United States Steel Corp.		519,986
				2,678,069

Number of Shares			Value
		Common Stocks (Continued)
		Metal Fabricate/Hardware—1.5%
	6,573	Quanex Corp.	$	282,836
		Mining—12.1%
	13,590	Alcoa, Inc.		482,309
	5,483	Century Aluminum Co.*		259,401
	7,957	Freeport-McMoRan Copper & Gold, Inc., Class B		534,392
	31,404	Hecla Mining Co.*		276,669
	6,356	Southern Copper Corp.		510,387
	6,837	Titanium Metals Corp.*		236,082
				2,299,240
		Miscellaneous Manufacturing—3.2%
	3,892	AptarGroup, Inc.		285,089
	14,649	Myers Industries, Inc.		328,870
				613,959
		Packaging & Containers—12.5%
	5,509	Ball Corp.		279,251
	7,572	Bemis Co.		251,542
	11,155	Crown Holdings, Inc.*		269,616
	50,686	Graphic Packaging Corp.*		260,019
	4,184	Greif, Inc., Class A		232,630
	10,265	Packaging Corp. of America		254,161
	7,818	Pactiv Corp.*		270,346
	7,782	Sealed Air Corp.		256,028
	6,879	Sonoco Products Co.		293,322
				2,366,915
		Total Common Stocks (Cost $17,063,351)		19,017,798
		Money Market Fund—0.2%
	31,916	Liquid Assets Portfolio Private Class** (Cost $31,916)		31,916
		Total Investments (Cost $17,095,267)—100.3%		19,049,714
		Liabilities in excess of other assets—(0.3%)		(61,856	)
		Net Assets—100.0%	$	18,987,858

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
30

Schedule of Investments

PowerShares Dynamic Consumer Discretionary Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Advertising—2.5%
	4,039	Omnicom Group, Inc.	$	422,924
		Apparel—18.7%
	8,592	Coach, Inc.*		419,547
	3,680	Deckers Outdoor Corp.*		278,686
	5,945	Gymboree (The) Corp.*		226,980
	8,650	Hanesbrands, Inc.*		230,004
	5,047	Liz Claiborne, Inc.		225,702
	7,947	NIKE, Inc., Class B		428,025
	4,903	Polo Ralph Lauren Corp.		451,615
	8,087	Steven Madden Ltd.*		240,588
	5,336	VF Corp.		468,555
	8,075	Wolverine World Wide, Inc.		230,784
				3,200,486
		Auto Parts & Equipment—2.7%
	4,032	Autoliv, Inc.		234,461
	2,999	BorgWarner, Inc.		233,652
				468,113
		Commercial Services—5.9%
	8,314	Aaron Rents, Inc.		235,868
	21,443	Coinmach Service Corp., Class A		226,867
	8,089	DeVry, Inc.		266,856
	2,848	ITT Educational Services, Inc.		276,854
				1,006,445
		Distribution/Wholesale—2.4%
	8,490	Genuine Parts Co.		419,491
		Entertainment—1.2%
	4,339	International Speedway Corp., Class A		214,347
		Home Builders—1.6%
	341	NVR, Inc.*		280,984
		Home Furnishings—3.0%
	2,268	Harman International Industries, Inc.		276,446
	9,104	Tempur-Pedic International, Inc.		236,431
				512,877
		Household Products/Wares—5.9%
	9,636	American Greetings Corp., Class A		245,236
	9,799	Helen of Troy Ltd. (Bermuda)*		222,437
	6,212	Jarden Corp.*		261,774
	9,722	Tupperware Brands Corp.		273,383
				1,002,830
		Housewares—2.4%
	13,525	Newell Rubbermaid, Inc.		414,812

Number of Shares			Value
		Common Stocks (Continued)
		Lodging—4.8%
	8,674	Marriott International, Inc., Class A	$	392,152
	6,333	Starwood Hotels & Resorts Worldwide, Inc.		424,437
				816,589
		Media—6.7%
	17,410	Journal Communications, Inc., Class A		234,861
	3,929	Meredith Corp.		227,568
	15,918	Sinclair Broadcast Group, Inc., Class A		259,941
	12,217	Walt Disney (The) Co.		427,350
				1,149,720
		Retail—38.3%
	6,117	Aeropostale, Inc.*		251,715
	7,364	American Eagle Outfitters		217,017
	8,830	Applebee's International, Inc.		239,999
	8,688	Asbury Automotive Group, Inc.		249,954
	34,333	Blockbuster, Inc., Class A*		212,865
	6,297	Bob Evans Farms, Inc.		231,100
	6,645	Brinker International, Inc.		206,660
	6,395	Brown Shoe Co. Inc.		172,537
	6,525	Buckle (The), Inc.		232,421
	10,701	Burger King Holdings, Inc.		251,152
	4,937	CBRL Group, Inc.		220,091
	7,535	Charlotte Russe Holdings, Inc.*		205,932
	4,123	Children's Place Retail Stores (The), Inc.*		217,983
	6,697	Claire's Stores, Inc.		218,121
	7,770	Family Dollar Stores, Inc.		247,397
	4,018	IHOP Corp.		236,741
	5,108	J.C. Penney Co., Inc.		403,992
	3,279	Jack in the Box, Inc.*		218,447
	5,222	Men's Wearhouse (The), Inc.		225,956
	7,374	Nordstrom, Inc.		404,980
	7,178	Payless ShoeSource, Inc.*		228,978
	6,862	Ross Stores, Inc.		227,475
	15,789	Staples, Inc.		391,567
	15,080	TJX Cos., Inc.		420,581
	7,094	Yum! Brands, Inc.		438,834
				6,572,495
		Toys/Games/Hobbies—4.1%
	7,989	Hasbro, Inc.		252,532
	15,940	Mattel, Inc.		451,102
				703,634
		Total Common Stocks (Cost $16,375,574)		17,185,747

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares Dynamic Consumer Discretionary Sector Portfolio

April 30, 2007

Number of Shares			Value
		Money Market Fund—0.3%
	45,074	Liquid Assets Portfolio Private Class** (Cost $45,074)	$	45,074
		Total Investments (Cost $16,420,648)—100.5%		17,230,821
		Liabilities in excess of other assets—(0.5%)		(74,423	)
		Net Assets—100.0%	$	17,156,398

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	17,008,384			99.2	%
Bermuda		222,437			1.3
Total investments		17,230,821			100.5
Liabilities in excess of other assets		(74,423	)		(0.5	)
Net Assets	$	17,156,398			100.0	%

See Notes to Financial Statements.
32

Schedule of Investments

PowerShares Dynamic Consumer Staples Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.7%
		Agriculture—13.2%
	17,633	Alliance One International, Inc.*	$	172,980
	4,258	Altria Group, Inc.		293,461
	1,765	Bunge Ltd. (Bermuda)		133,716
	2,043	Loews Corp. - Carolina Group		156,351
	4,291	Reynolds American, Inc.		275,740
	2,708	Universal Corp.		169,737
	2,468	UST, Inc.		139,886
	7,912	Vector Group Ltd.		144,394
				1,486,265
		Beverages—13.1%
	5,451	Anheuser-Busch Cos., Inc.		268,135
	2,293	Brown-Forman Corp., Class B		146,591
	5,773	Coca-Cola (The) Co.		301,293
	1,749	Molson Coors Brewing Co., Class B		164,896
	4,614	Pepsi Bottling Group, Inc.		151,385
	6,729	PepsiAmericas, Inc.		162,438
	4,225	PepsiCo, Inc.		279,230
				1,473,968
		Cosmetics/Personal Care—10.3%
	6,373	Alberto-Culver Co.		154,800
	3,859	Avon Products, Inc.		153,588
	2,671	Chattem, Inc.*		152,621
	3,993	Colgate-Palmolive Co.		270,486
	3,142	Estee Lauder (The) Cos., Inc., Class A		161,562
	4,209	Procter & Gamble Co.		270,681
				1,163,738
		Distribution/Wholesale—1.4%
	5,224	Central European Distribution Corp.*		155,414
		Electrical Components & Equipment—1.5%
	1,700	Energizer Holdings, Inc.*		165,206
		Food—38.7%
	3,553	Campbell Soup Co.		138,922
	5,829	ConAgra Foods, Inc.		143,277
	4,555	Corn Products International, Inc.		181,380
	4,781	Dean Foods Co.*		174,172
	4,771	General Mills, Inc.		285,783
	3,152	H.J. Heinz Co.		148,491
	3,989	Hormel Foods Corp.		151,941
	3,567	Ingles Markets, Inc., Class A		128,269
	3,683	J & J Snack Foods Corp.		143,527
	2,943	J.M. Smucker (The) Co.		164,278
	5,474	Kellogg Co.		289,629
	8,202	Kraft Foods, Inc., Class A		274,521
	10,629	Kroger (The) Co.		313,661
	3,781	McCormick & Co., Inc.		140,351
	2,473	Ralcorp Holdings, Inc.*		162,748
	5,190	Ruddick Corp.		155,856
	4,235	Safeway, Inc.		153,731
	8,627	Sara Lee Corp.		141,569

Number of Shares			Value
		Common Stocks (Continued)
	68	Seaboard Corp.	$	169,524
	8,084	Sysco Corp.		264,670
	4,983	Tootsie Roll Industries, Inc.		144,457
	8,023	Tyson Foods, Inc., Class A		168,162
	3,407	Weis Markets, Inc.		146,637
	2,945	Wm. Wrigley Jr. Co.		173,402
				4,358,958
		Household Products/Wares—6.7%
	3,165	Church & Dwight Co., Inc.		160,560
	2,285	Clorox Co.		153,278
	3,898	Kimberly-Clark Corp.		277,421
	10,699	Playtex Products, Inc.*		162,839
				754,098
		Miscellaneous Manufacturing—1.2%
	3,327	Lancaster Colony Corp.		140,499
		Pharmaceuticals—2.1%
	2,861	NBTY, Inc.*		141,362
	2,420	USANA Health Sciences, Inc.*		96,413
				237,775
		Retail—11.5%
	4,458	BJ's Wholesale Club, Inc.*		153,935
	4,747	Costco Wholesale Corp.		254,297
	8,400	CVS Corp.		304,416
	3,141	Longs Drug Stores Corp.		171,938
	8,389	Nu Skin Enterprises, Inc., Class A		145,381
	5,504	Wal-Mart Stores, Inc.		263,752
				1,293,719
		Total Common Stocks (Cost $10,464,776)		11,229,640
		Money Market Fund—0.8%
	94,474	Liquid Assets Portfolio Private Class** (Cost $94,474)		94,474
		Total Investments (Cost $10,559,250)—100.5%		11,324,114
		Liabilities in excess of other assets—(0.5%)		(59,783	)
		Net Assets—100.00%	$	11,264,331

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	11,190,398			99.3	%
Bermuda		133,716			1.2
Total investments		11,324,114			100.5
Liabilities in excess of other assets		(59,783	)		(0.5	)
Net Assets	$	11,264,331			100.0	%

See Notes to Financial Statements.
33

Schedule of Investments

PowerShares Dynamic Energy Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Coal—2.8%
	10,107	Alliance Holdings GP LP	$	270,969
	15,544	Alpha Natural Resources, Inc.*		269,999
				540,968
		Electric—1.4%
	8,690	MDU Resources Group, Inc.		263,307
		Energy - Alternate Sources—1.3%
	9,907	Covanta Holding Corp.*		243,118
		Gas—12.8%
	5,577	AGL Resources, Inc.		242,823
	7,277	Atmos Energy Corp.		230,826
	4,938	Energen Corp.		276,774
	5,024	Nicor, Inc.		257,430
	9,691	NiSource, Inc.		238,302
	5,186	Northwest Natural Gas Co.		263,501
	7,124	Sempra Energy		452,231
	8,774	UGI Corp.		248,831
	7,237	WGL Holdings, Inc.		244,900
				2,455,618
		Mining—1.6%
	15,332	USEC, Inc.*		309,246
		Oil & Gas—46.3%
	8,917	BreitBurn Energy Partners L.P.		326,362
	6,674	Cabot Oil & Gas Corp.		243,067
	6,075	Chevron Corp.		472,574
	6,425	ConocoPhillips		445,574
	6,527	Devon Energy Corp.		475,622
	4,603	ENSCO International, Inc.		259,517
	13,558	EXCO Resources, Inc.*		227,639
	5,740	Exxon Mobil Corp.		455,641
	7,788	Frontier Oil Corp.		275,150
	34,279	Grey Wolf, Inc.*		245,438
	7,768	Hess Corp.		440,834
	4,214	Holly Corp.		268,010
	4,663	Marathon Oil Corp.		473,528
	7,361	Noble Energy, Inc.		432,900
	8,948	Occidental Petroleum Corp.		453,664
	26,225	Parker Drilling Co.*		284,804
	4,925	Plains Exploration & Production Co.*		231,426
	6,302	St. Mary Land & Exploration Co.		230,779
	2,581	Tesoro Corp.		312,817
	6,896	Todco.*		313,492
	5,482	Transocean, Inc. (Cayman Islands)*		472,548
	7,346	Valero Energy Corp.		515,909
	8,393	Western Refining, Inc.		332,531
	5,185	Whiting Petroleum Corp.*		228,244
	8,213	XTO Energy, Inc.		445,720
				8,863,790

Number of Shares			Value
		Common Stocks (Continued)
		Oil & Gas Services—25.6%
	6,606	Baker Hughes, Inc.	$	531,057
	4,010	Cameron International Corp.*		258,926
	3,486	FMC Technologies, Inc.*		247,088
	17,065	Global Industries Ltd.*		354,269
	5,189	Grant Prideco, Inc.*		267,441
	13,684	Halliburton Co.		434,741
	16,690	Input/Output, Inc.*		233,493
	4,189	Lufkin Industries, Inc.		260,640
	6,387	NATCO Group, Inc., Class A*		243,983
	6,181	National Oilwell Varco, Inc.*		524,458
	5,734	Oceaneering International, Inc.*		272,594
	6,685	Schlumberger Ltd. (Netherlands)		493,554
	2,383	SEACOR Holdings, Inc.*		227,052
	7,759	Superior Energy Services, Inc.*		281,884
	4,320	Tidewater, Inc.		273,067
				4,904,247
		Pipelines—5.6%
	6,894	Copano Energy LLC		269,280
	6,365	DCP Midstream Partners, LP		260,965
	5,513	ONEOK, Inc.		266,884
	2,899	Questar Corp.		281,580
				1,078,709
		Retail—1.2%
	4,923	World Fuel Services Corp.		227,492
		Transportation—1.6%
	6,201	Gulfmark Offshore, Inc.*		297,028
		Total Common Stocks (Cost $15,860,048)		19,183,523
		Money Market Fund—0.2%
	31,280	Liquid Assets Portfolio Private Class** (Cost $31,280)		31,280
		Total Investments (Cost $15,891,328)—100.4%		19,214,803
		Liabilities in excess of other assets—(0.4%)		(77,522	)
		Net Assets—100.0%	$	19,137,281

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	18,248,701			95.3	%
Netherlands		493,554			2.6
Cayman Islands		472,548			2.5
Total investments		19,214,803			100.4
Liabilities in excess of other assets		(77,522	)		(0.4	)
Net Assets	$	19,137,281			100.0	%

See Notes to Financial Statements.
34

Schedule of Investments

PowerShares Dynamic Financial Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.4%
		Banks—11.1%
	3,417	Chittenden Corp.	$	99,298
	2,754	City Holding Co.		104,569
	1,723	Comerica, Inc.		106,671
	5,091	KeyCorp		181,647
	2,877	State Street Corp.		198,139
	2,287	SunTrust Banks, Inc.		193,069
				883,393
		Commercial Services—2.5%
	2,951	Moody's Corp.		195,120
		Diversified Financial Services—12.2%
	1,602	AG Edwards, Inc.		116,065
	2,992	Eaton Vance Corp.		114,354
	1,609	Franklin Resources, Inc.		211,277
	2,809	GAMCO Investors, Inc., Class A		128,147
	919	Goldman Sachs Group (The), Inc.		200,903
	1,580	Piper Jaffray Cos., Inc.*		100,820
	4,219	Waddell & Reed Financial, Inc., Class A		102,184
				973,750
		Insurance—72.0%
	3,455	ACE Ltd. (Cayman Islands)		205,434
	1,214	AMBAC Financial Group, Inc.		111,445
	2,990	American Financial Group, Inc.		105,457
	1,644	Arch Capital Group Ltd. (Bermuda)*		119,716
	2,932	Argonaut Group, Inc.*		98,545
	2,012	Assurant, Inc.		115,750
	3,753	Chubb Corp.		202,024
	4,993	CNA Surety Corp.*		103,056
	3,623	Commerce Group, Inc.		118,146
	2,651	Delphi Financial Group, Class A		113,198
	1,097	Everest Re Group, Ltd. (Bermuda)		110,402
	2,705	FBL Financial Group, Inc., Class A		104,792
	3,121	Harleysville Group, Inc.		95,315
	2,062	Hartford Financial Services Group (The), Inc.		208,674
	3,367	HCC Insurance Holdings, Inc.		103,232
	5,121	Horace Mann Educators Corp.		107,746
	3,676	IPC Holdings, Ltd. (Bermuda)		110,206
	2,822	Lincoln National Corp.		200,785
	4,512	Loews Corp.		213,509
	221	Markel Corp.*		101,419
	1,976	Nationwide Financial Services, Class A		112,889
	2,776	Odyssey Re Holdings Corp.		116,314
	3,511	Ohio Casualty Corp.		111,088
	4,741	Old Republic International Corp.		100,841
	1,532	PartnerRe Ltd. (Bermuda)		110,335
	2,296	Philadelphia Consolidated Holding Co.*		99,646
	2,282	PMI Group (The), Inc.		110,609
	3,165	Principal Financial Group, Inc.		200,946
	8,549	Progressive (The) Corp.		197,225
	2,152	Prudential Financial, Inc.		204,440

Number of Shares			Value
		Common Stocks (Continued)
	1,848	Reinsurance Group of America, Inc.	$	115,149
	1,899	RLI Corp.		105,755
	1,592	Safeco Corp.		106,250
	2,343	Safety Insurance Group, Inc.		93,861
	4,362	Selective Insurance Group, Inc.		113,761
	1,678	Transatlantic Holdings, Inc.		116,604
	3,754	Travelers Cos. (The), Inc.		203,091
	4,575	United America Indemnity Ltd., Class A (Cayman Islands)*		114,284
	2,275	Unitrin, Inc.		107,266
	3,200	W.R. Berkley Corp.		103,968
	188	White Mountains Insurance Group Ltd. (Bermuda)		107,724
	2,730	Willis Group Holdings Ltd. (Bermuda)		111,985
	2,731	XL Capital Ltd., Class A (Cayman Islands)		212,963
	2,155	Zenith National Insurance Corp.		99,669
				5,725,514
		Real Estate—1.3%
	3,001	CB Richard Ellis Group, Inc., Class A*		101,584
		Software—1.3%
	1,710	SEI Investments Co.		104,361
		Total Common Stocks (Cost $7,543,612)		7,983,722
		Money Market Fund—0.6%
	46,642	Liquid Assets Portfolio Private Class** (Cost $46,642)		46,642
		Total Investments (Cost $7,590,254)—101.0%		8,030,364
		Liabilities in excess of other assets—(1.0%)		(75,986	)
		Net Assets—100.0%	$	7,954,378

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	6,827,315			85.9	%
Bermuda		670,368			8.4
Cayman Islands		532,681			6.7
Total investments		8,030,364			101.0
Liabilities in excess of other assets		(75,986	)		(1.0	)
Net Assets	$	7,954,378			100.0	%

See Notes to Financial Statements.
35

Schedule of Investments

PowerShares Dynamic Healthcare Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Biotechnology—2.7%
	9,979	Bio-Rad Laboratories, Inc., Class A*	$	706,214
	111,901	Incyte Corp.*		862,757
				1,568,971
		Commercial Services—8.2%
	26,953	AMN Healthcare Services, Inc.*		656,306
	16,170	Chemed Corp.		813,351
	38,570	Cross Country Healthcare, Inc.*		759,443
	29,826	Emergency Medical Services Corp., Class A*		998,574
	24,385	McKesson Corp.		1,434,570
				4,662,244
		Electronics—9.1%
	42,932	Applera Corp. - Applied Biosystems Group		1,341,196
	11,960	Dionex Corp.*		825,240
	31,094	PerkinElmer, Inc.		752,475
	13,382	Varian, Inc.*		775,621
	24,969	Waters Corp.*		1,483,907
				5,178,439
		Healthcare - Products—32.8%
	28,089	Baxter International, Inc.		1,590,681
	18,031	Becton, Dickinson & Co.		1,418,859
	13,800	Biosite, Inc.*		1,276,500
	34,954	Conceptus, Inc.*		722,849
	25,070	Cytyc Corp.*		883,216
	18,386	Dade Behring Holdings, Inc.		902,936
	23,428	Dentsply International, Inc.		782,729
	14,762	Edwards Lifesciences Corp.*		723,338
	15,622	Gen-Probe, Inc.*		798,440
	12,668	Hillenbrand Industries, Inc.		774,648
	8,765	IDEXX Laboratories, Inc.*		790,340
	21,808	Johnson & Johnson		1,400,510
	15,023	Kinetic Concepts, Inc.*		751,150
	15,342	Mentor Corp.		596,957
	22,406	Patterson Cos., Inc.*		807,960
	35,394	PSS World Medical, Inc.*		711,419
	28,052	STERIS Corp.		717,009
	13,548	Techne Corp.*		798,926
	34,269	Wright Medical Group, Inc.*		809,434
	16,364	Zimmer Holdings, Inc.*		1,480,615
				18,738,516
		Healthcare - Services—25.8%
	30,371	Aetna, Inc.		1,423,792
	21,826	AMERIGROUP Corp.*		613,965
	31,512	AmSurg Corp.*		723,200
	23,347	Apria Healthcare Group, Inc.*		741,034
	25,090	Coventry Health Care, Inc.*		1,450,955
	14,001	Health Net, Inc.*		756,894
	22,986	Humana, Inc.*		1,453,636
	19,345	Lincare Holdings, Inc.*		762,967
	17,465	Magellan Health Services, Inc.*		749,249

Number of Shares			Value
		Common Stocks (Continued)
	13,948	Manor Care, Inc.	$	905,086
	25,328	Medcath Corp.*		752,748
	13,808	National Healthcare Corp.		708,488
	13,880	Pediatrix Medical Group, Inc.*		791,854
	26,387	UnitedHealth Group, Inc.		1,400,094
	12,927	Universal Health Services, Inc., Class B		784,927
	9,444	WellCare Health Plans, Inc.*		761,092
				14,779,981
		Insurance—2.6%
	9,724	Cigna Corp.		1,512,957
		Pharmaceuticals—17.7%
	25,430	AmerisourceBergen Corp.		1,271,246
	25,710	Forest Laboratories, Inc.*		1,368,029
	27,584	Medicines (The), Co.*		628,364
	32,587	Merck & Co., Inc.		1,676,274
	34,974	Mylan Laboratories, Inc.		766,980
	54,613	Pfizer, Inc.		1,445,060
	32,647	Sciele Pharma, Inc.*		807,034
	19,691	VCA Antech, Inc.*		776,416
	42,512	ViroPharma, Inc.*		641,081
	26,122	Watson Pharmaceuticals, Inc.*		713,131
				10,093,615
		Software—1.3%
	14,062	Cerner Corp.*		748,661
		Total Common Stocks (Cost $56,142,137)		57,283,384
		Money Market Fund—0.0%
	14,039	Liquid Assets Portfolio Private Class** (Cost $14,039)		14,039
		Total Investments (Cost $56,156,176)—100.2%		57,297,423
		Liabilities in excess of other assets—(0.2%)		(114,388	)
		Net Assets—100.0%	$	57,183,035

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
36

Schedule of Investments

PowerShares Dynamic Industrials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Aerospace/Defense—17.1%
	7,291	Boeing Co.	$	678,062
	8,327	General Dynamics Corp.		653,670
	6,447	Lockheed Martin Corp.		619,815
	8,846	Northrop Grumman Corp.		651,419
	12,008	Raytheon Co.		642,908
	9,615	Rockwell Collins, Inc.		631,417
	9,745	United Technologies Corp.		654,182
				4,531,473
		Building Materials—1.3%
	10,115	Lennox International, Inc.		341,988
		Commercial Services—22.9%
	13,094	ABM Industries, Inc.		368,465
	9,549	Administaff, Inc.		316,931
	4,738	Consolidated Graphics, Inc.*		356,535
	12,004	Healthcare Services Group.		336,112
	7,599	Heidrick & Struggles International, Inc.*		358,521
	14,667	Korn/Ferry International*		345,701
	18,395	Labor Ready, Inc.*		399,172
	8,386	Manpower, Inc.		672,977
	15,201	Quanta Services, Inc.*		417,875
	10,511	Resources Connection, Inc.*		317,117
	15,246	Rollins, Inc.		351,725
	17,089	R.R. Donnelley & Sons Co.		686,977
	19,663	SAIC, Inc.*		359,636
	10,783	TeleTech Holdings, Inc.*		406,843
	7,437	Watson Wyatt Worldwide, Inc., Class A		350,506
				6,045,093
		Electronics—2.9%
	6,673	Thomas & Betts Corp.*		363,545
	8,187	Woodward Governor Co.		404,028
				767,573
		Engineering & Construction—7.6%
	14,472	Infrasource Services, Inc.*		483,075
	7,712	Jacobs Engineering Group, Inc.*		388,916
	7,011	McDermott International, Inc. (Panama)*		376,210
	9,668	Perini Corp.*		411,857
	7,814	URS Corp.*		341,472
				2,001,530
		Environmental Control—1.3%
	12,502	Republic Services, Inc.		349,181
		Hand/Machine Tools—1.5%
	5,462	Kennametal, Inc.		385,399
		Home Furnishings—1.1%
	8,399	American Woodmark Corp.		289,849

Number of Shares			Value
		Common Stocks (Continued)
		Household Products/Wares—5.0%
	9,689	Avery Dennison Corp.	$	602,656
	13,810	Ennis, Inc.		337,655
	7,082	John H. Harland Co.		372,513
				1,312,824
		Machinery-Construction & Mining—1.5%
	5,056	Terex Corp.*		393,610
		Machinery-Diversified—8.6%
	6,088	Cascade Corp.		377,273
	9,101	Cummins, Inc.		838,748
	9,921	Gardner Denver, Inc.*		375,014
	5,655	Manitowoc (The) Co., Inc.		385,841
	6,426	Nordson Corp.		294,504
				2,271,380
		Metal Fabricate/Hardware—1.5%
	10,743	RBC Bearings, Inc.		408,341
		Miscellaneous Manufacturing—15.9%
	6,075	Acuity Brands, Inc.		359,154
	6,122	Ceradyne, Inc.*		360,280
	13,750	Cooper Industries Ltd., Class A (Bermuda)		684,200
	8,887	Danaher Corp.		632,666
	13,803	Honeywell International, Inc.		747,847
	10,799	ITT Corp.		689,084
	5,251	Teleflex, Inc.		377,179
	15,220	Tredegar Corp.		355,691
				4,206,101
		Office Furnishings—2.5%
	9,039	Herman Miller, Inc.		311,032
	15,286	Knoll, Inc.		354,941
				665,973
		Office/Business Equipment—3.9%
	24,677	IKON Office Solutions, Inc.		369,168
	13,722	Pitney Bowes, Inc.		658,656
				1,027,824
		Retail—1.3%
	11,968	Copart, Inc.*		346,833
		Transportation—4.2%
	11,642	Horizon Lines, Inc., Class A		395,945
	10,712	HUB Group, Inc., Class A*		385,632
	12,502	Pacer International, Inc.		319,426
				1,101,003
		Total Common Stocks (Cost $24,471,820)		26,445,975

See Notes to Financial Statements.
37

Schedule of Investments (Continued)

PowerShares Dynamic Industrials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Money Market Fund—0.1%
	21,219	Liquid Assets Portfolio Private Class** (Cost $21,219)	$	21,219
		Total Investments (Cost $24,493,039)—100.2%		26,467,194
		Liabilities in excess of other assets—(0.2%)		(57,861	)
		Net Assets—100.0%	$	26,409,333

*  Non-income producing security.

**  Affiliated investments.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	25,406,783			96.2	%
Bermuda		684,200			2.6
Panama		376,210			1.4
Total investments		26,467,193			100.2
Liabilities in excess of other assets		(57,860	)		(0.2	)
Net Assets	$	26,409,333			100.0	%

See Notes to Financial Statements.
38

Schedule of Investments

PowerShares Dynamic Technology Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Commercial Services—4.2%
	4,754	Alliance Data Systems Corp.*	$	302,640
	11,149	Convergys Corp.*		281,624
	13,455	Gartner, Inc.*		339,469
				923,733
		Computers—35.9%
	13,473	Agilysys, Inc.		283,337
	9,101	Ansoft Corp.*		293,871
	6,159	Apple, Inc.*		614,667
	35,624	Brocade Communications Systems, Inc.*		348,046
	14,270	Cadence Design Systems, Inc.*		316,794
	11,509	Covansys Corp.*		384,401
	4,039	DST Systems, Inc.*		315,244
	18,937	Electronic Data Systems Corp.		553,718
	4,784	Factset Research Systems, Inc.		294,264
	141,150	Gateway, Inc.*		309,119
	13,440	Hewlett-Packard Co.		566,362
	5,613	International Business Machines Corp.		573,704
	12,219	Jack Henry & Associates, Inc.		290,201
	8,634	Lexmark International, Inc., Class A*		470,553
	16,661	Mentor Graphics Corp.*		269,575
	7,704	MTS Systems Corp.		327,497
	11,382	NCR Corp.*		573,653
	18,158	SYKES Enterprises, Inc.*		335,197
	11,348	Synopsys, Inc.*		313,886
	7,738	Syntel, Inc.		271,294
	14,851	Western Digital Corp.*		262,566
				7,967,949
		Distribution/Wholesale—1.3%
	14,763	Ingram Micro, Inc., Class A*		289,650
		Electrical Components & Equipment—1.6%
	14,647	Advanced Energy Industries, Inc.*		358,852
		Electronics—9.7%
	16,489	Agilent Technologies, Inc.*		566,727
	16,176	Amphenol Corp., Class A		567,939
	8,880	Dolby Laboratories, Inc., Class A*		314,530
	3,328	Mettler-Toledo International, Inc.*		324,879
	13,096	Paxar Corp.*		393,011
				2,167,086
		Internet—4.1%
	9,455	McAfee, Inc.*		307,193
	32,350	TIBCO Software, Inc.*		295,032
	21,684	United Online, Inc.		312,900
				915,125

Number of Shares			Value
		Common Stocks (Continued)
		Office/Business Equipment—4.5%
	14,836	Global Imaging Systems, Inc.*	$	428,612
	30,683	Xerox Corp.*		567,636
				996,248
		Semiconductors—5.7%
	52,314	Atmel Corp.*		278,310
	18,714	Photronics, Inc.*		281,646
	16,415	QLogic Corp.*		293,500
	6,069	Varian Semiconductor Equipment Associates, Inc.*		402,739
				1,256,195
		Software—21.2%
	12,917	Autodesk, Inc.*		533,085
	25,041	BEA Systems, Inc.*		295,233
	17,144	BMC Software, Inc.*		554,951
	31,301	Compuware Corp.*		308,941
	11,730	CSG Systems International, Inc.*		314,129
	7,455	Fair Isaac Corp.		266,218
	10,031	Fiserv, Inc.*		533,348
	8,246	ManTech International Corp., Class A*		252,987
	18,983	Microsoft Corp.		568,352
	2,339	MicroStrategy, Inc., Class A*		266,085
	11,598	Sybase, Inc.*		280,556
	17,106	Total System Services, Inc.		531,312
				4,705,197
		Telecommunications—12.0%
	42,265	Avaya, Inc.*		546,064
	19,942	Cisco Systems, Inc.*		533,249
	7,645	CommScope, Inc.*		356,639
	8,214	Comtech Telecommunications Corp.*		310,900
	8,458	Interdigital Communications Corp.*		278,099
	10,511	NETGEAR, Inc.*		353,275
	8,843	Polycom, Inc.*		294,472
				2,672,698
		Total Investments (Cost $20,610,469)—100.2%		22,252,733
		Liabilities in excess of other assets—(0.2%)		(42,448	)
		Net Assets—100.0%	$	22,210,285

*  Non-income producing security.

See Notes to Financial Statements.
39

Schedule of Investments

PowerShares Dynamic Telecommunications & Wireless Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Commercial Services—2.5%
	33,619	Convergys Corp.*	$	849,216
		Electronics—2.7%
	15,695	Garmin Ltd. (Cayman Islands)		913,292
		Internet—2.8%
	65,387	United Online, Inc.		943,534
		Media—19.4%
	72,305	DIRECTV Group (The), Inc.*		1,723,751
	38,905	EchoStar Communications Corp., Class A*		1,810,250
	55,570	Liberty Global, Inc., Class A*		1,994,407
	112,795	Mediacom Communications Corp., Class A*		973,421
				6,501,829
		Software—2.8%
	35,371	CSG Systems International, Inc.*		947,235
		Telecommunications—69.9%
	59,365	Alaska Communications Systems Group, Inc.		943,904
	26,382	ALLTEL Corp.		1,653,888
	41,100	American Tower Corp., Class A*		1,561,800
	44,711	AT&T, Inc.		1,731,209
	69,520	Avaya, Inc.*		898,198
	19,621	CenturyTel, Inc.		903,547
	60,135	Cisco Systems, Inc.*		1,608,010
	60,723	Citizens Communications Co.		945,457
	24,769	Comtech Telecommunications Corp.*		937,507
	15,834	Embarq Corp.		950,673
	61,510	General Communication, Inc., Class A*		875,287
	30,340	Global Crossing Ltd. (Bermuda)*		875,006
	15,302	Golden Telecom, Inc.		896,850
	17,916	Harris Corp.		919,987
	42,705	Plantronics, Inc.		1,072,323
	31,965	RCN Corp.*		863,694
	61,302	Syniverse Holdings, Inc.*		632,024
	16,149	Telephone & Data Systems, Inc.		919,686
	12,655	United States Cellular Corp.*		917,488
	43,068	Verizon Communications, Inc.		1,644,336
	25,347	ViaSat, Inc.*		869,402
	58,440	Windstream Corp.		854,393
				23,474,669
		Total Investments (Cost $29,201,062)—100.1%		33,629,775
		Liabilities in excess of other assets—(0.1%)		(23,813	)
		Net Assets—100.0%	$	33,605,962

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	31,841,477			94.8	%
Cayman Islands		913,292			2.7
Bermuda		875,006			2.6
Total investments		33,629,775			100.1
Liabilities in excess of other assets		(23,813	)		(0.1	)
Net Assets	$	33,605,962			100.0	%

See Notes to Financial Statements.
40

Schedule of Investments

PowerShares Dynamic Utilities Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.8%
		Electric—86.4%
	127,514	AES (The) Corp.*	$	2,804,033
	32,351	Allegheny Energy, Inc.*		1,729,484
	32,170	ALLETE, Inc.		1,557,350
	35,872	Alliant Energy Corp.		1,571,194
	32,454	DTE Energy Co.		1,641,848
	142,694	Duke Energy Corp.		2,928,081
	60,487	Edison International		3,166,494
	63,695	El Paso Electric Co.*		1,681,548
	44,732	FirstEnergy Corp.		3,061,458
	44,669	NSTAR		1,603,617
	38,616	OGE Energy Corp.		1,484,399
	45,578	Otter Tail Corp.		1,558,768
	57,289	Pepco Holdings, Inc.		1,691,171
	59,472	PG&E Corp.		3,009,283
	75,641	PPL Corp.		3,298,705
	30,937	Progress Energy, Inc.		1,563,865
	37,803	Public Service Enterprise Group, Inc.		3,268,069
	36,359	SCANA Corp.		1,582,707
	91,532	TECO Energy, Inc.		1,642,999
	47,334	TXU Corp.		3,104,164
	40,062	UIL Holdings Corp.		1,368,117
	40,447	Unisource Energy Corp.		1,553,569
	55,362	Westar Energy, Inc.		1,506,954
	31,659	Wisconsin Energy Corp.		1,544,643
	64,089	Xcel Energy, Inc.		1,543,904
				51,466,424
		Energy-Alternate Sources—2.7%
	65,195	Covanta Holding Corp.*		1,599,885
		Gas—10.7%
	36,697	AGL Resources, Inc.		1,597,787
	47,888	Atmos Energy Corp.		1,519,007
	63,771	NiSource, Inc.		1,568,129
	34,126	Northwest Natural Gas Co.		1,733,943
				6,418,866
		Total Investments (Cost $53,176,805)—99.8%		59,485,175
		Other assets less liabilities—0.2%		94,306
		Net Assets—100.00%	$	59,579,481

*  Non-income producing security.

See Notes to Financial Statements.
41

Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

April 30, 2007

	PowerShares Dynamic Basic Materials Sector Portfolio			PowerShares Dynamic Consumer Discretionary Sector Portfolio			PowerShares Dynamic Consumer Staples Sector Portfolio			PowerShares Dynamic Energy Sector Portfolio			PowerShares Dynamic Financial Sector Portfolio
ASSETS:
Unaffiliated investments at value	$	19,017,798		$	17,185,747		$	11,229,640		$	19,183,523		$	7,983,722
Affiliated investments at value		31,916			45,074			94,474			31,280			46,642
Cash		—			—			—			—			—
Receivables:
Dividends		10,361			6,063			12,792			13,780			4,351
Capital stock sold		3,164,643			—			—			—			—
Due from Adviser		10,001			10,181			10,143			10,239			10,833
Other assets		8,494			8,625			8,409			10,784			9,562
Total Assets		22,243,213			17,255,690			11,355,458			19,249,606			8,055,110
LIABILITIES:
Due to custodian		38,067			43,018			38,823			53,683			47,487
Payables:
Investments purchased		3,162,614			—			—			—			—
Accrued advisory fees		5,475			6,438			3,726			7,667			3,232
Accrued expenses		49,199			49,836			48,578			50,975			50,013
Total Liabilities		3,255,355			99,292			91,127			112,325			100,732
NET ASSETS	$	18,987,858		$	17,156,398		$	11,264,331		$	19,137,281		$	7,954,378
NET ASSETS CONSIST OF:
Paid-in capital	$	17,039,241		$	16,629,864		$	10,629,106		$	16,034,658		$	7,768,610
Undistributed net investment income		10,077			13,617			74,679			4,453			18,933
Accumulated net realized loss on investments		(15,907	)		(297,256	)		(204,318	)		(225,305	)		(273,275	)
Net unrealized appreciation on investments		1,954,447			810,173			764,864			3,323,475			440,110
Net Assets	$	18,987,858		$	17,156,398		$	11,264,331		$	19,137,281		$	7,954,378
Shares outstanding (unlimited amount authorized, $0.01 par value)		600,000			600,000			400,000			600,000			300,000
Net asset value	$	31.65		$	28.59		$	28.16		$	31.90		$	26.51
Unaffiliated investments at cost	$	17,063,351		$	16,375,574		$	10,464,776		$	15,860,048		$	7,543,612
Affiliated investments at cost	$	31,916		$	45,074		$	94,474		$	31,280		$	46,642

See Notes to Financial Statements.
42

	PowerShares Dynamic Healthcare Sector Portfolio			PowerShares Dynamic Industrials Sector Portfolio			PowerShares Dynamic Technology Sector Portfolio			PowerShares Dynamic Telecommunications & Wireless Portfolio			PowerShares Dynamic Utilities Portfolio
ASSETS:
Unaffiliated investments at value	$	57,283,384		$	26,445,975		$	22,252,733		$	33,629,775		$	59,485,175
Affiliated investments at value		14,039			21,219			—			—			—
Cash		—			—			—			—			76,114
Receivables:
Dividends		2,414			10,813			399			33,315			71,561
Capital stock sold		5,718,304			—			—			—			—
Due from Adviser		8,329			9,988			9,948			13,067			17,859
Other assets		8,978			11,950			9,866			7,666			4,875
Total Assets		63,035,448			26,499,945			22,272,946			33,683,823			59,655,584
LIABILITIES:
Due to custodian		67,711			29,636			3,887			22,134			—
Payables:
Investments purchased		5,721,752			—			—			—			—
Accrued advisory fees		14,561			9,716			8,171			13,698			24,807
Accrued expenses		48,389			51,260			50,603			42,029			51,296
Total Liabilities		5,852,413			90,612			62,661			77,861			76,103
NET ASSETS	$	57,183,035		$	26,409,333		$	22,210,285		$	33,605,962		$	59,579,481
NET ASSETS CONSIST OF:
Paid-in capital	$	56,302,408		$	24,639,608		$	21,110,902		$	30,909,368		$	54,025,595
Undistributed net investment income		—			—			—			75,384			152,683
Accumulated net realized loss on investments		(260,620	)		(204,430	)		(542,881	)		(1,807,503	)		(907,167	)
Net unrealized appreciation on investments		1,141,247			1,974,155			1,642,264			4,428,713			6,308,370
Net Assets	$	57,183,035		$	26,409,333		$	22,210,285		$	33,605,962		$	59,579,481
Shares outstanding (unlimited amount authorized, $0.01 par value)		2,000,000			900,000			800,000			1,700,000			2,900,000
Net asset value	$	28.59		$	29.34		$	27.76		$	19.77		$	20.54
Unaffiliated investments at cost	$	56,142,137		$	24,471,820		$	20,610,469		$	29,201,062		$	53,176,805
Affiliated investments at cost	$	14,039		$	21,219		$	—		$	—		$	—

43

Statements of Operations

	PowerShares Dynamic Basic Materials Sector Portfolio			PowerShares Dynamic Consumer Discretionary Sector Portfolio			PowerShares Dynamic Consumer Staples Sector Portfolio			PowerShares Dynamic Energy Sector Portfolio			PowerShares Dynamic Financial Sector Portfolio
	For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	177,062		$	97,333		$	276,673		$	92,501		$	118,572
Affiliated dividend income		307			334			554			303			398
Total Income		177,369			97,667			277,227			92,804			118,970
EXPENSES:
Advisory fees		39,686			35,535			33,403			46,867			37,529
Audit		16,500			16,500			16,500			16,500			16,500
Listing fee and expenses		10,000			10,000			10,000			10,000			10,000
Printing		5,164			5,582			4,827			6,273			5,861
Offering costs		4,516			4,524			4,510			4,669			4,587
Administration fees		4,206			4,060			4,051			4,382			4,187
Licensing		3,968			3,554			3,340			4,687			3,753
Accounting		3,585			3,487			3,482			3,702			3,572
Legal		2,500			2,500			2,500			2,500			2,500
Custodian & transfer agent fees		1,975			1,927			1,924			2,034			1,969
Trustees		321			212			274			370			341
Registration & filings		269			354			276			431			422
Other expenses		12,236			12,249			12,235			12,236			12,235
Total Expenses		104,926			100,484			97,322			114,651			103,456
Less fees waived:
Advisory		(39,686	)		(35,535	)		(33,403	)		(46,867	)		(37,529	)
Other fees assumed by the Adviser		(8,598	)		(13,681	)		(15,451	)		(1,652	)		(12,018	)
Net Expenses		56,642			51,268			48,468			66,132			53,909
Net Investment Income (Loss)		120,727			46,399			228,759			26,672			65,061
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(15,907	)		(297,256	)		(204,318	)		(228,063	)		(273,275	)
In-kind redemptions		1,081,203			1,163,496			605,645			701,195			194,830
Net realized gain (loss)		1,065,296			866,240			401,327			473,132			(78,445	)
Net change in unrealized appreciation/depreciation on investments		1,954,447			810,173			764,864			3,323,475			440,110
Net realized and unrealized gain on investments		3,019,743			1,676,413			1,166,191			3,796,607			361,665
Net increase in net assets resulting from operations	$	3,140,470		$	1,722,812		$	1,394,950		$	3,823,279		$	426,726

*  Commencement of Investment Operations.

See Notes to Financial Statements.
44

	PowerShares Dynamic Healthcare Sector Portfolio			PowerShares Dynamic Industrials Sector Portfolio			PowerShares Dynamic Technology Sector Portfolio			PowerShares Dynamic Telecommunications & Wireless Portfolio			PowerShares Dynamic Utilities Portfolio
	For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	37,680		$	100,432		$	19,855		$	575,772		$	1,426,164
Affiliated dividend income		145			385			10			—			1,734
Total Income		37,825			100,817			19,865			575,772			1,427,898
EXPENSES:
Advisory fees		47,574			49,975			44,809			151,175			240,637
Audit		16,500			16,500			16,500			16,500			16,500
Listing fee and expenses		10,000			10,000			10,000			10,074			10,052
Printing		5,416			6,151			5,908			15,542			25,713
Offering costs		4,699			4,747			4,608			9,256			1,878
Administration fees		4,164			4,433			4,295			54,388			59,999
Licensing		4,757			4,998			4,481			9,070			11,820
Accounting		3,557			3,736			3,644			49,737			54,998
Legal		2,500			2,500			2,500			1,270			2,114
Custodian & transfer agent fees		1,961			2,051			2,005			7,195			7,501
Trustees		298			385			344			1,132			1,849
Registration & filings		345			585			424			—			—
Other expenses		12,236			12,819			12,236			12,394			9,472
Total Expenses		114,007			118,880			111,754			337,733			442,533
Less fees waived:
Advisory		(46,927	)		(48,047	)		(44,809	)		(137,387	)		(139,461	)
Other fees assumed by the Adviser		—			—			(3,552	)		—			—
Net Expenses		67,080			70,833			63,393			200,346			303,072
Net Investment Income (Loss)		(29,255	)		29,984			(43,528	)		375,426			1,124,826
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(260,620	)		(204,430	)		(542,881	)		(1,756,414	)		(694,192	)
In-kind redemptions		1,145,564			916,044			609,981			4,614,484			5,162,055
Net realized gain (loss)		884,944			711,614			67,100			2,858,070			4,467,863
Net change in unrealized appreciation/depreciation on investments		1,141,247			1,974,155			1,642,264			2,042,772			5,735,162
Net realized and unrealized gain on investments		2,026,191			2,685,769			1,709,364			4,900,842			10,203,025
Net increase in net assets resulting from operations	$	1,996,936		$	2,715,753		$	1,665,836		$	5,276,268		$	11,327,851

45

Statements of Changes in Net Assets

	PowerShares Dynamic Basic Materials Sector Portfolio			PowerShares Dynamic Consumer Discretionary Sector Portfolio			PowerShares Dynamic Consumer Staples Sector Portfolio			PowerShares Dynamic Energy Sector Portfolio			PowerShares Dynamic Financial Sector Portfolio			PowerShares Dynamic Healthcare Sector Portfolio
	For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007
OPERATIONS:
Net investment income (loss)	$	120,727		$	46,399		$	228,759		$	26,672		$	65,061		$	(29,255	)
Net realized gain (loss) on investments		1,065,296			866,240			401,327			473,132			(78,445	)		884,944
Net change in unrealized appreciation/depreciation of investments		1,954,447			810,173			764,864			3,323,475			440,110			1,141,247
Net increase in net assets resulting from operations		3,140,470			1,722,812			1,394,950			3,823,279			426,726			1,996,936
Undistributed net investment income included in the price of units issued and redeemed		9,184			(54,343	)		18,869			—			(10,327	)		(34,205	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(110,650	)		(32,796	)		(154,080	)		(19,296	)		(46,128	)		—
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(110,650	)		(32,796	)		(154,080	)		(19,296	)		(46,128	)		—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		27,194,924			39,571,339			23,102,425			23,757,197			22,623,052			68,579,509
Value of shares repurchased		(11,236,886	)		(24,104,957	)		(13,078,964	)		(8,423,899	)		(15,049,272	)		(13,393,410	)
Net income equalization		(9,184	)		54,343			(18,869	)		—			10,327			34,205
Net increase (decrease) in net assets resulting from share transactions		15,948,854			15,520,725			10,004,592			15,333,298			7,584,107			55,220,304
Increase in Net Assets		18,987,858			17,156,398			11,264,331			19,137,281			7,954,378			57,183,035
NET ASSETS:
Beginning of period		—			—			—			—			—			—
End of period	$	18,987,858		$	17,156,398		$	11,264,331		$	19,137,281		$	7,954,378		$	57,183,035
Undistributed net investment income at end of period	$	10,077		$	13,617		$	74,679		$	4,453		$	18,933		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,000,000			1,500,000			900,000			900,000			900,000			2,500,000
Shares repurchased		(400,000	)		(900,000	)		(500,000	)		(300,000	)		(600,000	)		(500,000	)
Shares outstanding, beginning of period		—			—			—			—			—			—
Shares outstanding, end of period		600,000			600,000			400,000			600,000			300,000			2,000,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
46

	PowerShares Dynamic Industrials Sector Portfolio			PowerShares Dynamic Technology Sector Portfolio			PowerShares Dynamic Telecommunications & Wireless Portfolio						PowerShares Dynamic Utilities Portfolio
	For the period October 12, 2006* through April 30, 2007			For the period October 12, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	29,984		$	(43,528	)	$	375,426		$	85,436		$	1,124,826		$	414,443
Net realized gain (loss) on investments		711,614			67,100			2,858,070			799,175			4,467,863			1,172,426
Net change in unrealized appreciation/depreciation of investments		1,974,155			1,642,264			2,042,772			2,385,941			5,735,162			573,208
Net increase in net assets resulting from operations		2,715,753			1,665,836			5,276,268			3,270,552			11,327,851			2,160,077
Undistributed net investment income included in the price of units issued and redeemed		6,933			(11,761	)		(39,739	)		—			119,398			(9,333	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(30,567	)		—			(325,394	)		(60,084	)		(1,025,489	)		(361,097	)
Tax return of capital		(6,775	)		—			—			—			—			—
Total distributions to shareholders		(37,342	)		—			(325,394	)		(60,084	)		(1,025,489	)		(361,097	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		34,518,651			30,855,070			30,113,496			37,788,226			90,348,494			45,288,573
Value of shares repurchased		(10,787,729	)		(10,310,621	)		(33,127,001	)		(9,330,101	)		(63,932,035	)		(24,226,893	)
Net income equalization		(6,933	)		11,761			39,739			—			(119,398	)		9,333
Net increase (decrease) in net assets resulting from share transactions		23,723,989			20,556,210			(2,973,766	)		28,458,125			26,297,061			21,071,013
Increase in Net Assets		26,409,333			22,210,285			1,937,369			31,668,593			36,718,821			22,860,660
NET ASSETS:
Beginning of period		—			—			31,668,593			—			22,860,660			—
End of period	$	26,409,333		$	22,210,285		$	33,605,962		$	31,668,593		$	59,579,481		$	22,860,660
Undistributed net investment income at end of period	$	—		$	—		$	75,384		$	25,352		$	152,683		$	53,346
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,300,000			1,200,000			1,700,000			2,500,000			5,000,000			2,900,000
Shares repurchased		(400,000	)		(400,000	)		(1,900,000	)		(600,000	)		(3,500,000	)		(1,500,000	)
Shares outstanding, beginning of period		—			—			1,900,000			—			1,400,000			—
Shares outstanding, end of period		900,000			800,000			1,700,000			1,900,000			2,900,000			1,400,000

47

Financial Highlights

PowerShares Dynamic Basic Materials Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.56
Net investment income**		0.24
Net realized and unrealized gain on investments		6.03
Total from operations		6.27
Undistributed net investment income included in price of units issued and redeemed**		0.02
Distributions to shareholders from:
Net investment income		(0.20	)
Net asset value at end of period	$	31.65
TOTAL RETURN***		24.69	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	18,988
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		1.32	%†
Net investment income, net of waivers		1.52	%†
Portfolio turnover rate ††		9	%

PowerShares Dynamic Consumer Discretionary Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.43
Net investment income**		0.09
Net realized and unrealized gain on investments		3.34
Total from operations		3.43
Undistributed net investment income included in price of units issued and redeemed**		(0.11	)
Distributions to shareholders from:
Net investment income		(0.16	)
Net asset value at end of period	$	28.59
TOTAL RETURN***		13.11	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	17,156
Ratio to average net assets of:
Expenses, net of waivers		0.72	%†
Expenses, prior to waivers		1.41	%†
Net investment income, net of waivers		0.65	%†
Portfolio turnover rate ††		20	%

*  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.
48

Financial Highlights (Continued)

PowerShares Dynamic Consumer Staples Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.25
Net investment income**		0.49
Net realized and unrealized gain on investments		2.65
Total from operations		3.14
Undistributed net investment income included in price of units issued and redeemed**		0.04
Distributions to shareholders from:
Net investment income		(0.27	)
Net asset value at end of period	$	28.16
TOTAL RETURN***		12.69	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	11,264
Ratio to average net assets of:
Expenses, net of waivers		0.73	%†
Expenses, prior to waivers		1.46	%†
Net investment income, net of waivers		3.42	%†
Portfolio turnover rate ††		18	%

PowerShares Dynamic Energy Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.80
Net investment income**		0.05
Net realized and unrealized gain on investments		6.08
Total from operations		6.13
Undistributed net investment income included in price of units issued and redeemed**		—
Distributions to shareholders from:
Net investment income		(0.03	)
Net asset value at end of period	$	31.90
TOTAL RETURN***		23.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	19,137
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		1.22	%†
Net investment income, net of waivers		0.28	%†
Portfolio turnover rate ††		12	%

*  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.
49

Financial Highlights (Continued)

PowerShares Dynamic Financial Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.16
Net investment income**		0.13
Net realized and unrealized gain on investments		1.33
Total from operations		1.46
Undistributed net investment income included in price of units issued and redeemed**		(0.02	)
Distributions to shareholders from:
Net investment income		(0.09	)
Net asset value at end of period	$	26.51
TOTAL RETURN***		5.72	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	7,954
Ratio to average net assets of:
Expenses, net of waivers		0.72	%†
Expenses, prior to waivers		1.38	%†
Net investment income, net of waivers		0.87	%†
Portfolio turnover rate ††		33	%

PowerShares Dynamic Healthcare Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.01
Net investment loss**		(0.04	)
Net realized and unrealized gain on investments		3.67
Total from operations		3.63
Undistributed net investment income included in price of units issued and redeemed**		(0.05	)
Net asset value at end of period	$	28.59
TOTAL RETURN***		14.31	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	57,183
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		1.20	%†
Net investment loss, net of waivers		(0.31	)%†
Portfolio turnover rate ††		14	%

*  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.
50

Financial Highlights (Continued)

PowerShares Dynamic Industrials Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.72
Net investment income**		0.04
Net realized and unrealized gain on investments		3.62
Total from operations		3.66
Undistributed net investment income included in price of units issued and redeemed**		0.01
Distributions to shareholders from:
Net investment income		(0.04	)
Tax return of capital		(0.01	)
Total distributions		(0.05	)
Net asset value at end of period	$	29.34
TOTAL RETURN***		14.28	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	26,409
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		1.19	%†
Net investment income, net of waivers		0.30	%†
Portfolio turnover rate ††		14	%

PowerShares Dynamic Technology Sector Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.54
Net investment loss**		(0.07	)
Net realized and unrealized gain on investments		2.31
Total from operations		2.24
Undistributed net investment income included in price of units issued and redeemed**		(0.02	)
Net asset value at end of period	$	27.76
TOTAL RETURN***		8.69	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	22,210
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†
Expenses, prior to waivers		1.25	%†
Net investment loss, net of waivers		(0.49	)%†
Portfolio turnover rate ††		27	%

*  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.
51

Financial Highlights (Continued)

PowerShares Dynamic Telecommunications & Wireless Portfolio

	For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.67		$	14.95
Net investment income**		0.22			0.05
Net realized and unrealized gain on investments		3.10			1.70
Total from operations		3.32			1.75
Undistributed net investment income included in price of units issued and redeemed**		(0.02	)		—
Distributions to shareholders from:
Net investment income		(0.20	)		(0.03	)
Net asset value at end of period	$	19.77		$	16.67
TOTAL RETURN***		19.93	%		11.74	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	33,606		$	31,669
Ratio to average net assets of:
Expenses, net of waivers		0.66	%		0.67	%†
Expenses, prior to waivers		1.12	%		0.97	%†
Net investment income, net of waivers		1.24	%		0.79	%†
Portfolio turnover rate ††		43	%		3	%

PowerShares Dynamic Utilities Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.33		$	15.32
Net investment income**		0.44			0.24
Net realized and unrealized gain on investments		4.11			0.97
Total from operations		4.55			1.21
Undistributed net investment income included in price of units issued and redeemed**		0.05			(0.01	)
Distributions to shareholders from:
Net investment income		(0.39	)		(0.19	)
Net asset value at end of period	$	20.54		$	16.33
TOTAL RETURN***		28.48	%		7.82	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	59,579		$	22,861
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.69	%†
Expenses, prior to waivers		0.92	%		0.89	%†
Net investment income, net of waivers		2.34	%		2.62	%†
Portfolio turnover rate ††		39	%		38	%

*  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.
52

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

PowerShares Dynamic Basic Materials Sector Portfolio	"Dynamic Basic Materials Sector Portfolio"
PowerShares Dynamic Consumer Discretionary Sector Portfolio	"Dynamic Consumer Discretionary Sector Portfolio"
PowerShares Dynamic Consumer Staples Sector Portfolio	"Dynamic Consumer Staples Sector Portfolio"
PowerShares Dynamic Energy Sector Portfolio	"Dynamic Energy Sector Portfolio"
PowerShares Dynamic Financial Sector Portfolio	"Dynamic Financial Sector Portfolio"
PowerShares Dynamic Healthcare Sector Portfolio	"Dynamic Healthcare Sector Portfolio"
PowerShares Dynamic Industrials Sector Portfolio	"Dynamic Industrials Sector Portfolio"
PowerShares Dynamic Technology Sector Portfolio	"Dynamic Technology Sector Portfolio"
PowerShares Dynamic Telecommunications & Wireless Portfolio	"Dynamic Telecommunications & Wireless Portfolio"
PowerShares Dynamic Utilities Portfolio	"Dynamic Utilities Portfolio"

All Portfolios except Dynamic Telecommunications & Wireless Portfolio and Dynamic Utilities Portfolio commenced investment operations on October 12, 2006.

Each portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on the American Stock Exchange. The Funds' market prices may differ to some degree from the 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, each 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 the Fund's fees and expenses) of the following equity indices:

Fund	Index
Dynamic Basic Materials Sector Portfolio	Dynamic Basic Materials Sector IntellidexSM Index
Dynamic Consumer Discretionary Sector Portfolio	Dynamic Consumer Discretionary Sector IntellidexSM Index
Dynamic Consumer Staples Sector Portfolio	Dynamic Consumer Staples Sector IntellidexSM Index
Dynamic Energy Sector Portfolio	Dynamic Energy Sector IntellidexSM Index
Dynamic Financial Sector Portfolio	Dynamic Financial Sector IntellidexSM Index
Dynamic Healthcare Sector Portfolio	Dynamic Healthcare Sector IntellidexSM Index
Dynamic Industrials Sector Portfolio	Dynamic Industrials Sector IntellidexSM Index
Dynamic Technology Sector Portfolio	Dynamic Technology Sector IntellidexSM Index
Dynamic Telecommunications & Wireless Portfolio	Dynamic Telecommunications & Wireless IntellidexSM Index
Dynamic Utilities Portfolio	Dynamic Utilities IntellidexSM Index

53

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions 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. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

Beginning May 1, 2006 (or since inception, if later), all Funds use the accounting practice of equalization. Prior to that date, only Dynamic Utilities Portfolio practiced equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost of repurchases of capital shares is

54

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

applied to undistributed net investment income. The amount of equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services. The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.50% per annum on each Fund's average daily net assets.

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, offering costs, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchan ge Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dynamic Basic Materials Sector Portfolio	$	39,686	$	8,598
Dynamic Consumer Discretionary Sector Portfolio		35,535		13,681
Dynamic Consumer Staples Sector Portfolio		33,403		15,451
Dynamic Energy Sector Portfolio		46,867		1,652
Dynamic Financial Sector Portfolio		37,529		12,018
Dynamic Healthcare Sector Portfolio		46,927		—
Dynamic Industrials Sector Portfolio		48,047		—
Dynamic Technology Sector Portfolio		44,809		3,552
Dynamic Telecommunications & Wireless Portfolio		137,387		—
Dynamic Utilities Portfolio		139,461		—

The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which 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 as specified above.

55

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

During the period ended April 30, 2007, the details of expense waivers and reimbursements to the Adviser under the Expense Agreement was as follows:

	Gross Waivers			Gross Reimbursements		Net Waivers
Dynamic Industrials Sector Portfolio	$	(48,574	)	$	527	$	(48,047	)

The net amounts of waivers or reimbursements are also shown on the Statements of Operations.

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dynamic Basic Materials Sector Portfolio	$	48,284	$	48,284	$	48,284
Dynamic Consumer Discretionary Sector Portfolio		49,216		49,216		49,216
Dynamic Consumer Staples Sector Portfolio		48,854		48,854		48,854
Dynamic Energy Sector Portfolio		48,519		48,519		48,519
Dynamic Financial Sector Portfolio		49,547		49,547		49,547
Dynamic Healthcare Sector Portfolio		46,927		46,927		46,927
Dynamic Industrials Sector Portfolio		48,047		48,047		48,047
Dynamic Technology Sector Portfolio		48,361		48,361		48,361
Dynamic Telecommunications & Wireless Portfolio		170,079		170,079		137,387
Dynamic Utilities Portfolio		170,755		170,755		139,461

Distribution Agreement

Effective September 18, 2006 (or since inception, if later), A I M 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. Prior to September 18, 2006, ALPS Distributors, Inc. served as the distributor.

The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the American Stock Exchange (the "Licensor"). The trademarks are owned by the Licensor. These trademarks have been licensed to the Adviser for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensor and the Licensor makes no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the licensing fees, which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

56

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 4. INVESCO Transaction and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVESCAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO, PLC announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by AIM Advisors, Inc., an affiliate of the Adviser.

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax-basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
Dynamic Basic Materials Sector Portfolio	$	10,077	$	—		$	1,954,093	$	2,042,250	$	(88,157	)	$	1,964,170
Dynamic Consumer Discretionary Sector Portfolio		13,617		—			810,173		1,030,324		(220,151	)		823,790
Dynamic Consumer Staples Sector Portfolio		74,679		—			688,422		843,871		(155,449	)		763,101
Dynamic Energy Sector Portfolio		4,453		—			3,326,233		3,352,709		(26,476	)		3,330,686
Dynamic Financial Sector Portfolio		18,933		—			440,110		549,957		(109,847	)		459,043
Dynamic Healthcare Sector Portfolio		—		—			1,141,247		1,746,894		(605,647	)		1,141,247
Dynamic Industrials Sector Portfolio		—		—			1,974,155		2,185,247		(211,092	)		1,974,155
Dynamic Technology Sector Portfolio		—		—			1,642,264		1,939,479		(297,215	)		1,642,264
Dynamic Telecommunications & Wireless Portfolio		75,384		(1,394,222	)		4,423,754		4,762,235		(338,481	)		3,104,916
Dynamic Utilities Portfolio		152,683		(430,964	)		6,308,072		6,418,141		(110,069	)		6,029,791

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

Dynamic Basic Materials Sector Portfolio	$	17,095,621
Dynamic Consumer Discretionary Sector Portfolio		16,420,648
Dynamic Consumer Staples Sector Portfolio		10,635,692
Dynamic Energy Sector Portfolio		15,888,570
Dynamic Financial Sector Portfolio		7,590,254
Dynamic Healthcare Sector Portfolio		56,156,176
Dynamic Industrials Sector Portfolio		24,493,039
Dynamic Technology Sector Portfolio		20,610,469
Dynamic Telecommunications & Wireless Portfolio		29,206,021
Dynamic Utilities Portfolio		53,177,103

57

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Distributions to Shareholders:

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
Dynamic Basic Materials Sector Portfolio	$	110,650
Dynamic Consumer Discretionary Sector Portfolio		32,796
Dynamic Consumer Staples Sector Portfolio		154,080
Dynamic Energy Sector Portfolio		19,296
Dynamic Financial Sector Portfolio		46,128
Dynamic Industrials Sector Portfolio		30,567
Dynamic Telecommunications & Wireless Portfolio		325,394
Dynamic Utilities Portfolio		1,025,489
	Distributions paid from Return of Capital
Dynamic Industrials Sector Portfolio	$	6,775

The tax character of distributions paid during the period ended April 30, 2006 was as follows:

	Distributions paid from Ordinary Income
Dynamic Telecommunications & Wireless Portfolio	$	60,084
Dynamic Utilities Portfolio		361,097

At April 30, 2007, 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.

	Capital Loss Available Through										Total
	2011		2012		2013		2014		2015		Amount
Dynamic Telecommunications & Wireless Portfolio	$	—	$	—	$	—	$	—	$	1,394,222	$	1,394,222
Dynamic Utilities Portfolio		—		—		—		—		430,964		430,964

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
Dynamic Basic Materials Sector Portfolio	$	15,553
Dynamic Consumer Discretionary Sector Portfolio		297,256
Dynamic Consumer Staples Sector Portfolio		127,876

58

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

	Post-October Losses
Dynamic Energy Sector Portfolio	$	228,063
Dynamic Financial Sector Portfolio		273,275
Dynamic Healthcare Sector Portfolio		260,620
Dynamic Industrials Sector Portfolio		204,430
Dynamic Technology Sector Portfolio		542,881
Dynamic Telecommunications & Wireless Portfolio		408,322
Dynamic Utilities Portfolio		475,905

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in real estate investment trusts, investments in partnerships, wash sales from redemption in-kind transactions, redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			(Accumulated Losses)			Paid in Capital
Dynamic Basic Materials Sector Portfolio	$	(9,184	)	$	(1,081,203	)	$	1,090,387
Dynamic Consumer Discretionary Sector Portfolio		54,357			(1,163,496	)		1,109,139
Dynamic Consumer Staples Sector Portfolio		(18,869	)		(605,645	)		624,514
Dynamic Energy Sector Portfolio		(2,923	)		(698,437	)		701,360
Dynamic Financial Sector Portfolio		10,327			(194,830	)		184,503
Dynamic Healthcare Sector Portfolio		63,460			(1,145,564	)		1,082,104
Dynamic Industrials Sector Portfolio		425			(916,044	)		915,619
Dynamic Technology Sector Portfolio		55,289			(609,981	)		554,692
Dynamic Telecommunications & Wireless Portfolio		39,739			(4,608,954	)		4,569,215
Dynamic Utilities Portfolio		(119,398	)		(5,162,055	)		5,281,453

Note 6. Investment Transactions

For the period ended April 30, 2007, 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 Basic Materials Sector Portfolio	$	1,334,529	$	1,834,001
Dynamic Consumer Discretionary Sector Portfolio		2,748,914		2,793,417
Dynamic Consumer Staples Sector Portfolio		2,261,517		2,284,123
Dynamic Energy Sector Portfolio		2,086,565		2,164,439
Dynamic Financial Sector Portfolio		4,855,088		4,337,028
Dynamic Healthcare Sector Portfolio		2,964,765		2,832,569
Dynamic Industrials Sector Portfolio		2,721,803		2,896,826
Dynamic Technology Sector Portfolio		4,469,805		4,420,572
Dynamic Telecommunications & Wireless Portfolio		12,909,042		12,961,402
Dynamic Utilities Portfolio		19,286,778		18,572,470

59

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

For the period ended April 30, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Basic Materials Sector Portfolio	$	26,885,714	$	10,388,188
Dynamic Consumer Discretionary Sector Portfolio		36,895,582		21,341,746
Dynamic Consumer Staples Sector Portfolio		20,766,256		10,680,201
Dynamic Energy Sector Portfolio		23,066,107		7,601,318
Dynamic Financial Sector Portfolio		21,282,339		14,178,342
Dynamic Healthcare Sector Portfolio		67,806,967		12,681,970
Dynamic Industrials Sector Portfolio		36,236,578		12,301,348
Dynamic Technology Sector Portfolio		30,383,379		9,889,243
Dynamic Telecommunications & Wireless Portfolio		30,028,636		32,859,792
Dynamic Utilities Portfolio		88,056,490		62,305,600

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Transaction fees at scheduled amounts to $500 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 9. Risk of Concentration

The Funds concentrate their investments in certain industries, subjecting them to greater risk than funds that invest in a wider range of industries.

Note 10. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

60

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 11. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of Fin 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of Fin 40, if any, on the Funds' financial statements.

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

61

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust:

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

62

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
Dynamic Basic Materials Sector Portfolio		100	%		100	%
Dynamic Consumer Discretionary Sector Portfolio		100	%		100	%
Dynamic Consumer Staples Sector Portfolio		100	%		100	%
Dynamic Energy Sector Portfolio		100	%		100	%
Dynamic Financial Sector Portfolio		100	%		100	%
Dynamic Healthcare Sector Portfolio		0	%		0	%
Dynamic Industrials Sector Portfolio		100	%		100	%
Dynamic Technology Sector Portfolio		0	%		0	%
Dynamic Telecommunications & Wireless Portfolio		100	%		100	%
Dynamic Utilities Portfolio		100	%		100	%

63

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989- Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

64

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994-1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

65

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002- Present); Manager, Nuveen Investments (April 1998- August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)-(19) of the 1940 Act.

***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

66

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001-2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

67

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the Funds, information describing the Adviser's current organization, including operations assistance provided

68

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on

69

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

70

PowerShares    Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (ETF). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com.

This page contains advertising materials and should not be viewed as part of the Annual Report.
71

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market  

PWO  -  Dynamic OTC  

PIQ  -  Dynamic MagniQuant  

PJF  -  Dynamic Large Cap  

PJG  -  Dynamic Mid Cap  

PJM  -  Dynamic Small Cap  

PWB  -  Dynamic Large Cap Growth  

PWV  -  Dynamic Large Cap Value  

PWJ  -  Dynamic Mid Cap Growth  

PWP  -  Dynamic Mid Cap Value  

PWT  -  Dynamic Small Cap Growth  

PWY  -  Dynamic Small Cap Value  

PGZ  -  Dynamic Aggressive Growth  

PVM  -  Dynamic Deep Value  

PYZ  -  Dynamic Basic Materials Sector  

PEZ  -  Dynamic Consumer Discretionary Sector  

PSL  -  Dynamic Consumer Staples Sector  

PXI  -  Dynamic Energy Sector  

PFI  -  Dynamic Financials Sector  

PTH  -  Dynamic Healthcare Sector  

PRN  -  Dynamic Industrials Sector  

PTF  -  Dynamic Technology Sector  

PTE  -  Dynamic Telecommunications & Wireless  

PUI  -  Dynamic Utilities  

PJB  -  Dynamic Banking  

PBE  -  Dynamic Biotechnology & Genome  

PKB  -  Dynamic Building & Construction  

PXE  -  Dynamic Energy Exploration & Production  

PBJ  -  Dynamic Food & Beverage  

PHW  -  Dynamic Hardware & Consumer Electronics  

PTJ  -  Dynamic Healthcare Services  

PIC  -  Dynamic Insurance  

PEJ  -  Dynamic Leisure and Entertainment  

PBS  -  Dynamic Media  

PXQ  -  Dynamic Networking  

PXJ  -  Dynamic Oil & Gas Services  

PJP  -  Dynamic Pharmaceuticals  

PMR  -  Dynamic Retail  

PSI  -  Dynamic Semiconductors  

PSJ  -  Dynamic Software  

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

This page contains advertising materials and should not be viewed as part of the Annual Report.
72

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000  

PRFZ  -  FTSE RAFI US 1500 Small-Mid  

PRFM  -  FTSE RAFI Basic Materials Sector  

PRFG  -  FTSE RAFI Consumer Goods Sector  

PRFS  -  FTSE RAFI Consumer Services Sector  

PRFE  -  FTSE RAFI Energy Sector  

PRFF  -  FTSE RAFI Financials Sector  

PRFH  -  FTSE RAFI Health Care Sector  

PRFN  -  FTSE RAFI Industrials Sector  

PRFQ  -  FTSE RAFI Telecom & Technology Sector  

PRFU  -  FTSE RAFI Utilities Sector  

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense  

ADRA  -  BLDRS Asia 50 ADR Index Fund  

ADRD  -  BLDRS Developed Markets 100 ADR Index Fund  

ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund  

ADRU  -  BLDRS Europe 100 ADR Index Fund  

PKW  -  Buyback Achievers  

PZD  -  Cleantech  

PFM  -  Dividend Achievers  

PDP  -  DWA Technical Lenders  

PGF  -  Financial Preferred  

PGJ  -  Golden Dragon Halter USX China  

PHJ  -  High Growth Rate Dividend Achievers  

PEY  -  High Yield Equity Dividend Achievers  

PID  -  International Dividend Achievers  

PSP  -  Listed Private Equity  

PXN  -  Lux Nanotech  

QQQQ  -  PowerShares QQQ  

PYH  -  Value Line Industry Rotation  

PIV  -  Value Line Timeliness Select  

PHO  -  Water Resources  

PBW  -  WilderHill Clean Energy  

PUW  -  WilderHill Progressive Energy  

PZI  -  Zacks Micro Cap  

PZJ  -  Zacks Small Cap  

This page contains advertising materials and should not be viewed as part of the Annual Report.
73

PowerShares   Asset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFG  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

This page contains advertising materials and should not be viewed as part of the Annual Report.
74

PowerShares   Risk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 ADR Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

This page contains advertising materials and should not be viewed as part of the Annual Report.
75

Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

This page contains advertising materials and should not be viewed as part of the Annual Report.
76

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs are not closed-end funds and trade at or near net asset values.

This page contains advertising materials and should not be viewed as part of the Annual Report.
77

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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) 337-4246. 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)337-4246; 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.

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 ETFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares ETFs 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.

A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares ETFs call A I M Distributors, Inc. at (800) 337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-3

2007 Annual Report to Shareholders

30 April 2007

PowerShares Dynamic Banking Portfolio

PowerShares Dynamic Biotechnology & Genome Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Food & Beverage Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Healthcare Services Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Leisure and Entertainment Portfolio

PowerShares Dynamic Media Portfolio

PowerShares Dynamic Networking Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Pharmaceuticals Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Semiconductors Portfolio

PowerShares Dynamic Software Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	36
Frequency Distribution of Discounts & Premiums	38
Fees and Expenses	40
Industry Portfolios
Schedules of Investments
PowerShares Dynamic Banking Portfolio	43
PowerShares Dynamic Biotechnology & Genome Portfolio	44
PowerShares Dynamic Building & Construction Portfolio	45
PowerShares Dynamic Energy Exploration & Production Portfolio	46
PowerShares Dynamic Food & Beverage Portfolio	47
PowerShares Dynamic Hardware & Consumer Electronics Portfolio	48
PowerShares Dynamic Healthcare Services Portfolio	49
PowerShares Dynamic Insurance Portfolio	50
PowerShares Dynamic Leisure and Entertainment Portfolio	51
PowerShares Dynamic Media Portfolio	52
PowerShares Dynamic Networking Portfolio	53
PowerShares Dynamic Oil & Gas Services Portfolio	54
PowerShares Dynamic Pharmaceuticals Portfolio	55
PowerShares Dynamic Retail Portfolio	56
PowerShares Dynamic Semiconductors Portfolio	57
PowerShares Dynamic Software Portfolio	58
Statements of Assets and Liabilities	60
Statements of Operations	62
Statements of Changes in Net Assets	64
Financial Highlights	70
Notes to Financial Statements	78
Report of Independent Registered Public Accounting Firm	89
Supplemental Information (Unaudited)	90
Information about Advisory Agreement (Unaudited)	95

To My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US 1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing investors with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P 500^® Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the summer of 2006 energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

PowerShares Dynamic Banking Portfolio (ticker: PJB)

The PowerShares Dynamic Banking Portfolio is based on the Dynamic Banking Intellidex^SM Index. The Index thoroughly evaluates companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. Securities shown to possess the greatest capital appreciation potential are selected by the index and incorporated by the portfolio manager.

Since its October 12, 2006 inception date, the portfolio has returned -5.08% compared to the Dow Jones Regional Banks Index which returned 1.46%. The portfolio was heavily weighted in the commercial banks industry with slight exposure to the thrifts & mortgage finance and the diversified financial services industries. Within commercial banks, the companies which were laggards and weighted heavily on performance were Sterling Financial, Hancock Holding and Trustmark. First Bancorp and Comerica are two examples of banks which added positively to performance.

Industry Breakdown (% of the Fund's

Net Assets)

Super-Regional Banks-U.S.	32.4
Commercial Banks-Central U.S.	22.6
Commercial Banks-Southern U.S.	17.3
Commercial Banks-Eastern U.S.	7.9
Finance-Investment Banker/Broker	5.8
S&L/Thrifts-Eastern U.S.	5.8
Commercial Banks-Western U.S.	5.7
S&L/Thrifts-Western U.S.	3.1
Money Market Fund	1.2
Other	(1.8	)

Style Allocation (%)

Small-Cap Value	50.6
Large-Cap Value	26.9
Mid-Cap Value	22.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
JPMorgan Chase & Co.	5.8
Wells Fargo & Co.	5.8
Comerica, Inc.	5.6
SunTrust Banks, Inc.	5.5
Bank of America Corp.	5.5
KeyCorp	5.2
PNC Financial Services Group, Inc.	4.8
Bank of Hawaii Corp.	3.1
TCF Financial Corp.	3.1
Downey Financial Corp.	3.1
Total	47.5

4

Manager's Analysis (Continued)

PowerShares Dynamic Banking Portfolio (ticker: PJB)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Banking IntellidexSM Index		-4.53
Dow Jones Regional Banks Index		1.46
KBW Banking Index		1.22

Fund

NAV Return	-5.08
Share Price Return	-5.06

Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.76% while the Fund's gross annualized total operating expense ratio was 1.88%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones Regional Banks Index and the KBW Banking Index are unmanaged indices based on the average performance of approximately 50 and 24 common stocks, respectively.

5

Manager's Analysis

PowerShares Dynamic Biotechnology & Genome Portfolio (ticker: PBE)

The PowerShares Dynamic Biotechnology & Genome Portfolio seeks to replicate, before fees and expenses, the Dynamic Biotechnology & Genome Intellidex^SM Index, which is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

Over the past year, the Fund returned 11.95% which was in-line with the performance of the S&P SuperComposite Biotechnology Index which returned 11.87% during the same period. Biotechnology, life sciences tools & services and pharmaceuticals contributed the most to performance for the portfolio. MedImmune, Regeneron Pharmaceuticals and Gilead Sciences led the way in the biotechnology industry, with New River Pharmaceuticals and ViroPharma also contributing positively to performance. There were several stocks which impacted the portfolio negatively including Telik, Neurocrine Biosciences, Alkermers and Luminex.

Industry Breakdown (% of the Fund's

Net Assets)

Biotechnology	49.6
Pharmaceuticals	24.6
Electronics	15.2
Health Care Products	5.9
Chemicals	4.8
Other	(0.1	)

Style Allocation (%)

Small-Cap Growth	42.2
Mid-Cap Growth	24.3
Large-Cap Growth	19.2
Mid-Cap Value	12.0
Small-Cap Value	2.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
MedImmune, Inc.	8.3
Gilead Sciences, Inc.	5.3
Waters Corp.	5.1
Biogen Idec, Inc.	4.8
Sigma-Aldrich Corp.	4.8
Amgen, Inc.	4.7
Applera Corp. - Applied Biosystems Group	4.6
Genentech, Inc.	4.5
PDL BioPharma, Inc.	3.4
Regeneron Pharmaceuticals, Inc.	3.3
Total	48.8

6

Manager's Analysis (Continued)

PowerShares Dynamic Biotechnology & Genome Portfolio (ticker: PBE)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Biotechnology & Genome IntellidexSM Index		11.58		15.61		30.81
S&P SuperComposite Biotechnology Index		11.87		15.73		31.07
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	11.95	15.79	31.20
Share Price Return	11.79	15.76	31.12

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.67%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.66%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Biotechnology Index and the Russell 3000^® Index are an unmanaged indices based on the average performance of 14 and 3,000 common stocks, respectively.

^† Average annualized

7

Manager's Analysis

PowerShares Dynamic Building & Construction Portfolio (ticker: PKB)

The PowerShares Dynamic Building & Construction Portfolio seeks to replicate, before fees and expenses, the Dynamic Building and Construction Intellidex^SM Index. The Index thoroughly evaluates companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. Securities shown to possess the greatest capital appreciation potential are selected by the index.

Over the past year, the Fund has returned 3.06%, underperforming the S&P SuperComposite Construction & Engineering Index which returned 14.77% during the same period. Stocks which lagged came mainly from the household durables industry including Champion Enterprises, KB Home, Ryland Group, Toll Brothers, Pulte Homes and many other home building related stocks. The portfolio was aided by a strong performance from Infrasource Services, Quanta Services, Granite Construction, and Vulcan Materials.

Industry Breakdown (% of the Fund's

Net Assets)

Engineering & Construction	20.2
Building Materials	18.0
Machinery-Construction & Mining	10.7
Home Builders	9.6
Machinery-Diversified	8.7
Commercial Services	5.8
Mining	5.1
Textiles	4.8
Retail	4.3
Electric	3.0
Metal Fabricate/Hardware	2.9
Office Furnishings	2.7
Miscellaneours Manufacturing	2.3
Home Furnishings	2.2
Other	(0.3	)

Style Allocation (%)

Small-Cap Value	31.3
Mid-Cap Value	30.0
Mid-Cap Growth	17.1
Small-Cap Growth	12.2
Large-Cap Value	5.2
Large-Cap Growth	4.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Terex Corp.	5.4
Jacobs Engineering Group, Inc.	5.3
Caterpillar, Inc.	5.3
Vulcan Materials Co.	5.1
American Standard Cos., Inc.	4.9
Mohawk Industries, Inc.	4.8
Lowe's Cos., Inc.	4.3
Lennar Corp., Class A	4.1
Infrasource Services, Inc.	3.6
NVR, Inc.	3.2
Total	46.0

8

Manager's Analysis (Continued)

PowerShares Dynamic Building & Construction Portfolio (ticker: PKB)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Building and Construction IntellidexSM Index		4.90		16.23		25.50
S&P SuperComposite Construction & Engineering Index		14.77		35.49		58.17
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	3.06	14.47	22.63
Share Price Return	3.11	14.44	22.59

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.80%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 1.65%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Construction & Engineering Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 9 and 3,000 common stocks, respectively.

^† Average annualized

9

Manager's Analysis

PowerShares Dynamic Energy Exploration & Production Portfolio (ticker: PXE)

The PowerShares Dynamic Energy Exploration & Production Portfolio seeks to replicate, before fees and expenses, the Dynamic Energy Exploration & Production Intellidex^SM Index. The index thoroughly evaluates companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. Securities shown to possess the greatest capital appreciation potential are selected by the index.

The portfolio returned a respectable 14.66% for the year compared to the S&P SuperComposite Oil & Gas Exploration & Production Index which returned 11.70% for the year. During 2006 and the beginning of 2007, increasing energy prices and outages at refineries led to a rise in the prices of those companies held in the Fund. The top contributors to the portfolio's performance were refiners Tesoro, Holly, Western Refining as well as integrated oil & gas companies such as Marathon Oil, Exxon Mobil, Chevron. Anadarko Petroleum, W&T Offshore and Sunoco were the largest laggards which contributed negatively to the Fund's performance for the year.

Industry Breakdown (% of the Fund's

Net Assets)

Oil Companies-Exploration & Production	46.4
Oil Companies-Integrated	26.7
Oil Refining & Marketing	21.1
Pipelines	2.9
Gas-Distribution	2.9
Other	0.0

Style Allocation (%)

Large-Cap Value	29.0
Mid-Cap Value	22.9
Small-Cap Value	21.7
Mid-Cap Growth	13.7
Large-Cap Growth	10.2
Small-Cap Growth	2.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Valero Energy Corp.	5.4
Devon Energy Corp.	5.0
Marathon Oil Corp.	5.0
Chevron Corp.	4.9
Exxon Mobil Corp.	4.8
Occidental Petroleum Corp.	4.7
XTO Energy, Inc.	4.7
Hess Corp.	4.6
Western Refining, Inc.	3.5
BreitBurn Enegry Partners LP	3.4
Total	46.0

10

Manager's Analysis (Continued)

PowerShares Dynamic Energy Exploration & Production Portfolio (ticker: PXE)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Energy Exploration & Production IntellidexSM Index		14.99		21.52		34.21
S&P SuperComposite Oil & Gas Exploration & Production Index		11.70		15.30		23.98
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	14.66	21.03	33.39
Share Price Return	14.34	20.86	33.11

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.74%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Oil & Gas Exploration & Production Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 25 and 3,000 common stocks, respectively.

^† Average annualized

11

Manager's Analysis

PowerShares Dynamic Food & Beverage Portfolio (ticker: PBJ)

The PowerShares Dynamic Food & Beverage Portfolio is based on the Dynamic Food & Beverage Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Over the past year, the Fund has returned a strong 16.79% but underperformed the S&P SuperComposite Food & Tobacco Products Index which returned 22.01% during the same period. Large cap stocks were in favor for the year as those largely contributed to the strong performance of the portfolio. Those stocks included Seaboard, Corn Products International, J.M. Smucker, Coca-Cola, Safeway, Jack in the Box and McDonald's. Archer Daniels Midland, Panera Bread, whereas Starbucks caused the largest drag on performance for the year.

Industry Breakdown (% of the Fund's

Net Assets)

Food	53.3
Beverages	23.4
Retail	18.1
Miscellaneous Manufacturing	2.5
Agriculture	2.4
Money Market Fund	0.3
Other	0.0

Style Allocation (%)

Large-Cap Value	40.8
Mid-Cap Value	30.5
Small-Cap Value	20.7
Large-Cap Growth	5.0
Mid-Cap Growth	3.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Coca-Cola (The) Co.	5.4
Kellogg Co.	5.2
McDonald's Corp.	5.1
General Mills, Inc.	5.1
Safeway, Inc.	5.0
PepsiCo, Inc.	5.0
Yum! Brands, Inc.	5.0
Anheuser-Busch Cos., Inc.	4.8
Corn Products International, Inc.	3.2
Dean Foods Co.	3.1
Total	46.9

12

Manager's Analysis (Continued)

PowerShares Dynamic Food & Beverage Portfolio (ticker: PBJ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Food & Beverage IntellidexSM Index		17.39		11.02		21.37
S&P SuperComposite Food & Tobacco Products Index		22.01		15.63		30.86
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	16.79	10.36	20.04
Share Price Return	16.85	10.40	20.10

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.07%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.64% while the Fund's gross annualized total operating expense ratio was 1.15%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Food & Tobacco Products Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 40 and 3,000 common stocks, respectively.

^† Average annualized

13

Manager's Analysis

PowerShares Dynamic Hardware & Consumer Electronics (ticker: PHW)

The PowerShares Dynamic Hardware & Consumer Electronics Portfolio is based on the Dynamic Hardware & Consumer Electronics Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Over the past year, the Fund returned 6.74% while the comparable S&P SuperComposite Technology Hardware & Equipment Index returned 10.11% during the period. Stock selection in large cap growth companies contributed to the performance of the portfolio including Hewlett-Packard, Brocade Communications Systems and Apple as well as Garmin Ltd. and Xerox. The stocks which caused the largest drag on performance for the year were Palm and Multi-Fineline Electronix.

Industry Breakdown (% of the Fund's

Net Assets)

Computers	48.2
Elecronics	17.4
Telecommunications	10.3
Office/Business Equipment	7.8
Semiconductors	5.7
Home Furnishings	3.2
Information Technology	2.9
Commercial Services	2.8
Micellaneous Manufacturing	2.7
Other	(1.0	)

Style Allocation (%)

Large-Cap Growth	29.4
Small-Cap Value	23.1
Mid-Cap Growth	18.6
Mid-Cap Value	15.5
Small-Cap Growth	8.5
Large-Cap Value	4.9

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Apple, Inc.	5.5
EMC Corp.	5.2
Dell, Inc.	5.2
Xerox Corp.	5.1
Hewlett-Packard Co.	5.1
Network Appliance, Inc.	4.6
Motorola, Inc.	4.5
Sun Microsystems, Inc.	4.1
Paxar Corp.	3.5
Plantronics, Inc.	3.2
Total	46.0

14

Manager's Analysis (Continued)

PowerShares Dynamic Hardware & Consumer Electronics (ticker: PHW)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Hardware & Consumer Electronics IntellidexSM Index		7.32		12.52		17.92
S&P SuperComposite Technology Hardware & Equipment Index		10.11		11.09		15.83
Russell 3000® Index		14.48		14.31		20.55

Fund

NAV Return	6.74	11.84	16.93
Share Price Return	6.65	11.82	16.89

Fund Inception: 6 December 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.03%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.72% while the Fund's gross annualized total operating expense ratio was 1.96%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Technology Hardware & Equipment Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 108 and 3,000 common stocks, respectively.

^† Average annualized

15

Manager's Analysis

PowerShares Dynamic Healthcare Services Portfolio (ticker: PTJ)

The PowerShares Dynamic Healthcare Services Portfolio is based on the Dynamic Healthcare Services Intellidex^SM Index. The Index thoroughly evaluates companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. Securities shown to possess the greatest capital appreciation potential are selected by the Index

Since its October 12, 2006 inception date, the Fund has shown strong performance returning 12.70%. Over that short time, the portfolio easily outperformed the broader Dow Jones US Healthcare Index as well as the more narrow Dow Jones Healthcare Providers Index. Those stocks which contributed to the portfolio's performance since inception were Express Scripts, CIGNA and WellCare Group. Caremark Rx and Molina Healthcare were two of the laggards on the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets)

Medical-HMO	35.6
Human Resources	8.5
Medical-Outpatient/Home Medical Care	7.9
Pharmacy Services	6.0
Medical-Nursing Homes	5.7
Medical-Hospitals	5.4
Life/Health Insurance	5.3
Health Care Cost Containment	5.1
Medical-Wholesale Drug Distribution	4.5
Dental Supplies & Equipment	2.9
Diversified Operations	2.9
Physician Practice Management	2.8
Medical Labs & Testing Services	2.7
Medical Products	2.5
Retirement/Aged Care	2.5
Other	(0.3	)

Style Allocation (%)

Mid-Cap Growth	30.4
Large-Cap Growth	19.8
Small-Cap Value	18.2
Small-Cap Growth	16.3
Mid-Cap Value	10.0
Large-Cap Value	5.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Express Scripts, Inc.	6.0
CIGNA Corp.	5.3
Humana, Inc.	5.1
McKesson Corp.	5.1
Aetna, Inc.	5.0
UnitedHealth Group, Inc.	4.9
WellPoint, Inc.	4.8
AmerisourceBergen Corp.	4.5
Emergency Medical Services Corp., Class A	3.5
Manor Care, Inc.	3.2
Total	47.4

16

Manager's Analysis (Continued)

PowerShares Dynamic Healthcare Services Portfolio (ticker: PTJ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
Dynamic Healthcare Services IntellidexSM Index		13.25
Dow Jones US Healthcare Index		8.19
Dow Jones Healthcare Providers Index		12.36

Fund

NAV Return	12.70
Share Price Return	12.78

Fund Inception: 12 October 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.70%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.70% while the Fund's gross annualized total operating expense ratio was 1.20%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Dow Jones US Healthcare Index and the Dow Jones Healthcare Providers Index are unmanaged indices based on the average performance of approximately 50 and 180 common stocks, respectively.

17

Manager's Analysis

PowerShares Dynamic Insurance Portfolio (ticker: PIC)

The PowerShares Dynamic Insurance Portfolio is based on the Dynamic Insurance Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Over the past year, the Fund has returned 9.62%, underperforming the S&P SuperComposite Insurance Index which returned 12.49% during the same period. Stock selection in large cap value stocks hindered performance, however, stock selection in small cap stocks added to performance for the year. Those stocks which contributed positively to the portfolio's performance were Loews, Lincoln National and Odyssey Re Holdings. AON, Progressive, Ohio Casualty and Radian Group were among the Fund's laggards.

Industry Breakdown (% of the Fund's

Net Assets)

Property/Casualty Insurance	38.8
Multi-Line Insurance	26.2
Life/Health Insurance	21.0
Reinsurance	8.3
Insurance Brokers	2.8
Financial Guarantee Insurance	2.8
Other	0.1

Style Allocation (%)

Large-Cap Value	40.6
Mid-Cap Value	35.3
Small-Cap Value	21.7
Mid-Cap Growth	2.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Loews Corp.	5.3
Hartford Financial Services Group (The), Inc.	5.2
ACE Ltd. (Cayman Islands)	5.1
Prudential Financial, Inc.	5.1
Travelers Cos. (The), Inc.	5.0
Chubb (The) Corp.	5.0
Lincoln National Corp.	5.0
Progressive (The) Corp.	4.9
Arch Capital Group Ltd. (Bermuda)	3.0
Commerce Group (The), Inc.	2.9
Total	46.5

18

Manager's Analysis (Continued)

PowerShares Dynamic Insurance Portfolio (ticker: PIC)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Insurance IntellidexSM Index		10.15		15.54		24.37
S&P SuperComposite Insurance Index		12.49		13.72		21.42
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	9.62	14.93	23.37
Share Price Return	9.56	14.93	23.37

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.87%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.96%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The Index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Insurance Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 52 and 3,000 common stocks, respectively.

^† Average annualized

19

Manager's Analysis

PowerShares Dynamic Leisure and Entertainment Portfolio (ticker: PEJ)

The PowerShares Dynamic Leisure and Entertainment Portfolio is based on the Dynamic Leisure and Entertainment Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Leisure and Entertainment Portfolio returned 13.02% to shareholders during the reporting period. PEJ continued to keep pace with the broad U.S. market posting similar results to the S&P SuperComposite Hotels, Restaurants & Leisure Index. The Fund is comprised mainly of consumer discretionary stocks. Restaurant stocks continued to lead the charge with McDonald's, Jack in the Box and Bob Evans Farms contributing positively. Internet retail stock Priceline.com performed exceptionally well helping the Fund's returns. Media stocks were generally unimpressive with World Wrestling Entertainment and Warner Music Group lagging.

Industry Breakdown (% of the Fund's

Net Assets)

Retail	40.8
Lodging	20.3
Media	12.8
Entertainment	9.8
Internet	8.5
Leisure Time	8.2
Other	(0.4	)

Style Allocation (%)

Small-Cap Value	24.1
Mid-Cap Value	21.5
Mid-Cap Growth	18.0
Large-Cap Value	16.0
Large-Cap Growth	14.7
Small-Cap Growth	5.7

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
McDonald's Corp.	5.4
Carnival Corp. (Panama)	5.2
Yum! Brands, Inc.	5.2
CBS Corp., Class B	5.2
Walt Disney (The) Co.	5.1
Hilton Hotels Corp.	4.7
Marriott International, Inc., Class A	4.7
International Game Technology	4.5
Wendy's International, Inc.	3.2
Expedia, Inc.	3.0
Total	46.2

20

Manager's Analysis (Continued)

PowerShares Dynamic Leisure and Entertainment Portfolio (ticker: PEJ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Leisure and Entertainment IntellidexSM Index		13.71		13.44		26.31
S&P SuperComposite Hotels, Restaurants & Leisure Index		12.79		14.27		28.03
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	13.02	12.70	24.79
Share Price Return	12.98	12.72	24.82

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.03%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.64% while the Fund's gross annualized total operating expense ratio was 1.07%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Hotels, Restaurants & Leisure Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 45 and 3,000 common stocks, respectively.

^† Average annualized

21

Manager's Analysis

PowerShares Dynamic Media Portfolio (ticker: PBS)

The PowerShares Dynamic Media Portfolio is based on the Dynamic Media Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

PowerShares Dynamic Media Portfolio returned 14.42% during the reporting period. Sinclair Broadcast Group had stunning performance during the reporting period boosting the Fund's returns along with media stocks Direct TV, Clear Channel Communications and Walt Disney. Internet services company ValueClick and WebMD, an internet heath care stock, both performed well while Getty Images and Valassis Communications lagged.

Industry Breakdown (% of the Fund's

Net Assets)

Media	65.4
Advertising	13.1
Internet	10.8
Commercial Services	5.2
Computers	2.9
Telecommunications	2.7
Money Market Fund	0.1
Other	(0.2	)

Style Allocation (%)

Large-Cap Growth	24.9
Small-Cap Value	24.6
Mid-Cap Growth	17.4
Large-Cap Value	14.9
Mid-Cap Value	12.9
Small-Cap Growth	5.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
DIRECTV Group (The), Inc.	5.3
CBS Corp., Class B	5.2
Google, Inc., Class A	5.1
Walt Disney (The) Co.	5.1
Omnicom Group, Inc.	5.0
McGraw-Hill (The) Cos., Inc.	5.0
Time Warner, Inc.	4.9
News Corp., Class A	4.8
Sinclair Broadcast Group, Inc., Class A	3.1
Mediacom Communications Corp., Class A	3.0
Total	46.5

22

Manager's Analysis (Continued)

PowerShares Dynamic Media Portfolio (ticker: PBS)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Media IntellidexSM Index		15.01		6.45		12.26
S&P SuperComposite Media Index		20.56		10.81		20.94
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	14.42	5.70	10.81
Share Price Return	14.35	5.67	10.75

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.04%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.64% while the Fund's gross annualized total operating expense ratio was 1.24%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Media Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 52 and 3,000 common stocks, respectively.

^† Average annualized

23

Manager's Analysis

PowerShares Dynamic Networking Portfolio (ticker: PXQ)

The PowerShares Dynamic Networking Portfolio is based on the Dynamic Networking Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

PowerShares Dynamic Networking Portfolio posted a 7.48% return to shareholders during the reporting period. Communications equipment companies led the Fund's performance with Juniper, Cisco and Sonus Networks performing well. Software companies also furthered the Fund's performance this year as Altiris and RSA Security had healthy returns. Semiconductor stocks generally had poor performance with Conexant Systems and Broadcom within the lagging group of stocks. The one bright spot for the Fund's semiconductor stocks was Agere Systems while all others were a drag to the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets)

Telecommunications	64.8
Internet	13.5
Semiconductors	13.4
Software	5.1
Computers	3.3
Other	(0.1	)

Style Allocation (%)

Small-Cap Growth	35.3
Mid-Cap Growth	24.4
Small-Cap Value	16.7
Mid-Cap Value	13.3
Large-Cap Growth	10.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Juniper Networks, Inc.	5.9
McAfee, Inc.	5.3
QUALCOMM, Inc.	5.2
Avaya, Inc.	5.2
Citrix Systems, Inc.	5.1
F5 Networks, Inc.	5.1
Tellabs, Inc.	5.1
Cisco Systems, Inc.	5.0
Netgear, Inc.	3.3
Brocade Communications Systems, Inc.	3.3
Total	48.5

24

Manager's Analysis (Continued)

PowerShares Dynamic Networking Portfolio (ticker: PXQ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Networking IntellidexSM Index		8.13		13.17		25.76
S&P SuperComposite Communications Equipment Index		2.14		13.11		25.64
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	7.48	12.74	24.87
Share Price Return	7.67	12.74	24.87

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 1.03%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.64% while the Fund's gross annualized total operating expense ratio was 1.24%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Communications Equipment Index and the Russell 3000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of 38 and 3,000 common stocks, respectively.

^† Average annualized

25

Manager's Analysis

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 and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Oil & Gas Services Portfolio returned 6.03% to shareholders. The Fund benefited most from energy equipment and services companies. Veritas, Input/Output and National Oilwell Varco all posted respectable returns during the reporting period. Other solid performers were Overseas Shipholding Group and Foster Wheeler both posting handsome gains. The Fund was hurt by laggards Weatherford Int., Halliburton and Horizon Offshore.

Industry Breakdown (% of the Fund's

Net Assets)

Oil & Gas Services	60.6
Oil & Gas	28.4
Transportation	5.6
Engineering & Construction	5.4
Money Market	0.1
Other	(0.1	)

Style Allocation (%)

Mid-Cap Growth	38.9
Large-Cap Growth	30.1
Small-Cap Value	16.3
Small-Cap Growth	7.5
Mid-Cap Value	7.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Baker Hughes, Inc.	5.4
National Oilwell Varco, Inc.	5.4
Schlumberger Ltd. (Netherlands)	5.1
Transocean, Inc. (Cayman Islands)	4.8
GlobalSantaFe Corp. (Cayman Islands)	4.8
Diamond Offshore Drilling, Inc.	4.7
BJ Services Co.	4.6
Halliburton Co.	4.5
Global Industries Ltd.	3.6
Todco	3.2
Total	46.1

26

Manager's Analysis (Continued)

PowerShares Dynamic Oil & Gas Services Portfolio (ticker: PXJ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Oil Services IntellidexSM Index		6.03		24.20		38.71
S&P SuperComposite Oil & Gas Equipment & Services Index		4.16		30.33		49.17
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	6.03	23.88	38.16
Share Price Return	5.80	23.89	38.17

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.67%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.65%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Oil & Gas Equipment & Services Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 25 and 3,000 common stocks, respectively.

^† Average annualized

27

Manager's Analysis

PowerShares Dynamic Pharmaceuticals Portfolio (ticker: PJP)

The PowerShares Dynamic Pharmaceuticals Portfolio is based on the Dynamic Pharmaceuticals Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

Pharmaceutical stocks posted strong rebounds from the prior year helping the Fund post a 19.20% return for the reporting period. The returns of the Fund were slightly behind the S&P SuperComposite Pharmaceutical Index which posted a 20.80% return for the same period. The Fund, however, remains well ahead of that index, posting a since inception cumulative return of 33.20% while the S&P SuperComposite Pharmaceutical Index has returned only 16.91%.

Merck, Schering-Plough and Abbott Laboratories all posted solid returns for the year. The Fund benefited from biotech companies which are involved in the pharmaceutical space. Biotechnology companies MedImmune, Inc., Gilead Sciences and Millennium Pharmaceuticals all posted handsome returns for the reporting period, adding to the Fund's healthy gains.

Industry Breakdown (% of the Fund's

Net Assets)

Pharmaceuticals	70.7
Biotechnology	18.9
Healthcare-Products	4.8
Household Products/Wares	2.9
Cosmetics & Personal Care	2.7
Other	0.0

Style Allocation (%)

Large-Cap Growth	26.4
Large-Cap Value	25.9
Mid-Cap Growth	17.6
Small-Cap Growth	17.0
Small-Cap Value	7.9
Mid-Cap Value	5.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Schering-Plough Corp.	6.4
Merck & Co., Inc.	5.7
Wyeth	5.3
Eli Lilly & Co.	5.2
Pfizer, Inc.	5.0
Johnson & Johnson	4.8
Amgen, Inc.	4.6
MedImmune, Inc.	4.5
Genentech, Inc.	4.5
Prestige Brands Holdings, Inc.	2.9
Total	48.9

28

Manager's Analysis (Continued)

PowerShares Dynamic Pharmaceuticals Portfolio (ticker: PJP)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Pharmaceuticals IntellidexSM Index		19.76		17.18		34.12
S&P SuperComposite Pharmaceutical Index		20.80		8.80		16.91
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	19.20	16.74	33.20
Share Price Return	19.10	16.75	33.22

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.88%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.80%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Pharmaceutical Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 44 and 3,000 common stocks, respectively.

^† Average annualized

29

Manager's Analysis

PowerShares Dynamic Retail Portfolio (ticker: PMR)

The PowerShares Dynamic Retail Portfolio is based on the Dynamic Retail Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Retail Portfolio returned 9.72% to shareholders during the reporting period. Since the Fund's inception in October of 2005 the Fund has delivered a 32.74% cumulative return. Retail companies continued to perform well during the year. Nordstrom's, Sears and J.C. Penney all posted excellent returns which helped the Fund. Specialty retail stores also helped boost returns in the Fund. Buckle, Inc. Asbury Automotive and CarMax all had strong performances over the year. Consumer staple stocks advanced with Kroger and CVS/Caremark in the lead. Building supply companies Builders First Source and Lowe's lagged, hurting overall returns.

Industry Breakdown (% of the Fund's

Net Assets)

Retail	81.6
Commercial Services	5.6
Food	5.6
Apparel	2.9
Distribution/Wholesale	2.9
Home Builders	1.8
Money Market Fund	0.5
Other	(0.9	)

Style Allocation (%)

Small-Cap Value	28.0
Mid-Cap Value	19.6
Large-Cap Value	15.9
Mid-Cap Growth	13.5
Small-Cap Growth	12.6
Large-Cap Growth	10.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Safeway, Inc.	5.6
Kohl's Corp.	5.5
Sears Holdings Corp.	5.5
AutoZone, Inc.	5.5
TJX Cos., Inc.	5.3
Nordstrom, Inc.	5.1
J. C. Penney Co., Inc.	5.1
Staples, Inc.	4.9
Aeropostale, Inc.	3.2
Asbury Automotive Group, Inc.	3.1
Total	48.8

30

Manager's Analysis (Continued)

PowerShares Dynamic Retail Portfolio (ticker: PMR)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Retail IntellidexSM Index		10.31		21.25		33.76
S&P SuperComposite Retailing Index		8.93		14.32		22.38
Russell 3000® Index		14.48		18.02		28.42

Fund

NAV Return	9.72	20.64	32.74
Share Price Return	9.87	20.65	32.76

Fund Inception: 26 October 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.97%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.64% while the Fund's gross annualized total operating expense ratio was 1.41%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Retailing Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 91 and 3,000 common stocks, respectively.

^† Average annualized

31

Manager's Analysis

PowerShares Dynamic Semiconductors Portfolio (ticker: PSI)

The PowerShares Dynamic Semiconductors Portfolio is based on the Dynamic Semiconductors Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Semiconductors Portfolio returned -5.60% during the reporting period. Semiconductor stocks in general fared poorly during the reporting period. Omnivision Technologies, Amkor Technology and Mattson Technology all had a rough year hurting shareholders returns. Qualcomm also struggled during the period furthering shareholder's negative impact. Some bright spots in the industry were MEMC Electronic Materials, Varian Semiconductors and Freescale Semiconductors. These stocks helped to lessen the negative return in the Fund.

Industry Breakdown (% of the Fund's

Net Assets)

Semiconductors	92.5
Telecommunications	4.5
Electronic Components & Equipment	3.2
Other	(0.2	)

Style Allocation (%)

Mid-Cap Growth	51.5
Small-Cap Growth	20.4
Large-Cap Growth	15.2
Small-Cap Value	10.7
Mid-Cap Value	2.2

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Linear Technology Corp.	5.4
Texas Instruments, Inc.	5.3
Analog Devices, Inc.	5.2
Intel Corp.	5.1
KLA-Tencor Corp.	5.1
NVIDIA Corp.	5.0
Applied Materials, Inc.	4.9
MEMC Electronic Materials, Inc.	4.9
Varian Semiconductor Equipment Associates, Inc.	3.6
Advanced Energy Industries, Inc.	3.2
Total	47.7

32

Manager's Analysis (Continued)

PowerShares Dynamic Semiconductors Portfolio (ticker: PSI)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Semiconductors IntellidexSM Index		-5.10		14.71		28.94
S&P SuperComposite Semiconductor Index		0.85		2.96		5.55
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	-5.60	14.06	27.60
Share Price Return	-5.57	14.04	27.54

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.78%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Semiconductor Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 39 and 3,000 common stocks, respectively.

^† Average annualized

33

Manager's Analysis

PowerShares Dynamic Software Portfolio (ticker: PSJ)

The PowerShares Dynamic Software Portfolio is based on the Dynamic Software Intellidex^SM Index and seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The PowerShares Dynamic Software Portfolio performed well this year returning 10.57% to shareholders. Since inception in June 2005 shareholders have been rewarded with a 36.11% cumulative return. Software companies fared well during the reporting period with Altiris, Oracle and Hyperion Solutions leading the pack. IT Services and Computer peripheral companies also helped shareholder's returns with Convergys, Fiserv and NCR all in the positive. Citrix, Adobe and Red Hat didn't fare so well during the period, hurting shareholder's overall return.

Industry Breakdown (% of the Fund's

Net Assets)

Software	53.3
Computers	30.1
Internet	11.6
Electronics	2.9
Commercial Services	2.6
Other	(0.5	)

Style Allocation (%)

Mid-Cap Growth	33.0
Small-Cap Growth	21.7
Mid-Cap Value	21.2
Small-Cap Value	13.0
Large-Cap Growth	11.1

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Oracle Corp.	5.7
Cadence Design Systems, Inc.	5.4
NCR Corp.	5.4
Microsoft Corp.	5.3
BMC Software, Inc.	5.2
BEA Systems, Inc.	5.1
Fiserv, Inc.	5.0
Autodesk, Inc.	5.0
WebEx Communications, Inc.	3.4
Activision, Inc.	3.2
Total	48.7

34

Manager's Analysis (Continued)

PowerShares Dynamic Software Portfolio (ticker: PSJ)

  Growth of a $10,000 Investment Since Inception

  Fund Performance History (%)  As of 30 April 2007

Index

	Avg. Ann.†		Fund Inception
	1 Year		Avg. Ann.†		Cumulative
Dynamic Software IntellidexSM Index		10.95		18.66		37.29
S&P SuperComposite Software & Services Index		14.14		11.13		21.59
Russell 3000® Index		14.48		14.60		28.71

Fund

NAV Return	10.57	18.11	36.11
Share Price Return	10.51	18.10	36.09

Fund Inception: 23 June 2005

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.91%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio was 0.83%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P SuperComposite Software & Services Index and the Russell 3000^® Index are unmanaged indices based on the average performance of 102 and 3,000 common stocks, respectively.

^† Average annualized

35

Funds' Distribution History

	Ex-Dividend	04/13/07		03/16/07		03/15/07		02/15/07		01/12/07		12/15/06		11/15/06		10/13/06		09/15/06
	Record	04/17/07		03/20/07		03/20/07		02/20/07		01/16/07		12/19/06		11/17/06		10/17/06		09/16/06
	Payable	04/30/07		03/30/07		03/30/07		02/28/07		01/31/07		12/29/06		11/30/06		10/31/06		09/29/06
Fund	Ticker
PowerShares Dynamic Banking Portfolio	PJB		—		—		—		—		—		0.22276		—		—		—
PowerShares Dynamic Biotechnology & Genome Portfolio	PBE		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Building & Construction Portfolio	PKB		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Energy Exploration & Production Portfolio	PXE		—		—		—		—		—		0.05076		—		—		0.01201
PowerShares Dynamic Food & Beverage Portfolio	PBJ		—		0.03265		—		—		—		0.07933		—		—		0.01726
PowerShares Dynamic Hardware & Consumer Electronics Portfolio	PHW		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Services Portfolio	PTJ		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Insurance Portfolio	PIC		—		0.01758		—		—		—		0.07314		—		—		0.01536
PowerShares Dynamic Leisure and Entertainment Portfolio	PEJ		—		0.02530		—		—		—		0.05101		—		—		—
PowerShares Dynamic Media Portfolio	PBS		—		—		—		—		—		0.03264		—		—		—
PowerShares Dynamic Networking Portfolio	PXQ		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Oil & Gas Services Portfolio	PXJ		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Pharmaceuticals Portfolio	PJP		—		0.01580		—		—		—		0.05529		—		—		—
PowerShares Dynamic Retail Portfolio	PMR		—		0.02680		—		—		—		0.00881		—		—		—
PowerShares Dynamic Semiconductors Portfolio	PSI		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Software Portfolio	PSJ		—		—		—		—		—		—		—		—		—

36

	08/15/06		07/14/06		06/16/06		06/15/06		05/15/06		03/17/06		12/30/05		12/16/05		09/16/05
	08/17/06		07/18/06		06/20/06		06/19/06		05/17/06		03/21/06		01/04/06		12/20/05		09/20/05
	08/31/06		07/31/06		06/30/06		06/30/06		05/31/06		03/30/06		01/31/06		12/30/05		09/30/05
Fund
PowerShares Dynamic Banking Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Biotechnology & Genome Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Building & Construction Portfolio		—		—		0.00381		—		—		—		—		0.00730		—
PowerShares Dynamic Energy Exploration & Production Portfolio		—		—		0.00182		—		—		—		—		0.01681		—
PowerShares Dynamic Food & Beverage Portfolio		—		—		0.03994		—		—		0.01605		—		0.02825		0.04552
PowerShares Dynamic Hardware & Consumer Electronics Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Services Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Insurance Portfolio		—		—		0.02181		—		—		0.01798		—		0.04533		—
PowerShares Dynamic Leisure and Entertainment Portfolio		—		—		0.01010		—		—		—		—		0.01677		—
PowerShares Dynamic Media Portfolio		—		—		0.00739		—		—		—		—		0.00257		0.01746
PowerShares Dynamic Networking Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Oil & Gas Services Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Pharmaceuticals Portfolio		—		—		0.02365		—		—		0.01237		—		0.01581		0.01493
PowerShares Dynamic Retail Portfolio		—		—		0.01022		—		—		—		—		0.01269		—
PowerShares Dynamic Semiconductors Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Software Portfolio		—		—		—		—		—		—		—		—		—

37

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PJB	PowerShares Dynamic Banking Portfolio	10/12/06		136		44		3		0		0		0		0
PBE	PowerShares Dynamic Biotechnology & Genome Portfolio	06/23/05		465		226		21		1		1		0		0
PKB	PowerShares Dynamic Building & Construction Portfolio	10/26/05		378		116		15		2		0		0		0
PXE	PowerShares Dynamic Energy Exploration & Production Portfolio	10/26/05		378		215		8		2		0		0		0
PBJ	PowerShares Dynamic Food & Beverage Portfolio	06/23/05		465		237		14		0		0		0		0
PHW	PowerShares Dynamic Hardware & Consumer Electronics Portfolio	12/06/05		350		127		9		2		0		0		0
PTJ	PowerShares Dynamic Healthcare Services Portfolio	10/12/06		136		28		3		0		0		0		0
PIC	PowerShares Dynamic Insurance Portfolio	10/26/05		378		159		7		1		0		0		0
PEJ	PowerShares Dynamic Leisure and Entertainment Portfolio	06/23/05		465		198		11		2		0		0		0
PBS	PowerShares Dynamic Media Portfolio	06/23/05		465		165		10		1		0		0		0
PXQ	PowerShares Dynamic Networking Portfolio	06/23/05		465		168		8		2		0		0		0
PXJ	PowerShares Dynamic Oil & Gas Services Portfolio	10/26/05		378		171		28		6		0		0		0
PJP	PowerShares Dynamic Pharmaceuticals Portfolio	06/23/05		465		256		6		4		0		0		0
PMR	PowerShares Dynamic Retail Portfolio	10/26/05		378		158		6		1		0		0		0
PSI	PowerShares Dynamic Semiconductors Portfolio	06/23/05		465		253		14		2		0		0		0
PSJ	PowerShares Dynamic Software Portfolio	06/23/05		465		246		6		6		0		0		0

38

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PJB		87		2		0		0		0		0
PBE		198		16		2		0		0		0
PKB		240		5		0		0		0		0
PXE		145		6		2		0		0		0
PBJ		207		7		0		0		0		0
PHW		207		4		1		0		0		0
PTJ		104		1		0		0		0		0
PIC		209		2		0		0		0		0
PEJ		250		4		0		0		0		0
PBS		285		3		1		0		0		0
PXQ		278		8		1		0		0		0
PXJ		167		5		1		0		0		0
PJP		196		3		0		0		0		0
PMR		202		11		0		0		0		0
PSI		194		2		0		0		0		0
PSJ		203		3		1		0		0		0

39

Fees and Expenses

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 period ended April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Banking Portfolio Actual	$	1,000.00	$	970.41		0.78	%	$	3.81
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.93		0.78	%	$	3.91
PowerShares Dynamic Biotechnology & Genome Portfolio Actual	$	1,000.00	$	1,042.12		0.63	%	$	3.19
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Building & Construction Portfolio Actual	$	1,000.00	$	1,194.89		0.61	%	$	3.32
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.77		0.61	%	$	3.06

40

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Energy Exploration & Production Portfolio
Actual	$	1,000.00	$	1,156.26		0.63	%	$	3.37
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Food & Beverage Portfolio
Actual	$	1,000.00	$	1,100.31		0.63	%	$	3.28
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Hardware & Consumer Electronics Portfolio
Actual	$	1,000.00	$	1,060.46		0.67	%	$	3.42
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.47		0.67	%	$	3.36
PowerShares Dynamic Healthcare Services Portfolio
Actual	$	1,000.00	$	1,147.30		0.70	%	$	3.73
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.32		0.70	%	$	3.51
PowerShares Dynamic Insurance Portfolio Actual	$	1,000.00	$	1,075.79		0.63	%	$	3.24
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Leisure and Entertainment Portfolio
Actual	$	1,000.00	$	1,051.34		0.63	%	$	3.20
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Media Portfolio Actual	$	1,000.00	$	1,086.41		0.63	%	$	3.26
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Networking Portfolio Actual	$	1,000.00	$	1,119.23		0.63	%	$	3.31
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Oil & Gas Services Portfolio
Actual	$	1,000.00	$	1,173.73		0.63	%	$	3.40
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Pharmaceuticals Portfolio
Actual	$	1,000.00	$	1,096.14		0.63	%	$	3.27
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Retail Portfolio Actual	$	1,000.00	$	1,052.81		0.63	%	$	3.21
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16

41

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Dynamic Semiconductors Portfolio
Actual	$	1,000.00	$	1,117.30		0.63	%	$	3.31
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16
PowerShares Dynamic Software Portfolio Actual	$	1,000.00	$	1,062.53		0.63	%	$	3.22
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.63	%	$	3.16

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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.

42

Schedule of Investments

PowerShares Dynamic Banking Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.6%
		Commercial Banks - Central US—22.6%
	4,350	AMCORE Financial, Inc.	$	124,454
	4,172	Associated Banc-Corp.		135,089
	2,962	BancFirst Corp.		126,803
	4,862	Chemical Financial Corp.		129,961
	2,926	Commerce Bancshares, Inc.		138,517
	3,423	First Financial Bankshares, Inc.		132,470
	1,512	Park National Corp.		134,220
	5,400	TCF Financial Corp.		146,233
				1,067,747
		Commercial Banks - Eastern US—7.9%
	4,639	Chittenden Corp.		134,809
	6,594	Sterling Financial Corp.		109,790
	14,239	TrustCo Bank Corp. NY		130,572
				375,171
		Commercial Banks - Southern US—17.3%
	5,699	BancorpSouth, Inc.		140,024
	4,285	Capital City Bank Group, Inc.		127,736
	3,738	City Holding Co.		141,932
	696	First Citizens BancShares, Inc., Class A		141,218
	4,965	Trustmark Corp.		132,119
	4,591	WesBanco, Inc.		134,654
				817,683
		Commercial Banks - Western US—5.7%
	2,767	Bank of Hawaii Corp.		146,375
	5,830	Glacier Bancorp, Inc.		125,228
				271,603
		Finance - Investment Banker/Broker—5.8%
	5,295	JPMorgan Chase & Co.		275,870
		S&L/Thrifts - Eastern US—5.8%
	10,115	First Niagara Financial Group, Inc.		137,564
	8,102	Provident Financial Services, Inc.		138,868
				276,432
		S&L/Thrifts - Western US—3.1%
	2,183	Downey Financial Corp.		146,152
		Super-Regional Banks - US—32.4%
	5,111	Bank of America Corp.		260,150
	4,289	Comerica, Inc.		265,531
	6,914	KeyCorp		246,692
	3,051	PNC Financial Services Group, Inc.		226,079
	3,106	SunTrust Banks, Inc.		262,209
	7,583	Wells Fargo & Co.		272,153
				1,532,814
		Total Common Stocks (Cost $4,937,944)		4,763,472

Number of Shares			Value
		Money Market Fund—1.2%
	55,436	Liquid Assets Portfolio Private Class* (Cost $55,436)	$	55,436
		Total Investments (Cost $4,993,380)—101.8%		4,818,908
		Liabilities in excess of other assets—(1.8%)		(82,922	)
		Net Assets—100.0%	$	4,735,986

*  Affiliated investment.

See Notes to Financial Statements.
43

Schedule of Investments

PowerShares Dynamic Biotechnology & Genome Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Biotechnology—49.6%
	187,674	Amgen, Inc.*	$	12,037,410
	265,021	Biogen Idec, Inc.*		12,511,641
	145,387	Genentech, Inc.*		11,629,506
	325,479	GTx, Inc.*		6,350,095
	994,091	Incyte Corp.*		7,664,442
	102,228	Invitrogen Corp.*		6,692,867
	379,062	MedImmune, Inc.*		21,485,235
	602,107	Millennium Pharmaceuticals, Inc.*		6,671,346
	91,111	Millipore Corp.*		6,726,725
	197,660	Myriad Genetics, Inc.*		7,224,473
	347,854	PDL BioPharma, Inc.*		8,786,792
	313,876	Regeneron Pharmaceuticals, Inc.*		8,537,427
	472,125	Savient Pharmaceuticals, Inc.*		5,429,438
	211,011	Vertex Pharmaceuticals, Inc.*		6,486,478
				128,233,875
		Chemicals—4.8%
	292,667	Sigma-Aldrich Corp.		12,315,427
		Electronics—15.2%
	381,390	Applera Corp. - Applied Biosystems Group		11,914,624
	106,198	Dionex Corp.*		7,327,662
	118,857	Varian, Inc.*		6,888,952
	221,838	Waters Corp.*		13,183,832
				39,315,070
		Healthcare - Products—5.9%
	713,654	Bruker BioSciences Corp.*		8,214,157
	120,402	Techne Corp.*		7,100,106
				15,314,263
		Pharmaceuticals—24.6%
	389,189	Alkermes, Inc.*		6,394,375
	322,845	Alnylam Pharmaceuticals, Inc.*		6,059,801
	168,810	Gilead Sciences, Inc.*		13,795,152
	464,363	Medarex, Inc.*		6,357,129
	265,977	Noven Pharmaceuticals, Inc.*		6,226,522
	422,677	Osiris Therapeutics, Inc.*		5,997,787
	200,052	Theravance, Inc.*		6,627,723
	117,338	United Therapeutics Corp.*		6,560,368
	377,700	ViroPharma, Inc.*		5,695,716
				63,714,573
		Total Investments (Cost $236,749,302)—100.1%		258,893,208
		Liabilities in excess of other assets—(0.1%)		(277,294	)
		Net Assets—100.0%	$	258,615,914

*  Non-income producing security.

See Notes to Financial Statements.
44

Schedule of Investments

PowerShares Dynamic Building & Construction Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.3%
		Building Materials—18.0%
	16,702	American Standard Cos., Inc.	$	919,612
	9,826	Armstrong World Industries, Inc.*		501,126
	27,420	Builders FirstSource, Inc.*		442,285
	14,088	Lennox International, Inc.		476,315
	3,794	Martin Marietta Materials, Inc.		553,241
	15,734	Owens Corning, Inc.*		482,247
				3,374,826
		Commercial Services—5.8%
	16,453	McGrath RentCorp		496,058
	21,174	Quanta Services, Inc.*		582,073
				1,078,131
		Electric—3.0%
	18,456	MDU Resources Group, Inc.		559,217
		Engineering & Construction—20.2%
	8,127	EMCOR Group, Inc.*		509,482
	20,159	Infrasource Services, Inc.*		672,907
	19,696	Jacobs Engineering Group, Inc.*		993,269
	13,466	Perini Corp*		573,652
	10,884	URS Corp.*		475,631
	8,422	Washington Group International, Inc.*		563,600
				3,788,541
		Home Builders—9.6%
	17,989	Lennar Corp., Class A		768,310
	726	NVR, Inc.*		598,224
	9,892	Ryland Group, Inc.		438,216
				1,804,750
		Home Furnishings—2.2%
	11,699	American Woodmark Corp.		403,732
		Machinery - Construction & Mining—10.7%
	13,634	Caterpillar, Inc.		990,101
	12,911	Terex Corp.*		1,005,121
				1,995,222
		Machinery - Diversified—8.7%
	8,481	Cascade Corp.		525,568
	7,877	Manitowoc (The) Co., Inc.		537,448
	3,517	NACCO Industries, Inc., Class A		560,539
				1,623,555
		Metal Fabricate/Hardware—2.9%
	8,656	Valmont Industries, Inc.		544,289
		Mining—5.1%
	7,650	Vulcan Materials Co.		946,076
		Miscellaneous Manufacturing—2.3%
	6,321	Ameron International Corp.		437,034

Number of Shares			Value
		Common Stocks (Continued)
		Office Furnishings—2.7%
	29,876	Interface, Inc., Class A	$	503,411
		Retail—4.3%
	26,250	Lowe's Cos., Inc.		802,200
		Textiles—4.8%
	9,865	Mohawk Industries, Inc.*		889,428
		Total Investments (Cost $16,348,848)—100.3%		18,750,412
		Liabilities in excess of other assets—(0.3%)		(51,624	)
		Net Assets—100.0%	$	18,698,788

*  Non-income producing security.

See Notes to Financial Statements.
45

Schedule of Investments

PowerShares Dynamic Energy Exploration & Production Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Gas - Distribution—2.9%
	63,756	Energen Corp.	$	3,573,524
		Oil Companies - Exploration & Production—46.4%
	115,128	BreitBurn Energy Partners LP		4,213,685
	86,171	Cabot Oil & Gas Corp.		3,138,348
	85,577	Cimarex Energy Co.		3,371,734
	123,952	CNX Gas Corp.*		3,478,093
	84,268	Devon Energy Corp.		6,140,609
	175,046	EXCO Resources, Inc.*		2,939,022
	91,062	Forest Oil Corp.*		3,209,025
	71,223	Newfield Exploration Co.*		3,116,006
	51,841	Noble Energy, Inc.		3,048,769
	41,514	Penn Virginia Corp.		3,323,196
	63,583	Plains Exploration & Production Co.*		2,987,765
	160,876	Rosetta Resources, Inc.*		3,460,443
	81,364	St. Mary Land & Exploration Co.		2,979,550
	75,691	Swift Energy Co.*		3,076,839
	66,943	Whiting Petroleum Corp.*		2,946,831
	106,037	XTO Energy, Inc.		5,754,628
				57,184,543
		Oil Companies - Integrated—26.7%
	78,435	Chevron Corp.		6,101,458
	176,796	Delek US Holdings, Inc.		3,371,500
	74,107	Exxon Mobil Corp.		5,882,614
	100,294	Hess Corp.		5,691,685
	60,203	Marathon Oil Corp.		6,113,614
	115,530	Occidental Petroleum Corp.		5,857,371
				33,018,242
		Oil Refining & Marketing—21.1%
	108,630	Alon USA Energy, Inc.		4,062,762
	100,547	Frontier Oil Corp.		3,552,326
	54,401	Holly Corp.		3,459,904
	33,327	Tesoro Corp.		4,039,232
	94,849	Valero Energy Corp.		6,661,244
	108,359	Western Refining, Inc.		4,293,184
				26,068,652
		Pipelines—2.9%
	37,427	Questar Corp.		3,635,285
		Total Investments (Cost $107,300,517)—100.0%		123,480,246
		Other assets less liabilities —0.0%		8,091
		Net Assets—100.0%	$	123,488,337

*  Non-income producing security.

See Notes to Financial Statements.
46

Schedule of Investments

PowerShares Dynamic Food & Beverage Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.7%
		Agriculture—2.4%
	10,477	Bunge Ltd. (Bermuda)	$	793,738
		Beverages—23.4%
	32,353	Anheuser-Busch Cos., Inc.		1,591,444
	13,584	Brown-Forman Corp., Class B		868,425
	34,263	Coca-Cola (The) Co.		1,788,186
	10,379	Molson Coors Brewing Co., Class B		978,532
	27,387	Pepsi Bottling Group (The), Inc.		898,567
	25,074	PepsiCo, Inc.		1,657,141
				7,782,295
		Food—53.3%
	21,090	Campbell Soup Co.		824,619
	34,596	ConAgra Foods, Inc.		850,370
	27,035	Corn Products International, Inc.		1,076,534
	28,349	Dean Foods Co.		1,032,754
	28,319	General Mills, Inc.		1,696,307
	18,709	H.J. Heinz Co.		881,381
	23,673	Hormel Foods Corp.		901,705
	21,170	Ingles Markets, Inc., Class A		761,273
	21,857	J & J Snack Foods Corp.		851,767
	17,469	J.M. Smucker (The) Co.		975,120
	32,489	Kellogg Co.		1,718,992
	22,440	McCormick & Co., Inc.		832,973
	14,674	Ralcorp Holdings, Inc.*		965,696
	46,068	Safeway, Inc.		1,672,268
	401	Seaboard Corp.		999,693
	29,575	Tootsie Roll Industries, Inc.		857,379
	20,215	Weis Markets, Inc.		870,054
				17,768,885
		Miscellaneous Manufacturing—2.5%
	19,750	Lancaster Colony Corp.		834,043
		Retail—18.1%
	40,368	Burger King Holdings, Inc.		947,437
	27,645	Domino's Pizza, Inc.		891,551
	12,374	Jack in the Box, Inc.*		824,356
	35,194	McDonald's Corp.		1,699,167
	26,761	Yum! Brands, Inc.		1,655,435
				6,017,946
		Total Common Stocks (Cost $29,641,461)		33,196,907

Number of Shares			Value
		Money Market Fund—0.3%
	106,759	Liquid Assets Portfolio Private Class** (Cost $106,759)	$	106,759
		Total Investments (Cost $29,748,220)—100.0%		33,303,666
		Other assets less liabilities —0.0%		10,136
		Net Assets—100.0%	$	33,313,802

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	32,509,928		97.6	%
Bermuda		793,738		2.4
Total investments		33,303,666		100.0
Other assets less liabilities		10,136		0.0
Net Assets	$	33,313,802		100.0	%

See Notes to Financial Statements.
47

Schedule of Investments

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—101.0%
		Commercial Services—2.8%
	11,184	Coinstar, Inc.*	$	347,711
		Computers—48.2%
	6,961	Apple, Inc.*		694,707
	40,263	Brocade Communications Systems, Inc.*		393,370
	25,632	Dell, Inc.*		646,182
	7,073	Diebold, Inc.		337,170
	42,791	EMC Corp.*		649,566
	159,532	Gateway, Inc.*		349,375
	15,190	Hewlett-Packard Co.		640,107
	9,738	Komag, Inc.*		267,892
	5,323	Lexmark International, Inc., Class A*		290,104
	15,466	Network Appliance, Inc.*		575,490
	98,891	Sun Microsystems, Inc.*		516,211
	12,782	Synaptics, Inc.*		382,949
	16,785	Western Digital Corp.*		296,759
				6,039,882
		Electronics—17.4%
	10,166	Agilent Technologies, Inc.*		349,405
	15,304	Benchmark Electronics, Inc.*		324,139
	16,910	Checkpoint Systems, Inc.*		371,851
	5,883	Garmin Ltd. (Cayman Islands)		342,332
	12,325	National Instruments Corp.		343,375
	14,801	Paxar Corp.*		444,177
				2,175,279
		Home Furnishings—3.2%
	3,275	Harman International Industries, Inc.		399,190
		Information Technology—2.9%
	14,216	Inter-Tel, Inc.		358,528
		Miscellaneous Manufacturing—2.7%
	13,555	Eastman Kodak Co.		337,655
		Office/Business Equipment—7.8%
	7,050	Pitney Bowes, Inc.		338,400
	34,678	Xerox Corp.*		641,543
				979,943
		Semiconductors—5.7%
	18,038	Emulex Corp.*		378,437
	18,552	QLogic Corp.*		331,710
				710,147

Number of Shares			Value
		Common Stocks (Continued)
		Telecommunications—10.3%
	32,378	Motorola, Inc.	$	561,111
	16,006	Plantronics, Inc.		401,911
	9,994	Polycom, Inc.*		332,800
				1,295,822
		Total Investments (Cost $11,532,830)—101.0%		12,644,157
		Liabilities in excess of other assets—(1.0%)		(123,767	)
		Net Assets—100.0%	$	12,520,390

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	12,301,825			98.3	%
Cayman Islands		342,332			2.7
Total investments		12,644,157			101.0
Liabilities in excess of other asset		(123,767	)		(1.0	)
Net Assets	$	12,520,390			100.0	%

See Notes to Financial Statements.
48

Schedule of Investments

PowerShares Dynamic Healthcare Services Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.3%
		Dental Supplies & Equipment—2.9%
	22,190	Patterson Cos., Inc.*	$	800,171
		Diversified Operations—2.9%
	16,021	Chemed Corp.		805,856
		Health Care Cost Containment—5.1%
	24,150	McKesson Corp.		1,420,745
		Human Resources—8.5%
	26,705	AMN Healthcare Services, Inc.*		650,267
	38,202	Cross Country Healthcare, Inc.*		752,197
	29,544	Emergency Medical Services Corp., Class A*		989,133
				2,391,597
		Life/Health Insurance—5.3%
	9,632	CIGNA Corp.		1,498,643
		Medical Labs & Testing Services—2.7%
	9,405	Laboratory Corp. of America Holdings*		742,431
		Medical Products—2.5%
	35,066	PSS World Medical, Inc.*		704,827
		Medical - HMO—35.6%
	30,091	Aetna, Inc.		1,410,666
	21,613	AMERIGROUP Corp.*		607,974
	13,559	Coventry Health Care, Inc.*		784,117
	13,872	Health Net, Inc.*		749,920
	22,774	Humana, Inc.*		1,440,227
	17,302	Magellan Health Services, Inc.*		742,256
	18,752	Sierra Health Services, Inc.*		776,708
	26,136	UnitedHealth Group, Inc.		1,386,776
	9,353	WellCare Health Plans, Inc.*		753,758
	17,009	WellPoint, Inc.*		1,343,201
				9,995,603
		Medical - Hospitals—5.4%
	25,083	Medcath Corp.*		745,467
	12,809	Universal Health Services, Inc., Class B		777,762
				1,523,229
		Medical - Nursing Homes—5.7%
	13,820	Manor Care, Inc.		896,780
	13,685	National Healthcare Corp		702,177
				1,598,957
		Medical - Outpatient/Home Medical Care—7.9%
	31,215	Amsurg Corp., Class A*		716,384
	23,125	Apria Healthcare Group, Inc.*		733,988
	19,161	Lincare Holdings, Inc.*		755,710
				2,206,082

Number of Shares			Value
		Common Stocks (Continued)
		Medical - Wholesale Drug Distribution—4.5%
	25,196	AmerisourceBergen Corp.	$	1,259,548
		Pharmacy Services—6.0%
	17,627	Express Scripts, Inc.*		1,684,260
		Physician Practice Management—2.8%
	13,746	Pediatrix Medical Group, Inc.*		784,209
		Retirement/Aged Care—2.5%
	18,572	Sunrise Senior Living, Inc.*		711,122
		Total Investments (Cost $26,894,250)—100.3%		28,127,280
		Liabilities in excess of other assets—(0.3%)		(85,791	)
		Net Assets—100.0%	$	28,041,489

*  Non-income producing security.

See Notes to Financial Statements.
49

Schedule of Investments

PowerShares Dynamic Insurance Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.9%
		Financial Guarantee Insurance—2.8%
	17,504	AMBAC Financial Group, Inc.	$	1,606,867
		Insurance Brokers—2.8%
	39,402	Willis Group Holdings Ltd. (Bermuda)		1,616,270
		Life/Health Insurance—21.0%
	38,265	Delphi Financial Group, Inc., Class A		1,633,916
	39,038	FBL Financial Group, Inc., Class A		1,512,332
	40,746	Lincoln National Corp.		2,899,078
	28,514	Nationwide Financial Services, Inc., Class A		1,629,005
	31,060	Prudential Financial, Inc.		2,950,700
	26,678	Reinsurance Group of America, Inc.		1,662,306
				12,287,337
		Multi-line Insurance—26.2%
	49,859	ACE Ltd. (Cayman Islands)		2,964,616
	43,158	American Financial Group, Inc.		1,522,183
	29,020	Assurant, Inc.		1,669,521
	29,762	Hartford Financial Services Group (The), Inc.		3,011,914
	48,596	HCC Insurance Holdings, Inc.		1,489,953
	73,913	Horace Mann Educators Corp.		1,555,130
	65,127	Loews Corp.		3,081,809
				15,295,126
		Property/Casualty Insurance—38.8%
	23,716	Arch Capital Group Ltd. (Bermuda)*		1,726,999
	54,157	Chubb (The) Corp.		2,915,271
	52,277	Commerce Group (The), Inc.		1,704,753
	3,183	Markel Corp.*		1,460,711
	33,134	Philadelphia Consolidated Holding Co.*		1,438,016
	123,344	Progressive (The) Corp.		2,845,546
	27,381	RLI Corp.		1,524,848
	22,948	Safeco Corp.		1,531,550
	54,152	Travelers Cos. (The), Inc.		2,929,622
	66,002	United America Indemnity Ltd., Class A (Cayman Islands)*		1,648,730
	46,161	W. R. Berkley Corp.		1,499,771
	31,095	Zenith National Insurance Corp.		1,438,144
				22,663,961
		Reinsurance—8.3%
	53,056	IPC Holdings, Ltd. (Bermuda)		1,590,619
	22,103	PartnerRe Ltd. (Bermuda)		1,591,858
	24,225	Transatlantic Holdings, Inc.		1,683,395
				4,865,872
		Total Investments (Cost $54,324,349)—99.9%		58,335,433
		Other assets less liabilities—0.1%		65,781
		Net Assets—100.0%	$	58,401,214

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	48,845,071		83.6	%
Bermuda		6,525,746		11.2
Cayman Islands		2,964,616		5.1
Total investments		58,335,433		99.9
Other assets less liabilities		65,781		0.1
Net Assets	$	58,401,214		100.0	%

See Notes to Financial Statements.
50

Schedule of Investments

PowerShares Dynamic Leisure and Entertainment Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.4%
		Entertainment—9.8%
	57,914	International Game Technology	$	2,208,839
	25,554	International Speedway Corp., Class A		1,262,368
	35,201	Speedway Motorsports, Inc.		1,365,799
				4,837,006
		Internet—8.5%
	63,559	Expedia, Inc.*		1,501,263
	33,988	IAC/InterActiveCorp*		1,295,623
	25,541	Priceline.com, Inc.*		1,421,101
				4,217,987
		Leisure Time—8.2%
	53,110	Carnival Corp. (Panama)		2,596,548
	36,230	WMS Industries, Inc.*		1,444,128
				4,040,676
		Lodging—20.3%
	40,554	Ameristar Casinos, Inc.		1,231,219
	68,881	Hilton Hotels Corp.		2,341,954
	51,094	Marriott International, Inc., Class A		2,309,960
	20,342	Starwood Hotels & Resorts Worldwide, Inc.		1,363,321
	16,557	Station Casinos, Inc.		1,440,459
	38,872	Wyndham Worldwide Corp.*		1,344,971
				10,031,884
		Media—12.8%
	80,732	CBS Corp., Class B		2,564,856
	28,384	E.W. Scripps Co., Class A		1,229,027
	71,956	Walt Disney (The) Co.		2,517,021
				6,310,904
		Retail—40.8%
	52,007	Applebee's International, Inc.		1,413,550
	37,096	Bob Evans Farms, Inc.		1,361,423
	39,139	Brinker International, Inc.		1,217,223
	63,037	Burger King Holdings, Inc.		1,479,478
	29,078	CBRL Group, Inc.		1,296,297
	32,329	Darden Restaurants, Inc.		1,341,007
	43,165	Domino's Pizza, Inc.		1,392,071
	23,666	IHOP Corp.		1,394,401
	19,320	Jack in the Box, Inc.*		1,287,098
	54,956	McDonald's Corp.		2,653,277
	42,584	Rare Hospitality International, Inc.*		1,240,046
	41,429	Wendy's International, Inc.		1,561,873
	41,788	Yum! Brands, Inc.		2,585,006
				20,222,750
		Total Investments (Cost $45,680,013)—100.4%		49,661,207
		Liabilities in excess of other assets—(0.4%)		(188,872	)
		Net Assets—100.0%	$	49,472,335

*  Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	47,064,659			95.2	%
Panama		2,596,548			5.2
Total investments		49,661,207			100.4
Liabilities in excess of other assets		(188,872	)		(0.4	)
Net Assets	$	49,472,335			100.0	%

See Notes to Financial Statements.
51

Schedule of Investments

PowerShares Dynamic Media Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Advertising—13.1%
	30,584	Clear Channel Outdoor Holdings, Inc., Class A*	$	873,173
	31,423	Harte-Hanks, Inc.		820,140
	66,086	Interpublic Group of Cos., Inc.*		837,970
	15,025	Omnicom Group, Inc.		1,573,269
				4,104,552
		Commercial Services—5.2%
	16,637	Monster Worldwide, Inc.*		699,586
	22,788	Viad Corp.		930,662
				1,630,248
		Computers—2.9%
	22,309	IHS, Inc., Class A*		922,254
		Internet—10.8%
	3,394	Google, Inc., Class A*		1,599,863
	35,477	Sohu.com, Inc.*		898,278
	30,583	ValueClick, Inc.*		874,674
				3,372,815
		Media—65.4%
	45,721	Belo Corp., Class A		881,044
	50,983	CBS Corp., Class B		1,619,730
	56,196	Cox Radio, Inc., Class A*		793,488
	69,793	DIRECTV Group (The), Inc.*		1,663,865
	23,434	Dow Jones & Co., Inc.		851,357
	17,927	E.W. Scripps Co., Class A		776,239
	13,822	Gannett Co., Inc.		788,683
	32,660	Hearst-Argyle Television, Inc.		869,736
	22,323	John Wiley & Sons, Inc., Class A		835,996
	64,756	Journal Communications, Inc., Class A		873,558
	23,913	McGraw-Hill (The) Cos., Inc.		1,567,019
	108,879	Mediacom Communications Corp., Class A*		939,626
	14,611	Meredith Corp.		846,269
	67,635	News Corp., Class A		1,514,348
	24,109	Scholastic Corp.*		744,245
	59,213	Sinclair Broadcast Group, Inc., Class A		966,948
	74,273	Time Warner, Inc.		1,532,252
	45,444	Walt Disney (The) Co.		1,589,631
	1,104	Washington Post (The) Co., Class B		821,376
				20,475,410
		Telecommunications—2.7%
	30,852	RCN Corp.*		833,621
		Total Common Stocks (Cost $30,449,149)		31,338,900

Number of Shares			Value
		Money Market Fund—0.1%
	38,742	Liquid Assets Portfolio Private Class** (Cost $38,742)	$	38,742
		Total Investments (Cost $30,487,891)—100.2%		31,377,642
		Liabilities in excess of other assets—(0.2%)		(72,267	)
		Net Assets—100.0%	$	31,305,375

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
52

Schedule of Investments

PowerShares Dynamic Networking Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Computers—3.3%
	62,876	Brocade Communications Systems, Inc.*	$	614,299
		Internet—13.5%
	12,395	F5 Networks, Inc.*		951,688
	30,594	McAfee, Inc.*		993,999
	23,412	Websense, Inc.*		578,511
				2,524,198
		Semiconductors—13.4%
	140,469	Applied Micro Circuits Corp.*		394,718
	25,055	DSP Group, Inc.*		462,766
	28,169	Emulex Corp.*		590,985
	28,972	QLogic Corp.*		518,019
	16,413	Silicon Laboratories, Inc.*		538,511
				2,504,999
		Software—5.1%
	29,289	Citrix Systems, Inc.*		954,821
		Telecommunications—64.8%
	129,770	3Com Corp.*		522,973
	28,956	Acme Packet, Inc.*		391,196
	30,233	ADC Telecommunications, Inc.*		556,287
	22,062	ADTRAN, Inc.		561,478
	34,543	Arris Group, Inc.*		511,927
	74,599	Avaya, Inc.*		963,819
	35,808	C-COR, Inc.*		441,155
	35,198	Cisco Systems, Inc.*		941,195
	14,498	Comtech Telecommunications Corp.*		548,749
	33,705	Foundry Networks, Inc.*		509,620
	58,040	Harmonic, Inc.*		479,991
	48,953	Juniper Networks, Inc.*		1,094,588
	18,552	Netgear, Inc.*		623,533
	45,219	Nextwave Wireless, Inc.*		428,224
	22,332	QUALCOMM, Inc.		978,141
	70,704	Sonus Networks, Inc.*		546,542
	133,039	Sycamore Networks, Inc.*		488,253
	39,094	Tekelec*		560,608
	89,326	Tellabs, Inc.*		948,642
				12,096,921
		Total Investments (Cost $18,252,658)—100.1%		18,695,238
		Liabilities in excess of other assets—(0.1%)		(18,202	)
		Net Assets—100.0%	$	18,677,036

*  Non-income producing security.

See Notes to Financial Statements.
53

Schedule of Investments

PowerShares Dynamic Oil & Gas Services Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Engineering & Construction—5.4%
	111,768	Foster Wheeler Ltd. (Bermuda)*	$	7,692,992
	128,443	McDermott International, Inc. (Panama)*		6,892,251
				14,585,243
		Oil & Gas—28.4%
	151,037	Diamond Offshore Drilling, Inc.		12,928,767
	128,569	ENSCO International, Inc.		7,248,720
	203,422	GlobalSantaFe Corp. (Cayman Islands)		13,004,768
	957,432	Grey Wolf, Inc.*		6,855,213
	732,467	Parker Drilling Co.*		7,954,592
	223,878	Pride International, Inc.*		7,345,437
	192,608	Todco*		8,755,960
	153,128	Transocean, Inc. (Cayman Islands)*		13,199,634
				77,293,091
		Oil & Gas Services—60.6%
	184,499	Baker Hughes, Inc.		14,831,875
	291,172	Basic Energy Services, Inc.*		7,526,796
	439,783	BJ Services Co.		12,604,181
	111,997	Cameron International Corp.*		7,231,646
	159,727	Dril-Quip, Inc.*		8,066,214
	97,373	FMC Technologies, Inc.*		6,901,798
	476,634	Global Industries Ltd.*		9,894,922
	144,944	Grant Prideco, Inc.*		7,470,414
	382,214	Halliburton Co.		12,142,939
	466,162	Input/Output, Inc.*		6,521,606
	116,997	Lufkin Industries, Inc.		7,279,553
	178,398	NATCO Group, Inc., Class A*		6,814,804
	172,639	National Oilwell Varco, Inc.*		14,648,419
	160,154	Oceaneering International, Inc.*		7,613,721
	186,727	Schlumberger Ltd. (Netherlands)		13,786,054
	66,554	SEACOR Holdings, Inc.*		6,341,265
	216,723	Superior Energy Services, Inc.*		7,873,547
	120,666	Tidewater, Inc.		7,627,298
				165,177,052
		Transportation—5.6%
	173,185	Gulfmark Offshore, Inc.*		8,295,561
	99,811	Overseas Shipholding Group, Inc.		7,066,619
				15,362,180
		Total Common Stocks (Cost $242,338,034)		272,417,566

Number of Shares			Value
		Money Market Fund—0.1%
	206,884	Liquid Assets Portfolio Private Class** (Cost $206,884)	$	206,884
		Total Investments (Cost $242,544,918)—100.1%		272,624,450
		Liabilities in excess of other assets—(0.1%)		(168,488	)
		Net Assets—100.0%	$	272,455,962

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	218,048,751			80.1	%
Cayman Islands		26,204,402			9.6
Netherlands		13,786,054			5.1
Bermuda		7,692,992			2.8
Panama		6,892,251			2.5
Total investments		272,624,450			100.1
Liabilities in excess of other assets		(168,488	)		(0.1	)
Net Assets	$	272,455,962			100.0	%

See Notes to Financial Statements.
54

Schedule of Investments

PowerShares Dynamic Pharmaceuticals Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.0%
		Biotechnology—18.9%
	59,676	Amgen, Inc.*	$	3,827,618
	45,968	Biogen Idec, Inc.*		2,170,149
	46,231	Genentech, Inc.*		3,698,018
	65,748	MedImmune, Inc.*		3,726,597
	191,462	Millennium Pharmaceuticals, Inc.*		2,121,399
				15,543,781
		Cosmetics & Personal Care—2.7%
	38,691	Chattem, Inc.*		2,210,804
		Healthcare-Products—4.8%
	61,611	Johnson & Johnson		3,956,658
		Household Products/Wares—2.9%
	184,103	Prestige Brands Holdings, Inc.*		2,395,180
		Pharmaceuticals—70.7%
	19,188	Allergan, Inc.		2,325,586
	77,021	Alpharma, Inc., Class A		1,871,610
	38,239	Barr Pharmaceuticals, Inc.*		1,849,238
	72,908	Eli Lilly & Co.		4,311,050
	67,223	Endo Pharmaceuticals Holdings, Inc.*		2,079,880
	39,616	Forest Laboratories, Inc.*		2,107,967
	29,280	Gilead Sciences, Inc.*		2,392,762
	115,225	King Pharmaceuticals, Inc.*		2,356,351
	84,976	KV Pharmaceutical Co., Class A*		2,210,226
	77,912	Medicines (The) Co.*		1,774,835
	57,018	Medicis Pharmaceutical Corp., Class A		1,733,347
	92,046	Merck & Co., Inc.		4,734,846
	98,803	Mylan Laboratories, Inc.		2,166,750
	154,268	Pfizer, Inc.		4,081,931
	75,247	Pharmion Corp.*		2,279,232
	135,163	Salix Pharmaceuticals Ltd.*		1,759,822
	165,926	Schering-Plough Corp.		5,264,833
	92,210	Sciele Pharma, Inc.*		2,279,431
	40,027	Sepracor, Inc.*		2,148,649
	121,937	Valeant Pharmaceuticals International		2,197,305
	73,778	Watson Pharmaceuticals, Inc.*		2,014,139
	78,050	Wyeth		4,331,775
				58,271,565
		Total Investments (Cost $76,347,471)—100.0%		82,377,988
		Liabilities in excess of other assets—(0.0)%		(32,697	)
		Net Assets—100.0%	$	82,345,291

*  Non-income producing security.

See Notes to Financial Statements.
55

Schedule of Investments

PowerShares Dynamic Retail Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.4%
		Apparel—2.9%
	17,954	Gymboree Corp.*	$	685,484
		Commercial Services—5.6%
	25,105	Aaron Rents, Inc.		712,229
	13,605	Dollar Thrifty Automotive Group*		637,802
				1,350,031
		Distribution/Wholesale—2.9%
	13,987	Genuine Parts Co.		691,098
		Food—5.6%
	36,886	Safeway, Inc.		1,338,962
		Home Builders—1.8%
	7,321	Amrep Corp.		441,163
		Retail—81.6%
	18,474	Aeropostale, Inc.*		760,205
	22,239	American Eagle Outfitters, Inc.		655,383
	26,241	Asbury Automotive Group, Inc.		754,954
	9,897	AutoZone, Inc.*		1,316,697
	103,695	Blockbuster, Inc., Class A*		642,909
	19,315	Brown Shoe Co, Inc.		521,119
	19,705	Buckle (The), Inc.		701,892
	22,754	Charlotte Russe Holdings, Inc.*		621,867
	12,449	Children's Place Retail Stores (The), Inc.*		658,179
	20,223	Claire's Stores, Inc.		658,663
	23,573	Copart, Inc.*		683,146
	33,124	Dress Barn, Inc.*		659,499
	23,464	Family Dollar Stores, Inc.		747,094
	21,983	Hibbett Sports, Inc.*		640,804
	15,426	J. C. Penney Co., Inc.		1,220,042
	17,859	Kohl's Corp.*		1,322,280
	15,775	Men's Wearhouse, Inc.		682,584
	22,270	Nordstrom, Inc.		1,223,068
	21,680	Payless Shoesource, Inc.*		691,592
	20,727	Ross Stores, Inc.		687,100
	6,909	Sears Holdings Corp.*		1,318,997
	47,684	Staples, Inc.		1,182,563
	45,540	TJX Cos., Inc.		1,270,111
				19,620,748
		Total Common Stocks (Cost $23,361,773)		24,127,486

Number of Shares			Value
		Money Market Fund—0.5%
	111,949	Liquid Assets Portfolio Private Class** (Cost $111,949)	$	111,949
		Total Investments (Cost $23,473,722)—100.9%		24,239,435
		Liabilities in excess of other assets—(0.9%)		(210,189	)
		Net Assets—100.0%	$	24,029,246

*   Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
56

Schedule of Investments

PowerShares Dynamic Semiconductors Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Electrical Components & Equipment—3.2%
	213,430	Advanced Energy Industries, Inc.*	$	5,229,035
		Semiconductors—92.5%
	197,737	Altera Corp.		4,456,992
	360,346	AMIS Holdings, Inc.*		4,180,014
	361,851	Amkor Technology, Inc.*		5,062,295
	216,339	Analog Devices, Inc.		8,355,012
	416,551	Applied Materials, Inc.		8,006,110
	762,290	Atmel Corp.*		4,055,383
	270,319	Brooks Automation, Inc*		4,722,473
	489,365	Cirrus Logic, Inc.*		4,051,942
	228,891	Fairchild Semiconductor International, Inc.*		4,028,482
	255,588	Integrated Device Technology, Inc.*		3,828,708
	385,061	Intel Corp.		8,278,812
	99,351	International Rectifier Corp.*		3,505,103
	147,590	KLA-Tencor Corp.		8,198,625
	95,219	Lam Research Corp.*		5,120,878
	712,452	Lattice Semiconductor Corp.*		3,889,988
	231,974	Linear Technology Corp.		8,680,466
	145,770	MEMC Electronic Materials, Inc.*		7,999,858
	116,301	Microchip Technology, Inc.		4,691,582
	171,002	National Semiconductor Corp.		4,497,353
	135,297	Novellus Systems, Inc.*		4,379,564
	244,828	NVIDIA Corp.*		8,052,393
	272,685	Photronics, Inc.*		4,103,909
	468,853	Silicon Image, Inc.*		4,107,152
	625,568	Skyworks Solutions, Inc.*		4,310,164
	248,185	Texas Instruments, Inc.		8,530,118
	88,420	Varian Semiconductor Equipment Associates, Inc.*		5,867,551
	186,903	Verigy Ltd. (Singapore)*		4,723,039
				149,683,966
		Telecommunications—4.5%
	123,244	Interdigital Communications Corp.*		4,052,263
	512,377	RF Micro Devices, Inc.*		3,202,356
				7,254,619
		Total Investments (Cost $154,188,258)—100.2%		162,167,620
		Liabilities in excess of other assets—(0.2%)		(281,613	)
		Net Assets—100.0%	$	161,886,007

*   Non-income producing security.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	157,444,581			97.3	%
Singapore		4,723,039			2.9
Total investments		162,167,620			100.2
Liabilities in excess of other assets		(281,613	)		(0.2	)
Net Assets	$	161,886,007			100.0	%

See Notes to Financial Statements.
57

Schedule of Investments

PowerShares Dynamic Software Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.5%
		Commercial Services—2.6%
	74,389	Convergys Corp.*	$	1,879,066
		Computers—30.1%
	60,724	Ansoft Corp.*		1,960,778
	174,557	Cadence Design Systems, Inc.*		3,875,165
	26,952	DST Systems, Inc.*		2,103,604
	81,528	Jack Henry & Associates, Inc.		1,936,290
	68,778	Manhattan Associates, Inc.*		1,989,060
	111,170	Mentor Graphics Corp.*		1,798,731
	34,754	MICROS Systems, Inc.*		1,904,519
	75,943	NCR Corp.*		3,827,527
	75,715	Synopsys, Inc.*		2,094,277
				21,489,951
		Electronics—2.9%
	59,247	Dolby Laboratories, Inc., Class A*		2,098,529
		Internet—11.6%
	122,567	Interwoven, Inc.*		1,871,598
	63,084	McAfee, Inc.*		2,049,599
	215,850	TIBCO Software, Inc.*		1,968,552
	42,247	WebEx Communications, Inc.*		2,397,095
				8,286,844
		Software—53.3%
	112,612	Activision, Inc.*		2,252,240
	86,189	Autodesk, Inc.*		3,557,020
	306,314	BEA Systems, Inc.*		3,611,442
	86,172	Blackbaud, Inc.		1,902,678
	114,390	BMC Software, Inc.*		3,702,804
	36,790	Cerner Corp.*		1,958,700
	78,268	CSG Systems International, Inc.*		2,096,017
	49,741	Fair Isaac Corp.		1,776,251
	66,931	Fiserv, Inc.*		3,558,721
	126,659	Microsoft Corp.		3,792,170
	15,605	MicroStrategy, Inc., Class A*		1,775,225
	217,625	Oracle Corp.*		4,091,350
	77,388	Sybase, Inc.*		1,872,016
	59,977	THQ, Inc.*		2,001,432
				37,948,066
		Total Investments (Cost $64,742,398)—100.5%		71,702,456
		Liabilities in excess of other assets—(0.5%)		(333,202	)
		Net Assets—100.0%	$	71,369,254

*  Non-income producing security.

See Notes to Financial Statements.
58

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Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

April 30, 2007

	PowerShares Dynamic Banking Portfolio			PowerShares Dynamic Biotechnology & Genome Portfolio			PowerShares Dynamic Building & Construction Portfolio			PowerShares Dynamic Energy Exploration & Production Portfolio			PowerShares Dynamic Food & Beverage Portfolio			PowerShares Dynamic Hardware & Consumer Electronics Portfolio			PowerShares Dynamic Healthcare Services Portfolio			PowerShares Dynamic Insurance Portfolio
ASSETS:
Unaffiliated investments at value	$	4,763,472		$	258,893,208		$	18,750,412		$	123,480,246		$	33,196,907		$	12,644,157		$	28,127,280		$	58,335,433
Affiliated investments at value		55,436			—			—			—			106,759			—			—			—
Cash		—			—			—			94,778			—			—			—			84,011
Receivables:
Dividends		2,536			—			6,667			—			46,208			—			2,463			28,214
Capital stock sold		—			1,965,389			—			2,157,264			1,753,358			—			—			1,897,301
Due from Adviser		9,885			23,162			10,977			16,195			14,116			18,076			9,387			15,034
Other assets		8,000			6,450			6,542			6,542			6,450			5,999			7,949			6,542
Total Assets		4,839,329			260,888,209			18,774,598			125,755,025			35,123,798			12,668,232			28,147,079			60,366,535
LIABILITIES:
Due to custodian		50,379			87,830			31,952			—			27,213			98,474			39,316			—
Payables:
Investments purchased		—			1,975,052			—			2,155,415			1,730,259			—			—			1,895,260
Accrued advisory fees		1,991			102,885			7,552			48,175			12,953			5,062			11,686			22,869
Accrued expenses		50,973			106,528			36,306			63,098			39,571			44,306			54,588			47,192
Total Liabilities		103,343			2,272,295			75,810			2,266,688			1,809,996			147,842			105,590			1,965,321
NET ASSETS	$	4,735,986		$	258,615,914		$	18,698,788		$	123,488,337		$	33,313,802		$	12,520,390		$	28,041,489		$	58,401,214
NET ASSETS CONSIST OF:
Paid-in capital	$	5,173,680		$	266,594,947		$	18,864,779		$	110,798,773		$	32,085,180		$	13,049,115		$	27,034,265		$	55,390,391
Undistributed net investment income		24,714			—			18,249			96,401			422,812			—			—			63,761
Accumulated net realized loss on investments		(287,936	)		(30,122,939	)		(2,585,804	)		(3,586,566	)		(2,749,636	)		(1,640,052	)		(225,806	)		(1,064,022	)
Net unrealized appreciation (depreciation) on investments		(174,472	)		22,143,906			2,401,564			16,179,729			3,555,446			1,111,327			1,233,030			4,011,084
Net Assets	$	4,735,986		$	258,615,914		$	18,698,788		$	123,488,337		$	33,313,802		$	12,520,390		$	28,041,489		$	58,401,214
Shares outstanding (unlimited amount authorized, $0.01 par value)		200,000			13,400,000			1,000,000			5,800,000			1,900,000			700,000			1,000,000			3,100,000
Net asset value	$	23.68		$	19.30		$	18.70		$	21.29		$	17.53		$	17.89		$	28.04		$	18.84
Unaffiliated investments at cost	$	4,937,944		$	236,749,302		$	16,348,848		$	107,300,517		$	29,641,461		$	11,532,830		$	26,894,250		$	54,324,349
Affiliated investments at cost	$	55,436		$	—		$	—		$	—		$	106,759		$	—		$	—		$	—

See Notes to Financial Statements.
60

	PowerShares Dynamic Leisure and Entertainment Portfolio			PowerShares Dynamic Media Portfolio			PowerShares Dynamic Networking Portfolio			PowerShares Dynamic Oil & Gas Services Portfolio			PowerShares Dynamic Pharmaceuticals Portfolio			PowerShares Dynamic Retail Portfolio			PowerShares Dynamic Semiconductors Portfolio			PowerShares Dynamic Software Portfolio
ASSETS:
Unaffiliated investments at value	$	49,661,207		$	31,338,900		$	18,695,238		$	272,417,566		$	82,377,988		$	24,127,486		$	162,167,620		$	71,702,456
Affiliated investments at value		—			38,742			—			206,884			—			111,949			—			—
Cash		—			—			7,251			32,239			25,045			—			—			—
Receivables:
Dividends		17,212			8,287			—			872			4			3,920			58,712			—
Capital stock sold		—			—			—			—			—			—			7,671,761			—
Due from Adviser		14,131			13,183			12,983			21,240			21,090			12,978			11,240			18,369
Other assets		6,450			6,450			6,450			6,542			6,450			6,543			6,450			6,450
Total Assets		49,699,000			31,405,562			18,721,922			272,685,343			82,430,577			24,262,876			169,915,783			71,727,275
LIABILITIES:
Due to custodian		165,982			48,997			—			—			—			183,471			240,521			276,500
Payables:
Investments purchased		—			—			—			—			—			—			7,681,294			—
Accrued advisory fees		20,065			13,509			8,494			109,957			33,001			10,659			50,291			29,411
Accrued expenses		40,618			37,681			36,392			119,424			52,285			39,500			57,670			52,110
Total Liabilities		226,665			100,187			44,886			229,381			85,286			233,630			8,029,776			358,021
NET ASSETS	$	49,472,335		$	31,305,375		$	18,677,036		$	272,455,962		$	82,345,291		$	24,029,246		$	161,886,007		$	71,369,254
NET ASSETS CONSIST OF:
Paid-in capital	$	48,661,463		$	34,763,424		$	21,139,442		$	266,811,945		$	77,436,451		$	24,577,929		$	166,522,507		$	68,414,091
Undistributed net investment income		—			12,161			—			45,350			—			22,155			—			—
Accumulated net realized loss on investments		(3,170,322	)		(4,359,961	)		(2,904,986	)		(24,480,865	)		(1,121,677	)		(1,336,551	)		(12,615,862	)		(4,004,895	)
Net unrealized appreciation (depreciation) on investments		3,981,194			889,751			442,580			30,079,532			6,030,517			765,713			7,979,362			6,960,058
Net Assets	$	49,472,335		$	31,305,375		$	18,677,036		$	272,455,962		$	82,345,291		$	24,029,246		$	161,886,007		$	71,369,254
Shares outstanding (unlimited amount authorized, $0.01 par value)		2,700,000			1,900,000			1,000,000			12,000,000			4,200,000			1,200,000			8,500,000			3,500,000
Net asset value	$	18.32		$	16.48		$	18.68		$	22.70		$	19.61		$	20.02		$	19.05		$	20.39
Unaffiliated investments at cost	$	45,680,013		$	30,449,149		$	18,252,658		$	242,338,034		$	76,347,471		$	23,361,773		$	154,188,258		$	64,742,398
Affiliated investments at cost	$	—		$	38,742		$	—		$	206,884		$	—		$	111,949		$	—		$	—

61

Statements of Operations

	PowerShares Dynamic Banking Portfolio			PowerShares Dynamic Biotechnology & Genome Portfolio			PowerShares Dynamic Building & Construction Portfolio			PowerShares Dynamic Energy Exploration & Production Portfolio			PowerShares Dynamic Food & Beverage Portfolio			PowerShares Dynamic Hardware & Consumer Electronics Portfolio			PowerShares Dynamic Healthcare Services Portfolio			PowerShares Dynamic Insurance Portfolio
	For the period October 12, 2006* through April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			For the period October 12, 2006* through April 30, 2007			Year Ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	102,308		$	174,371		$	118,148		$	1,166,099		$	870,138		$	29,034		$	13,159		$	642,565
Affiliated dividend income		435			—			162			1,706			3,087			—			—			480
Total Income		102,743			174,371			118,310			1,167,805			873,225			29,034			13,159			643,045
EXPENSES:
Advisory fees		21,892			1,165,041			75,528			530,156			142,996			60,870			47,899			214,060
Audit		16,500			16,500			16,500			16,500			16,500			16,500			16,500			16,500
Listing fee and expenses		10,000			10,578			10,081			10,264			10,059			10,041			10,000			10,074
Offering costs		4,482			1,654			1,878			1,878			1,319			9,856			4,479			1,878
Administration fees		3,742			59,999			59,999			59,999			59,999			54,162			4,338			59,999
Printing		3,553			104,453			8,850			49,784			12,268			11,852			5,271			20,231
Accounting		3,276			54,998			54,998			54,998			54,998			49,587			3,673			54,998
Legal		2,500			9,935			1,412			6,324			1,560			679			2,500			2,191
Licensing		2,189			69,889			2,749			30,078			8,578			3,652			4,790			11,599
Custodian and transfer agent fees		1,821			16,552			7,501			9,703			8,501			8,920			2,019			7,501
Registration and filings		143			12,590			—			435			1,211			—			733			1,387
Trustees		124			8,869			528			3,774			1,109			442			369			1,756
Other expenses		12,236			17,385			9,715			11,873			10,427			12,313			12,235			9,590
Total Expenses		82,458			1,548,443			249,739			785,766			329,525			238,874			114,806			411,764
Less fees waived:
Advisory		(21,892	)		(78,242	)		(75,528	)		(117,014	)		(142,996	)		(60,870	)		(47,524	)		(140,805	)
Other fees assumed by the Adviser		(27,089	)		—			(78,341	)		—			(4,427	)		(90,842	)		—			—
Net Expenses		33,477			1,470,201			95,870			668,752			182,102			87,162			67,282			270,959
Net Investment Income (Loss)		69,266			(1,295,830	)		22,440			499,053			691,123			(58,128	)		(54,123	)		372,086
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(287,936	)		(25,334,394	)		(2,487,592	)		(4,160,205	)		(1,428,956	)		(1,505,413	)		(225,806	)		(908,039	)
In-kind redemptions		77,971			21,166,135			662,646			8,378,246			2,478,072			1,221,989			1,075,521			2,636,343
Net realized gain (loss)		(209,965	)		(4,168,259	)		(1,824,946	)		4,218,041			1,049,116			(283,424	)		849,715			1,728,304
Net change in unrealized appreciation/ depreciation on investments		(174,472	)		30,260,487			1,243,144			7,881,779			2,942,933			285,507			1,233,030			2,466,573
Net realized and unrealized gain (loss) on investments		(384,437	)		26,092,228			(581,802	)		12,099,820			3,992,049			2,083			2,082,745			4,194,877
Net increase (decrease) in net assets resulting from operations	$	(315,171	)	$	24,796,398		$	(559,362	)	$	12,598,873		$	4,683,172		$	(56,045	)	$	2,028,622		$	4,566,963

*  Commencement of Investment Operations.

See Notes to Financial Statements.
62

	PowerShares Dynamic Leisure and Entertainment Portfolio			PowerShares Dynamic Media Portfolio			PowerShares Dynamic Networking Portfolio			PowerShares Dynamic Oil & Gas Services Portfolio			PowerShares Dynamic Pharmaceuticals Portfolio			PowerShares Dynamic Retail Portfolio			PowerShares Dynamic Semiconductors Portfolio			PowerShares Dynamic Software Portfolio
	Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007			Year Ended April 30, 2007
INVESTMENT INCOME:
Unaffiliated dividend income	$	351,508		$	220,173		$	25,093		$	1,863,170		$	817,489		$	194,430		$	343,618		$	82,720
Affiliated dividend income		1,952			1,311			—			1,886			3,621			2,308			—			339
Total Income		353,460			221,484			25,093			1,865,056			821,110			196,738			343,618			83,059
EXPENSES:
Advisory fees		167,805			124,348			122,422			1,442,227			386,568			99,369			421,997			333,698
Audit		16,500			16,500			16,500			16,500			16,500			16,500			16,500			16,500
Listing fee and expenses		10,067			10,059			10,067			10,804			10,154			10,056			10,249			10,118
Offering costs		1,318			1,289			1,287			2,438			1,305			1,878			1,302			1,285
Administration fees		59,999			59,999			59,999			59,999			59,999			59,999			59,999			59,999
Printing		15,998			11,899			10,821			133,898			34,436			11,811			39,759			32,431
Accounting		54,998			54,998			54,998			54,998			54,998			54,998			54,998			54,998
Legal		1,707			1,287			1,124			18,563			4,050			956			4,285			3,406
Licensing		10,067			7,459			7,344			85,986			23,192			3,937			25,320			20,020
Custodian and transfer agent fees		8,001			8,702			8,501			18,025			10,925			7,501			9,172			8,341
Registration and filings		1,282			300			212			1,339			3,241			550			381			646
Trustees		1,354			933			930			10,688			2,942			867			3,153			2,603
Other expenses		10,684			10,441			10,535			19,544			12,014			11,055			13,009			11,016
Total Expenses		359,780			308,214			304,740			1,875,009			620,324			279,477			660,124			555,061
Less fees waived:
Advisory		(146,252	)		(124,348	)		(122,422	)		(55,303	)		(131,335	)		(99,369	)		(126,497	)		(132,710	)
Other fees assumed by the Adviser		—			(25,292	)		(26,170	)		—			—			(52,796	)		—			—
Net Expenses		213,528			158,574			156,148			1,819,706			488,989			127,312			533,627			422,351
Net Investment Income (Loss)		139,932			62,910			(131,055	)		45,350			332,121			69,426			(190,009	)		(339,292	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(1,804,212	)		(2,616,684	)		(2,120,269	)		(23,289,712	)		(810,908	)		(1,066,019	)		(10,437,819	)		(3,136,814	)
In-kind redemptions		3,920,909			3,870,781			5,976,254			22,747,144			7,092,798			3,433,387			9,176,280			9,986,126
Net realized gain (loss)		2,116,697			1,254,097			3,855,985			(542,568	)		6,281,890			2,367,368			(1,261,539	)		6,849,312
Net change in unrealized appreciation/ depreciation on investments		1,377,435			858,209			(2,673,735	)		4,979,597			7,374,349			(1,871,851	)		(3,142,437	)		2,073,236
Net realized and unrealized gain (loss) on investments		3,494,132			2,112,306			1,182,250			4,437,029			13,656,239			495,517			(4,403,976	)		8,922,548
Net increase (decrease) in net assets resulting from operations	$	3,634,064		$	2,175,216		$	1,051,195		$	4,482,379		$	13,988,360		$	564,943		$	(4,593,985	)	$	8,583,256

63

Statements of Changes in Net Assets

	PowerShares Dynamic Banking Portfolio			PowerShares Dynamic Biotechnology & Genome Portfolio						PowerShares Dynamic Building & Construction Portfolio
	For the period October 12, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	69,266		$	(1,295,830	)	$	(735,610	)	$	22,440		$	(614	)
Net realized gain (loss) on investments		(209,965	)		(4,168,259	)		8,629,116			(1,824,946	)		6,061,237
Net change in unrealized appreciation/depreciation on investments		(174,472	)		30,260,487			(8,116,581	)		1,243,144			1,158,420
Net increase (decrease) in net assets resulting from operations		(315,171	)		24,796,398			(223,075	)		(559,362	)		7,219,043
Undistributed net investment income (loss) included in the price of units issued and redeemed		(19,989	)		98,651			—			13,852			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(44,552	)		—			—			(4,191	)		(15,330	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		22,356,336			155,765,402			331,894,266			17,839,986			74,726,928
Value of shares repurchased		(17,260,627	)		(171,967,279	)		(81,649,798	)		(23,983,205	)		(56,525,081	)
Net income equalization		19,989			(98,651	)		—			(13,852	)		—
Net increase (decrease) in net assets resulting from shares transactions		5,115,698			(16,300,528	)		250,244,468			(6,157,071	)		18,201,847
Increase (Decrease) in Net Assets		4,735,986			8,594,521			250,021,393			(6,706,772	)		25,405,560
NET ASSETS:
Beginning of period		—			250,021,393			—			25,405,560			—
End of period	$	4,735,986		$	258,615,914		$	250,021,393		$	18,698,788		$	25,405,560
Undistributed net investment income at end of period	$	24,714		$	—		$	—		$	18,249		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		900,000			8,900,000			19,100,000			1,100,000			4,600,000
Shares repurchased		(700,000	)		(10,000,000	)		(4,600,000	)		(1,500,000	)		(3,200,000	)
Shares outstanding, beginning of period		—			14,500,000			—			1,400,000			—
Shares outstanding, end of period		200,000			13,400,000			14,500,000			1,000,000			1,400,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
64

	PowerShares Dynamic Energy Exploration & Production Portfolio						PowerShares Dynamic Food & Beverage Portfolio						PowerShares Dynamic Hardware & Consumer Electronics Portfolio
	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	499,053		$	(4,486	)	$	691,123		$	182,138		$	(58,128	)	$	(46,184	)
Net realized gain (loss) on investments		4,218,041			4,581,724			1,049,116			(385,786	)		(283,424	)		1,708,634
Net change in unrealized appreciation/depreciation on investments		7,881,779			8,297,950			2,942,933			612,513			285,507			825,820
Net increase (decrease) in net assets resulting from operations		12,598,873			12,875,188			4,683,172			408,865			(56,045	)		2,488,270
Undistributed net investment income (loss) included in the price of units issued and redeemed		(44,428	)		—			28,365			—			17,722			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(351,098	)		(47,068	)		(306,737	)		(143,712	)		—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		142,236,445			133,305,347			29,846,194			34,218,637			11,586,059			30,972,458
Value of shares repurchased		(142,790,736	)		(34,338,614	)		(25,178,900	)		(10,213,717	)		(15,773,610	)		(16,696,742	)
Net income equalization		44,428			—			(28,365	)		—			(17,722	)		—
Net increase (decrease) in net assets resulting from shares transactions		(509,863	)		98,966,733			4,638,929			24,004,920			(4,205,273	)		14,275,716
Increase (Decrease) in Net Assets		11,693,484			111,794,853			9,043,729			24,270,073			(4,243,596	)		16,763,986
NET ASSETS:
Beginning of period		111,794,853			—			24,270,073			—			16,763,986			—
End of period	$	123,488,337		$	111,794,853		$	33,313,802		$	24,270,073		$	12,520,390		$	16,763,986
Undistributed net investment income at end of period	$	96,401		$	—		$	422,812		$	38,426		$	—		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		7,600,000			8,000,000			1,900,000			2,300,000			700,000			2,000,000
Shares repurchased		(7,800,000	)		(2,000,000	)		(1,600,000	)		(700,000	)		(1,000,000	)		(1,000,000	)
Shares outstanding, beginning of period		6,000,000			—			1,600,000			—			1,000,000			—
Shares outstanding, end of period		5,800,000			6,000,000			1,900,000			1,600,000			700,000			1,000,000

65

Statements of Changes in Net Assets (Continued)

	PowerShares Healthcare Services Portfolio			PowerShares Dynamic Insurance Portfolio						PowerShares Dynamic Leisure and Entertainment Portfolio
	For the period October 12, 2006* through April 30, 2007			For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	(54,123	)	$	372,086		$	136,825		$	139,932		$	46,331
Net realized gain (loss) on investments		849,715			1,728,304			1,096,704			2,116,697			(297,491	)
Net change in unrealized appreciation/depreciation on investments		1,233,030			2,466,573			1,544,511			1,377,435			2,603,759
Net increase (decrease) in net assets resulting from operations		2,028,622			4,566,963			2,778,040			3,634,064			2,352,599
Undistributed net investment income (loss) included in the price of units issued and redeemed		(26,513	)		26,238			—			17,232			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			(333,066	)		(112,084	)		(158,121	)		(28,509	)
Tax return of capital		—			—			—			(21,748	)		—
Total distributions		—			(333,066	)		(112,084	)		(179,869	)		(28,509	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		41,920,078			67,091,384			51,895,393			48,534,706			37,406,748
Value of shares repurchased		(15,907,211	)		(44,088,414	)		(23,397,002	)		(30,217,844	)		(12,029,560	)
Net income equalization		26,513			(26,238	)		—			(17,232	)		—
Net increase (decrease) in net assets resulting from share transactions		26,039,380			22,976,732			28,498,391			18,299,630			25,377,188
Increase (Decrease) in Net Assets		28,041,489			27,236,867			31,164,347			21,771,057			27,701,278
NET ASSETS:
Beginning of period		—			31,164,347			—			27,701,278			—
End of period	$	28,041,489		$	58,401,214		$	31,164,347		$	49,472,335		$	27,701,278
Undistributed net investment income at end of period	$	—		$	63,761		$	24,741		$	—		$	18,022
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,600,000			3,800,000			3,200,000			2,800,000			2,500,000
Shares repurchased		(600,000	)		(2,500,000	)		(1,400,000	)		(1,800,000	)		(800,000	)
Shares outstanding, beginning of period		—			1,800,000			—			1,700,000			—
Shares outstanding, end of period		1,000,000			3,100,000			1,800,000			2,700,000			1,700,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
66

	PowerShares Dynamic Media Portfolio						PowerShares Dynamic Networking Portfolio						PowerShares Dynamic Oil & Gas Services Portfolio
	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	62,910		$	41,079		$	(131,055	)	$	(130,625	)	$	45,350		$	(77,301	)
Net realized gain (loss) on investments		1,254,097			(1,073,312	)		3,855,985			846,150			(542,568	)		4,830,987
Net change in unrealized appreciation/depreciation on investments		858,209			31,542			(2,673,735	)		3,116,315			4,979,597			25,099,935
Net increase (decrease) in net assets resulting from operations		2,175,216			(1,000,691	)		1,051,195			3,831,840			4,482,379			29,853,621
Undistributed net investment income (loss) included in the price of units issued and redeemed		(9,491	)		—			36,561			—			45,370			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(58,259	)		(34,051	)		—			—			—			—
Tax return of capital		—			—			—			—			—			—
Total distributions		(58,259	)		(34,051	)		—			—			—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		45,055,211			35,776,211			43,920,427			35,217,483			192,578,053			362,551,971
Value of shares repurchased		(40,409,878	)		(10,198,384	)		(54,100,512	)		(11,243,397	)		(260,736,085	)		(56,273,977	)
Net income equalization		9,491			—			(36,561	)		—			(45,370	)		—
Net increase (decrease) in net assets resulting from share transactions		4,654,824			25,577,827			(10,216,646	)		23,974,086			(68,203,402	)		306,277,994
Increase (Decrease) in Net Assets		6,762,290			24,543,085			(9,128,890	)		27,805,926			(63,675,653	)		336,131,615
NET ASSETS:
Beginning of period		24,543,085			—			27,805,926			—			336,131,615			—
End of period	$	31,305,375		$	24,543,085		$	18,677,036		$	27,805,926		$	272,455,962		$	336,131,615
Undistributed net investment income at end of period	$	12,161		$	7,510		$	—		$	—		$	45,350		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		2,900,000			2,400,000			2,600,000			2,300,000			9,500,000			18,700,000
Shares repurchased		(2,700,000	)		(700,000	)		(3,200,000	)		(700,000	)		(13,200,000	)		(3,000,000	)
Shares outstanding, beginning of period		1,700,000			—			1,600,000			—			15,700,000			—
Shares outstanding, end of period		1,900,000			1,700,000			1,000,000			1,600,000			12,000,000			15,700,000

67

Statements of Changes in Net Assets (Continued)

	PowerShares Dynamic Pharmaceuticals Portfolio						PowerShares Dynamic Retail Portfolio
	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	332,121		$	142,619		$	69,426		$	21,805
Net realized gain (loss) on investments		6,281,890			3,028,471			2,367,368			2,686,969
Net change in unrealized appreciation/depreciation on investments		7,374,349			(1,343,832	)		(1,871,851	)		2,637,564
Net increase (decrease) in net assets resulting from operations		13,988,360			1,827,258			564,943			5,346,338
Undistributed net investment income (loss) included in the price of units issued and redeemed		(24,592	)		—			(3,544	)		—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(367,491	)		(107,249	)		(54,224	)		(16,497	)
Tax return of capital		(27,281	)		—			—			—
Total distributions		(394,772	)		(107,249	)		(54,224	)		(16,497	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		72,406,707			84,466,520			77,371,444			67,902,200
Value of shares repurchased		(69,811,556	)		(20,029,977	)		(77,636,176	)		(49,448,782	)
Net income equalization		24,592			—			3,544			—
Net increase (decrease) in net assets resulting from share transactions		2,619,743			64,436,543			(261,188	)		18,453,418
Increase in Net Assets		16,188,739			66,156,552			245,987			23,783,259
NET ASSETS:
Beginning of period		66,156,552			—			23,783,259			—
End of period	$	82,345,291		$	66,156,552		$	24,029,246		$	23,783,259
Undistributed net investment income at end of period	$	—		$	35,370		$	22,155		$	5,308
CHANGES IN SHARES OUTSTANDING:
Shares sold		4,200,000			5,200,000			4,300,000			4,300,000
Shares repurchased		(4,000,000	)		(1,200,000	)		(4,400,000	)		(3,000,000	)
Shares outstanding, beginning of period		4,000,000			—			1,300,000			—
Shares outstanding, end of period		4,200,000			4,000,000			1,200,000			1,300,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
68

	PowerShares Dynamic Semiconductors Portfolio						PowerShares Dynamic Software Portfolio
	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006			For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
OPERATIONS:
Net investment income (loss)	$	(190,009	)	$	(200,059	)	$	(339,292	)	$	(158,565	)
Net realized gain (loss) on investments		(1,261,539	)		9,142,828			6,849,312			1,953,589
Net change in unrealized appreciation/depreciation on investments		(3,142,437	)		11,121,799			2,073,236			4,886,822
Net increase (decrease) in net assets resulting from operations		(4,593,985	)		20,064,568			8,583,256			6,681,846
Undistributed net investment income (loss) included in the price of units issued and redeemed		(71,444	)		—			1,824			—
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			—			—			—
Tax return of capital		—			—			—			—
Total distributions		—			—			—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		159,099,139			157,737,331			99,964,940			62,047,515
Value of shares repurchased		(99,548,000	)		(70,873,046	)		(86,977,854	)		(18,930,449	)
Net income equalization		71,444			—			(1,824	)		—
Net increase (decrease) in net assets resulting from share transactions		59,622,583			86,864,285			12,985,262			43,117,066
Increase in Net Assets		54,957,154			106,928,853			21,570,342			49,798,912
NET ASSETS:
Beginning of period		106,928,853			—			49,798,912			—
End of period	$	161,886,007		$	106,928,853		$	71,369,254		$	49,798,912
Undistributed net investment income at end of period	$	—		$	—		$	—		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		8,800,000			9,200,000			5,500,000			3,800,000
Shares repurchased		(5,600,000	)		(3,900,000	)		(4,700,000	)		(1,100,000	)
Shares outstanding, beginning of period		5,300,000			—			2,700,000			—
Shares outstanding, end of period		8,500,000			5,300,000			3,500,000			2,700,000

69

Financial Highlights

PowerShares Dynamic Banking Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period .	$	25.17
Net investment income**		0.22
Net realized and unrealized loss on investments		(1.43	)
Total from operations		(1.21	)
Undistributed net investment loss included in price of units issued and redeemed**		(0.06	)
Distributions to shareholders from:
Net investment income		(0.22	)
Net asset value at end of period	$	23.68
TOTAL RETURN:***		(5.08	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	4,736
Ratio to average net assets of:
Expenses, net of waivers ..		0.76	%†
Expenses, prior to waivers		1.88	%†
Net investment income, net of waivers		1.58	%†
Portfolio turnover rate ††		57	%

PowerShares Dynamic Biotechnology & Genome Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.24		$	14.71
Net investment loss**		(0.10	)		(0.08	)
Net realized and unrealized gain on investments		2.15			2.61
Total from operations		2.05			2.53
Undistributed net investment income included in price of units issued and redeemed**		0.01			—
Net asset value at end of period	$	19.30		$	17.24
TOTAL RETURN:***		11.95	%		17.20	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	258,616		$	250,021
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.64	%†
Expenses, prior to waivers		0.66	%†††		0.67	%†
Net investment loss, net of waivers		(0.56	)%		(0.55	)%†
Portfolio turnover rate ††		82	%		49	%

*  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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the year ended April 30, 2007.

See Notes to Financial Statements.
70

Financial Highlights (Continued)

PowerShares Dynamic Building & Construction Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.15		$	15.26
Net investment income**		0.02			—	(a)
Net realized and unrealized gain on investments		0.52			2.90
Total from operations		0.54			2.90
Undistributed net investment income included in price of units issued and redeemed**		0.01			—
Distributions to shareholders from:
Net investment income		—	(a)		(0.01	)
Net asset value at end of period	$	18.70		$	18.15
TOTAL RETURN:***		3.06	%		18.99	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted) .	$	18,699		$	25,406
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.67	%†
Expenses, prior to waivers		1.65	%		0.80	%†
Net investment income, net of waivers		0.15	%		—	†(a)
Portfolio turnover rate ††		59	%		29	%

PowerShares Dynamic Energy Exploration & Production Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.63		$	16.03
Net investment income**		0.09			—	(a)
Net realized and unrealized gain on investments		2.64			2.62
Total from operations		2.73			2.62
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		—
Distributions to shareholders from:
Net investment income		(0.06	)		(0.02	)
Net asset value at end of period	$	21.29		$	18.63
TOTAL RETURN:***		14.66	%		16.33	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	123,488		$	111,795
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.66	%†
Expenses, prior to waivers		0.74	%		0.75	%†
Net investment income (loss), net of waivers		0.47	%		(0.01	)%†
Portfolio turnover rate ††		59	%		19	%

*  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 $0.005 or 0.005%

See Notes to Financial Statements.
71

Financial Highlights (Continued)

PowerShares Dynamic Food & Beverage Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	15.17		$	14.85
Net investment income**		0.39			0.11
Net realized and unrealized gain on investments		2.12			0.30
Total from operations		2.51			0.41
Undistributed net investment income included in price of units issued and redeemed**		0.02			—
Distributions to shareholders from:
Net investment income		(0.17	)		(0.09	)
Net asset value at end of period	$	17.53		$	15.17
TOTAL RETURN:***		16.79	%		2.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	33,314		$	24,270
Ratio to average net assets of:
Expenses, net of waivers		0.64	%		0.69	%†
Expenses, prior to waivers		1.15	%		1.07	%†
Net investment income, net of waivers		2.42	%		0.91	%†
Portfolio turnover rate ††		50	%		72	%

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

	For the year ended April 30, 2007			For the period December 6, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.76		$	15.30
Net investment loss**		(0.08	)		(0.03	)
Net realized and unrealized gain on investments		1.19			1.49
Total from operations		1.11			1.46
Undistributed net investment income included in price of units issued and redeemed**		0.02			—
Net asset value at end of period	$	17.89		$	16.76
TOTAL RETURN:***		6.74	%		9.54	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	12,520		$	16,764
Ratio to average net assets of:
Expenses, net of waivers		0.72	%		0.68	%†
Expenses, prior to waivers		1.96	%		1.03	%†
Net investment loss, net of waivers		(0.48	)%		(0.48	)%†
Portfolio turnover rate ††		52	%		14	%

*  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.
72

Financial Highlights (Continued)

PowerShares Dynamic Healthcare Services Portfolio

	For the period October 12, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	24.88
Net investment loss**		(0.08	)
Net realized and unrealized gain on investments		3.28
Total from operations		3.20
Undistributed net investment loss included in price of units issued and redeemed**		(0.04	)
Net asset value at end of period	$	28.04
TOTAL RETURN:***		12.70	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	28,041
Ratio to average net assets of:
Expenses, net of waivers		0.70	%†
Expenses, prior to waivers		1.20	%†
Net investment loss, net of waivers		(0.56	)%†
Portfolio turnover rate ††		13	%

PowerShares Dynamic Insurance Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.31		$	15.44
Net investment income**		0.15			0.07
Net realized and unrealized gain on investments		1.50			1.86
Total from operations		1.65			1.93
Undistributed net investment income included in price of units issued and redeemed** .		0.01			—
Distributions to shareholders from:
Net investment income		(0.13	)		(0.06	)
Net asset value at end of period	$	18.84		$	17.31
TOTAL RETURN:***		9.62	%		12.54	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	58,401		$	31,164
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.68	%†
Expenses, prior to waivers		0.96	%		0.87	%†
Net investment income, net of waivers		0.87	%		0.81	%†
Portfolio turnover rate ††		40	%		30	%

*  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.
73

Financial Highlights (Continued)

PowerShares Dynamic Leisure and Entertainment Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.29		$	14.77
Net investment income**		0.07			0.03
Net realized and unrealized gain on investments		2.04			1.51
Total from operations		2.11			1.54
Undistributed net investment income included in price of units issued and redeemed**		0.01			—
Distributions to shareholders from:
Net investment income		(0.08	)		(0.02	)
Tax return of capital		(0.01	)		—
Total distributions		(0.09	)		(0.02	)
Net asset value at end of period	$	18.32		$	16.29
TOTAL RETURN:***		13.02	%		10.41	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	49,472		$	27,701
Ratio to average net assets of:
Expenses, net of waivers		0.64	%		0.68	%†
Expenses, prior to waivers		1.07	%		1.03	%†
Net investment income, net of waivers		0.42	%		0.22	%†
Portfolio turnover rate ††		35	%		48	%

PowerShares Dynamic Media Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	14.44		$	14.93
Net investment income**		0.04			0.02
Net realized and unrealized gain (loss) on investments		2.05			(0.49	)
Total from operations		2.09			(0.47	)
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		—
Distributions to shareholders from:
Net investment income		(0.04	)		(0.02	)
Net asset value at end of period	$	16.48		$	14.44
TOTAL RETURN:***		14.42	%		(3.15	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	31,305		$	24,543
Ratio to average net assets of:
Expenses, net of waivers		0.64	%		0.68	%†
Expenses, prior to waivers		1.24	%		1.04	%†
Net investment income, net of waivers		0.25	%		0.19	%†
Portfolio turnover rate ††		43	%		68	%

*  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.
74

Financial Highlights (Continued)

PowerShares Dynamic Networking Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.38		$	14.96
Net investment loss**		(0.09	)		(0.08	)
Net realized and unrealized gain on investments		1.36			2.50
Total from operations		1.27			2.42
Undistributed net investment income included in price of units issued and redeemed**		0.03			—
Net asset value at end of period	$	18.68		$	17.38
TOTAL RETURN:***		7.48	%		16.18	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	18,677		$	27,806
Ratio to average net assets of:
Expenses, net of waivers		0.64	%		0.68	%†
Expenses, prior to waivers		1.24	%		1.03	%†
Net investment loss, net of waivers		(0.54	)%		(0.59	)%†
Portfolio turnover rate ††		62	%		42	%

PowerShares Dynamic Oil & Gas Services Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	21.41		$	16.43
Net investment income (loss)**		—	(a)		(0.01	)
Net realized and unrealized gain on investments		1.29			4.99
Total from operations		1.29			4.98
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—
Net asset value at end of period	$	22.70		$	21.41
TOTAL RETURN:***		6.03	%		30.31	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	272,456		$	336,132
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.64	%†
Expenses, prior to waivers		0.65	%†††		0.67	%†
Net investment income (loss), net of waivers		0.02	%		(0.10	)%†
Portfolio turnover rate ††		76	%		10	%

*  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.

†††  These expenses, prior to waivers, include amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the year ended April 30, 2007.

(a)  Amount represents less than $0.005

See Notes to Financial Statements.
75

Financial Highlights (Continued)

PowerShares Dynamic Pharmaceuticals Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	16.54		$	14.84
Net investment income**		0.08			0.06
Net realized and unrealized gain on investments		3.09			1.68
Total from operations		3.17			1.74
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		—
Distributions to shareholders from:
Net investment income		(0.08	)		(0.04	)
Tax return of capital		(0.01	)		—
Total distributions		(0.09	)		(0.04	)
Net asset value at end of period	$	19.61		$	16.54
TOTAL RETURN:***		19.20	%		11.74	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	82,345		$	66,157
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.66	%†
Expenses, prior to waivers		0.80	%		0.88	%†
Net investment income, net of waivers		0.43	%		0.42	%†
Portfolio turnover rate ††		29	%		29	%

PowerShares Dynamic Retail Portfolio

	For the year ended April 30, 2007			For the period October 26, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.29		$	15.13
Net investment income**		0.07			0.01
Net realized and unrealized gain on investments		1.71			3.16
Total from operations		1.78			3.17
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—
Distributions to shareholders from:
Net investment income		(0.05	)		(0.01	)
Net asset value at end of period	$	20.02		$	18.29
TOTAL RETURN:***		9.72	%		20.98	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	24,029		$	23,783
Ratio to average net assets of:
Expenses, net of waivers		0.64	%		0.70	%†
Expenses, prior to waivers		1.41	%		0.97	%†
Net investment income, net of waivers		0.35	%		0.17	%†
Portfolio turnover rate ††		73	%		11	%

*  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 $0.005

See Notes to Financial Statements.
76

Financial Highlights (Continued)

PowerShares Dynamic Semiconductors Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	20.18		$	14.93
Net investment loss**		(0.04	)		(0.05	)
Net realized and unrealized gain (loss) on investments		(1.08	)		5.30
Total from operations		(1.12	)		5.25
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		—
Net asset value at end of period	$	19.05		$	20.18
TOTAL RETURN:***		(5.60	)%		35.16	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	161,886		$	106,929
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.65	%†
Expenses, prior to waivers		0.78	%		0.75	%†
Net investment loss, net of waivers		(0.23	)%		(0.33	)%†
Portfolio turnover rate ††		51	%		42	%

PowerShares Dynamic Software Portfolio

	For the year ended April 30, 2007			For the period June 23, 2005* through April 30, 2006
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.44		$	14.98
Net investment loss**		(0.10	)		(0.08	)
Net realized and unrealized gain on investments		2.05			3.54
Total from operations		1.95			3.46
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—
Net asset value at end of period	$	20.39		$	18.44
TOTAL RETURN:***		10.57	%		23.10	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	71,369		$	49,799
Ratio to average net assets of:
Expenses, net of waivers		0.63	%		0.67	%†
Expenses, prior to waivers		0.83	%		0.91	%†
Net investment loss, net of waivers		(0.51	)%		(0.53	)%†
Portfolio turnover rate ††		59	%		75	%

*  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 $0.005

See Notes to Financial Statements.
77

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

PowerShares Dynamic Banking Portfolio	"Dynamic Banking Portfolio"
PowerShares Dynamic Biotechnology &
Genome Portfolio	"Dynamic Biotechnology & Genome Portfolio"
PowerShares Dynamic Building &
Construction Portfolio	"Dynamic Building & Construction Portfolio"
PowerShares Dynamic Energy Exploration &	"Dynamic Energy Exploration & Production
Production Portfolio	Portfolio"
PowerShares Dynamic Food & Beverage Portfolio	"Dynamic Food & Beverage Portfolio"
PowerShares Dynamic Hardware & Consumer	"Dynamic Hardware & Consumer Electronics
Electronics Portfolio	Portfolio"
PowerShares Dynamic Healthcare Services Portfolio	"Dynamic Healthcare Services Portfolio"
PowerShares Dynamic Insurance Portfolio	"Dynamic Insurance Portfolio"
PowerShares Dynamic Leisure and
Entertainment Portfolio	"Dynamic Leisure and Entertainment Portfolio"
PowerShares Dynamic Media Portfolio	"Dynamic Media Portfolio"
PowerShares Dynamic Networking Portfolio	"Dynamic Networking Portfolio"
PowerShares Dynamic Oil & Gas Services Portfolio	"Dynamic Oil & Gas Services Portfolio"
PowerShares Dynamic Pharmaceuticals Portfolio	"Dynamic Pharmaceuticals Portfolio"
PowerShares Dynamic Retail Portfolio	"Dynamic Retail Portfolio"
PowerShares Dynamic Semiconductors Portfolio	"Dynamic Semiconductors Portfolio"
PowerShares Dynamic Software Portfolio	"Dynamic Software Portfolio"

Dynamic Banking Portfolio and Dynamic Healthcare Services Portfolio both commenced investment operations on October 12, 2006. Each portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on the American Stock Exchange. The Funds' market prices may differ to some degree from the 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, each 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 the Fund's fees and expenses) of the following equity indices:

Fund	Index
Dynamic Banking Portfolio	Dynamic Banking IntellidexSM Index
Dynamic Biotechnology & Genome Portfolio	Dynamic Biotechnology & Genome IntellidexSM Index
Dynamic Building & Construction Portfolio	Dynamic Building and Construction IntellidexSM Index

78

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Fund	Index
Dynamic Energy Exploration & Production Portfolio	Dynamic Energy Exploration & Production IntellidexSM Index
Dynamic Food & Beverage Portfolio	Dynamic Food & Beverage IntellidexSM Index
Dynamic Hardware & Consumer Electronics Portfolio	Dynamic Hardware & Consumer Electronics IntellidexSM Index
Dynamic Healthcare Services Portfolio	Dynamic Healthcare Services IntellidexSM Index
Dynamic Insurance Portfolio	Dynamic Insurance IntellidexSM Index
Dynamic Leisure and Entertainment Portfolio	Dynamic Leisure and Entertainment IntellidexSM Index
Dynamic Media Portfolio	Dynamic Media IntellidexSM Index
Dynamic Networking Portfolio	Dynamic Networking IntellidexSM Index
Dynamic Oil & Gas Services Portfolio	Dynamic Oil Services IntellidexSM Index
Dynamic Pharmaceuticals Portfolio	Dynamic Pharmaceuticals IntellidexSM Index
Dynamic Retail Portfolio	Dynamic Retail IntellidexSM Index
Dynamic Semiconductors Portfolio	Dynamic Semiconductors IntellidexSM Index
Dynamic Software Portfolio	Dynamic Software IntellidexSM Index

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 at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or

79

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions 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. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

Beginning May 1, 2006 (or since inception, if later), all Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost of repurchases of capital shares is applied to undistributed net investment income. The amount of equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income (loss) included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services. The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.50% per annum on each Fund's average daily net assets.

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, offering costs, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchan ge Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

80

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dynamic Banking Portfolio	$	21,892	$	27,089
Dynamic Biotechnology & Genome Portfolio		78,242		—
Dynamic Building & Construction Portfolio		75,528		78,341
Dynamic Energy Exploration & Production Portfolio		117,014		—
Dynamic Food & Beverage Portfolio		142,996		4,427
Dynamic Hardware & Consumer Electronics Portfolio		60,870		90,842
Dynamic Healthcare Services Portfolio		47,524		—
Dynamic Insurance Portfolio		140,805		—
Dynamic Leisure and Entertainment Portfolio		146,252		—
Dynamic Media Portfolio		124,348		25,292
Dynamic Networking Portfolio		122,422		26,170
Dynamic Oil & Gas Services Portfolio		55,303		—
Dynamic Pharmaceuticals Portfolio		131,335		—
Dynamic Retail Portfolio		99,369		52,796
Dynamic Semiconductors Portfolio		126,497		—
Dynamic Software Portfolio		132,710		—

The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which 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 as specified above.

During the period ended April 30, 2007, the details of expense waivers and reimbursements to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbursements		Net Waivers
Dynamic Biotechnology & Genome Portfolio	$	(80,436	)	$	2,194	$	(78,242	)
Dynamic Oil & Gas Services Portfolio		(58,092	)		2,789		(55,303	)

The net amounts of waivers are also shown on the Statements of Operations.

81

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dynamic Banking Portfolio	$	48,981	$	48,981	$	48,981
Dynamic Biotechnology & Genome Portfolio		124,909		124,909		80,436
Dynamic Building & Construction Portfolio		181,766		181,766		153,869
Dynamic Energy Exploration & Production Portfolio		148,949		148,949		117,014
Dynamic Food & Beverage Portfolio		224,372		224,372		147,423
Dynamic Hardware & Consumer Electronics Portfolio		185,290		185,290		151,712
Dynamic Healthcare Services Sector Portfolio		47,524		47,524		47,524
Dynamic Insurance Portfolio		171,237		171,237		140,805
Dynamic Leisure and Entertainment Portfolio		219,928		219,928		146,252
Dynamic Media Portfolio		225,106		225,106		149,640
Dynamic Networking Portfolio		224,484		224,484		148,592
Dynamic Oil & Gas Services Portfolio		83,696		83,696		58,092
Dynamic Pharmaceuticals Portfolio		203,520		203,520		131,335
Dynamic Retail Portfolio		187,454		187,454		152,165
Dynamic Semiconductors Portfolio		189,851		189,851		126,497
Dynamic Software Portfolio		206,116		206,116		132,710

Distribution Agreement

Effective September 18, 2006 (or since inception, if later), A I M 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. Prior to September 18, 2006, ALPS Distributors, Inc. served as the distributor.

The Board of Trustees of the Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the American Stock Exchange (the "Licensor"). The trademarks are owned by the Licensor. These trademark have been licensed to the Adviser for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensor and the Licensor makes no representation regarding the advisability of investing in any of these Funds. The Funds pay the licensing fees which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

82

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 4. INVESCO Transaction and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVESCAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO PLC, announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by A I M Advisors, Inc., an affiliate of the Adviser.

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax-basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
Dynamic Banking Portfolio	$	24,714	$	—		$	(174,472	)	$	81,844	$	(256,316	)	$	(149,758	)
Dynamic Biotechnology & Genome Portfolio		—		(19,933,720	)		21,099,278			32,997,482		(11,898,204	)		1,165,558
Dynamic Building & Construction Portfolio		18,249		(2,263,182	)		2,398,007			2,722,636		(324,629	)		153,074
Dynamic Energy Exploration & Production Portfolio(2)		96,401		(285,311	)		16,023,625			16,865,463		(841,838	)		15,834,715
Dynamic Food & Beverage Portfolio		422,812		(2,399,272	)		3,543,046			3,855,804		(312,758	)		1,566,586
Dynamic Hardware & Consumer Electronics Portfolio		—		(1,413,579	)		1,106,108			1,413,731		(307,623	)		(307,471	)
Dynamic Healthcare Services Portfolio		—		—			1,230,839			1,560,853		(330,014	)		1,230,839
Dynamic Insurance Portfolio		63,761		(774,301	)		3,998,007			4,233,264		(235,257	)		3,287,467
Dynamic Leisure and Entertainment Portfolio		—		(2,363,747	)		3,981,010			4,417,047		(436,037	)		1,617,263
Dynamic Media Portfolio		12,161		(3,733,107	)		886,358			1,477,063		(590,705	)		(2,834,588	)
Dynamic Networking Portfolio		—		(2,322,628	)		378,464			1,036,580		(658,116	)		(1,944,164	)
Dynamic Oil & Gas Services Portfolio		45,350		(15,026,862	)		29,783,264			33,478,138		(3,694,874	)		14,801,752
Dynamic Pharmaceuticals Portfolio(1)		—		(876,207	)		5,802,069			8,260,004		(2,457,935	)		4,925,862
Dynamic Retail Portfolio		22,155		(937,070	)		765,713			1,391,111		(625,398	)		(149,202	)
Dynamic Semiconductors Portfolio		—		(9,430,420	)		7,872,051			10,367,652		(2,495,601	)		(1,558,369	)
Dynamic Software Portfolio		—		(3,125,705	)		6,946,900			7,682,674		(735,774	)		3,821,195

83

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

Dynamic Banking Portfolio	$	4,993,380
Dynamic Biotechnology & Genome Portfolio		237,793,930
Dynamic Building & Construction Portfolio		16,352,405
Dynamic Energy Exploration & Production Portfolio(1)		107,456,621
Dynamic Food & Beverage Portfolio		29,760,620
Dynamic Hardware & Consumer Electronics Portfolio		11,538,049
Dynamic Healthcare Services Portfolio		26,896,441
Dynamic Insurance Portfolio		54,337,426
Dynamic Leisure and Entertainment Portfolio		45,680,197
Dynamic Media Portfolio		30,491,284
Dynamic Networking Portfolio		18,316,774
Dynamic Oil & Gas Services Portfolio		242,841,186
Dynamic Pharmaceuticals Portfolio(2)		76,575,919
Dynamic Retail Portfolio		23,473,722
Dynamic Semiconductors Portfolio		154,295,569
Dynamic Software Portfolio		64,755,556

Distributions to Shareholders:

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
Dynamic Banking Portfolio	$	44,552
Dynamic Building & Construction Portfolio		4,191
Dynamic Energy Exploration & Production Portfolio(1)		351,098
Dynamic Food & Beverage Portfolio		306,737
Dynamic Insurance Portfolio		333,066
Dynamic Leisure and Entertainment Portfolio		158,121
Dynamic Media Portfolio		58,259
Dynamic Pharmaceuticals Portfolio(2)		367,491
Dynamic Retail Portfolio		54,224
	Distributions paid from Return of Capital
Dynamic Leisure and Entertainment Portfolio	$	21,748
Dynamic Pharmaceuticals Portfolio(2)		27,281

The tax character of distributions paid during the period ended April 30, 2006 was as follows:

	Distributions paid from Ordinary Income
Dynamic Building & Construction Portfolio	$	15,330
Dynamic Energy Exploration & Production Portfolio(1)		47,068
Dynamic Food & Beverage Portfolio		143,712
Dynamic Insurance Portfolio		112,084

84

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

	Distributions paid from Ordinary Income
Dynamic Leisure and Entertainment Portfolio	$	28,509
Dynamic Media Portfolio		34,051
Dynamic Pharmaceuticals Portfolio(2)		107,249
Dynamic Retail Portfolio		16,497

At April 30, 2007, 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.

	Capital Loss Available Through						Total
	2013		2014		2015		Amount
Dynamic Biotechnology & Genome Portfolio	$	—	$	321,497	$	19,612,223	$	19,933,720
Dynamic Building & Construction Portfolio		—		—		2,263,182		2,263,182
Dynamic Energy Exploration & Production Portfolio(1)		—		—		285,311		285,311
Dynamic Food & Beverage Portfolio		—		433,620		1,965,652		2,399,272
Dynamic Hardware & Consumer Electronics Portfolio		—		—		1,413,579		1,413,579
Dynamic Insurance Portfolio		—		—		774,301		774,301
Dynamic Leisure and Entertainment Portfolio		—		751,908		1,611,839		2,363,747
Dynamic Media Portfolio		—		545,973		3,187,134		3,733,107
Dynamic Networking Portfolio		—		383,187		1,939,441		2,322,628
Dynamic Oil & Gas Services Portfolio		—		—		15,026,862		15,026,862
Dynamic Pharmaceuticals Portfolio(2)		164,751		66,659		644,797		876,207
Dynamic Retail Portfolio		—		—		937,070		937,070
Dynamic Semiconductors Portfolio		—		271,588		9,158,832		9,430,420
Dynamic Software Portfolio		—		108,427		3,017,278		3,125,705

Capital losses incurred after October 31 ("post-October losses") within the taxable year are deemed to arise on the first business day of each Fund's next taxable year.

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
Dynamic Banking Portfolio	$	287,936
Dynamic Biotechnology & Genome Portfolio		9,144,591
Dynamic Building & Construction Portfolio		319,065
Dynamic Energy Exploration & Production Portfolio(1)		3,145,151
Dynamic Food & Beverage Portfolio		337,964
Dynamic Hardware & Consumer Electronics Portfolio		221,254
Dynamic Healthcare Services Portfolio		223,615
Dynamic Insurance Portfolio		276,644

85

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

	Post-October Losses
Dynamic Leisure and Entertainment Portfolio	$	806,391
Dynamic Media Portfolio		623,461
Dynamic Networking Portfolio		518,242
Dynamic Oil & Gas Services Portfolio		9,157,735
Dynamic Pharmaceuticals Portfolio(2)		17,022
Dynamic Retail Portfolio		399,481
Dynamic Semiconductors Portfolio		3,078,131
Dynamic Software Portfolio		866,032

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in real estate investment trusts, investments in partnerships, wash sales from redemption in-kind transactions, redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			Undistributed Capital Gains/ (Accumulated Losses)			Paid in Capital
Dynamic Banking Portfolio	$	19,989		$	(77,971	)	$	57,982
Dynamic Biotechnology & Genome Portfolio		1,197,179			(20,868,583	)		19,671,404
Dynamic Building & Construction Portfolio		(13,852	)		(659,878	)		673,730
Dynamic Energy Exploration & Production Portfolio(1)		(7,126	)		(8,164,621	)		8,171,747
Dynamic Food & Beverage Portfolio		(28,365	)		(2,469,870	)		2,498,235
Dynamic Hardware & Consumer Electronics Portfolio		40,406			(1,221,989	)		1,181,583
Dynamic Healthcare Services Portfolio		80,636			(1,075,521	)		994,885
Dynamic Insurance Portfolio		(26,238	)		(2,621,869	)		2,648,107
Dynamic Leisure and Entertainment Portfolio		4,683			(3,915,532	)		3,910,849
Dynamic Media Portfolio		9,491			(3,831,219	)		3,821,728
Dynamic Networking Portfolio		94,494			(5,971,189	)		5,876,695
Dynamic Oil & Gas Services Portfolio		(45,370	)		(22,607,287	)		22,652,657
Dynamic Pharmaceuticals Portfolio(2)		51,873			(7,027,691	)		6,975,818
Dynamic Retail Portfolio		5,189			(3,431,212	)		3,426,023
Dynamic Semiconductors Portfolio		261,453			(9,161,280	)		8,899,827
Dynamic Software Portfolio		337,468			(9,941,227	)		9,603,759

⁽¹⁾ First tax year-end was May 31, 2006. Tax year-end was changed to April 30, 2007.

⁽²⁾ First tax year-end was November 30, 2005. Tax year-end was changed to April 30, 2006.

86

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 6. Investment Transactions

For the period ended April 30, 2007, 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 Banking Portfolio	$	4,639,393	$	4,403,200
Dynamic Biotechnology & Genome Portfolio		193,053,351		192,324,118
Dynamic Building & Construction Portfolio		9,090,994		9,291,459
Dynamic Energy Exploration & Production Portfolio		64,760,774		63,855,266
Dynamic Food & Beverage Portfolio		14,125,864		14,298,413
Dynamic Hardware & Consumer Electronics Portfolio		6,448,768		6,335,893
Dynamic Healthcare Services Portfolio		2,725,342		2,552,840
Dynamic Insurance Portfolio		17,394,678		17,917,106
Dynamic Leisure and Entertainment Portfolio		11,941,932		12,593,748
Dynamic Media Portfolio		11,044,989		10,768,148
Dynamic Networking Portfolio		15,035,059		15,592,520
Dynamic Oil & Gas Services Portfolio		221,286,476		222,606,187
Dynamic Pharmaceuticals Portfolio		22,520,852		22,778,127
Dynamic Retail Portfolio		14,887,405		15,866,318
Dynamic Semiconductors Portfolio		45,852,252		48,611,313
Dynamic Software Portfolio		42,534,906		39,162,446

For the period ended April 30, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Banking Portfolio	$	19,094,033	$	14,182,317
Dynamic Biotechnology & Genome Portfolio		147,653,718		165,616,280
Dynamic Building & Construction Portfolio		17,140,385		23,274,756
Dynamic Energy Exploration & Production Portfolio		139,168,752		140,539,614
Dynamic Food & Beverage Portfolio		29,671,717		24,525,489
Dynamic Hardware & Consumer Electronics Portfolio		10,280,302		14,516,769
Dynamic Healthcare Services Portfolio		41,044,981		15,172,948
Dynamic Insurance Portfolio		67,664,012		44,016,383
Dynamic Leisure and Entertainment Portfolio		52,847,565		33,688,744
Dynamic Media Portfolio		46,443,928		42,003,335
Dynamic Networking Portfolio		43,864,507		53,614,971
Dynamic Oil & Gas Services Portfolio		192,104,335		258,970,752
Dynamic Pharmaceuticals Portfolio		72,523,294		69,632,615
Dynamic Retail Portfolio		80,174,829		79,345,376
Dynamic Semiconductors Portfolio		157,402,895		95,042,285
Dynamic Software Portfolio		96,759,908		87,189,833

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

87

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Transaction fees at $500 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 9. Risk of Concentration

The Funds concentrate their investments in certain industries, subjecting them to greater risk than funds that invest in a wider range of industries.

Note 10. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

Note 11. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of FIN 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of FIN 48, if any, on the Funds' financial statements.

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

88

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

89

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
Dynamic Banking Portfolio		100	%		100	%
Dynamic Biotechnology & Genome Portfolio		0	%		0	%
Dynamic Building & Construction Portfolio		100	%		100	%
Dynamic Energy Exploration & Production Portfolio		100	%		100	%
Dynamic Food & Beverage Portfolio		100	%		100	%
Dynamic Hardware & Consumer Electronics Portfolio		0	%		0	%
Dynamic Healthcare Services Portfolio		0	%		0	%
Dynamic Insurance Portfolio		100	%		100	%
Dynamic Leisure and Entertainment Portfolio		100	%		100	%
Dynamic Media Portfolio		100	%		100	%
Dynamic Networking Portfolio		0	%		0	%
Dynamic Oil & Gas Services Portfolio		0	%		0	%
Dynamic Pharmaceuticals Portfolio		100	%		100	%
Dynamic Retail Portfolio		100	%		100	%
Dynamic Semiconductors Portfolio		0	%		0	%
Dynamic Software Portfolio		0	%		0	%

90

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989- Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

91

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994-1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

92

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002-Present); Manager, Nuveen Investments (April 1998- August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)(19) of the 1940 Act.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

93

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupations(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001- 2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

94

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the Funds, information describing the Adviser's current organization, including operations assistance provided

95

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses

96

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

97

PowerShares        Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (ETF). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com

This page contains advertising materials and should not be viewed as part of the Annual Report.
98

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market  

PWO  -  Dynamic OTC  

PIQ  -  Dynamic MagniQuant  

PJF  -  Dynamic Large Cap  

PJG  -  Dynamic Mid Cap  

PJM  -  Dynamic Small Cap  

PWB  -  Dynamic Large Cap Growth  

PWV  -  Dynamic Large Cap Value  

PWJ  -  Dynamic Mid Cap Growth  

PWP  -  Dynamic Mid Cap Value  

PWT  -  Dynamic Small Cap Growth  

PWY  -  Dynamic Small Cap Value  

PGZ  -  Dynamic Aggressive Growth  

PVM  -  Dynamic Deep Value  

PYZ  -  Dynamic Basic Materials Sector  

PEZ  -  Dynamic Consumer Discretionary Sector  

PSL  -  Dynamic Consumer Staples Sector  

PXI  -  Dynamic Energy Sector  

PFI  -  Dynamic Financials Sector  

PTH  -  Dynamic Healthcare Sector  

PRN  -  Dynamic Industrials Sector  

PTF  -  Dynamic Technology Sector  

PTE  -  Dynamic Telecommunications & Wireless  

PUI  -  Dynamic Utilities  

PJB  -  Dynamic Banking  

PBE  -  Dynamic Biotechnology & Genome  

PKB  -  Dynamic Building & Construction  

PXE  -  Dynamic Energy Exploration & Production  

PBJ  -  Dynamic Food & Beverage  

PHW  -  Dynamic Hardware and Consumer Electronics  

PTJ  -  Dynamic Healthcare Services  

PIC  -  Dynamic Insurance  

PEJ  -  Dynamic Leisure and Entertainment  

PBS  -  Dynamic Media  

PXQ  -  Dynamic Networking  

PXJ  -  Dynamic Oil & Gas Services  

PJP  -  Dynamic Pharmaceuticals  

PMR  -  Dynamic Retail  

PSI  -  Dynamic Semiconductors  

PSJ  -  Dynamic Software  

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

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99

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000  

PRFZ  -  FTSE RAFI US 1500 Small-Mid  

PRFM  -  FTSE RAFI Basic Materials Sector  

PRFG  -  FTSE RAFI Consumer Goods Sector  

PRFS  -  FTSE RAFI Consumer Services Sector  

PRFE  -  FTSE RAFI Energy Sector  

PRFF  -  FTSE RAFI Financials Sector  

PRFH  -  FTSE RAFI Health Care Sector  

PRFN  -  FTSE RAFI Industrials Sector  

PRFQ  -  FTSE RAFI Telecom & Technology Sector  

PRFU  -  FTSE RAFI Utilities Sector  

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense  

ADRA  -  BLDRS Asia 50 ADR Index Fund  

ADRD  -  BLDRS Developed Markets 100 ADR Index Fund  

ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund  

ADRU  -  BLDRS Europe 100 ADR Index Fun  

PKW  -  Buyback Achievers  

PZD  -  Cleantech  

PFM  -  Dividend Achievers  

PDP  -  DWA Technical Lenders  

PGF  -  Financial Preferred  

PGJ  -  Golden Dragon Halter USX China  

PHJ  -  High Growth Rate Dividend Achievers  

PEY  -  High Yield Equity Dividend Achievers  

PID  -  International Dividend Achievers  

PSP  -  Listed Private Equity  

PXN  -  Lux Nanotech  

QQQQ  -  PowerShares QQQ  

PYH  -  Value Line Industry Rotation  

PIV  -  Value Line Timeliness Select  

PHO  -  Water Resources  

PBW  -  WilderHill Clean Energy  

PUW  -  WilderHill Progressive Energy  

PZI  -  Zacks Micro Cap  

PZJ  -  Zacks Small Cap  

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100

PowerSharesAsset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFG  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

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101

PowerSharesRisk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

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102

Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

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103

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs area not closed-end funds and trade at or near net asset values.

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104

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) 337-4246. 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) 337-4246; 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.

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 ETFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares ETFs 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.

A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares ETFs call A I M Distributors, Inc. at (800)337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-7

2007 Annual Report to Shareholders

30 April 2007

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

PowerShares FTSE RAFI Basic Materials Sector Portfolio

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

PowerShares FTSE RAFI Consumer Services Sector Portfolio

PowerShares FTSE RAFI Energy Sector Portfolio

PowerShares FTSE RAFI Financials Sector Portfolio

PowerShares FTSE RAFI Health Care Sector Portfolio

PowerShares FTSE RAFI Industrials Sector Portfolio

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

PowerShares FTSE RAFI Utilities Sector Portfolio

Table of Contents

Shareholder Letter	2
The Market Environment	3
Manager's Analysis	4
Funds' Distribution History	25
Frequency Distribution of Discounts & Premiums	26
Fees and Expenses	28
Fundamental Indices Portfolios
Schedules of Investments
PowerShares FTSE RAFI US 1500 Small-Mid Portfolio	30
PowerShares FTSE RAFI Basic Materials Sector Portfolio	44
PowerShares FTSE RAFI Consumer Goods Sector Portfolio	45
PowerShares FTSE RAFI Consumer Services Sector Portfolio	47
PowerShares FTSE RAFI Energy Sector Portfolio	50
PowerShares FTSE RAFI Financials Sector Portfolio	51
PowerShares FTSE RAFI Health Care Sector Portfolio	54
PowerShares FTSE RAFI Industrials Sector Portfolio	56
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio	59
PowerShares FTSE RAFI Utilities Sector Portfolio	61
Statements of Assets and Liabilities	62
Statements of Operations	64
Statements of Changes in Net Assets	66
Financial Highlights	68
Notes to Financial Statements	73
Report of Independent Registered Public Accounting Firm	81
Supplemental Information (Unaudited)	82
Information about Advisory Agreement (Unaudited)	87

To My Fellow Investors,

It gives me great pleasure to report on the state of your investment(s) in PowerShares Exchange-Traded Funds and to thank you for your continued confidence in PowerShares Capital Management LLC.

Let me share with you the exciting events that have taken place at PowerShares as I look back over the past 12 months and at what the future may hold.

PowerShares has experienced significant growth over the past 12 months. We now have 70 exchange-traded funds ("ETFs") in the market, an increase of 33 funds from the 37 funds at the beginning of the fiscal year. PowerShares now offers more U.S. based equity ETFs than any other ETF sponsor. Assets under management increased almost 75%, from $6 billion to over $10 billion at April 30, 2007. This phenomenal growth demonstrates the continued strong demand for our original listings as well as the excellent reception of our new funds.

Of the new funds offered, 10 were FTSE RAFI funds, which were the first PowerShares Exchange-Traded Funds to be listed on the NASDAQ stock exchange, making PowerShares the only ETF sponsor to list ETFs on all three major U.S. exchanges: the American Stock Exchange, the NASDAQ, and the New York Stock Exchange.

PowerShares continues to be recognized as an innovator in the ETF marketplace. In 2007, our FTSE RAFI US 1000 Fund was awarded the most innovative new ETF at the Third Annual Global ETF Awards program.

Drawing on our increased resources as a member of the INVESCO family, we plan to introduce several PowerShares ETFs for international and global investing. These new funds will help to fulfill our goal of providing Investors with the opportunity to invest in intelligent ETFs in marketplaces around the globe.

On behalf of PowerShares Capital Management LLC and the Board of Trustees for the PowerShares Exchanged-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.

Highest Regards,

H. Bruce Bond

President and Chairman of the Board of Trustees
PowerShares Exchange-Traded Fund Trust

2

The Market Environment

Although spikes of volatility marked the beginning and end of the reporting period, the U.S. equity marketplace provided strong results, with the S&P 500^® Index posting double digit returns of 15.24%. At the beginning of the reporting period, enthusiasm over economic expansion gave way to uncertainty over interest rates and concern that corporate profits would be difficult to sustain. But by the end of summer 2006, energy prices had cooled and investors surmised the Fed's actions had contained inflation without significant damage to ongoing corporate earnings.

Stocks resumed their upward path until late February of 2007, when Chinese regulators threatened to clamp down on local trading practices, causing global markets to retreat sharply. Global concerns, coupled with a slowing housing market domestically and the Fed's insistence that inflation posed a greater risk than a recession, amplified volatility. However, a strong job market, sustained earnings and indications that inflation would remain contained were enough to resume the rally by the end of the reporting period.

The telecom and utilities sectors posted the best results, while technology and industrial sectors lagged. Bond prices recovered moderately during the reporting period as the Fed ended its two year hike on rates in June of 2006 and a retracting housing market eased inflation concerns. With a few bumps along the way, commodity prices continued their upward march.

3

Manager's Analysis

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio (ticker: PRFZ)

The PowerShares FTSE RAFI US 1500 Small-Mid Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE US 1500 Small-Mid Index. The FTSE US 1500 Small-Mid Index is designed to track the performance of the small and medium-sized U.S. equities, selected based on the following four fundamental measures of firm size: book value, income, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI US 1500 Small-Mid Portfolio returned 13.42%, ahead of the Russell 2000^® Index which returned 11.72%.

Relative to the Russell 2000^® Index, the industrials, consumer discretionary, and information technology sectors generated the greatest relative out-performance.

Industry Breakdown (% of the Fund's

Net Assets)

Financials	21.1
Consumer Discretionary	18.3
Industrials	16.6
Information Technology	15.1
Health Care	8.5
Energy	7.7
Materials	5.5
Consumer Staples	3.2
Telecommunication Services	1.8
Utilities	1.4
Money Market Fund	0.2
Other	0.6

Style Allocation (%)

Small-Cap Value	55.7
Small-Cap Growth	26.2
Mid-Cap Growth	15.1
Mid-Cap Value	2.9
Large-Cap Growth	0.1

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Cabela's, Inc., Class A	0.2
Ryerson, Inc.	0.2
Jo-Ann Stores, Inc.	0.2
Chico's FAS, Inc.	0.2
Western Refining, Inc.	0.2
Fastenal Co.	0.2
Jarden Corp.	0.2
Blyth, Inc.	0.2
Denbury Resources, Inc.	0.2
Helmerich & Payne, Inc.	0.2
Total	2.0

4

Manager's Analysis (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio (ticker: PRFZ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE US 1500 Small-Mid Index		14.22
Russell 2000® Index		11.72
S&P Small Cap Index		12.55

Fund

NAV Return	13.42
Share Price Return	13.35

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.73% while the Fund's gross annualized total operating expense ratio was 0.92%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The Russell 2000^® Index and the S&P Small Cap Index are unmanaged indices based on the average performance of approximately 2,000 and 600 common stocks, respectively.

5

Manager's Analysis

PowerShares FTSE RAFI Basic Materials Sector Portfolio (ticker: PRFM)

The PowerShares FTSE RAFI Basic Materials Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Basic Materials Sector Index. The FTSE Basic Materials Sector Index is designed to track the performance of the largest U.S. equities in the Basic Materials sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Basic Materials Sector Portfolio returned 26.17%, ahead of the S&P Materials Index which returned 24.99%.

Top contributors to the portfolio were E.I. du Pont de Nemours and Co., Alcoa, Inc., and Dow Chemicals Co. The index also benefited from underweighting Newmont Mining Corp.

Industry Breakdown (% of the Fund's

Net Assets)

Chemicals	54.1
Mining	15.8
Forest Products & Paper	12.4
Iron/Steel	8.5
Coal	4.3
Metal/Fabricate Hardware	1.7
Household Products/Wares	1.0
Money Market Fund	0.4
Other	1.8

Style Allocation (%)

Large-Cap Value	50.0
Mid-Cap Value	27.1
Large-Cap Growth	9.2
Mid-Cap Growth	8.5
Small-Cap Value	2.9
Small-Cap Growth	2.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Dow Chemical (The) Co.	10.7
Alcoa, Inc.	9.7
International Paper Co.	8.8
E.I. du Pont de Nemours and Co.	7.6
PPG Industries, Inc.	4.2
Weyerhaeuser Co.	3.6
Air Products & Chemicals, Inc.	3.5
Monsanto Co.	3.3
Praxair, Inc.	3.2
Nucor Corp.	2.9
Total	57.5

6

Manager's Analysis (Continued)

PowerShares FTSE RAFI Basic Materials Sector Portfolio (ticker: PRFM)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Basic Materials Sector Index		27.25
S&P Materials Index		24.99
Dow Jones Basic Materials Index		25.58

Fund

NAV Return	26.17
Share Price Return	26.21

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.76% while the Fund's gross annualized total operating expense ratio was 1.18%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Materials Index and the Dow Jones Basic Materials Index are unmanaged indices based on the average performance of approximately 30 and 90 common stocks, respectively.

7

Manager's Analysis

PowerShares FTSE RAFI Consumer Goods Sector Portfolio (ticker: PRFG)

The PowerShares FTSE RAFI Consumer Goods Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Consumer Goods Sector Index. The FTSE Consumer Goods Sector Index is designed to track the performance of the largest U.S. equities in the Consumer Goods sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Consumer Goods Sector Portfolio returned 10.78%, ahead of S&P Consumer Staples Index which returned 7.86%.

Top contributors to the portfolio were Time Warner, Goodyear Tire & Rubber (The) Co., and McDonald's Corp.

The portfolio benefited from overweighting Goodyear Tire & Rubber (The) Co., and underweighting Starbucks Corp.

Industry Breakdown (% of the Fund's

Net Assets)

Food	19.2
Auto Manufacturers	18.7
Agriculture	14.9
Beverages	13.5
Cosmetics/Personal Care	8.3
Auto Parts & Equipment	5.6
Home Builders	4.7
Apparel	3.0
Household Products/Wares	3.0
Miscellaneous Manufacturing	1.5
Home Furnishings	1.2
Hand/Machine Tools	0.9
Leisure Time	0.9
Toys/Games/Hobbies	0.8
Distribution/Wholesale	0.7
Textiles	0.7
Housewares	0.6
Software	0.5
Office Furnishings	0.3
Electrical Components & Equipment	0.2
Electronics	0.1
Machinery-Diversified	0.1
Pharmaceuticals	0.1
Money Market	0.7
Other	(0.2	)

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
General Motors Corp.	9.7
Altria Group, Inc.	9.5
Ford Motor Co.	9.1
Kraft Foods, Inc., Class A	7.3
Procter & Gamble Co.	5.8
Coca-Cola (The) Co.	5.0
PepsiCo, Inc.	3.6
Kimberly-Clark Corp.	1.9
Anheuser-Busch Cos., Inc.	1.8
Archer-Daniels-Midland Co.	1.6
Total	55.3

Style Allocation (%)

Large-Cap Value	42.9
Mid-Cap Value	26.2
Large-Cap Growth	23.8
Small-Cap Value	4.7
Mid-Cap Growth	1.9
Small-Cap Growth	0.5

8

Manager's Analysis (Continued)

PowerShares FTSE RAFI Consumer Goods Sector Portfolio (ticker: PRFG)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Consumer Goods Sector Index		11.57
S&P Consumer Staples Index		7.86
Dow Jones Consumer Goods Index		10.78

Fund

NAV Return	10.78
Share Price Return	10.82

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.76% while the Fund's gross annualized total operating expense ratio was 1.27%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Consumer Staples Index and the Dow Jones Consumer Goods Index are unmanaged indices based on the average performance of approximately 39 and 160 common stocks, respectively.

9

Manager's Analysis

PowerShares FTSE RAFI Consumer Services Sector Portfolio (ticker: PRFS)

The PowerShares FTSE RAFI Consumer Services Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Consumer Services Sector Index. The FTSE Consumer Services Sector Index is designed to track the performance of the largest U.S. equities in the Consumer Services sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Consumer Services Sector Portfolio returned 12.78%, behind S&P Consumer Discretionary Index which returned 13.26%.

Top contributors to the portfolio were Altria Group, Inc., Kroger (The) Co., and Coca Cola (The) Co.

The portfolio benefited from overweighting Kroger (The) Co., and underweighting Walgreen Co.

Industry Breakdown (% of the Fund's

Net Assets)

Retail	47.6
Media	24.3
Food	7.2
Commercial Services	5.1
Internet	3.1
Pharmaceuticals	3.0
Lodging	2.8
Leisure Time	2.0
Advertising	1.5
Airlines	1.3
Entertainment	0.9
Transporation	0.2
Household Products/Wares	0.1
Software	0.1
Trucking & Leasing	0.1
Money Market Fund	0.3
Other	0.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Wal-Mart Stores, Inc.	11.1
Time Warner, Inc.	4.8
Home Depot, Inc.	3.8
CVS Caremark Corp.	3.8
Kroger (The) Co.	2.7
Walt Disney (The) Co.	2.6
Comcast Corp., Class A	2.3
Target Corp.	2.2
McDonald's Corp.	2.2
CBS Corp., Class B	2.2
Total	37.7

Style Allocation (%)

Large-Cap Value	34.9
Large-Cap Growth	33.0
Mid-Cap Value	18.1
Mid-Cap Growth	8.1
Small-Cap Value	4.8
Small-Cap Growth	1.1

10

Manager's Analysis (Continued)

PowerShares FTSE RAFI Consumer Services Sector Portfolio (ticker: PRFS)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Consumer Services Sector Index		13.37
S&P Consumer Discretionary Index		13.26
Dow Jones Consumer Services Index		11.22

Fund

NAV Return	12.78
Share Price Return	12.82

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.77% while the Fund's gross annualized total operating expense ratio was 1.40%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Consumer Discretionary Index and the Dow Jones Consumer Services Index are unmanaged indices based on the average performance of approximately 86 and 250 common stocks, respectively.

11

Manager's Analysis

PowerShares FTSE RAFI Energy Sector Portfolio (ticker: PRFE)

The PowerShares FTSE RAFI Energy Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Oil & Gas Index. The FTSE Energy Sector Index is designed to track the performance of the largest U.S. equities in the Energy sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Energy Sector Portfolio returned 27.86%, ahead of S&P Energy Index which returned 25.90%.

Top contributors to the portfolio were Exxon Mobil Corp., Chevron Corp., and ConocoPhillips.

The portfolio benefited from overweighting Tesoro Corp. and Chevron Corp.

Industry Breakdown (% of the Fund's

Net Assets)

Oil & Gas	83.2
Oil & Gas Services	10.9
Pipelines	4.6
Electric	1.5
Money Market Fund	0.3
Other	(0.5	)

Style Allocation (%)

Large-Cap Value	65.5
Large-Cap Growth	17.3
Mid-Cap Value	9.5
Mid-Cap Growth	6.4
Small-Cap Value	1.3

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Exxon Mobil Corp.	21.0
Chevron Corp.	20.2
ConocoPhillips	6.4
Marathon Oil Corp.	4.4
Valero Energy Corp.	4.1
Occidental Petroleum Corp.	3.8
Schlumberger Ltd. (Netherlands)	3.1
Devon Energy Corp.	2.7
Anadarko Petroleum Corp.	2.5
El Paso Corp.	2.1
Total	70.3

12

Manager's Analysis (Continued)

PowerShares FTSE RAFI Energy Sector Portfolio (ticker: PRFE)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Oil & Gas Index		28.51
S&P Energy Index		25.90
Dow Jones Oil & Gas Index		26.07

Fund

NAV Return	27.86
Share Price Return	27.82

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.74% while the Fund's gross annualized total operating expense ratio was 1.09%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Energy Index and the Dow Jones Oil & Gas Index are unmanaged indices based on the average performance of approximately 29 and 70 common stocks, respectively.

13

Manager's Analysis

PowerShares FTSE RAFI Financials Sector Portfolio (ticker: PRFF)

The PowerShares FTSE RAFI Financials Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Financials Sector Index. The FTSE Financials Sector Index is designed to track the performance of the largest U.S. equities in the Financials sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Financials Sector Portfolio returned 8.62%, slightly behind the S&P Financials Index which returned 9.10%.

Top contributors to the portfolio were Citigroup, Inc., JPMorgan Chase & Co., and Berkshire Hathaway, Inc., Class B.

The index benefited from overweighting Berkshire Hathaway, Inc., Class B and Equity Office Properties, and underweighting Bank of America Corp.

Industry Breakdown (% of the Fund's

Net Assets)

Diversified Financial Services	34.4
Insurance	28.7
Banks	23.3
REITS	7.8
Savings & Loans	2.8
Investment Companies	0.5
Forest Products & Paper	0.3
Commercial Services	0.2
Software	0.2
Real Estate	0.1
Money Market Fund	0.1
Other	1.6

Style Allocation (%)

Large-Cap Value	68.1
Mid-Cap Value	18.7
Large-Cap Growth	6.1
Mid-Cap Growth	3.8
Small-Cap Value	2.4
Small-Cap Growth	0.9

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
JPMorgan Chase & Co.	12.0
Citigroup, Inc.	6.8
American International Group, Inc.	4.7
Berkshire Hathaway, Inc., Class B	4.6
Wells Fargo & Co.	3.5
Bank of America Corp.	2.9
Wachovia Corp.	2.8
Morgan Stanley	2.5
Merrill Lynch & Co., Inc.	2.0
Freddie Mac	1.9
Total	43.7

14

Manager's Analysis (Continued)

PowerShares FTSE RAFI Financials Sector Portfolio (ticker: PRFF)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Financials Sector Index		9.30
S&P Financials Index		9.10
Dow Jones Financials Index		6.94

Fund

NAV Return	8.62
Share Price Return	8.66

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.78% while the Fund's gross annualized total operating expense ratio was 1.44%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Financials Index and the Dow Jones Financials Index are unmanaged indices based on the average performance of approximately 89 and 300 common stocks, respectively.

15

Manager's Analysis

PowerShares FTSE RAFI Health Care Sector Portfolio (ticker: PRFH)

The PowerShares FTSE RAFI Health Care Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Health Care Sector Index. The FTSE Health Care Sector Index is designed to track the performance of the largest U.S. equities in the Health Care sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Health Care Sector Portfolio returned 9.38%, slightly ahead of S&P Health Care Index which returned 9.26%.

Top contributors to the portfolio were Merck & Co., Inc., Schering Plough Corp., and Bristol-Myers Squibb Co.

The portfolio benefited from overweighting Merck & Co., Inc. and underweighting Amgen, Inc.

Industry Breakdown (% of the Fund's

Net Assets)

Pharmaceuticals	55.6
Healthcare-Products	21.1
Healthcare-Services	14.4
Biotechnology	5.9
Insurance	1.5
Electronics	0.7
Distribution/Wholesale	0.2
Health Care Equipment & Supplies	0.2
Money Market	0.4
Other	0.0

Style Allocation (%)

Large-Cap Value	58.7
Large-Cap Growth	27.6
Mid-Cap Growth	8.0
Mid-Cap Value	4.7
Small-Cap Value	1.0

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Pfizer, Inc.	14.1
Merck & Co., Inc.	12.1
Johnson & Johnson	10.5
Bristol-Myers Squibb Co.	6.2
Abbott Laboratories	5.0
Eli Lilly & Co.	4.5
Wyeth	4.5
WellPoint, Inc.	3.1
UnitedHealth Group, Inc.	2.7
Schering-Plough Corp.	2.6
Total	65.3

16

Manager's Analysis (Continued)

PowerShares FTSE RAFI Health Care Sector Portfolio (ticker: PRFH)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Health Care Sector Index		9.91
S&P Health Care Index		9.26
Dow Jones Health Care Index		8.38

Fund

NAV Return	9.38
Share Price Return	9.37

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.75% while the Fund's gross annualized total operating expense ratio was 1.11%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Health Care Index and the Dow Jones Health Care Index are unmanaged indices based on the average performance of approximately 56 and 180 common stocks, respectively.

17

Manager's Analysis

PowerShares FTSE RAFI Industrials Sector Portfolio (ticker: PRFN)

The PowerShares FTSE RAFI Industrials Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Industrials Sector Index. The FTSE Industrials Sector Index is designed to track the performance of the largest U.S. equities in the Industrials sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Industrials Sector Portfolio returned 17.01%, ahead of S&P Industrials Index which returned 13.90%.

Top contributors to the portfolio were General Electric Co., Tyco International Ltd., and Honeywell International, Inc.

The portfolio benefited from overweighting Navistar International Corp., and underweighting United Parcel Service, Inc., Class B.

Industry Breakdown (% of the Fund's

Net Assets)

Miscellaneous Manufacturing	37.9
Aerospace/Defense	13.3
Transportation	12.2
Commercial Services	4.8
Electronics	4.1
Software	3.8
Packaging & Containers	3.1
Machinery-Diversified	2.6
Machinery-Construction & Mining	2.5
Electrical Components & Equipment	2.2
Environmental Control	2.2
Building Materials	1.9
Engineering & Construction	1.6
Forest Products & Paper	1.6
Auto Manufacturers	1.1
Computers	0.6
Household Products/Wares	0.6
Metal Fabricate/Hardware	0.6
Distribution/Wholesale	0.5
Chemicals	0.4
Mining	0.4
Electric	0.3
Hand/Machine Tools	0.2
Telecommunications	0.2
Trucking & Leasing	0.2
Internet	0.1
Retail	0.1
Money Market	0.1
Other	0.8

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
General Electric Co.	21.5
Tyco International Ltd. (Bermuda)	3.5
United Parcel Service, Inc., Class B	3.4
Boeing Co.	3.1
3M Co.	2.9
United Technologies Corp.	2.7
Honeywell International, Inc.	2.4
Caterpillar, Inc.	2.3
Northrop Grumman Corp.	1.8
Emerson Electric Co.	1.8
Total	45.4

Style Allocation (%)

Large-Cap Value	51.3
Mid-Cap Value	21.8
Large-Cap Growth	13.4
Mid-Cap Growth	9.5
Small-Cap Value	3.8
Small-Cap Growth	0.2

18

Manager's Analysis (Continued)

PowerShares FTSE RAFI Industrials Sector Portfolio (ticker: PRFN)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Industrials Sector Index		17.56
S&P Industrials Index		13.90
Dow Jones Industrials Index		15.42

Fund

NAV Return	17.01
Share Price Return	16.96

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.73% while the Fund's gross annualized total operating expense ratio was 1.00%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Industrials Index and the Dow Jones Industrials Index are unmanaged indices based on the average performance of approximately 52 and 270 common stocks, respectively.

19

Manager's Analysis

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio (ticker: PRFQ)

The PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Telecommunications & Technology Sector Index. The FTSE Telecommunications & Technology Sector Index is designed to track the performance of the largest U.S. equities in the Telecommunications & Technology sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio returned 12.15%, ahead of S&P Technology and Telecom Index which returned 11.17%.

Top contributors to the portfolio were Microsoft Corp., International Business Machines Corp., Hewlett Packard Co., AT&T, Inc., and Verizon Communications, Inc.

The portfolio benefited from overweighting Avnet, Inc. and underweighting Advanced Micro Devices, Inc.

Industry Breakdown (% of the Fund's

Net Assets)

Telecommunications	41.8
Computers	20.5
Software	18.2
Semiconductors	12.7
Internet	2.3
Distribution/Wholesale	2.2
Office/Business Equipment	2.1
Holding Companies-Diversified	0.2
Retail	0.1
Money Market Fund	0.2
Other	(0.3	)

Style Allocation (%)

Large-Cap Growth	44.6
Large-Cap Value	36.2
Mid-Cap Growth	8.7
Mid-Cap Value	8.1
Small-Cap Value	2.0
Small-Cap Growth	0.4

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Microsoft Corp.	14.5
Verizon Communications, Inc.	11.2
AT&T, Inc.	10.7
Intel Corp.	6.2
International Business Machines Corp.	5.6
Sprint Nextel Corp.	4.2
Hewlett-Packard Co.	3.7
Cisco Systems, Inc.	3.2
Dell, Inc.	2.6
Motorola, Inc.	2.1
Total	64.0

20

Manager's Analysis (Continued)

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio (ticker: PRFQ)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Telecommunications & Technology Sector Index		12.97
S&P Technology and Telecom Index		11.17
Dow Jones Technology Index		10.43

Fund

NAV Return	12.15
Share Price Return	12.25

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.75% while the Fund's gross annualized total operating expense ratio was 1.17%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Technology and Telecom Index and the Dow Jones Technology Index are unmanaged indices based on the average performance of approximately 88 and 252 common stocks, respectively.

21

Manager's Analysis

PowerShares FTSE RAFI Utilities Sector Portfolio (ticker: PRFU)

The PowerShares FTSE RAFI Utilities Sector Portfolio seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the FTSE Utilities Sector Index. The FTSE Utilities Sector Index is designed to track the performance of the largest U.S. equities in the Utilities sector, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities are then weighted by each of these four fundamental measures. An overall weight is calculated for each firm by equally-weighting each fundamental measure. Each of the equities with the highest fundamental weight are then selected and assigned a weight equal to its fundamental weight.

Since its inception on September 20, 2006 until April 30, 2007, the PowerShares FTSE RAFI Utilities Sector Portfolio returned 23.87%, behind S&P Utilities Index which returned 25.52%.

Top contributors to the portfolio were Reliant Energy, Inc., American Electric Power Co., Inc., and FPL Group, Inc.

The portfolio benefited from overweighting Reliant Energy, Inc., and underweighting TXU Corp.

Industry Breakdown (% of the Fund's

Net Assets)

Electric	84.4
Gas	9.6
Pipelines	4.7
Environmental Control	0.5
Water	0.2
Money Market Fund	0.5
Other	0.1

Style Allocation (%)

Large-Cap Value	47.7
Mid-Cap Value	33.2
Mid-Cap Growth	8.6
Small-Cap Value	7.0
Large-Cap Growth	3.5

Top Ten Fund Holdings (% of the Fund's

Net Assets)

Security
Exelon Corp.	5.0
Southern Co.	4.8
American Electric Power Co., Inc.	4.6
Dominion Resources, Inc.	4.5
Duke Energy Corp.	3.8
FirstEnergy Corp.	3.4
Public Service Enterprise Group, Inc.	3.1
FPL Group, Inc.	3.0
Progress Energy, Inc.	2.9
Entergy Corp.	2.8
Total	37.9

22

Manager's Analysis (Continued)

PowerShares FTSE RAFI Utilities Sector Portfolio (ticker: PRFU)

Growth of a $10,000 Investment Since Inception

Fund Performance History (%)  As of 30 April 2007

Index

	Fund Inception Cumulative
FTSE Utilities Sector Index		24.59
S&P Utilities Index		25.52
Dow Jones Utilities Index		22.76

Fund

NAV Return	23.87
Share Price Return	23.65

Fund Inception: 20 September 2006

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 Share Price performance reflects fee waivers, absent which, performance would have been lower. According to the Fund's most recent Prospectus, the Fund's total gross annual operating expenses was indicated as 0.75%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.75% while the Fund's gross annualized total operating expense ratio was 1.19%. The Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in a lower fee actually paid by investors. This waiver extends through April 30, 200 8. Absent reimbursements or waivers, performance would have been lower. NAV and Share Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Share Price, respectively. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund Shares. See powershares.com to find the most recent month-end performance numbers.

The index performance results are hypothetical. Index returns do not represent Fund returns. An investor cannot invest directly in an index. The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

The S&P Utilities Index and the Dow Jones Utilities Index are unmanaged indices based on the average performance of approximately 31 and 90 common stocks, respectively.

23

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Funds' Distribution History

	Ex-Dividend	4/13/07		3/16/07		3/15/07		2/15/07		1/15/07		12/15/06
	Record	4/17/07		3/20/07		3/20/07		2/20/07		1/17/07		12/19/06
	Payable	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06
Fund	Ticker
PowerShares FTSE RAFI US 1500 Small-Mid Portfolio	PRFZ		—		0.03020		—		—		—		0.14258
PowerShares FTSE RAFI Basic Materials Sector Portfolio	PRFM		—		0.05952		—		—		—		0.59859
PowerShares FTSE RAFI Consumer Goods Sector Portfolio	PRFG		—		—		—		—		—		0.32984
PowerShares FTSE RAFI Consumer Services Sector Portfolio	PRFS		—		—		—		—		—		0.09283
PowerShares FTSE RAFI Energy Sector Portfolio	PRFE		—		0.10320		—		—		—		0.10379
PowerShares FTSE RAFI Financials Sector Portfolio	PRFF		—		—		—		—		—		0.41582
PowerShares FTSE RAFI Health Care Sector Portfolio	PRFH		—		0.23850		—		—		—		0.13869
PowerShares FTSE RAFI Industrials Sector Portfolio	PRFN		—		0.11650		—		—		—		0.21147
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio	PRFQ		—		0.09750		—		—		—		0.14861
PowerShares FTSE RAFI Utilities Sector Portfolio	PRFU		—		0.26830		—		—		—		0.38618

25

Frequency Distribution of Discounts & Premiums

Since Inception thru April 30, 2007

					Closing Price Above NAV
Ticker	Fund Name	Inception	Days		0-24 Basis Points		25-49 Basis Points		50-99 Basis Points		100-149 Basis Points		150-199 Basis Points		200+ Basis Points
PRFZ	PowerShares FTSE RAFI US 1500 Small-Mid Portfolio	9/20/06		152		60		3		0		0		1		0
PRFM	PowerShares FTSE RAFI Basic Materials Sector Portfolio	9/20/06		152		64		0		0		0		0		0
PRFG	PowerShares FTSE RAFI Consumer Goods Sector Portfolio	9/20/06		152		78		3		0		0		0		0
PRFS	PowerShares FTSE RAFI Consumer Services Sector Portfolio	9/20/06		152		71		2		0		0		0		0
PRFE	PowerShares FTSE RAFI Energy Sector Portfolio	9/20/06		152		66		2		0		0		0		0
PRFF	PowerShares FTSE RAFI Financials Sector Portfolio	9/20/06		152		69		0		0		0		0		0
PRFH	PowerShares FTSE RAFI Health Care Sector Portfolio	9/20/06		152		77		1		1		0		0		0
PRFN	PowerShares FTSE RAFI Industrials Sector Portfolio	9/20/06		152		74		2		0		0		0		0
PRFQ	PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio	9/20/06		152		66		3		0		0		0		0
PRFU	PowerShares FTSE RAFI Utilities Sector Portfolio	9/20/06		152		48		0		0		0		0		0

26

	Closing Price Below NAV
Ticker	-0-24 Basis Points		-25-49 Basis Points		-50-99 Basis Points		-100-149 Basis Points		-150-199 Basis Points		-200+ Basis Points
PRFZ		87		1		0		0		0		0
PRFM		88		0		0		0		0		0
PRFG		69		2		0		0		0		0
PRFS		79		0		0		0		0		0
PRFE		84		0		0		0		0		0
PRFF		82		1		0		0		0		0
PRFH		73		0		0		0		0		0
PRFN		76		0		0		0		0		0
PRFQ		83		0		0		0		0		0
PRFU		103		1		0		0		0		0

27

Fees and Expenses

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 period ended April 30, 2007.

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 annualized 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 Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares FTSE RAFI US 1500 Small-Mid Portfolio Actual	$	1,000.00	$	1,087.71		0.72	%	$	3.73
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.22		0.72	%	$	3.61
PowerShares FTSE RAFI Basic Materials Sector Portfolio Actual	$	1,000.00	$	1,179.57		0.77	%	$	4.16
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.98		0.77	%	$	3.86
PowerShares FTSE RAFI Consumer Goods Sector Portfolio Actual	$	1,000.00	$	1,069.39		0.77	%	$	3.95
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.98		0.77	%	$	3.86
PowerShares FTSE RAFI Consumer Services Sector Portfolio Actual	$	1,000.00	$	1,072.98		0.79	%	$	4.06
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.88		0.79	%	$	3.96

28

Fees and Expenses (Continued)

	Beginning Account Value November 1, 2006		Ending Account Value April 30, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares FTSE RAFI Energy Sector Portfolio Actual	$	1,000.00	$	1,167.67		0.74	%	$	3.98
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.12		0.74	%	$	3.71
PowerShares FTSE RAFI Financials Sector Portfolio Actual	$	1,000.00	$	1,050.81		0.79	%	$	4.02
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.88		0.79	%	$	3.96
PowerShares FTSE RAFI Health Care Sector Portfolio Actual	$	1,000.00	$	1,100.59		0.75	%	$	3.91
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.08		0.75	%	$	3.76
PowerShares FTSE RAFI Industrials Sector Portfolio Actual	$	1,000.00	$	1,123.00		0.73	%	$	3.84
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.17		0.73	%	$	3.66
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio Actual	$	1,000.00	$	1,077.02		0.75	%	$	3.86
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.08		0.75	%	$	3.76
PowerShares FTSE RAFI Utilities Sector Portfolio Actual	$	1,000.00	$	1,163.87		0.76	%	$	4.08
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.03		0.76	%	$	3.81

(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 April 30, 2007. Expenses are calculated by multiplying the Fund's annualized expense ratio by the average account value for the period; then multiplying the result by 181 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.

29

Schedule of Investments

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.2%
		Consumer Discretionary—18.3%
	1,279	4Kids Entertainment, Inc.*	$	20,809
	1	99 Cents Only Stores*		14
	1,912	A.C. Moore Arts & Crafts, Inc.*		39,253
	3,841	Aaron Rents, Inc.		108,969
	2,186	Aeropostale, Inc.*		89,954
	7,192	AFC Enterprises, Inc.*		136,720
	2,196	Aftermarket Technology Corp.*		60,675
	953	Ambassadors Group, Inc.		31,945
	2,790	Ameristar Casinos, Inc.		84,704
	3,551	Applebee's International, Inc.		96,516
	729	Arbitron, Inc.		35,925
	2,406	Arctic Cat, Inc.		42,827
	541	Avatar Holdings, Inc.*		40,613
	2,676	Bally Technologies, Inc.*		62,618
	1,052	Bandag, Inc.		53,063
	1,090	Bandag, Inc., Class A		54,805
	2,295	Bebe Stores, Inc.		40,163
	1,669	Big 5 Sporting Goods Corp.		42,726
	774	BJ's Restaurants, Inc.*		15,937
	328	Blue Nile, Inc.*		15,436
	4,464	Bluegreen Corp.*		49,327
	5,893	Blyth, Inc.		153,807
	3,172	Bob Evans Farms, Inc.		116,412
	1,134	Bright Horizons Family Solutions, Inc.*		43,795
	3,543	Brookfield Homes Corp.		120,320
	3,188	Brown Shoe Co., Inc.		86,012
	1,400	Buckle (The), Inc.		49,868
	4,787	Building Material Holding Corp.		69,507
	7,797	Cabela's, Inc., Class A*		184,944
	1,201	California Pizza Kitchen, Inc.*		40,125
	6,658	Callaway Golf Co.		119,578
	2,080	Carmike Cinemas, Inc.		51,958
	2,721	Carter's, Inc.*		71,290
	1,761	Catalina Marketing Corp.		55,824
	3,174	Cato (The) Corp., Class A		68,590
	2,135	CEC Entertainment, Inc.*		88,965
	833	Central European Media Enterprises Ltd., Class A (Bermuda)*		75,087
	8,457	Champion Enterprises, Inc.*		86,938
	1,396	Charlotte Russe Holding, Inc.*		38,153
	2,827	Cheesecake Factory (The), Inc.*		78,025
	6,077	Chico's FAS, Inc.*		160,189
	1,665	Children's Place Retail Stores (The), Inc.*		88,029
	696	Chipotle Mexican Grill, Inc., Class A*		45,400
	1,060	Choice Hotels International, Inc.		39,898
	1,704	Christopher & Banks Corp.		29,496
	1,119	Churchill Downs, Inc.		52,246
	12,750	Citadel Broadcasting Corp.		117,045
	4,378	CKE Restaurants, Inc.		88,917
	1,623	CKX, Inc.*		16,928
	1,526	Coinstar, Inc.*		47,443

Number of Shares			Value
		Common Stocks (Continued)
	2,860	Coldwater Creek, Inc.*	$	59,202
	2,155	Columbia Sportswear Co.		134,903
	1,977	Conn's, Inc.*		51,303
	5,554	Corinthian Colleges, Inc.*		76,812
	6,374	Cost Plus, Inc.*		62,147
	654	Courier Corp.		26,029
	9,534	Cox Radio, Inc., Class A*		134,620
	87	CROCS, Inc.*		4,862
	3,881	Crown Media Holdings, Inc., Class A*		22,199
	1,150	CSS Industries, Inc.		45,885
	2,415	CTC Media, Inc.*		62,983
	7,005	Cumulus Media, Inc., Class A*		65,777
	2,118	DEB Shops, Inc.		58,287
	379	Deckers Outdoor Corp.*		28,702
	1,116	dELiA*s, Inc.*		9,609
	3,394	DeVry, Inc.		111,968
	2,412	Dick's Sporting Goods, Inc.*		135,289
	3,796	Domino's Pizza, Inc.*		122,421
	4,122	DreamWorks Animation SKG, Inc., Class A*		120,692
	3,311	Dress Barn, Inc.*		65,922
	1,372	Drew Industries, Inc.*		39,472
	1,749	DSW, Inc., Class A*		67,791
	3,456	Educate, Inc.*		26,404
	11,177	Emmis Communications Corp., Class A*		111,658
	3,881	Entercom Communications Corp., Class A		107,659
	10,269	Entravision Communications Corp., Class A*		100,739
	3,396	Ethan Allen Interiors, Inc.		119,879
	4,557	Finish Line (The), Inc., Class A		60,107
	558	Fisher Communications, Inc.*		27,074
	8,569	Fleetwood Enterprises, Inc.*		71,380
	3,633	Fossil, Inc.*		102,342
	5,133	Fred's, Inc.		74,121
	1,665	Gaylord Entertainment Co.*		91,242
	21,320	Gemstar-TV Guide International, Inc.*		94,661
	2,166	Genesco, Inc.*		109,773
	6,811	Gentex Corp.		121,236
	6,176	Gray Television, Inc.		65,898
	982	GSI Commerce, Inc.*		21,702
	1,635	Guess?, Inc.		64,419
	2,385	Guitar Center, Inc.*		110,426
	1,462	Gymboree (The) Corp.*		55,819
	4,008	Harte-Hanks, Inc.		104,609
	3,554	Haverty Furniture Cos., Inc.		45,349
	2,767	Helen of Troy Ltd. (Bermuda)*		62,811
	1,015	Hibbett Sports, Inc.*		29,587
	5,042	HOT Topic, Inc.*		56,924
	597	Iconix Brand Group, Inc.*		12,018
	1,069	IHOP Corp.		62,985
	4,648	Interactive Data Corp.		133,072
	2,290	International Speedway Corp., Class A		113,126
	4,512	Isle of Capri Casinos, Inc.*		110,273
	919	ITT Educational Services, Inc.*		89,336

See Notes to Financial Statements.
30

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	289	J Crew Group, Inc.*	$	11,702
	1,269	Jackson Hewitt Tax Service, Inc.		34,999
	2,684	JAKKS Pacific, Inc.*		64,497
	3,731	Jarden Corp.*		157,224
	5,370	Jo-Ann Stores, Inc.*		160,831
	2,564	John Wiley & Sons, Inc., Class A		96,022
	1,074	Jos. A. Bank Clothiers, Inc.*		41,499
	9,099	Journal Communications, Inc., Class A		122,746
	6,710	Journal Register Co.		39,388
	6,948	K2, Inc.*		104,845
	1,692	Kenneth Cole Productions, Inc., Class A		42,825
	1,101	Keystone Automotive Industries, Inc.*		36,619
	5,088	Kimball International, Inc., Class B		91,584
	4,485	Krispy Kreme Doughnuts, Inc.*		43,639
	1,568	K-Swiss, Inc., Class A		45,284
	2,898	Landry's Restaurants, Inc.		86,071
	1,897	Laureate Education, Inc.*		112,018
	6,436	Leapfrog Enterprises, Inc.*		70,539
	4,440	Lee Enterprises, Inc.		116,239
	2,740	Levitt Corp., Class A		23,263
	1,052	Life Time Fitness, Inc.*		54,073
	7,928	Lin TV Corp., Class A*		126,531
	3,997	Lithia Motors, Inc., Class A		107,719
	2,096	LKQ Corp.*		47,328
	2,906	M/I Homes, Inc.		86,395
	2,748	Marcus Corp.		59,714
	2,164	Marine Products Corp.		19,065
	967	Martha Stewart Living Omnimedia, Inc., Class A		18,383
	2,570	Marvel Entertainment, Inc.*		75,892
	1,400	Matthews International Corp., Class A		59,024
	3,249	Media General, Inc., Class A		119,368
	17,273	Mediacom Communications Corp., Class A*		149,066
	3,079	Men's Wearhouse (The), Inc.		133,228
	4,951	Modine Manufacturing Co.		114,517
	4,018	Monaco Coach Corp.		61,596
	392	Morningstar, Inc.*		20,411
	2,449	MTR Gaming Group, Inc.*		39,160
	3,392	Multimedia Games, Inc.*		37,990
	532	National Presto Industries, Inc.		31,436
	3,276	Nautilus, Inc.		45,242
	1,874	NetFlix, Inc.*		41,547
	4,795	New York & Co., Inc.*		66,986
	212	NutriSystem, Inc.*		13,144
	3,056	Oakley, Inc.		73,741
	3,321	O'Charleys, Inc.*		70,106
	1,101	Orient-Express Hotels Ltd., Class A (Bermuda)		57,968
	934	Overstock.com, Inc.*		16,765
	1,296	Oxford Industries, Inc.		60,160
	6,628	Pacific Sunwear of California, Inc.*		138,724
	3,623	Palm Harbor Homes, Inc.*		53,802

Number of Shares			Value
		Common Stocks (Continued)
	879	Panera Bread Co., Class A*	$	48,952
	2,533	Papa John's International, Inc.*		77,788
	2,861	Penn National Gaming, Inc.*		138,301
	1,280	PF Chang's China Bistro, Inc.*		48,960
	2,030	Phillips-Van Heusen Corp.		113,477
	2,227	Pinnacle Entertainment, Inc.*		62,534
	2,160	Pool Corp.		86,681
	694	Pre-Paid Legal Services, Inc.		39,593
	1,341	Priceline.com, Inc.*		74,613
	35,831	PRIMEDIA, Inc.*		89,578
	9,015	Quiksilver, Inc.*		119,900
	566	R.H. Donnelley Corp.*		44,199
	13,545	Radio One, Inc., Class D*		95,628
	2,575	Rare Hospitality International, Inc.*		74,984
	1,421	RC2 Corp.*		56,641
	1,414	RCN Corp.*		38,206
	985	Red Robin Gourmet Burgers, Inc.*		39,006
	3,291	Regis Corp.		125,815
	3,260	Ruby Tuesday, Inc.		87,238
	6,671	Russ Berrie & Co., Inc.		100,265
	2,917	Salem Communications Corp., Class A*		33,604
	2,856	Sauer-Danfoss, Inc.		85,166
	2,761	Scientific Games Corp., Class A*		91,914
	3,957	Sealy Corp.		67,467
	2,053	Select Comfort Corp.*		38,063
	639	Shuffle Master, Inc.*		10,882
	7,346	Sinclair Broadcast Group, Inc., Class A		119,960
	2,264	Skechers U.S.A., Inc., Class A*		71,090
	1,038	Skyline Corp.		34,098
	518	Smith & Wesson Holding Corp.*		7,107
	3,605	Sonic Corp.*		80,896
	1,182	Sotheby's		61,015
	8,015	Source Interlink Cos., Inc.*		51,857
	2,597	Speedway Motorsports, Inc.		100,764
	3,505	Stage Stores, Inc.		77,285
	1,723	Stamps.com, Inc.*		24,312
	3,217	Steak n Shake (The) Co.*		52,019
	4,732	Stein Mart, Inc.		77,132
	701	Steiner Leisure Ltd. (Bahamas)*		33,984
	918	Steven Madden Ltd.*		27,311
	9,139	Stewart Enterprises, Inc., Class A		68,725
	252	Strayer Education, Inc.		31,334
	3,103	Stride Rite (The) Corp.		43,752
	4,315	Superior Industries International, Inc.		98,598
	3,448	Systemax, Inc.*		58,719
	3,115	Tarragon Corp.		31,181
	15,360	Technical Olympic USA, Inc.		67,123
	3,788	Tempur-Pedic International, Inc.		98,374
	2,545	Texas Roadhouse, Inc., Class A*		37,208
	2,547	Thor Industries, Inc.		101,447
	2,275	Tractor Supply Co.*		117,709
	787	Triarc Cos., Inc., Class A		13,930

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,735	Triarc Cos., Inc., Class B	$	28,228
	7,601	Trump Entertainment Resorts, Inc.*		123,364
	3,963	Tuesday Morning Corp.		55,323
	1,992	Tween Brands, Inc.*		78,007
	423	Under Armour, Inc., Class A*		21,362
	1,475	UniFirst Corp.		62,068
	947	Universal Technical Institute, Inc.*		23,741
	3,803	Urban Outfitters, Inc.*		97,965
	1,914	Vail Resorts, Inc.*		109,136
	5,835	Valassis Communications, Inc.*		111,799
	2,854	ValueVision Media, Inc., Class A*		32,279
	550	Vertrue, Inc.*		26,026
	406	Volcom, Inc.*		17,056
	4,307	Warnaco Group (The), Inc.*		121,802
	2,138	Weight Watchers International, Inc.		102,603
	3,346	West Marine, Inc.*		49,186
	13,435	Westwood One, Inc.		91,492
	1,958	Winnebago Industries, Inc.		62,773
	1,116	WMS Industries, Inc.*		44,484
	2,991	Wolverine World Wide, Inc.		85,483
	1,028	Wynn Resorts Ltd.*		105,072
	389	Zumiez, Inc.*		15,350
				15,713,191
		Consumer Staples—3.2%
	390	Alico, Inc.		22,819
	11,138	Alliance One International, Inc.*		109,264
	1,284	Andersons (The), Inc.		59,642
	2,744	Bare Escentuals, Inc.*		110,940
	4,785	Casey's General Stores, Inc.		120,343
	1,899	Central European Distribution Corp.*		56,495
	2,405	Central Garden & Pet Co.*		35,618
	5,170	Central Garden and Pet Co., Class A*		74,034
	634	Chattem, Inc.*		36,227
	2,598	Church & Dwight Co., Inc.		131,797
	1,144	Delta & Pine Land Co.		47,179
	3,242	Elizabeth Arden, Inc.*		72,977
	1,513	Farmer Bros. Co.		32,454
	3,909	Flowers Foods, Inc.		121,922
	2,289	Hain Celestial Group, Inc.*		68,739
	657	Hansen Natural Corp.*		25,097
	3,656	Herbalife Ltd. (Cayman Islands)		146,568
	885	J&J Snack Foods Corp.		34,488
	3,189	Lancaster Colony Corp.		134,671
	3,336	Lance, Inc.		73,826
	6,097	Nu Skin Enterprises, Inc., Class A		105,661
	5,177	Playtex Products, Inc.*		78,794
	3,864	Premium Standard Farms, Inc.		83,772
	3,711	Prestige Brands Holdings, Inc.*		48,280
	1,751	Ralcorp Holdings, Inc.*		115,233
	1,340	Reddy Ice Holdings, Inc.		39,249
	14,938	Revlon, Inc., Class A*		19,270

Number of Shares			Value
		Common Stocks (Continued)
	2,382	Sanderson Farms, Inc.	$	94,160
	5,272	Smart & Final, Inc.*		114,719
	2,846	Tootsie Roll Industries, Inc.		82,506
	3,522	Topps (The) Co., Inc.		34,903
	2,958	TreeHouse Foods, Inc.*		89,154
	3,073	United Natural Foods, Inc.*		95,847
	349	USANA Health Sciences, Inc.*		13,904
	5,953	Vector Group Ltd.		108,642
	1,351	WD-40 Co.		46,718
	2,972	Wild Oats Markets, Inc.*		53,585
				2,739,497
		Energy—7.7%
	3,371	Alon USA Energy, Inc.		126,075
	4,151	Alpha Natural Resources, Inc.*		72,103
	164	APCO Argentina, Inc. (Cayman Islands)		15,703
	681	Atlas America, Inc.*		40,649
	546	ATP Oil & Gas Corp.*		23,729
	864	Atwood Oceanics, Inc.*		54,346
	4,980	Aventine Renewable Energy Holdings*		95,666
	1,724	Basic Energy Services, Inc.*		44,565
	1,895	Berry Petroleum Co., Class A		64,544
	2,163	Bill Barrett Corp.*		79,815
	3,185	Bois d'Arc Energy, Inc.*		47,679
	5,000	Brigham Exploration Co.*		30,300
	2,191	Bristow Group, Inc.*		82,382
	1,240	Bronco Drilling Co., Inc.*		22,419
	2,972	Cabot Oil & Gas Corp.		108,240
	946	CARBO Ceramics, Inc.		41,104
	645	Carrizo Oil & Gas, Inc.*		23,768
	481	Cheniere Energy, Inc.*		16,041
	1,231	Clayton Williams Energy, Inc.*		33,065
	4,900	Complete Production Services, Inc.*		117,943
	3,275	Comstock Resources, Inc.*		92,846
	1,160	Copano Energy LLC		45,310
	540	Core Laboratories N.V. (Netherlands)*		49,097
	1,898	Crosstex Energy, Inc.		57,035
	4,449	Delek US Holdings Inc.		84,842
	1,388	Delta Petroleum Corp.*		30,106
	4,645	Denbury Resources, Inc.*		153,702
	1,022	Dril-Quip, Inc.*		51,611
	446	Enbridge Energy Management LLC*		25,868
	3,657	Encore Acquisition Co.*		97,678
	3,273	Energy Partners Ltd.*		54,692
	4,871	EXCO Resources, Inc.*		81,784
	3,802	Gasco Energy, Inc.*		6,844
	3,185	General Maritime Corp. (Marshall Islands)		102,143
	1,792	Giant Industries, Inc.*		134,346
	4,856	Global Industries, Ltd.*		100,811
	376	Goodrich Petroleum Corp.*		13,209
	10,615	Grey Wolf, Inc.*		76,003
	1,035	GulfMark Offshore, Inc.*		49,577

See Notes to Financial Statements.
32

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	5,361	Harvest Natural Resources, Inc.*	$	53,878
	3,068	Helix Energy Solutions Group, Inc.*		117,382
	4,757	Helmerich & Payne, Inc.		153,603
	1,061	Hercules Offshore, Inc.		33,347
	2,017	Holly Corp.		128,281
	1,812	Horizon Offshore, Inc.*		28,992
	1,658	Hornbeck Offshore Services, Inc.*		52,443
	546	Hydril*		52,864
	2,466	Input/Output, Inc.*		34,499
	16,275	International Coal Group, Inc.*		90,977
	1,956	Kinder Morgan Management LLC*		103,968
	4,656	Knightsbridge Tankers Ltd. (Bermuda)		135,769
	1,981	Lone Star Technologies, Inc.*		131,558
	689	Lufkin Industries, Inc.		42,870
	4,760	Mariner Energy, Inc.*		107,338
	24,815	Meridian Resource (The) Corp.*		64,767
	8,851	Newpark Resources, Inc.*		72,755
	2,453	Nordic American Tanker Shipping (Bermuda)		94,490
	2,412	Oceaneering International, Inc.*		114,666
	3,695	Oil States International, Inc.*		125,371
	4,447	OMI Corp. (Marshall Islands)		129,274
	131	Pacific Ethanol, Inc.*		1,939
	661	Parallel Petroleum Corp.*		15,276
	7,810	Parker Drilling Co.*		84,817
	834	Penn Virginia Corp.		66,762
	3,838	PetroHawk Energy Corp.*		55,459
	658	Petroleum Development Corp.*		34,216
	2,230	PetroQuest Energy, Inc.*		25,467
	1,893	Pioneer Drilling Co.*		25,953
	2,911	Plains Exploration & Production Co.*		136,788
	1,524	Quicksilver Resources, Inc.*		63,795
	2,544	Range Resources Corp.		92,983
	244	Rentech, Inc.*		586
	5,135	Rosetta Resources Inc.*		110,454
	2,609	RPC, Inc.		43,022
	2,403	St. Mary Land & Exploration Co.		87,998
	3,222	Superior Energy Services, Inc.*		117,055
	2,479	Swift Energy Co.*		100,771
	2,190	TETRA Technologies, Inc.*		58,013
	2,386	Todco*		108,468
	464	Toreador Resources Corp.*		7,433
	1,739	Tsakos Energy Navigation Ltd. (Bermuda)		99,384
	1,654	Ultra Petroleum Corp. (Canada)*		93,815
	2,522	Unit Corp.*		144,132
	1,853	Universal Compression Holdings, Inc.*		123,354
	2,101	VeraSun Energy Corp.*		41,873
	3,861	W&T Offshore, Inc.		117,181
	1,565	Warren Resources, Inc.*		20,674
	3,989	Western Refining, Inc.		158,043
	1,532	W-H Energy Services, Inc.*		82,897
	2,998	Whiting Petroleum Corp.*		131,972
				6,567,312

Number of Shares			Value
		Common Stocks (Continued)
		Financials—21.1%
	1,691	1st Source Corp.	$	41,835
	5,216	21st Century Insurance Group		108,545
	1,525	Acadia Realty Trust		40,992
	4,183	Accredited Home Lenders Holding Co.*		48,857
	7,394	Advance America Cash Advance Centers, Inc.		126,733
	432	Advanta Corp., Class A		18,256
	1,134	Advanta Corp., Class B		51,960
	1,200	Affiliated Managers Group, Inc.*		141,156
	3,464	Affordable Residential Communities, Inc.*		40,633
	987	Alabama National BanCorp.		61,806
	30	Alexander's, Inc.*		11,520
	1,059	Alexandria Real Estate Equities, Inc.		112,095
	6,159	Alfa Corp.		110,492
	1,937	AMCORE Financial, Inc.		55,418
	4,012	American Equity Investment Life Holding Co.		54,764
	1,732	Anchor BanCorp Wisconsin, Inc.		46,625
	9,897	Anthracite Capital, Inc.		114,805
	9,086	Anworth Mortgage Asset Corp.		87,226
	2,469	Apollo Investment Corp.		54,244
	2,335	Ares Capital Corp.		41,937
	2,130	Argonaut Group, Inc.*		71,589
	1,113	Arrow Financial Corp.		24,709
	2,936	Ashford Hospitality Trust, Inc.		35,232
	1,931	Asset Acceptance Capital Corp.*		35,569
	4,374	Assured Guaranty Ltd. (Bermuda)		123,391
	1,803	Baldwin & Lyons, Inc., Class B		44,408
	878	BancFirst Corp.		37,587
	4,324	Bank Mutual Corp.		50,980
	1,193	Bank of Granite Corp.		19,243
	706	Bank of the Ozarks, Inc.		20,806
	1,916	BankUnited Financial Corp., Class A		41,481
	718	Banner Corp.		26,796
	1,911	BioMed Realty Trust, Inc.		54,865
	1,661	Boston Private Financial Holdings, Inc.		46,192
	2,656	Bristol West Holdings, Inc.		58,857
	6,106	Brookline Bancorp, Inc.		72,784
	4,109	Brown & Brown, Inc.		105,807
	1,064	Cadence Financial Corp.		20,216
	2,125	Calamos Asset Management, Inc., Class A		49,853
	528	Camden National Corp.		20,914
	1,150	Capital City Bank Group, Inc.		34,282
	132	Capital Southwest Corp.		20,434
	3,606	CapitalSource, Inc.		92,927
	946	Capitol Bancorp Ltd.		28,522
	3,344	Capitol Federal Financial		129,145
	651	Cascade Bancorp		13,957
	1,232	Cash America International, Inc.		53,173
	2,427	Cathay General Bancorp		79,581
	523	CBOT Holdings, Inc., Class A*		98,674
	1,720	Cedar Shopping Centers, Inc.		27,468
	3,977	Centennial Bank Holdings, Inc.*		34,839

See Notes to Financial Statements.
33

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,749	Central Pacific Financial Corp.	$	60,096
	2,758	Chemical Financial Corp.		73,721
	3,424	Chittenden Corp.		99,501
	5,972	Citizens Banking Corp.		119,500
	2,143	Citizens, Inc.*		16,415
	949	City Bank		29,618
	1,089	City Holding Co.		41,349
	2,611	CNA Surety Corp.		53,891
	926	CoBiz, Inc.		16,983
	491	Cohen & Steers, Inc.		25,193
	681	Columbia Banking System, Inc.		20,668
	2,990	Community Bank System, Inc.		61,295
	1,724	Community Banks, Inc.		40,738
	1,169	Community Trust Bancorp, Inc.		38,881
	3,184	CompuCredit Corp.*		115,133
	1,611	Corporate Office Properties Trust		75,894
	5,117	Corus Bankshares, Inc.		86,017
	4,847	Crawford & Co., Class A		30,972
	6,203	Crawford & Co., Class B		39,761
	2,093	Credit Acceptance Corp.*		56,176
	5,733	CVB Financial Corp.		68,051
	3,243	Deerfield Triarc Capital Corp.		52,504
	2,650	Delphi Financial Group, Inc., Class A		113,155
	2,073	DiamondRock Hospitality Co.		37,915
	937	Digital Realty Trust, Inc.		37,902
	4,172	Dime Community Bancshares, Inc.		55,529
	808	Dollar Financial Corp.*		23,545
	1,976	East West Bancorp, Inc.		78,763
	1,551	EastGroup Properties, Inc.		77,721
	3,783	Eaton Vance Corp.		144,587
	1,861	Encore Capital Group, Inc.*		22,183
	104	Enstar Group Ltd. (Bermuda)*		10,816
	1,529	Entertainment Properties Trust		92,382
	4,756	Equity Inns, Inc.		81,328
	1,983	Extra Space Storage, Inc.		37,102
	832	Farmers Capital Bank Corp.		23,837
	2,386	FBL Financial Group, Inc., Class A		92,434
	1,186	Federal Agricultural Mortgage Corp., Class C		32,473
	5,375	FelCor Lodging Trust, Inc.		137,224
	17,982	Fieldstone Investment Corp.		67,073
	1,314	Financial Federal Corp.		34,532
	1,111	Financial Institutions, Inc.		21,376
	1,326	First Acceptance Corp.*		13,419
	1,267	First BanCorp		26,392
	9,956	First BanCorp		124,848
	1,398	First Busey Corp.		28,114
	1,071	First Cash Financial Services, Inc.*		24,612
	2,676	First Charter Corp.		58,711
	588	First Citizens BancShares, Inc., Class A		119,305
	8,280	First Commonwealth Financial Corp.		92,156
	950	First Community Bancorp		52,117
	907	First Community Bancshares, Inc.		29,813

Number of Shares			Value
		Common Stocks (Continued)
	4,665	First Financial Bancorp	$	69,509
	1,266	First Financial Bankshares, Inc.		48,994
	1,193	First Financial Corp.		34,024
	1,014	First Financial Holdings, Inc.		34,344
	1,475	First Indiana Corp.		28,645
	1,302	First Marblehead (The) Corp.		47,198
	2,009	First Merchants Corp.		43,334
	3,059	First Midwest Bancorp, Inc.		109,940
	7,856	First Niagara Financial Group, Inc.		106,842
	997	First Republic Bank		53,938
	1,382	FirstFed Financial Corp.*		84,965
	9,894	Flagstar Bancorp, Inc.		116,749
	1,591	Flushing Financial Corp.		24,740
	6,424	FNB Corp.		107,795
	1,904	Forest City Enterprises, Inc., Class A		127,206
	195	Forest City Enterprises, Inc., Class B		13,032
	5,660	Franklin Street Properties Corp.		102,163
	1,877	Frontier Financial Corp.		46,643
	1,598	GAMCO Investors, Inc., Class A		72,901
	3,114	Getty Realty Corp.		89,247
	676	GFI Group, Inc.*		46,813
	2,162	Glacier Bancorp, Inc.		46,440
	2,077	GMH Communities Trust		20,853
	915	Gramercy Capital Corp.		29,637
	4,331	Great American Financial Resources, Inc.		106,066
	827	Great Southern Bancorp, Inc.		22,643
	4,489	Greater Bay Bancorp		115,771
	435	Greenhill & Co., Inc.		27,514
	1,558	Hancock Holding Co.		60,949
	2,009	Hanmi Financial Corp.		32,968
	2,848	Harleysville Group, Inc.		86,978
	2,730	Harleysville National Corp.		46,082
	2,156	Highland Hospitality Corp.		41,072
	1,901	Hilb, Rogal & Hobbs Co.		82,598
	11,712	HomeBanc Corp.		32,794
	4,411	Horace Mann Educators Corp.		92,807
	627	IBERIABANK Corp.		32,911
	1,917	Independent Bank Corp.		31,631
	1,133	Independent Bank Corp. of Massachusetts		33,650
	1,763	Infinity Property & Casualty Corp.		81,997
	6,824	Inland Real Estate Corp.		124,129
	4,208	Innkeepers USA Trust		73,935
	1,728	Integra Bank Corp.		39,260
	237	IntercontinentalExchange, Inc.*		30,099
	4,477	International Bancshares Corp.		128,714
	602	International Securities Exchange Holdings, Inc.		40,147
	1,873	Investment Technology Group, Inc.*		70,874
	3,200	Investors Bancorp, Inc.*		45,760
	1,576	Investors Financial Services Corp.		97,523
	3,932	Investors Real Estate Trust		41,483
	4,008	IPC Holdings Ltd. (Bermuda)		120,160

See Notes to Financial Statements.
34

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	3,316	Irwin Financial Corp.	$	53,155
	756	Jones Lang LaSalle, Inc.		81,262
	1,614	Kansas City Life Insurance Co.		72,727
	2,804	Kearny Financial Corp.		39,677
	1,611	Kilroy Realty Corp.		122,323
	3,820	KKR Financial Corp.		102,032
	1,804	KNBT Bancorp, Inc.		27,078
	6,565	Knight Capital Group, Inc., Class A*		106,353
	8,114	LaBranche & Co., Inc.*		66,048
	1,749	Lakeland Bancorp, Inc.		22,807
	1,683	LaSalle Hotel Properties		78,142
	5,657	Lexington Realty Trust		118,175
	1,552	LTC Properties, Inc.		38,909
	6,090	Luminent Mortgage Capital, Inc.		50,303
	2,548	MAF Bancorp, Inc.		102,302
	2,903	Maguire Properties, Inc.		104,595
	3,767	Max Re Capital Ltd. (Bermuda)		100,956
	1,718	MB Financial, Inc.		57,708
	6,027	MCG Capital Corp.		106,196
	15,506	MFA Mortgage Investments, Inc.		113,194
	1,733	Mid-America Apartment Communities, Inc.		93,495
	1,396	Midland (The) Co.		61,270
	1,175	Mid-State Bancshares		43,428
	1,456	Midwest Banc Holdings, Inc.		24,563
	4,461	Municipal Mortgage & Equity LLC		123,347
	963	Nara Bancorp, Inc.		15,899
	2,759	Nasdaq Stock Market (The), Inc.*		89,833
	1,474	National Financial Partners Corp.		67,907
	2,849	National Health Investors, Inc.		96,638
	3,740	National Penn Bancshares, Inc.		69,340
	5,481	National Retail Properties, Inc.		131,270
	315	National Western Life Insurance Co., Class A		84,326
	993	Navigators Group, Inc.*		50,732
	3,031	NBT Bancorp, Inc.		66,530
	4,344	Nelnet, Inc., Class A		116,810
	15,527	Netbank, Inc.		30,122
	888	New York Community Bancorp, Inc.		15,504
	5,719	NewAlliance Bancshares, Inc.		89,274
	2,184	Northwest Bancorp, Inc.		59,536
	1,390	OceanFirst Financial Corp.		23,644
	2,439	Ocwen Financial Corp.*		34,780
	7,467	Old National Bancorp		133,510
	892	Old Second Bancorp, Inc.		26,100
	1,324	Omega Financial Corp.		37,138
	3,479	Omega Healthcare Investors, Inc.		58,447
	1,341	optionsXpress Holdings, Inc.		33,096
	3,069	Oriental Financial Group		35,508
	3,241	Pacific Capital Bancorp		87,280
	1,337	Park National Corp.		118,685
	1,421	Parkway Properties, Inc.		75,313
	3,507	Partners Trust Financial Group, Inc.		38,858
	515	Peapack-Gladstone Financial Corp.		15,862

Number of Shares			Value
		Common Stocks (Continued)
	895	Peoples Bancorp, Inc.	$	22,420
	1,433	PFF Bancorp, Inc.		40,325
	2,361	Philadelphia Consolidated Holding Co.*		102,467
	565	Pico Holdings, Inc.*		25,239
	197	Pinnacle Financial Partners, Inc.*		5,766
	1,281	Piper Jaffray Cos.*		81,741
	3,788	Platinum Underwriters Holdings Ltd. (Bermuda)		129,625
	5,639	PMA Capital Corp., Class A*		52,837
	566	Portfolio Recovery Associates, Inc.*		31,498
	2,964	Presidential Life Corp.		56,346
	2,455	Primus Guaranty Ltd. (Bermuda)*		29,681
	638	PrivateBancorp, Inc.		20,946
	1,760	ProAssurance Corp.*		94,758
	1,213	Prosperity Bancshares, Inc.		42,079
	2,772	Provident Bankshares Corp.		88,815
	4,651	Provident Financial Services, Inc.		79,718
	2,224	Provident New York Bancorp		30,269
	1,306	PS Business Parks, Inc.		89,983
	3,178	RAIT Financial Trust		89,461
	1,554	Ramco-Gershenson Properties Trust		57,498
	1,225	Renasant Corp.		28,506
	920	Resource America, Inc., Class A		20,341
	1,312	RLI Corp.		73,065
	2,295	S&T Bancorp, Inc.		74,725
	762	S.Y. Bancorp, Inc.		17,953
	1,232	Safety Insurance Group, Inc.		49,354
	1,127	Sandy Spring Bancorp, Inc.		36,357
	4,310	Santander BanCorp		76,201
	1,021	Saul Centers, Inc.		53,010
	27,142	Scottish Re Group Ltd. (Cayman Islands)*		120,239
	1,058	Seacoast Banking Corp. of Florida		24,218
	1,748	SEI Investments Co.		106,680
	5,298	Selective Insurance Group		138,172
	1,088	Signature Bank*		34,228
	1,199	Simmons First National Corp., Class A		31,570
	1,324	Sovran Self Storage, Inc.		73,164
	4,080	Spirit Finance Corp.		58,711
	2,050	St. Joe (The) Co.		116,092
	2,750	State Auto Financial Corp.		82,638
	1,717	Sterling Bancorp		29,721
	3,909	Sterling Bancshares, Inc.		44,680
	2,062	Sterling Financial Corp.		34,332
	1,704	Sterling Financial Corp. of Spokane		50,234
	3,269	Stewart Information Services Corp.		131,479
	752	Suffolk Bancorp		23,658
	1,556	Sun Bancorp, Inc.*		29,346
	3,045	Sun Communities, Inc.		90,619
	2,456	Sunstone Hotel Investors, Inc.		70,045
	4,874	Susquehanna Bancshares, Inc.		108,593
	1,619	SVB Financial Group*		82,925
	1,424	SWS Group, Inc.		37,010

See Notes to Financial Statements.
35

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,566	Tanger Factory Outlet Centers, Inc.	$	63,486
	1,866	Taubman Centers, Inc.		104,589
	207	Tejon Ranch Co.*		10,313
	1,174	Texas Capital Bancshares, Inc.*		23,844
	1,011	TierOne Corp.		24,557
	782	Tompkins Trustco, Inc.		30,263
	428	Tower Group, Inc.		13,135
	930	Tradestation Group, Inc.*		11,327
	1,237	Triad Guaranty, Inc.*		54,688
	9,257	Trustco Bank Corp.		84,887
	3,606	UCBH Holdings, Inc.		64,764
	2,437	UMB Financial Corp.		95,335
	2,260	Umpqua Holdings Corp.		56,364
	2,268	United America Indemnity Ltd., Class A (Cayman Islands)*		56,655
	3,535	United Bankshares, Inc.		118,423
	1,616	United Community Banks, Inc.		47,769
	3,386	United Community Financial Corp.		34,944
	1,914	United Fire & Casualty Co.		70,340
	3,538	Universal American Financial Corp.*		65,665
	1,197	Universal Health Realty Income Trust		42,158
	2,357	Urstadt Biddle Properties, Inc., Class A		42,756
	1,503	USB Holding Co., Inc.		30,406
	3,530	USI Holdings Corp.*		59,798
	2,554	U-Store-It Trust		47,019
	23,743	W. Holding Co., Inc.		114,916
	9,272	W.P. Stewart & Co Ltd. (Bermuda)		94,853
	4,787	Waddell & Reed Financial, Inc., Class A		115,941
	3,042	Washington Real Estate Investment Trust		115,170
	994	Washington Trust Bancorp, Inc.		25,536
	1,206	Wauwatosa Holdings, Inc.*		21,117
	2,032	WesBanco, Inc.		59,599
	791	West Coast Bancorp.		24,576
	2,064	Westamerica Bancorp		96,657
	756	Western Alliance Bancorp*		24,373
	780	Wilshire Bancorp, Inc.		10,733
	1,219	Wintrust Financial Corp.		52,393
	714	World Acceptance Corp.*		30,652
	402	WSFS Financial Corp.		25,933
	2,296	Zenith National Insurance Corp.		106,190
				18,107,817
		Health Care—8.5%
	2,261	Affymetrix, Inc.*		59,396
	4,148	Albany Molecular Research, Inc.*		39,862
	314	Align Technology, Inc.*		7,115
	8,089	Alliance Imaging, Inc.*		72,801
	307	Allscripts Healthcare Solutions, Inc.*		8,120
	4,767	Alpharma, Inc., Class A		115,838
	845	Amedisys, Inc.*		26,491
	2,007	American Medical Systems Holdings, Inc.*		35,584
	3,911	AMERIGROUP Corp.*		110,016

Number of Shares			Value
		Common Stocks (Continued)
	1,972	AMN Healthcare Services, Inc.*	$	48,018
	2,707	Amsurg Corp., Class A*		62,126
	774	Analogic Corp.		47,446
	2,246	Applera Corp. - Celera Group*		31,444
	2,069	Arrow International, Inc.		65,877
	705	ArthroCare Corp.*		29,088
	300	Aspect Medical Systems, Inc.*		4,608
	1,786	Bio-Rad Laboratories, Inc., Class A*		126,395
	780	Biosite, Inc.*		72,150
	1,222	Brookdale Senior Living, Inc.		55,491
	2,848	Bruker BioSciences Corp.*		32,780
	2,129	Cambrex Corp.		51,650
	1,069	Celgene Corp.*		65,380
	2,856	Centene Corp.*		59,433
	1,636	Cephalon, Inc.*		130,242
	2,434	Cerner Corp.*		129,586
	1,165	Chemed Corp.		58,600
	477	Computer Programs & Systems, Inc.		15,192
	2,820	CONMED Corp.*		85,502
	2,196	Cooper (The) Cos., Inc.		112,216
	781	Corvel Corp.*		21,235
	2,095	Covance, Inc.*		126,748
	3,189	Cross Country Healthcare, Inc.*		62,791
	322	Cyberonics, Inc.*		7,039
	2,860	Cytyc Corp.*		100,758
	1,266	Datascope Corp.		46,905
	3,335	Dendrite International, Inc.*		53,027
	184	Digene Corp.*		8,436
	574	Dionex Corp.*		39,606
	43	Diversa Corp.*		313
	861	DJO, Inc.*		33,631
	983	Eclipsys Corp.*		18,421
	2,512	Edwards Lifesciences Corp.*		123,088
	8,043	Emdeon Corp.*		129,814
	3,748	Endo Pharmaceuticals Holdings, Inc.*		115,963
	654	Enzo Biochem, Inc.*		10,994
	1,072	Enzon Pharmaceuticals, Inc.*		9,091
	2,070	eResearch Technology, Inc.*		17,947
	4	ev3, Inc.*		71
	141	FoxHollow Technologies, Inc.*		3,143
	2,017	Genesis HealthCare Corp.*		129,088
	1,134	Gen-Probe, Inc.*		57,959
	5,071	Gentiva Health Services, Inc.*		94,929
	519	Geron Corp.*		3,690
	1,409	Greatbatch, Inc.*		40,903
	1,199	Haemonetics Corp.*		57,360
	1,197	HealthExtras, Inc.*		37,047
	1,808	Healthspring, Inc.*		42,524
	748	Healthways, Inc.*		31,730
	479	Hologic, Inc.*		27,566
	622	ICU Medical, Inc.*		25,969
	602	Idenix Pharmaceuticals, Inc.*		4,142

See Notes to Financial Statements.
36

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	828	IDEXX Laboratories, Inc.*	$	74,661
	38	Illumina, Inc.*		1,240
	742	ImClone Systems, Inc.*		31,082
	457	Immucor, Inc.*		14,912
	861	Integra LifeSciences Holdings Corp.*		39,236
	328	Intuitive Surgical, Inc.*		42,528
	5,571	Invacare Corp.		103,843
	1,090	inVentiv Health, Inc.*		41,366
	978	Inverness Medical Innovations, Inc.*		39,169
	195	Keryx Biopharmaceuticals, Inc.*		1,989
	2,053	Kinetic Concepts, Inc.*		102,650
	1,555	KV Pharmaceutical Co., Class A*		40,446
	261	KV Pharmaceutical Co., Class B*		6,770
	584	Kyphon, Inc.*		27,220
	572	Landauer, Inc.		26,827
	385	LCA-Vision, Inc.		16,158
	412	Lifecell Corp.*		12,113
	105	Luminex Corp.*		1,454
	1,678	Martek Biosciences Corp.*		36,228
	1,340	Matria Healthcare, Inc.*		38,833
	318	Maxygen, Inc.*		3,412
	2,151	MedCath Corp.*		63,928
	300	Medicines (The) Co.*		6,834
	1,518	Medicis Pharmaceutical Corp., Class A		46,147
	1,088	Mentor Corp.		42,334
	619	Meridian Bioscience, Inc.		18,403
	1,452	Merit Medical Systems, Inc.*		16,742
	364	MGI Pharma, Inc.*		8,015
	8,371	Millennium Pharmaceuticals, Inc.*		92,751
	1,450	Millipore Corp.*		107,054
	2,438	Molina Healthcare, Inc.*		73,676
	622	Momenta Pharmaceuticals, Inc.*		9,778
	151	Myriad Genetics, Inc.*		5,519
	2,797	Nabi Biopharmaceuticals*		14,544
	591	National Healthcare Corp.		30,324
	451	Nektar Therapeutics*		5,579
	1,128	Neurocrine Biosciences, Inc.*		14,359
	214	Nighthawk Radiology Holdings, Inc.*		4,154
	481	Noven Pharmaceuticals, Inc.*		11,260
	57	NuVasive, Inc.*		1,469
	2,393	Odyssey HealthCare, Inc.*		31,923
	11	Onyx Pharmaceuticals, Inc.*		294
	1,957	Option Care, Inc.		26,733
	990	Orthofix International NV (Netherlands)*		52,173
	236	OSI Pharmaceuticals, Inc.*		8,189
	151	Palomar Medical Technologies, Inc.*		6,182
	655	Panacos Pharmaceuticals, Inc.*		3,118
	3,236	Par Pharmaceutical Cos., Inc.*		87,145
	1,323	Parexel International Corp.*		51,967
	1,672	PDL BioPharma, Inc.*		42,235
	1,851	Pediatrix Medical Group, Inc.*		105,600
	4,858	Perrigo Co.		92,302

Number of Shares			Value
		Common Stocks (Continued)
	3,194	Pharmaceutical Product Development, Inc.	$	115,208
	1,145	PharmaNet Development Group, Inc.*		31,247
	828	Pharmion Corp.*		25,080
	1,309	PolyMedica Corp.		52,936
	1,401	PRA International*		31,831
	4,451	PSS World Medical, Inc.*		89,465
	1,142	Psychiatric Solutions, Inc.*		40,050
	712	Radiation Therapy Services, Inc.*		20,940
	2,939	RehabCare Group, Inc.*		48,141
	3,879	Res-Care, Inc.*		69,434
	1,363	ResMed, Inc.*		57,600
	2,713	Respironics, Inc.*		110,582
	1,132	Salix Pharmaceuticals Ltd.*		14,739
	1,626	Sciele Pharma, Inc.*		40,195
	2,861	Sierra Health Services, Inc.*		118,503
	1,089	Sirona Dental Systems, Inc.*		35,948
	435	SonoSite, Inc.*		12,606
	4,934	STERIS Corp.		126,113
	2,932	Sunrise Senior Living, Inc.*		112,266
	395	SurModics, Inc.*		16,049
	1,666	Symbion, Inc.*		36,519
	2,038	Symmetry Medical, Inc.*		34,626
	735	Syneron Medical Ltd. (Israel)*		18,515
	499	Tanox, Inc.*		9,311
	772	Techne Corp.*		45,525
	1,735	Thoratec Corp.*		34,041
	1,157	Trizetto Group (The), Inc.*		22,538
	342	United Therapeutics Corp.*		19,121
	6,872	Valeant Pharmaceuticals International		123,833
	1,644	Varian, Inc.*		95,286
	2,076	VCA Antech, Inc.*		81,857
	551	Ventana Medical Systems, Inc.*		26,773
	1,881	Viasys Healthcare, Inc.*		60,230
	1,227	ViroPharma, Inc.*		18,503
	531	Vital Signs, Inc.		30,299
	2,440	Waters Corp.*		145,010
	1,047	WellCare Health Plans, Inc.*		84,378
	1,436	West Pharmaceutical Services, Inc.		71,470
	1,821	Wright Medical Group, Inc.*		43,012
	496	Young Innovations, Inc.		13,536
	875	Zoll Medical Corp.*		21,149
	397	ZymoGenetics, Inc.*		5,939
				7,233,647
		Industrials—16.6%
	3,139	A.O. Smith Corp.		119,596
	649	AAON, Inc.		16,050
	1,689	AAR Corp.*		51,582
	4,935	ABM Industries, Inc.		138,871
	12,386	ABX Air, Inc.*		80,757
	4,325	Accuride Corp.*		63,188
	1,299	Actuant Corp., Class A		68,847

See Notes to Financial Statements.
37

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,892	Administaff, Inc.	$	62,795
	358	Advisory Board (The) Co.*		16,998
	7,367	AirTran Holdings, Inc.*		81,111
	2,775	Albany International Corp., Class A		106,283
	1,743	American Commercial Lines, Inc.*		51,366
	623	American Railcar Industries, Inc.		19,849
	1,586	American Reprographics Co.*		52,655
	148	American Science & Engineering, Inc.*		6,956
	1,129	American Woodmark Corp.		38,962
	692	Ameron International Corp.		47,845
	3,796	Ametek, Inc.		137,719
	2,346	Apogee Enterprises, Inc.		56,492
	3,868	Applied Industrial Technologies, Inc.		103,933
	759	Argon ST, Inc.*		19,893
	2,865	Arkansas Best Corp.		112,881
	1,611	Armor Holdings, Inc.*		115,187
	1,089	Astec Industries, Inc.*		44,322
	1,240	ASV, Inc.*		18,823
	2,425	Atlas Air Worldwide Holdings, Inc.*		139,486
	2,036	Baldor Electric Co.		80,198
	3,928	Barnes Group, Inc.		95,450
	3,015	BE Aerospace, Inc.*		110,500
	2,761	Beacon Roofing Supply, Inc.*		43,431
	1,891	Belden CDT, Inc.		105,669
	3,686	Blount International, Inc.*		50,240
	4,210	Bowne & Co., Inc.		70,223
	2,605	Brady Corp., Class A		85,600
	635	Bucyrus International, Inc., Class A		39,840
	664	Cascade Corp.		41,148
	7,129	CBIZ, Inc.*		49,618
	2,640	CDI Corp.		78,197
	2,542	Central Parking Corp.		56,890
	4,514	Cenveo, Inc.*		115,784
	618	Ceradyne, Inc.*		36,369
	9,676	China Yuchai International Ltd. (Bermuda)		89,503
	1,087	CIRCOR International, Inc.		39,567
	2,728	CLARCOR, Inc.		86,041
	803	Clean Harbors, Inc.*		37,356
	963	Consolidated Graphics, Inc.*		72,466
	3,163	Copart, Inc.*		91,664
	590	Corporate Executive Board Co.		37,548
	451	CoStar Group, Inc.*		22,013
	3,787	Covanta Holding Corp.*		92,933
	546	CRA International, Inc.*		28,157
	2,257	Cubic Corp.		45,433
	2,435	Curtiss-Wright Corp.		104,924
	727	Diamond Management & Technology Consultants, Inc.		8,244
	2,832	Diana Shipping, Inc. (Marshall Islands)		57,348
	3,328	Donaldson Co., Inc.		119,542
	1,947	DRS Technologies, Inc.		97,954
	2,172	DryShips, Inc. (Marshall Islands)		76,845

Number of Shares			Value
		Common Stocks (Continued)
	4,636	DynCorp International, Inc., Class A*	$	69,540
	1,464	Eagle Bulk Shipping, Inc. (Marshall Islands)		32,969
	1,617	EDO Corp.		44,468
	3,684	EGL, Inc.*		146,180
	3,686	Electro Rent Corp.		47,844
	1,700	Encore Wire Corp.		47,090
	362	Energy Conversion Devices, Inc.*		12,818
	4,472	EnerSys*		72,849
	1,664	Ennis, Inc.		40,685
	2,256	EnPro Industries, Inc.*		84,961
	1,204	ESCO Technologies, Inc.*		54,854
	2,068	Esterline Technologies Corp.*		86,298
	268	Evergreen Solar, Inc.*		2,618
	15,333	ExpressJet Holdings, Inc.*		91,538
	3,824	Fastenal Co.		157,242
	7,197	Federal Signal Corp.		113,641
	1,388	Florida East Coast Industries, Inc.		97,868
	883	Forward Air Corp.		26,940
	1,647	Foster Wheeler Ltd. (Bermuda)*		113,363
	965	Franklin Electric Co., Inc.		41,099
	435	FreightCar America, Inc.		21,646
	2,001	FTI Consulting, Inc.*		73,577
	1,780	G&K Services, Inc., Class A		62,122
	2,337	Gardner Denver, Inc.*		88,339
	1,045	Genco Shipping & Trading Ltd. (Marshall Islands)		37,369
	3,020	GenCorp, Inc.*		40,226
	1,838	General Cable Corp.*		105,575
	1,964	Genesee & Wyoming, Inc., Class A*		53,401
	1,639	Genlyte Group, Inc.*		127,858
	931	Geo Group (The), Inc.*		47,667
	6,221	Goodman Global, Inc.*		116,022
	858	Gorman-Rupp (The) Co.		27,516
	2,911	Graco, Inc.		114,985
	6,096	GrafTech International Ltd.*		60,838
	2,347	Granite Construction, Inc.		141,382
	1,422	Greenbrier Cos., Inc.		32,621
	4,359	Griffon Corp.*		104,572
	1,453	H&E Equipment Services, Inc.		34,378
	939	Healthcare Services Group, Inc.		26,292
	3,412	Heartland Express, Inc.		58,789
	286	Heico Corp.		10,339
	556	Heico Corp., Class A		17,208
	846	Heidrick & Struggles International, Inc.*		39,914
	2,748	Herman Miller, Inc.		94,559
	4,828	Hexcel Corp.*		104,768
	1,807	Horizon Lines, Inc., Class A		61,456
	2,539	Hub Group, Inc., Class A*		91,404
	3,431	Hudson Highland Group, Inc.*		55,960
	182	Huron Consulting Group, Inc.*		11,020
	2,358	IDEX Corp.		123,724
	1,297	IHS, Inc., Class A*		53,618

See Notes to Financial Statements.
38

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	769	II-VI, Inc.*	$	20,832
	2,383	InfraSource Services, Inc.*		79,545
	251	Innerworkings, Inc.*		3,080
	2,075	Insituform Technologies, Inc., Class A*		42,330
	3,894	Interface, Inc., Class A*		65,614
	3,109	Interline Brands, Inc.*		67,963
	3,870	Interpool, Inc.		103,368
	873	Ionatron, Inc.*		5,369
	11,166	JetBlue Airways Corp.*		110,655
	1,747	John H. Harland Co.		91,892
	2,431	Joy Global, Inc.		123,082
	5,582	K&F Industries Holdings, Inc.*		148,592
	2,639	Kaman Corp.		65,447
	1,388	Kaydon Corp.		65,972
	163	Kenexa Corp.*		5,046
	2,652	Kirby Corp.*		100,246
	2,593	Knight Transportation, Inc.		50,486
	5,976	Knoll, Inc.		138,763
	1,950	Korn/Ferry International*		45,962
	3,969	Labor Ready, Inc.*		86,127
	2,024	Landstar System, Inc.		97,779
	938	Lawson Products, Inc.		33,534
	1,871	LECG Corp.*		27,410
	2,141	Lincoln Electric Holdings, Inc.		136,446
	455	Lindsay Manufacturing Co.		13,900
	1,215	Macquarie Infrastructure Co. Trust		51,735
	1,994	Manitowoc (The) Co., Inc.		136,051
	1,761	McDermott International, Inc. (Panama)*		94,495
	1,512	McGrath Rentcorp		45,587
	62	Medis Technologies Ltd.*		947
	171	Middleby (The) Corp.*		23,475
	2,247	Mine Safety Appliances Co.		94,711
	1,474	Mobile Mini, Inc.*		44,176
	2,577	Moog, Inc., Class A*		109,574
	2,704	MSC Industrial Direct Co., Class A		131,793
	1,022	MTC Technologies, Inc.*		21,115
	2,686	Navigant Consulting, Inc.*		51,517
	1,730	NCI Building Systems, Inc.*		86,448
	1,844	Nordson Corp.		84,511
	2,422	Old Dominion Freight Line, Inc.*		71,594
	3,029	Orbital Sciences Corp.*		63,215
	3,114	Pacer International, Inc.		79,563
	2,173	Perini Corp.*		92,570
	1,447	Pike Electric Corp.*		29,475
	811	Powell Industries, Inc.*		25,538
	4,189	Power-One, Inc.*		17,845
	1,500	Quintana Maritime Ltd. (Marshall Islands)		24,195
	757	Raven Industries, Inc.		21,870
	1,995	Regal-Beloit Corp.		92,009
	3,746	Republic Airways Holdings, Inc.*		79,640
	1,183	Resources Connection, Inc.*		35,691
	1,190	Robbins & Myers, Inc.		45,732

Number of Shares			Value
		Common Stocks (Continued)
	2,502	Rollins, Inc.	$	57,721
	2,629	Roper Industries, Inc.		147,381
	1,902	Schawk, Inc.		34,293
	2,392	School Specialty, Inc.*		78,888
	1,292	Seaspan Corp. (Marshall Islands)		36,279
	2,203	Simpson Manufacturing Co., Inc.		70,871
	4,827	Skywest, Inc.		131,343
	14,297	Spherion Corp.*		122,239
	6,594	Standard Register (The) Co.		82,161
	1,798	Standex International Corp.		49,193
	1,152	Stericycle, Inc.*		100,385
	2,958	Superior Essex, Inc.*		105,601
	3,454	TAL International Group, Inc.		86,385
	1,280	Taser International, Inc.*		11,046
	2,049	Teledyne Technologies, Inc.*		90,381
	2,742	TeleTech Holdings, Inc.*		103,456
	1,345	Tennant Co.		43,067
	4,240	Tetra Tech, Inc.*		88,277
	2,671	Thomas & Betts Corp.*		145,515
	2,043	Toro (The) Co.		102,661
	2,187	TransDigm Group, Inc.*		82,822
	3,302	Tredegar Corp.		77,168
	1,183	Trex Co., Inc.*		24,121
	1,535	Triumph Group, Inc.		93,343
	4,431	UAP Holding Corp.		122,606
	480	United Industrial Corp.		23,482
	2,036	Universal Forest Products, Inc.		94,593
	2,096	US Airways Group, Inc.*		77,426
	2,659	UTi Worldwide, Inc. (Virgin Islands)		62,407
	1,308	Valmont Industries, Inc.		82,247
	3,170	Viad Corp.		129,463
	2,074	Vicor Corp.		22,233
	2,982	Volt Information Sciences, Inc.*		76,220
	2,927	Wabash National Corp.		45,544
	1,941	Wabtec Corp.		72,108
	4,757	Walter Industries, Inc.		141,378
	3,976	Waste Connections, Inc.*		123,932
	1,722	Watsco, Inc.		91,559
	1,114	Watson Wyatt Worldwide, Inc., Class A		52,503
	2,083	Watts Water Technologies, Inc., Class A		84,362
	2,839	Williams Scotsman International, Inc.*		62,543
	1,801	Woodward Governor Co.		88,879
	5,449	Xerium Technologies, Inc.		44,573
				14,210,319
		Information Technology—15.1%
	21,845	3Com Corp.*		88,035
	1,582	Actel Corp.*		23,160
	5,697	Acxiom Corp.		128,751
	16,715	Adaptec, Inc.*		64,520
	5,994	ADC Telecommunications, Inc.*		110,290
	4,166	ADTRAN, Inc.		106,025

See Notes to Financial Statements.
39

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,538	Advanced Analogic Technologies, Inc.*	$	12,473
	1,444	Advanced Energy Industries, Inc.*		35,378
	721	Advent Software, Inc.*		24,197
	4,563	Aeroflex, Inc.*		64,065
	2,412	Agile Software Corp.*		17,342
	4,278	Agilysys, Inc.		89,966
	871	Akamai Technologies, Inc.*		38,394
	6,215	AMIS Holdings, Inc.*		72,094
	4,108	Amphenol Corp., Class A		144,231
	228	Ansoft Corp.*		7,362
	592	Ansys, Inc.*		30,310
	11,524	Applied Micro Circuits Corp.*		32,382
	1,123	aQuantive, Inc.*		34,375
	2,923	Ariba, Inc.*		25,781
	4,365	Arris Group, Inc.*		64,689
	8,193	ASE Test Ltd. (Singapore)*		105,116
	994	Aspen Technology, Inc.*		13,499
	2,369	Asyst Technologies, Inc.*		16,938
	542	Atheros Communications, Inc.*		14,520
	1,374	ATMI, Inc.*		42,498
	1,085	AudioCodes Ltd. (Israel)*		7,270
	3,236	Autodesk, Inc.*		133,549
	2,673	Avid Technology, Inc.*		88,877
	2,306	Avocent Corp.*		64,591
	5,501	Axcelis Technologies, Inc.*		42,083
	15,830	BearingPoint, Inc.*		116,192
	10,725	BISYS Group (The), Inc.*		124,088
	1,702	Black Box Corp.		62,021
	646	Blackbaud, Inc.		14,264
	403	Blackboard, Inc.*		13,827
	7,093	Borland Software Corp.*		39,508
	7,208	Brightpoint, Inc.*		95,866
	8,648	Brocade Communications Systems, Inc.*		84,491
	2,290	Brooks Automation, Inc.*		40,006
	1,533	Cabot Microelectronics Corp.*		49,271
	2,221	CACI International, Inc., Class A*		101,566
	3,239	CDC Corp., Class A (Cayman Islands)*		28,989
	3,867	Checkpoint Systems, Inc.*		85,035
	8,852	ChipMOS TECHNOLOGIES Bermuda Ltd. (Bermuda)*		61,256
	9,212	Ciber, Inc.*		75,078
	947	Ciena Corp.*		27,615
	2,833	Cirrus Logic, Inc.*		23,457
	15,077	CMGI, Inc.*		31,662
	3,342	CNET Networks, Inc.*		28,173
	3,379	Cogent, Inc.*		47,441
	1,993	Cognex Corp.		42,949
	1,011	Cognizant Technology Solutions Corp., Class A*		90,383
	2,372	Coherent, Inc.*		74,457
	1,300	Cohu, Inc.		26,754
	2,457	CommScope, Inc.*		114,619

Number of Shares			Value
		Common Stocks (Continued)
	71	Commvault Systems, Inc.*	$	1,204
	815	Comtech Telecommunications Corp.*		30,848
	197	Concur Technologies, Inc.*		3,501
	11,018	Conexant Systems, Inc.*		17,078
	1,498	Covansys Corp.*		50,033
	10,970	Credence Systems Corp.*		40,699
	4,760	Cree, Inc.*		97,104
	2,937	CSG Systems International, Inc.*		78,653
	3,512	CTS Corp.		45,937
	1,443	Cymer, Inc.*		58,456
	6,084	Cypress Semiconductor Corp.*		138,836
	753	Daktronics, Inc.		17,153
	543	DealerTrack Holdings, Inc.*		17,919
	606	Digital River, Inc.*		35,469
	756	Diodes, Inc.*		27,912
	2,070	Ditech Networks, Inc.*		18,009
	45	DivX, Inc.*		907
	1,721	Dolby Laboratories, Inc., Class A*		60,958
	1,674	DSP Group, Inc.*		30,919
	3,690	Dycom Industries, Inc.*		95,608
	16,523	EarthLink, Inc.*		126,566
	1,791	Echelon Corp.*		23,193
	7,757	ECI Telecom Ltd. (Israel)*		64,849
	2,951	eFunds Corp.*		82,333
	1,885	Electro Scientific Industries, Inc.*		38,831
	3,349	Electronics for Imaging, Inc.*		89,318
	3,901	Emulex Corp.*		81,843
	8,006	Entegris, Inc.*		93,830
	1,129	Entrust, Inc.*		4,234
	1,764	Epicor Software Corp.*		25,578
	939	EPIQ Systems, Inc.*		22,189
	299	Equinix, Inc.*		24,958
	3,841	eSpeed, Inc., Class A*		35,568
	1,149	Euronet Worldwide, Inc.*		32,000
	2,598	Exar Corp.*		35,021
	704	Excel Technology, Inc.*		18,550
	7,996	Extreme Networks, Inc.*		32,704
	559	F5 Networks, Inc.*		42,920
	782	FactSet Research Systems, Inc.		48,101
	2,246	Fair Isaac Corp.		80,205
	261	FalconStor Software, Inc.*		3,007
	1,460	FEI Co.*		54,312
	2,442	Finisar Corp.*		8,840
	1,750	Flir Systems, Inc.*		70,858
	758	FormFactor, Inc.*		31,298
	894	Forrester Research, Inc.*		23,047
	5,695	Foundry Networks, Inc.*		86,108
	3,621	Gartner, Inc.*		91,358
	4,485	Genesis Microchip, Inc.*		38,481
	2,553	Gevity HR, Inc.		47,613
	683	GigaMedia Ltd. (Singapore)*		9,617
	2,808	Global Cash Access Holdings, Inc.*		44,001

See Notes to Financial Statements.
40

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	3,814	Global Imaging Systems, Inc.*	$	110,186
	2,021	Global Payments, Inc.		76,758
	1,529	Harmonic, Inc.*		12,645
	1,264	Heartland Payment Systems, Inc.		31,512
	441	Hittite Microwave Corp.*		19,924
	367	Hughes Communications, Inc.*		17,965
	3,588	Hutchinson Technology, Inc.*		68,172
	2,695	Imation Corp.		99,472
	2,068	Informatica Corp.*		30,441
	2,519	InfoSpace, Inc.*		64,638
	3,797	infoUSA, Inc.		35,654
	5,968	Integrated Device Technology, Inc.*		89,401
	530	Interdigital Communications Corp.*		17,426
	4,033	Intermec, Inc.*		90,057
	385	Internap Network Services Corp.*		5,914
	1,984	Inter-Tel, Inc.		50,036
	1,503	Interwoven, Inc.*		22,951
	777	Itron, Inc.*		52,323
	2,567	Ixia*		22,025
	1,038	j2 Global Communications, Inc.*		29,853
	3,331	Jack Henry & Associates, Inc.		79,111
	2,242	JDA Software Group, Inc.*		39,908
	2,162	Jupitermedia Corp.*		15,048
	5,797	Keane, Inc.*		81,274
	13,368	KEMET Corp.*		113,361
	136	Knot (The), Inc.*		2,901
	1,874	Komag, Inc.*		51,554
	3,248	Kopin Corp.*		11,011
	1,384	Kronos, Inc.*		75,525
	7,482	Lattice Semiconductor Corp.*		40,852
	5,069	Lawson Software, Inc.*		45,114
	1,265	Littelfuse, Inc.*		50,739
	1,774	Loral Space & Communications, Inc.*		85,099
	1,195	LTX Corp.*		7,122
	1,933	Macrovision Corp.*		46,914
	1,145	Magma Design Automation, Inc.*		15,721
	1,161	Manhattan Associates, Inc.*		33,576
	1,917	ManTech International Corp., Class A*		58,814
	4,935	MasTec, Inc.*		56,604
	1,735	MAXIMUS, Inc.		60,621
	2,429	MEMC Electronic Materials, Inc.*		133,303
	4,558	Mentor Graphics Corp.*		73,748
	2,380	Mercury Computer Systems, Inc.*		32,297
	3,990	Methode Electronics, Inc.		60,169
	2,977	Micrel, Inc.*		37,361
	977	MICROS Systems, Inc.*		53,540
	1,753	Microsemi Corp.*		40,512
	256	MicroStrategy, Inc., Class A*		29,123
	365	Midway Games, Inc.*		2,519
	3,027	MKS Instruments, Inc.*		81,578
	8,949	MPS Group, Inc.*		122,512
	2,553	MSC.Software Corp.*		33,342

Number of Shares			Value
		Common Stocks (Continued)
	969	MTS Systems Corp.	$	41,192
	1,448	Multi-Fineline Electronix, Inc.*		23,211
	5,495	NAM TAI Electronics, Inc. (Virgin Islands)		71,215
	2,342	National Instruments Corp.		65,248
	1,837	NAVTEQ Corp.*		64,956
	932	Net 1 UEPS Technologies, Inc.*		23,468
	1,218	Netgear, Inc.*		40,937
	107	Netlogic Microsystems, Inc.*		3,291
	651	NetRatings, Inc.*		13,547
	1,559	Newport Corp.*		24,461
	644	Novatel Wireless, Inc.*		11,714
	3,070	Nuance Communications, Inc.*		47,309
	3,351	Omnivision Technologies, Inc.*		45,306
	8,115	ON Semiconductor Corp.*		86,912
	2,842	Openwave Systems, Inc.*		20,889
	1,926	Optimal Group, Inc., Class A (Canada)*		16,910
	1,897	Orbotech Ltd. (Israel)*		43,498
	1,060	OSI Systems, Inc.*		27,995
	4,973	Palm, Inc.*		83,944
	3,586	Parametric Technology Corp.*		63,723
	1,318	Park Electrochemical Corp.		36,311
	3,511	Paxar Corp.*		105,365
	1,448	Pericom Semiconductor Corp.*		14,494
	979	Photon Dynamics, Inc.*		11,768
	5,365	Photronics, Inc.*		80,743
	2,537	Plantronics, Inc.		63,704
	4,531	Plexus Corp.*		94,970
	5,113	PMC - Sierra, Inc.*		39,523
	3,011	Polycom, Inc.*		100,266
	11,523	Powerwave Technologies, Inc.*		71,788
	1,817	Progress Software Corp.*		54,746
	6,973	QLogic Corp.*		124,677
	326	Quality Systems, Inc.		13,193
	36,914	Quantum Corp.*		101,514
	4,567	Quest Software, Inc.*		77,685
	735	Rackable Systems, Inc.*		8,644
	1,962	Rambus, Inc.*		38,867
	7,750	RealNetworks, Inc.*		58,513
	1,173	Red Hat, Inc.*		24,797
	2,908	Renaissance Learning, Inc.		35,478
	9,177	RF Micro Devices, Inc.*		57,356
	140	Riverbed Technology, Inc.*		4,467
	679	Rofin-Sinar Technologies, Inc.*		45,004
	813	Rogers Corp.*		36,861
	940	Rudolph Technologies, Inc.*		16,234
	5,620	S1 Corp.*		36,530
	1,418	Saifun Semiconductors Ltd. (Israel)*		15,286
	425	Salesforce.com, Inc.*		17,850
	3,334	Sapient Corp.*		24,105
	2,412	ScanSource, Inc.*		69,273
	1,686	SeaChange International, Inc.*		14,500
	3,642	Semtech Corp.*		52,518

See Notes to Financial Statements.
41

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,926	Silicon Image, Inc.*	$	16,872
	2,031	Silicon Laboratories, Inc.*		66,637
	6,658	Silicon Storage Technology, Inc.*		27,431
	940	Sina Corp. (Cayman Islands)*		32,411
	754	Sirf Technology Holdings, Inc.*		18,292
	13,295	Skyworks Solutions, Inc.*		91,603
	709	Sohu.com, Inc.*		17,952
	675	Sonic Solutions, Inc.*		8,795
	3,026	SonicWALL, Inc.*		24,692
	2,301	Sonus Networks, Inc.*		17,787
	737	SPSS, Inc.*		27,018
	2,609	SRA International, Inc., Class A*		63,738
	1,056	Standard Microsystems Corp.*		33,855
	287	Supertex, Inc.*		9,399
	5,104	Sybase, Inc.*		123,466
	10,858	Sycamore Networks, Inc.*		39,849
	2,766	Sykes Enterprises, Inc.*		51,060
	2,789	Symmetricom, Inc.*		22,786
	819	Synaptics, Inc.*		24,537
	1,637	Syntel, Inc.		57,393
	6,399	Take-Two Interactive Software, Inc.*		122,669
	518	Talx Corp.		17,866
	2,283	Technitrol, Inc.		61,253
	4,011	Tekelec*		57,518
	3,959	Tektronix, Inc.		116,355
	482	Tessera Technologies, Inc.*		20,625
	2,735	THQ, Inc.*		91,267
	8,730	TIBCO Software, Inc.*		79,618
	2,116	TNS, Inc.*		25,688
	1,122	Transaction Systems Architects, Inc.*		35,601
	409	Trident Microsystems, Inc.*		8,683
	3,083	Trimble Navigation Ltd.*		88,420
	9,845	Triquint Semiconductor, Inc.*		50,899
	1,369	Tyler Technologies, Inc.*		16,360
	133	Ultimate Software Group, Inc.*		3,671
	3,186	United Online, Inc.		45,974
	1,947	ValueClick, Inc.*		55,684
	1,645	Varian Semiconductor Equipment Associates, Inc.*		109,162
	1,710	Veeco Instruments, Inc.*		31,259
	1,142	VeriFone Holdings, Inc.*		40,301
	1,431	Verigy Ltd. (Singapore)*		36,161
	895	Viasat, Inc.*		30,699
	1,418	Vignette Corp.*		26,261
	282	VistaPrint Ltd. (Bermuda)*		10,541
	929	WebEx Communications, Inc.*		52,711
	2,238	webMethods, Inc.*		20,343
	1,054	Websense, Inc.*		26,044
	3,006	Wind River Systems, Inc.*		29,549
	783	Witness Systems, Inc.*		21,345
	1,204	Wright Express Corp.*		37,938
	908	Xyratex Ltd. (Bermuda)*		20,321

Number of Shares			Value
		Common Stocks (Continued)
	2,896	Zebra Technologies Corp., Class A*	$	115,232
	2,820	Zoran Corp.*		56,005
				12,942,841
		Materials—5.5%
	4,431	A. Schulman, Inc.		102,622
	1,449	AMCOL International Corp.		34,819
	1,164	Apex Silver Mines Ltd. (Cayman Islands)*		17,448
	2,008	AptarGroup, Inc.		147,087
	2,989	Arch Chemicals, Inc.		90,328
	5,736	Buckeye Technologies, Inc.*		72,675
	6,069	Caraustar Industries, Inc.*		43,211
	1,022	Carpenter Technology Corp.		124,040
	1,355	Century Aluminum Co.*		64,105
	2,673	CF Industries Holdings, Inc.		106,091
	1,415	Chaparral Steel Co.		99,758
	5,358	Chesapeake Corp.		79,084
	1,442	Cleveland-Cliffs, Inc.		99,916
	5,920	Coeur d'Alene Mines Corp.*		24,213
	2,733	Compass Minerals International, Inc.		93,851
	468	Deltic Timber Corp.		23,377
	2,285	Eagle Materials, Inc.		101,934
	6,349	Ferro Corp.		132,123
	2,085	Florida Rock Industries, Inc.		144,115
	6,048	Georgia Gulf Corp.		96,587
	3,044	Gibraltar Industries, Inc.		67,881
	5,317	Glatfelter		79,489
	4,574	H.B. Fuller Co.		116,957
	3,818	Headwaters, Inc.*		82,736
	2,004	Hecla Mining Co.*		17,655
	1,067	Innospec, Inc.		57,287
	1,461	Metal Management, Inc.		70,230
	1,542	Minerals Technologies, Inc.		98,102
	3,683	Myers Industries, Inc.		82,683
	1,409	Neenah Paper, Inc.		53,824
	1,640	NewMarket Corp.		77,293
	11,566	NL Industries, Inc.		137,057
	2,574	OM Group, Inc.*		135,212
	18,064	PolyOne Corp.*		118,500
	3,005	Quanex Corp.		129,305
	3,807	Rock-Tenn Co., Class A		145,657
	301	Royal Gold, Inc.		8,828
	478	RTI International Metals, Inc.*		45,061
	4,044	Ryerson, Inc.		166,371
	1,664	Schnitzer Steel Industries, Inc., Class A		86,378
	2,507	Schweitzer-Mauduit International, Inc.		68,817
	5,309	Sensient Technologies Corp.		138,990
	3,410	Spartech Corp.		95,685
	2,005	Stepan Co.		57,423
	5,269	Stillwater Mining Co.*		81,143
	1,339	Symyx Technologies, Inc.*		15,412
	7,074	Terra Industries, Inc.*		124,785

See Notes to Financial Statements.
42

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,714	Texas Industries, Inc.	$	130,555
	2,243	Titanium Metals Corp.*		77,451
	2,446	Tronox, Inc., Class A		34,562
	3,050	Tronox, Inc., Class B		42,304
	4,399	W.R. Grace & Co.*		117,013
	6,120	Wausau Paper Corp.		82,375
	4,605	Westlake Chemical Corp.		134,420
	2,543	Wheeling-Pittsburgh Corp.*		61,388
	142	Zoltek Cos., Inc.*		4,322
				4,740,535
		Telecommunication Services—1.8%
	2,677	Alaska Communications Systems Group, Inc.		42,564
	199	Cbeyond, Inc.*		6,921
	9,920	Centennial Communications Corp.		82,634
	405	Cogent Communications Group, Inc.*		10,311
	1,307	CT Communications, Inc.		31,904
	14,417	Dobson Communications Corp., Class A*		131,339
	2,774	FairPoint Communications, Inc.		52,040
	4,295	General Communication, Inc., Class A*		61,118
	1,046	Global Crossing Ltd. (Bermuda)*		30,167
	1,523	Golden Telecom, Inc.		89,263
	2,097	IDT Corp.		22,207
	7,796	IDT Corp., Class B		86,146
	619	InPhonic, Inc.*		5,905
	2,784	Iowa Telecommunications Services, Inc.		56,543
	481	iPCS, Inc.*		24,098
	1,949	Leap Wireless International, Inc.*		148,766
	1,820	Millicom International Cellular S.A. (Luxembourg)*		147,875
	892	NeuStar, Inc., Class A*		25,654
	1,435	North Pittsburgh Systems, Inc.		29,791
	2,885	NTELOS Holdings Corp.		58,104
	5,541	Premiere Global Services, Inc.*		67,434
	1,250	SBA Communications Corp., Class A*		36,775
	2,058	SureWest Communications		52,109
	5,585	Syniverse Holdings, Inc.*		57,581
	4,471	Time Warner Telecom, Inc., Class A*		91,656
	5,083	USA Mobility, Inc.*		108,573
	1,538	Vonage Holdings Corp.*		4,722
				1,562,200
		Utilities—1.4%
	1,375	American States Water Co.		49,005
	1,673	California Water Service Group		65,030
	1,518	Cascade Natural Gas Corp.		39,468
	1,730	Central Vermont Public Service Corp.		55,706
	2,475	CH Energy Group, Inc.		118,750
	5,333	El Paso Electric Co.*		140,790
	3,718	Empire District Electric (The) Co.		91,835
	849	ITC Holdings Corp.		35,726
	3,499	Laclede Group (The), Inc.		109,834
	2,388	MGE Energy, Inc.		86,255

Number of Shares			Value
		Common Stocks (Continued)
	2,913	Northwest Natural Gas Co.	$	148,009
	716	Ormat Technologies, Inc.		26,127
	3,381	Otter Tail Corp.		115,630
	1,054	SJW Corp.		36,532
	2,618	South Jersey Industries, Inc.		102,809
				1,221,506
		Total Common Stocks (Cost $82,105,408)		85,038,865
		Money Market Fund—0.2%
	140,705	Liquid Assets Portfolio Private Class** (Cost $140,705)		140,705
		Total Investments (Cost $82,246,113)—99.4%		85,179,570
		Other assets less liabilities—0.6%		500,306
		Net Assets—100.0%	$	85,679,876

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	81,882,710		95.5	%
Bermuda		1,460,142		1.7
Marshall Islands		496,422		0.6
Cayman Islands		418,013		0.5
Singapore		150,894		0.2
Israel		149,418		0.2
Luxembourg		147,875		0.2
Virgin Islands		133,622		0.2
Canada		110,725		0.1
Netherlands		101,270		0.1
Panama		94,495		0.1
Bahamas		33,984		0.0
Total investments		85,179,570		99.4
Other assets less liabilities		500,306		0.6
Net Assets	$	85,679,876		100.0	%

See Notes to Financial Statements.
43

Schedule of Investments

PowerShares FTSE RAFI Basic Materials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—97.8%
		Chemicals—54.1%
	11,331	Air Products & Chemicals, Inc.	$	866,822
	3,105	Airgas, Inc.		138,328
	3,353	Albemarle Corp.		142,335
	4,219	Cabot Corp.		191,121
	14,593	Celanese Corp., Series A		484,050
	12,622	Chemtura Corp.		139,221
	1,295	Cytec Industries, Inc.		71,096
	59,972	Dow Chemical (The) Co.		2,675,350
	38,551	E.I. du Pont de Nemours and Co.		1,895,552
	8,669	Eastman Chemical Co.		586,891
	8,776	Ecolab, Inc.		377,280
	2,689	FMC Corp.		206,865
	4,192	Hercules, Inc.*		78,977
	24,287	Huntsman Corp.		476,025
	4,899	International Flavors & Fragrances, Inc.		238,434
	5,047	Lubrizol (The) Corp.		302,517
	10,331	Lyondell Chemical Co.		321,501
	14,132	Monsanto Co.		833,647
	9,058	Mosaic (The) Co.*		267,211
	8,247	Olin Corp.		141,354
	14,451	PPG Industries, Inc.		1,063,305
	12,574	Praxair, Inc.		811,652
	5,974	Rockwood Holdings, Inc.*		183,402
	9,341	Rohm & Haas Co.		477,979
	5,237	RPM International, Inc.		111,391
	4,655	Sigma-Aldrich Corp.		195,882
	5,795	Valhi, Inc.		97,240
	7,105	Valspar (The) Corp.		192,119
				13,567,547
		Coal—4.3%
	4,573	Arch Coal, Inc.		164,948
	5,412	CONSOL Energy, Inc.		226,601
	5,429	Foundation Coal Holdings, Inc.		213,848
	5,493	Massey Energy Co.		147,926
	6,926	Peabody Energy Corp.		332,310
				1,085,633
		Forest Products & Paper—12.4%
	58,513	International Paper Co.		2,207,111
	11,297	Weyerhaeuser Co.		894,948
				3,102,059
		Household Products/Wares—1.0%
	3,972	Avery Dennison Corp.		247,058
		Iron/Steel—8.5%
	6,968	AK Steel Holding Corp.*		212,663
	1,604	Allegheny Technologies, Inc.		175,766
	11,538	Nucor Corp.		732,202
	3,252	Reliance Steel & Aluminum Co.		193,169

Number of Shares			Value
		Common Stocks (Continued)
	3,466	Steel Dynamics, Inc.	$	153,578
	6,464	United States Steel Corp.		656,355
				2,123,733
		Metal Fabricate/Hardware—1.7%
	6,821	Commercial Metals Co.		228,708
	9,457	Worthington Industries, Inc.		210,418
				439,126
		Mining—15.8%
	68,500	Alcoa, Inc.		2,431,064
	8,793	Freeport-McMoRan Copper & Gold, Inc., Class B		590,538
	8,433	Southern Copper Corp.		677,170
	2,218	Titanium Metals Corp.*		76,588
	9,669	USEC, Inc.*		195,024
				3,970,384
		Total Common Stocks (Cost $21,176,326)		24,535,540
		Money Market Fund—0.4%
	121,578	Liquid Assets Portfolio Private Class** (Cost $121,578)		121,578
		Total Investments (Cost $21,270,492)—98.2%		24,657,118
		Other assets less liabilities—1.8%		424,872
		Net Assets—100.0%	$	25,081,990

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
44

Schedule of Investments

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.5%
		Agriculture—14.9%
	22,309	Altria Group, Inc.	$	1,537,536
	6,624	Archer-Daniels-Midland Co.		256,349
	1,607	Bunge Ltd. (Bermuda)		121,746
	1,656	Loews Corp. - Carolina Group		126,734
	3,746	Reynolds American, Inc.		240,718
	556	Universal Corp.		34,850
	1,538	UST, Inc.		87,174
				2,405,107
		Apparel—3.0%
	539	Coach, Inc.*		26,319
	2,184	Hanesbrands, Inc.*		58,073
	1,635	Jones Apparel Group, Inc.		54,593
	593	Kellwood Co.		16,711
	1,017	Liz Claiborne, Inc.		45,480
	2,770	Nike, Inc., Class B		149,192
	355	Polo Ralph Lauren Corp.		32,699
	670	Timberland Co., Class A*		17,293
	979	VF Corp.		85,966
				486,326
		Auto Manufacturers—18.7%
	182,357	Ford Motor Co.*		1,466,151
	50,032	General Motors Corp.		1,562,500
				3,028,651
		Auto Parts & Equipment—5.6%
	1,272	American Axle & Manufacturing Holdings, Inc.		35,552
	2,885	ArvinMeritor, Inc.		59,575
	1,067	Autoliv, Inc.		62,046
	513	BorgWarner, Inc.		39,968
	1,971	Cooper Tire & Rubber Co.		38,099
	4,085	Goodyear Tire & Rubber (The) Co.*		135,867
	1,942	Johnson Controls, Inc.		198,726
	2,527	Lear Corp.*		92,791
	1,305	Tenneco, Inc.*		39,085
	3,300	TRW Automotive Holdings Corp.*		122,298
	9,810	Visteon Corp.*		89,467
				913,474
		Beverages—13.5%
	5,997	Anheuser-Busch Cos., Inc.		294,992
	210	Brown-Forman Corp., Class A		14,066
	458	Brown-Forman Corp., Class B		29,280
	15,494	Coca-Cola (The) Co.		808,633
	8,561	Coca-Cola Enterprises, Inc.		187,828
	2,271	Constellation Brands, Inc., Class A*		50,893
	816	Molson Coors Brewing Co., Class B		76,932
	2,930	Pepsi Bottling Group, Inc.		96,133
	1,777	PepsiAmericas, Inc.		42,897
	8,937	PepsiCo, Inc.		590,646
				2,192,300

Number of Shares			Value
		Common Stocks (Continued)
		Cosmetics/Personal Care—8.3%
	1,520	Alberto-Culver Co.	$	36,921
	2,707	Avon Products, Inc.		107,739
	2,817	Colgate-Palmolive Co.		190,824
	1,250	Estee Lauder (The) Cos., Inc., Class A		64,275
	14,632	Procter & Gamble Co.		940,983
				1,340,742
		Distribution/Wholesale—0.7%
	2,130	Genuine Parts Co.		105,243
		Electrical Components & Equipment—0.2%
	336	Energizer Holdings, Inc.*		32,652
		Electronics—0.1%
	392	Garmin Ltd. (Cayman Islands)		22,810
		Food—19.2%
	2,839	Campbell Soup Co.		111,005
	1,429	Chiquita Brands International, Inc.*		21,192
	9,610	ConAgra Foods, Inc.		236,215
	806	Corn Products International, Inc.		32,095
	1,950	Dean Foods Co.		71,039
	2,780	Del Monte Foods Co.		32,248
	1,523	Fresh Del Monte Produce, Inc. (Cayman Islands)		31,024
	3,379	General Mills, Inc.		202,402
	3,800	H.J. Heinz Co.		179,018
	1,536	Hershey (The) Co.		84,419
	1,294	Hormel Foods Corp.		49,288
	510	J.M. Smucker (The) Co.		28,468
	3,430	Kellogg Co.		181,481
	35,419	Kraft Foods, Inc., Class A		1,185,475
	904	McCormick & Co., Inc.		33,556
	920	Pilgrim's Pride Corp.		33,589
	14,081	Sara Lee Corp.		231,069
	9	Seaboard Corp.		22,437
	2,546	Smithfield Foods, Inc.*		77,831
	8,197	Tyson Foods, Inc., Class A		171,809
	1,607	Wm. Wrigley Jr. Co.		94,620
				3,110,280
		Hand/Machine Tools—0.9%
	626	Black & Decker Corp.		56,791
	608	Snap-On, Inc.		33,136
	830	Stanley Works (The)		48,372
				138,299
		Home Builders—4.7%
	792	Beazer Homes USA, Inc.		26,437
	1,928	Centex Corp.		86,317
	4,145	DR Horton, Inc.		91,936
	1,520	Hovnanian Enterprises, Inc., Class A*		36,465
	1,277	KB Home		56,328

See Notes to Financial Statements.
45

Schedule of Investments (Continued)

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	2,197	Lennar Corp., Class A	$	93,834
	780	MDC Holdings, Inc.		39,983
	565	Meritage Homes Corp.*		19,668
	73	NVR, Inc.*		60,152
	3,662	Pulte Homes, Inc.		98,507
	746	Ryland Group, Inc.		33,048
	1,212	Standard-Pacific Corp.		25,270
	2,068	Toll Brothers, Inc.*		61,585
	1,225	WCI Communities, Inc.*		26,754
				756,284
		Home Furnishings—1.2%
	1,343	Furniture Brands International, Inc.		21,595
	229	Harman International Industries, Inc.		27,913
	1,370	La-Z-Boy, Inc.		16,015
	1,200	Whirlpool Corp.		127,237
				192,760
		Household Products/Wares—3.0%
	1,523	ACCO Brands Corp.*		36,247
	1,149	Clorox Co.		77,075
	4,321	Kimberly-Clark Corp.		307,525
	431	Scotts Miracle-Gro (The) Co., Class A		19,382
	2,078	Spectrum Brands, Inc.*		14,463
	847	Tupperware Brands Corp.		23,818
				478,510
		Housewares—0.6%
	3,276	Newell Rubbermaid, Inc.		100,475
		Leisure Time—0.9%
	1,492	Brunswick Corp.		48,878
	1,268	Harley-Davidson, Inc.		80,289
	375	Polaris Industries, Inc.		18,949
				148,116
		Machinery-Diversified—0.1%
	784	Briggs & Stratton Corp.		23,261
		Miscellaneous Manufacturing—1.5%
	7,342	Eastman Kodak Co.		182,889
	2,631	Leggett & Platt, Inc.		61,881
				244,770
		Office Furnishings—0.3%
	448	HNI Corp.		18,700
	1,648	Steelcase, Inc., Class A		32,168
				50,868
		Pharmaceuticals—0.1%
	378	NBTY, Inc.*		18,677

Number of Shares			Value
		Common Stocks (Continued)
		Software—0.5%
	1,069	Activision, Inc.*	$	21,380
	1,125	Electronic Arts, Inc.*		56,711
				78,091
		Textiles—0.7%
	1,101	Cintas Corp.		41,254
	813	Mohawk Industries, Inc.*		73,301
				114,555
		Toys/Games/Hobbies—0.8%
	1,360	Hasbro, Inc.		42,990
	2,920	Mattel, Inc.		82,636
				125,626
		Total Common Stocks (Cost $14,885,390)		16,107,877
		Money Market Fund—0.7%
	106,031	Liquid Assets Portfolio Private Class** (Cost $106,031)		106,031
		Total Investments (Cost $14,991,421)—100.2%		16,213,908
		Liabilities in excess of other assets—(0.2%)		(26,997	)
		Net Assets—100.0%	$	16,186,911

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	16,038,328			99.1	%
Bermuda		121,746			0.8
Cayman Islands		53,834			0.3
Total investments		16,213,908			100.2
Liabilities in excess of other assets		(26,997	)		(0.2	)
Net Assets	$	16,186,911			100.0	%

See Notes to Financial Statements.
46

Schedule of Investments

PowerShares FTSE RAFI Consumer Services Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.3%
		Advertising—1.5%
	928	Clear Channel Outdoor Holdings, Inc., Class A*	$	26,494
	225	Getty Images, Inc.*		11,700
	2,835	Interpublic Group of Cos., Inc.*		35,948
	307	Lamar Advertising Co., Class A*		18,524
	707	Omnicom Group, Inc.		74,031
				166,697
		Airlines—1.3%
	375	Alaska Air Group, Inc.*		11,100
	1,659	AMR Corp.*		43,283
	979	Continental Airlines, Inc., Class B*		35,792
	3,797	Southwest Airlines Co.		54,488
				144,663
		Commercial Services—5.1%
	364	Apollo Group, Inc., Class A*		17,217
	6,728	Avis Budget Group, Inc.		189,259
	485	Career Education Corp.*		14,327
	354	Dollar Thrifty Automotive Group*		16,596
	2,258	H&R Block, Inc.		51,053
	623	Live Nation, Inc.*		12,641
	3,275	McKesson Corp.		192,668
	964	Rent-A-Center, Inc.*		26,838
	1,533	Service Corp. International		18,626
	2,378	ServiceMaster (The) Co.		36,597
				575,822
		Entertainment—0.9%
	745	International Game Technology		28,414
	2,536	Regal Entertainment Group, Class A		55,159
	2,276	Six Flags, Inc.*		13,565
	182	Warner Music Group Corp.		3,130
				100,268
		Food—7.2%
	971	Great Atlantic & Pacific Tea Co.		31,256
	10,241	Kroger (The) Co.		302,211
	443	Nash Finch Co.		17,264
	1,446	Pathmark Stores, Inc.*		18,249
	766	Performance Food Group Co.*		23,938
	485	Ruddick Corp.		14,565
	4,204	Safeway, Inc.		152,604
	2,175	SUPERVALU, Inc.		99,833
	3,832	Sysco Corp.		125,460
	303	Weis Markets, Inc.		13,041
	404	Whole Foods Market, Inc.		18,903
				817,324
		Household Products/Wares—0.1%
	662	American Greetings Corp., Class A		16,848
		Internet—3.1%
	652	Amazon.com, Inc.*		39,987

Number of Shares			Value
		Common Stocks (Continued)
	2,425	eBay, Inc.*	$	82,305
	1,758	Expedia, Inc.*		41,524
	1,975	IAC/InterActiveCorp*		75,287
	4,390	Liberty Media Corp. – Interactive, Class A*		109,881
				348,984
		Leisure Time—2.0%
	3,378	Carnival Corp. (Panama)		165,150
	1,426	Royal Caribbean Cruises Ltd. (Liberia)		59,279
				224,429
		Lodging—2.8%
	316	Boyd Gaming Corp.		14,378
	726	Harrah's Entertainment, Inc.		61,928
	1,085	Hilton Hotels Corp.		36,890
	160	Las Vegas Sands Corp.*		13,630
	808	Marriott International, Inc., Class A		36,530
	805	MGM Mirage*		54,136
	950	Starwood Hotels & Resorts Worldwide, Inc.		63,670
	139	Station Casinos, Inc.		12,093
	819	Wyndham Worldwide Corp.*		28,337
				321,592
		Media—24.3%
	1,072	Belo Corp., Class A		20,657
	882	Cablevision Systems Corp., Class A		28,912
	7,825	CBS Corp., Class B		248,600
	9,610	Charter Communications, Inc., Class A*		29,022
	2,815	Clear Channel Communications, Inc.		99,735
	9,682	Comcast Corp., Class A*		258,122
	5,026	Comcast Corp., Special Class A*		132,686
	3,304	DIRECTV Group (The), Inc.*		78,767
	1,549	Discovery Holding Co., Class A*		33,691
	492	Dow Jones & Co., Inc.		17,874
	951	EchoStar Communications Corp., Class A*		44,250
	589	EW Scripps Co., Class A		25,504
	1,779	Gannett Co., Inc.		101,510
	581	Hearst-Argyle Television, Inc.		15,472
	3,448	Idearc, Inc.*		119,818
	962	Liberty Global, Inc., Class A*		34,526
	963	Liberty Global, Inc., Series C*		32,174
	231	Liberty Media Corp. - Capital, Series A*		26,096
	1,094	McGraw-Hill Cos. (The), Inc.		71,690
	194	Meredith Corp.		11,236
	1,343	New York Times (The) Co., Class A		31,426
	6,599	News Corp., Class A		147,752
	3,003	News Corp., Class B		72,072
	488	Scholastic Corp.*		15,065
	4,175	Sun-Times Media Group, Inc., Class A		25,468
	26,706	Time Warner, Inc.		550,946
	2,621	Tribune Co.		85,969
	2,748	Viacom, Inc., Class B*		113,355
	8,476	Walt Disney (The) Co.		296,490
				2,768,885

See Notes to Financial Statements.
47

Schedule of Investments (Continued)

PowerShares FTSE RAFI Consumer Services Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Pharmaceuticals—3.0%
	2,333	AmerisourceBergen Corp.	$	116,627
	2,998	Cardinal Health, Inc.		209,710
	655	Omnicare, Inc.		21,726
				348,063
		Retail—47.6%
	225	Abercrombie & Fitch Co., Class A		18,374
	621	Advance Auto Parts, Inc.		25,585
	464	American Eagle Outfitters, Inc.		13,674
	399	AnnTaylor Stores Corp.*		15,354
	619	Asbury Automotive Group, Inc.		17,809
	4,594	AutoNation, Inc.*		93,901
	313	AutoZone, Inc.*		41,642
	580	Barnes & Noble, Inc.		22,927
	876	Bed Bath & Beyond, Inc.*		35,688
	2,566	Best Buy Co., Inc.		119,704
	877	Big Lots, Inc.*		28,239
	984	BJ's Wholesale Club, Inc.*		33,978
	5,157	Blockbuster, Inc., Class A*		31,973
	3,102	Blockbuster, Inc., Class B*		17,961
	809	Borders Group, Inc.		17,078
	730	Brinker International, Inc.		22,703
	556	Burger King Holdings, Inc.		13,049
	558	CarMax, Inc.*		13,905
	282	CBRL Group, Inc.		12,572
	1,218	Charming Shoppes, Inc.*		15,225
	576	Circuit City Stores, Inc.		10,051
	365	Claire's Stores, Inc.		11,888
	2,947	Costco Wholesale Corp.		157,871
	11,949	CVS Caremark Corp.		433,032
	642	Darden Restaurants, Inc.		26,630
	1,027	Dillard's, Inc., Class A		35,565
	2,259	Dollar General Corp.		48,230
	599	Dollar Tree Stores, Inc.*		23,553
	1,002	Family Dollar Stores, Inc.		31,904
	2,999	Federated Department Stores, Inc.		131,716
	1,297	Foot Locker, Inc.		30,856
	546	Gamestop Corp., Class A*		18,111
	5,128	Gap (The), Inc.		92,048
	466	Group 1 Automotive, Inc.		19,106
	11,452	Home Depot, Inc.		433,686
	201	Jack in the Box, Inc.*		13,391
	1,365	J. C. Penney Co., Inc.		107,958
	1,323	Kohl's Corp.*		97,955
	399	Longs Drug Stores Corp.		21,841
	6,224	Lowe's Cos., Inc.		190,205
	2,983	Ltd Brands, Inc.		82,241
	5,217	McDonald's Corp.		251,877
	761	Nordstrom, Inc.		41,794
	761	OfficeMax, Inc.		37,456
	440	O'Reilly Automotive, Inc.*		15,664

Number of Shares			Value
		Common Stocks (Continued)
	486	OSI Restaurant Partners, Inc.	$	19,348
	301	Pantry (The), Inc.*		13,542
	528	Payless Shoesource, Inc.*		16,843
	756	PEP Boys-Manny Moe & Jack		14,099
	544	PetSmart, Inc.		18,055
	1,822	Pier 1 Imports, Inc.*		13,756
	1,068	RadioShack Corp.		31,047
	9,675	Rite Aid Corp.*		59,405
	638	Ross Stores, Inc.		21,150
	1,830	Saks, Inc.		38,320
	1,730	Sally Beauty Holdings, Inc.*		16,989
	965	Sears Holdings Corp.*		184,228
	833	Sonic Automotive, Inc., Class A		23,815
	5,628	Staples, Inc.		139,574
	1,244	Starbucks Corp.*		38,589
	497	Talbots (The), Inc.		11,680
	4,298	Target Corp.		255,172
	489	Tiffany & Co.		23,320
	389	Tim Hortons, Inc.		12,265
	2,461	TJX Cos., Inc.		68,637
	1,326	United Auto Group, Inc.		26,891
	26,454	Wal-Mart Stores, Inc.		1,267,675
	886	Wendy's International, Inc.		33,402
	644	Williams-Sonoma, Inc.		22,682
	889	Yum! Brands, Inc.		54,994
	618	Zale Corp.*		17,248
				5,418,696
		Software—0.1%
	146	Dun & Bradstreet (The) Corp.		13,184
		Transportation—0.2%
	675	Laidlaw International, Inc.		23,119
		Trucking & Leasing—0.1%
	218	AMERCO, Inc.*		15,251
		Total Common Stocks (Cost $10,168,147)		11,303,825
		Money Market Fund—0.3%
	31,646	Liquid Assets Portfolio Private Class** (Cost $31,646)		31,646
		Total Investments (Cost $10,199,793)—99.6%		11,335,471
		Other assets less liabilities—0.4%		42,094
		Net Assets—100.0%	$	11,377,565

*  Non-income producing security.

**  Affiliated investment

See Notes to Financial Statements.
48

Schedule of Investments (Continued)

PowerShares FTSE RAFI Consumer Services Sector Portfolio

April 30, 2007

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	11,111,042		97.7	%
Panama		165,150		1.4
Liberia		59,279		0.5
Total investments		11,335,471		99.6
Other assets less liabilities		42,094		0.4
Net Assets	$	11,377,565		100.0	%

See Notes to Financial Statements.
49

Schedule of Investments

PowerShares FTSE RAFI Energy Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.2%
		Electric—1.5%
	18,545	Dynegy, Inc., Class A*	$	174,508
	2,759	OGE Energy Corp.		106,056
				280,564
		Oil & Gas—83.2%
	9,963	Anadarko Petroleum Corp.		464,874
	5,085	Apache Corp.		368,663
	4,972	Chesapeake Energy Corp.		167,805
	48,867	Chevron Corp.		3,801,363
	1,928	Cimarex Energy Co.		75,963
	1,863	CNX Gas Corp.*		52,276
	17,427	ConocoPhillips		1,208,561
	7,068	Devon Energy Corp.		515,045
	833	Diamond Offshore Drilling, Inc.		71,305
	1,171	ENSCO International, Inc.		66,021
	2,170	EOG Resources, Inc.		159,365
	49,665	Exxon Mobil Corp.		3,942,407
	2,150	Forest Oil Corp.*		75,766
	1,181	Frontier Oil Corp.		41,725
	1,934	GlobalSantaFe Corp. (Cayman Islands)		123,641
	6,363	Hess Corp.		361,100
	797	Houston Exploration Co.*		44,130
	8,166	Marathon Oil Corp.		829,257
	3,091	Murphy Oil Corp.		171,365
	4,105	Nabors Industries Ltd. (Bermuda)*		131,853
	2,405	Newfield Exploration Co.*		105,219
	892	Noble Corp. (Cayman Islands)		75,115
	1,510	Noble Energy, Inc.		88,803
	13,939	Occidental Petroleum Corp.		706,707
	1,894	Patterson-UTI Energy, Inc.		46,195
	2,107	Pioneer Natural Resources Co.		105,771
	1,464	Pogo Producing Co.		70,653
	2,800	Pride International, Inc.*		91,868
	1,239	Rowan Cos., Inc.		45,397
	905	Southwestern Energy Co.*		38,010
	1,430	Stone Energy Corp.*		42,371
	3,735	Sunoco, Inc.		282,105
	1,358	Tesoro Corp.		164,590
	2,144	Transocean, Inc. (Cayman Islands)*		184,813
	11,054	Valero Energy Corp.		776,322
	2,436	XTO Energy, Inc.		132,202
				15,628,626
		Oil & Gas Services—10.9%
	3,151	Baker Hughes, Inc.		253,309
	2,870	BJ Services Co.		82,254
	1,026	Cameron International Corp.*		66,249
	2,201	Dresser-Rand Group, Inc.*		70,234
	704	FMC Technologies, Inc.*		49,900
	828	Grant Prideco, Inc.*		42,675
	11,053	Halliburton Co.		351,154
	1,882	Hanover Compressor Co.*		40,708

Number of Shares			Value
		Common Stocks (Continued)
	1,535	National Oilwell Varco, Inc.*	$	130,245
	7,874	Schlumberger Ltd. (Netherlands)		581,336
	361	SEACOR Holdings, Inc.*		34,396
	1,723	Smith International, Inc.		90,354
	798	Tidewater, Inc.		50,442
	3,937	Weatherford International Ltd. (Bermuda)*		206,653
				2,049,909
		Pipelines—4.6%
	25,924	El Paso Corp.		388,860
	1,297	Kinder Morgan, Inc.		138,208
	11,511	Williams Cos., Inc.		339,575
				866,643
		Total Common Stocks (Cost $16,703,961)		18,825,742
		Money Market Fund—0.3%
	46,362	Liquid Assets Portfolio Private Class** (Cost $46,362)		46,362
		Total Investments (Cost $16,750,323)—100.5%		18,872,104
		Liabilities in excess of other assets—(0.5%)		(84,597	)
		Net Assets—100.0%	$	18,787,507

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	17,568,693			93.5	%
Netherlands		581,336			3.1
Cayman Islands		383,569			2.1
Bermuda		338,506			1.8
Total investments		18,872,104			100.5
Liabilities in excess of other assets		(84,597	)		(0.5	)
Net Assets	$	18,787,507			100.0	%

See Notes to Financial Statements.
50

Schedule of Investments

PowerShares FTSE RAFI Financials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—98.3%
		Banks—23.3%
	665	Associated Banc-Corp	$	21,533
	487	BancorpSouth, Inc.		11,966
	9,202	Bank of America Corp.		468,382
	235	Bank of Hawaii Corp.		12,432
	3,048	Bank of New York Co. (The), Inc.		123,383
	3,137	BB&T Corp.		130,562
	210	BOK Financial Corp.		10,779
	1,248	Capital One Financial Corp.		92,676
	206	City National Corp.		15,083
	691	Colonial BancGroup (The), Inc.		16,625
	1,151	Comerica, Inc.		71,258
	562	Commerce Bancorp, Inc.		18,793
	295	Commerce Bancshares, Inc.		13,965
	448	Compass Bancshares, Inc.		30,545
	228	Cullen/Frost Bankers, Inc.		11,667
	3,266	Fifth Third Bancorp		132,567
	841	First Horizon National Corp.		32,976
	696	FirstMerit Corp.		14,532
	1,351	Fremont General Corp.		10,200
	924	Fulton Financial Corp.		13,601
	1,522	Huntington Bancshares, Inc.		33,758
	2,619	Keycorp		93,446
	407	M&T Bank Corp.		45,315
	979	Marshall & Ilsley Corp.		47,012
	1,466	Mellon Financial Corp.		62,935
	4,631	National City Corp.		169,263
	693	Northern Trust Corp.		43,624
	1,776	PNC Financial Services Group, Inc.		131,602
	2,062	Popular, Inc.		34,662
	2,571	Regions Financial Corp.		90,216
	586	Sky Financial Group, Inc.		15,969
	383	South Financial Group (The), Inc.		8,667
	972	State Street Corp.		66,942
	1,799	SunTrust Banks, Inc.		151,872
	1,242	Synovus Financial Corp.		39,198
	723	TCF Financial Corp.		19,579
	333	Trustmark Corp.		8,861
	790	UnionBanCal Corp.		48,569
	9,067	US Bancorp		311,451
	594	Valley National Bancorp		15,070
	8,366	Wachovia Corp.		464,648
	287	Webster Financial Corp.		12,757
	15,959	Wells Fargo & Co.		572,769
	328	Whitney Holding Corp.		10,093
	329	Wilmington Trust Corp.		13,311
	398	Zions Bancorp		32,556
				3,797,670
		Commercial Services—0.2%
	325	Equifax, Inc.		12,935
	249	Moody's Corp.		16,464
				29,399

Number of Shares			Value
		Common Stocks (Continued)
		Diversified Financial Services—34.4%
	313	AG Edwards, Inc.	$	22,677
	3,366	American Express Co.		204,215
	773	AmeriCredit Corp.*		19,503
	1,116	Ameriprise Financial, Inc.		66,369
	550	Bear Stearns (The) Cos., Inc.		85,635
	2,458	Charles Schwab (The) Corp.		46,997
	22	Chicago Mercantile Exchange Holdings, Inc.		11,369
	1,165	CIT Group, Inc.		69,492
	20,652	Citigroup, Inc.		1,107,360
	3,818	Countrywide Financial Corp.		141,571
	4,796	Doral Financial Corp.*		6,714
	1,290	E*Trade Financial Corp.*		28,483
	318	Federated Investors, Inc., Class B		12,135
	455	Franklin Resources, Inc.		59,746
	4,816	Freddie Mac		311,980
	2,733	Friedman Billings Ramsey Group, Inc., Class A		15,168
	1,263	Goldman Sachs Group (The), Inc.		276,104
	449	IndyMac Bancorp, Inc.		13,578
	759	Janus Capital Group, Inc.		18,990
	366	Jefferies Group, Inc.		11,602
	37,487	JPMorgan Chase & Co.		1,953,074
	508	Lazard Ltd., Class A (Bermuda)		27,508
	205	Legg Mason, Inc.		20,334
	2,004	Lehman Brothers Holdings, Inc.		150,861
	3,618	Merrill Lynch & Co., Inc.		326,452
	4,821	Morgan Stanley		405,012
	197	Nuveen Investments, Inc., Class A		10,500
	248	NYSE Euronext, Inc.*		20,914
	398	Raymond James Financial, Inc.		12,211
	1,507	SLM Corp.		81,122
	93	Student Loan Corp.		18,944
	505	T. Rowe Price Group, Inc.		25,088
	821	TD Ameritrade Holding Corp.*		13,998
	972	Thornburg Mortgage, Inc.		27,022
				5,622,728
		Forest Products & Paper—0.3%
	1,082	Plum Creek Timber Co., Inc.		42,955
		Insurance—28.7%
	1,563	ACE Ltd. (Cayman Islands)		92,936
	1,951	AFLAC, Inc.		100,164
	29	Alleghany Corp.*		10,376
	454	Allied World Assurance Holdings Ltd. (Bermuda)		20,121
	3,696	Allstate (The) Corp.		230,336
	399	AMBAC Financial Group, Inc.		36,628
	659	American Financial Group, Inc.		23,243
	10,883	American International Group, Inc.		760,832
	210	American National Insurance		27,409
	1,804	AON Corp.		69,905

See Notes to Financial Statements.
51

Schedule of Investments (Continued)

PowerShares FTSE RAFI Financials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	295	Arch Capital Group Ltd. (Bermuda)*	$	21,482
	457	Arthur J. Gallagher & Co.		12,778
	348	Aspen Insurance Holdings Ltd. (Bermuda)		9,225
	616	Assurant, Inc.		35,438
	583	Axis Capital Holdings Ltd. (Bermuda)		21,629
	209	Berkshire Hathaway, Inc., Class B*		758,253
	2,012	Chubb Corp.		108,306
	883	Cincinnati Financial Corp.		39,947
	1,349	CNA Financial Corp.		62,958
	490	Commerce Group, Inc.		15,979
	628	Conseco, Inc.*		11,109
	332	Endurance Specialty Holdings Ltd. (Bermuda)		12,423
	274	Erie Indemnity Co., Class A		14,399
	265	Everest Re Group Ltd. (Bermuda)		26,670
	1,216	Fidelity National Title Group, Inc.		30,996
	693	First American Corp.		35,690
	5,141	Genworth Financial, Inc., Class A		187,595
	329	Hanover Insurance Group (The), Inc.		15,121
	1,481	Hartford Financial Services Group (The), Inc.		149,877
	374	HCC Insurance Holdings, Inc.		11,467
	207	LandAmerica Financial Group, Inc.		16,632
	894	Lincoln National Corp.		63,608
	1,875	Loews Corp.		88,725
	29	Markel Corp.*		13,308
	4,221	Marsh & McLennan Cos., Inc.		134,059
	799	MBIA, Inc.		55,578
	363	Mercury General Corp.		19,656
	3,458	MetLife, Inc.		227,191
	463	MGIC Investment Corp.		28,525
	909	Montpelier Re Holdings Ltd. (Bermuda)		16,598
	761	Nationwide Financial Services, Class A		43,476
	306	Odyssey Re Holdings Corp.		12,821
	346	Ohio Casualty Corp.		10,947
	1,838	Old Republic International Corp.		39,094
	347	PartnerRe Ltd. (Bermuda)		24,991
	927	Phoenix (The) Cos., Inc.		13,812
	408	PMI Group (The), Inc.		19,776
	957	Principal Financial Group, Inc.		60,760
	2,795	Progressive (The) Corp.		64,481
	419	Protective Life Corp.		19,651
	2,042	Prudential Financial, Inc.		193,990
	368	Radian Group, Inc.		21,384
	322	Reinsurance Group of America, Inc.		20,064
	291	RenaissanceRe Holdings Ltd. (Bermuda)		15,758
	666	Safeco Corp.		44,449
	277	Stancorp Financial Group, Inc.		13,185
	475	Torchmark Corp.		32,443
	292	Transatlantic Holdings, Inc.		20,291
	2,886	Travelers (The) Cos., Inc.		156,133
	565	Unitrin, Inc.		26,640
	2,789	UnumProvident Corp.		69,390
	21	Wesco Financial Corp.		9,345

Number of Shares			Value
		Common Stocks (Continued)
	42	White Mountains Insurance Group Ltd. (Bermuda)	$	24,066
	521	Willis Group Holdings Ltd. (Bermuda)		21,371
	695	WR Berkley Corp.		22,581
	941	XL Capital Ltd., Class A (Cayman Islands)		73,379
				4,691,450
		Investment Companies—0.5%
	1,118	Allied Capital Corp.		32,310
	652	American Capital Strategies Ltd.		31,739
	473	Tri-Continental Corp.		11,901
				75,950
		Real estate—0.1%
	344	CB Richard Ellis Group, Inc., Class A*		11,644
	291	W.P. Carey & Co. LLC		9,967
				21,611
		REITS—7.8%
	411	AMB Property Corp.		25,034
	887	American Financial Realty Trust		9,402
	396	American Home Mortgage Investment Corp.		9,813
	2,139	Annaly Capital Management, Inc.		34,031
	628	Apartment Investment & Management Co., Class A		34,728
	1,766	Archstone-Smith Trust		92,027
	232	AvalonBay Communities, Inc.		28,364
	452	Boston Properties, Inc.		53,137
	304	Brandywine Realty Trust		9,996
	200	BRE Properties, Inc., Class A		12,008
	247	Camden Property Trust		17,204
	330	CBL & Associates Properties, Inc.		14,999
	273	Colonial Properties Trust		13,544
	285	Cousins Properties, Inc.		9,567
	1,210	Crescent Real Estate EQT Co.		24,817
	391	Developers Diversified Realty Corp.		25,454
	859	Duke Realty Corp.		37,031
	175	Equity Lifestyle Properties, Inc.		9,497
	369	Equity One, Inc.		10,306
	473	Equity Residential		21,961
	70	Essex Property Trust, Inc.		9,020
	157	Federal Realty Investment Trust		14,157
	355	First Industrial Realty Trust, Inc.		15,545
	577	General Growth Properties, Inc.		36,841
	362	Glimcher Realty Trust		9,778
	740	Health Care Property Investors, Inc.		26,189
	353	Health Care REIT, Inc.		15,970
	383	Healthcare Realty Trust, Inc.		13,045
	392	Highwoods Properties, Inc.		15,986
	247	Home Properties, Inc.		13,758
	621	Hospitality Properties Trust		28,274
	980	Host Hotels & Resorts, Inc.		25,127
	1,712	HRPT Properties Trust		20,955

See Notes to Financial Statements.
52

Schedule of Investments (Continued)

PowerShares FTSE RAFI Financials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	1,562	IMPAC Mortgage Holdings, Inc.	$	8,669
	791	iStar Financial, Inc.		37,905
	664	Kimco Realty Corp.		31,918
	548	Liberty Property Trust		26,518
	203	Macerich (The) Co.		19,309
	554	Mack-Cali Realty Corp.		27,129
	389	Nationwide Health Properties, Inc.		12,471
	348	Newcastle Investment Corp.		10,165
	1,525	NovaStar Financial, Inc.		11,224
	222	Pennsylvania Real Estate Investment Trust		10,314
	273	Post Properties, Inc.		12,796
	232	Potlatch Corp.		10,066
	705	Prologis		45,684
	368	Public Storage, Inc.		34,342
	378	Rayonier, Inc.		16,394
	466	Realty Income Corp.		13,001
	294	Redwood Trust, Inc.		14,762
	229	Regency Centers Corp.		18,870
	482	Senior Housing Properties Trust		11,004
	342	Simon Property Group, Inc.		39,426
	80	SL Green Realty Corp.		11,272
	615	Strategic Hotels & Resorts, Inc.		13,315
	594	United Dominion Realty Trust, Inc.		17,844
	265	Ventas, Inc.		11,172
	484	Vornado Realty Trust		57,418
	378	Weingarten Realty Investors		18,091
				1,278,644
		Savings & Loans—2.8%
	615	Astoria Financial Corp.		16,334
	145	Downey Financial Corp.		9,708
	2,162	Hudson City Bancorp, Inc.		28,798
	1,870	New York Community Bancorp, Inc.		32,650
	689	People's United Financial, Inc.		13,718
	1,427	Sovereign Bancorp, Inc.		34,633
	552	Washington Federal, Inc.		13,088
	7,324	Washington Mutual, Inc.		307,463
				456,392
		Software—0.2%
	200	Mastercard, Inc., Class A		22,336
	315	MoneyGram International, Inc.		8,955
				31,291
		Total Common Stocks (Cost $15,346,146)		16,048,090

Number of Shares			Value
		Money Market Fund—0.1%
	17,423	Liquid Assets Portfolio Private Class** (Cost $17,423)	$	17,423
		Total Investments (Cost $15,363,569)—98.4%		16,065,513
		Other assets less liabilities—1.6%		253,447
		Net Assets—100.0%	$	16,318,960

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	15,657,356		95.9	%
Bermuda		241,842		1.5
Cayman Islands		166,315		1.0
Total investments		16,065,513		98.4
Other assets less liabilities		253,447		1.6
Net Assets	$	16,318,960		100.0	%

See Notes to Financial Statements.
53

Schedule of Investments

PowerShares FTSE RAFI Health Care Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.6%
		Biotechnology—5.9%
	7,951	Amgen, Inc.*	$	509,977
	3,113	Biogen Idec, Inc.*		146,965
	993	Charles River Laboratories International, Inc.*		47,028
	4,038	Genentech, Inc.*		323,000
	2,071	Genzyme Corp.*		135,257
	827	Invitrogen Corp.*		54,144
	1,359	Medimmune, Inc.*		77,028
				1,293,399
		Distribution/Wholesale—0.2%
	1,379	Owens & Minor, Inc.		48,748
		Electronics—0.7%
	1,840	Applera Corp. - Applied Biosystems Group		57,482
	1,816	Thermo Fisher Scientific, Inc.*		94,541
				152,023
		Health Care Equipment & Supplies—0.2%
	884	Advanced Medical Optics, Inc. *		35,740
		Healthcare-Products—21.1%
	1,841	Alcon, Inc. (Switzerland)		248,406
	1,114	Bausch & Lomb, Inc.		65,537
	6,515	Baxter International, Inc.		368,944
	879	Beckman Coulter, Inc.		55,210
	2,170	Becton Dickinson & Co.		170,757
	1,446	Biomet, Inc.		62,467
	11,533	Boston Scientific Corp.*		178,070
	754	CR Bard, Inc.		62,680
	826	Dade Behring Holdings, Inc.		40,565
	1,405	Dentsply International, Inc.		46,941
	1,277	Henry Schein, Inc.*		66,570
	1,072	Hillenbrand Industries, Inc.		65,553
	35,835	Johnson & Johnson		2,301,323
	8,322	Medtronic, Inc.		440,483
	1,340	Patterson Cos., Inc.*		48,320
	2,469	St. Jude Medical, Inc.*		105,649
	1,840	Stryker Corp.		119,490
	734	Varian Medical Systems, Inc.*		30,982
	1,620	Zimmer Holdings, Inc.*		146,578
				4,624,525
		Healthcare-Services—14.4%
	7,320	Aetna, Inc.		343,162
	1,145	Apria Healthcare Group, Inc.*		36,342
	2,041	Community Health Systems, Inc.*		75,109
	1,979	Coventry Health Care, Inc.*		114,446
	1,161	DaVita, Inc.*		63,402
	2,788	Health Net, Inc.*		150,719
	2,857	Humana, Inc.*		180,677
	1,743	Kindred Healthcare, Inc.*		60,866
	1,183	Laboratory Corp. of America Holdings*		93,386

Number of Shares			Value
		Common Stocks (Continued)
	1,136	LifePoint Hospitals, Inc.*	$	41,475
	1,389	Lincare Holdings, Inc.*		54,782
	915	Magellan Health Services, Inc.*		39,254
	1,033	Manor Care, Inc.		67,031
	2,227	Quest Diagnostics, Inc.		108,878
	31,449	Tenet Healthcare Corp.*		233,352
	3,089	Triad Hospitals, Inc.*		164,149
	11,226	UnitedHealth Group, Inc.		595,652
	1,079	Universal Health Services, Inc., Class B		65,517
	8,584	WellPoint, Inc.*		677,877
				3,166,076
		Insurance—1.5%
	2,145	CIGNA Corp.		333,741
		Pharmaceuticals—55.6%
	19,255	Abbott Laboratories		1,090,218
	623	Allergan, Inc.		75,508
	870	Barr Pharmaceuticals, Inc.*		42,073
	47,306	Bristol-Myers Squibb Co.		1,365,251
	16,725	Eli Lilly & Co.		988,949
	2,332	Express Scripts, Inc.*		222,823
	2,193	Forest Laboratories, Inc.*		116,690
	1,137	Gilead Sciences, Inc.*		92,916
	1,987	Hospira, Inc.*		80,573
	4,099	King Pharmaceuticals, Inc.*		83,825
	7,303	Medco Health Solutions, Inc.*		569,780
	51,658	Merck & Co., Inc.		2,657,287
	3,012	Mylan Laboratories, Inc.		66,053
	116,416	Pfizer, Inc.		3,080,366
	18,211	Schering-Plough Corp.		577,835
	2,678	Watson Pharmaceuticals, Inc.*		73,109
	17,791	Wyeth		987,401
				12,170,657
		Total Common Stocks (Cost $20,320,285)		21,824,909
		Money Market Fund—0.4%
	76,365	Liquid Assets Portfolio Private Class** (Cost $76,365)		76,365
		Total Investment (Cost $20,396,650)—100.0%		21,901,274
		Other assets less liabilities—0.0%		1,512
		Net Assets—100.0%	$	21,902,786

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
54

Schedule of Investments (Continued)

PowerShares FTSE RAFI Health Care Sector Portfolio

April 30, 2007

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	21,652,868		98.9	%
Switzerland		248,406		1.1
Total investments		21,901,274		100.0
Other assets less liabilities		1,512		0.0
Net Assets	$	21,902,786		100.0	%

See Notes to Financial Statements.
55

Schedule of Investments

PowerShares FTSE RAFI Industrials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.1%
		Aerospace/Defense—13.3%
	726	Alliant Techsystems, Inc.*	$	67,612
	13,670	Boeing Co.		1,271,311
	6,536	General Dynamics Corp.		513,076
	2,954	Goodrich Corp.		167,905
	1,915	L-3 Communications Holdings, Inc.		172,216
	7,023	Lockheed Martin Corp.		675,191
	10,119	Northrop Grumman Corp.		745,163
	10,970	Raytheon Co.		587,334
	1,470	Rockwell Collins, Inc.		96,535
	315	Sequa Corp., Class A*		36,918
	68	Sequa Corp., Class B*		8,092
	16,540	United Technologies Corp.		1,110,330
				5,451,683
		Auto Manufacturers—1.1%
	843	Oshkosh Truck Corp.		47,157
	4,840	Paccar, Inc.		406,464
				453,621
		Building Materials—1.9%
	8,585	American Standard Cos., Inc.		472,689
	2,952	Builders FirstSource, Inc.*		47,616
	1,749	Lennox International, Inc.		59,134
	540	Martin Marietta Materials, Inc.		78,743
	1,715	Masco Corp.		46,665
	1,138	USG Corp.*		52,519
				757,366
		Chemicals—0.4%
	2,450	Sherwin-Williams (The) Co.		156,237
		Commercial Services—4.8%
	10,186	Accenture Ltd., Class A (Bermuda)		398,272
	811	Alliance Data Systems Corp.*		51,628
	1,327	ChoicePoint, Inc.*		50,386
	3,512	Convergys Corp.*		88,713
	910	Corrections Corp. of America*		51,688
	2,369	Deluxe Corp.		89,667
	2,489	Hewitt Associates, Inc., Class A*		74,048
	2,892	Iron Mountain, Inc.*		81,265
	2,090	Kelly Services, Inc., Class A		59,983
	2,409	Manpower, Inc.		193,322
	871	Monster Worldwide, Inc.*		36,626
	4,677	PHH Corp.*		142,649
	1,949	Quanta Services, Inc.*		53,578
	1,444	Robert Half International, Inc.		48,085
	6,266	RR Donnelley & Sons Co.		251,893
	4,489	United Rentals, Inc.*		150,382
	5,678	Western Union (The) Co.		119,522
				1,941,707

Number of Shares			Value
		Common Stocks (Continued)
		Computers—0.6%
	2,829	Affiliated Computer Services, Inc., Class A*	$	169,485
	1,876	Ceridian Corp.*		63,334
				232,819
		Distribution/Wholesale—0.5%
	1,802	W.W. Grainger, Inc.		148,881
	974	WESCO International, Inc.*		61,528
				210,409
		Electric—0.3%
	4,252	MDU Resources Group, Inc.		128,836
		Electrical Components & Equipment—2.2%
	15,757	Emerson Electric Co.		740,421
	1,613	Hubbell, Inc., Class B		83,376
	1,666	Molex, Inc.		49,780
	1,211	Molex, Inc., Class A		32,443
				906,020
		Electronics—4.1%
	5,459	Agilent Technologies, Inc.*		187,626
	5,049	Arrow Electronics, Inc.*		199,536
	4,126	Avnet, Inc.*		168,753
	4,105	AVX Corp.		68,307
	2,154	Benchmark Electronics, Inc.*		45,622
	22,154	Flextronics International Ltd. (Singapore)*		247,017
	504	Mettler Toledo International, Inc.*		49,200
	2,745	PerkinElmer, Inc.		66,429
	52,070	Sanmina-SCI Corp.*		179,642
	106,607	Solectron Corp.*		357,134
	7,437	Vishay Intertechnology, Inc.*		123,826
				1,693,092
		Engineering & Construction—1.6%
	1,172	EMCOR Group, Inc.*		73,473
	1,863	Fluor Corp.		178,140
	3,335	Jacobs Engineering Group, Inc.*		168,184
	2,170	Shaw Group (The), Inc.*		70,373
	1,870	URS Corp.*		81,719
	1,078	Washington Group International, Inc.*		72,140
				644,029
		Environmental Control—2.2%
	19,168	Allied Waste Industries, Inc.*		256,276
	5,325	Republic Services, Inc.		148,727
	13,326	Waste Management, Inc.		498,526
				903,529
		Forest Products & Paper—1.6%
	4,359	Louisiana-Pacific Corp.		85,916
	7,399	MeadWestvaco Corp.		246,830
	15,832	Smurfit-Stone Container Corp.*		190,776
	2,350	Temple-Inland, Inc.		139,214
				662,736

See Notes to Financial Statements.
56

Schedule of Investments (Continued)

PowerShares FTSE RAFI Industrials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
		Hand/Machine Tools—0.2%
	895	Kennametal, Inc.	$	63,151
		Household Products/Wares—0.6%
	3,128	Fortune Brands, Inc.		250,553
		Internet—0.1%
	1,134	Checkfree Corp.*		38,170
		Machinery-Construction & Mining—2.5%
	12,822	Caterpillar, Inc.		931,133
	1,355	Terex Corp.*		105,487
				1,036,620
		Machinery-Diversified—2.6%
	2,037	AGCO Corp.*		85,004
	2,170	Cummins, Inc.		199,987
	4,311	Deere & Co.		471,623
	1,256	Flowserve Corp.		76,629
	379	NACCO Industries, Inc., Class A		60,405
	2,515	Rockwell Automation, Inc.		149,743
	2,005	Tecumseh Products Co., Class A*		20,371
	570	Tecumseh Products Co., Class B*		5,837
				1,069,599
		Metal Fabricate/Hardware—0.6%
	1,643	Mueller Industries, Inc.		53,890
	846	Precision Castparts Corp.		88,077
	3,389	Timken (The) Co.		111,770
				253,737
		Mining—0.4%
	1,183	Vulcan Materials Co.		146,302
		Miscellaneous Manufacturing—37.9%
	14,404	3M Co.		1,192,218
	813	Acuity Brands, Inc.		48,065
	1,099	Brink's (The) Co.		69,787
	1,228	Carlisle Cos., Inc.		50,569
	5,468	Cooper Industries Ltd., Class A (Bermuda)		272,088
	1,335	Crane Co.		56,751
	2,722	Danaher Corp.		193,779
	3,817	Dover Corp.		183,674
	3,212	Eaton Corp.		286,543
	238,203	General Electric Co.		8,780,162
	1,786	Harsco Corp.		91,086
	17,931	Honeywell International, Inc.		971,501
	8,826	Illinois Tool Works, Inc.		452,862
	6,922	Ingersoll-Rand Co. Ltd., Class A (Bermuda)		309,067
	2,799	ITT Corp.		178,604
	2,109	Pall Corp.		88,473
	2,326	Parker Hannifin Corp.		214,318
	2,677	Pentair, Inc.		86,039
	1,703	SPX Corp.		120,709

Number of Shares			Value
		Common Stocks (Continued)
	1,029	Teleflex, Inc.	$	73,913
	3,098	Textron, Inc.		314,974
	1,177	Trinity Industries, Inc.		54,613
	43,973	Tyco International Ltd. (Bermuda)		1,434,838
				15,524,633
		Packaging & Containers—3.1%
	2,200	Ball Corp.		111,518
	2,890	Bemis Co., Inc.		96,006
	6,241	Crown Holdings, Inc.*		150,845
	10,242	Graphic Packaging Corp.*		52,541
	660	Greif, Inc., Class A		36,696
	194	Greif, Inc., Class B		9,855
	7,593	Owens-Illinois, Inc.*		228,473
	2,391	Packaging Corp. of America		59,201
	3,044	Pactiv Corp.*		105,262
	7,732	Sealed Air Corp.		254,383
	883	Silgan Holdings, Inc.		50,667
	2,861	Sonoco Products Co.		121,993
				1,277,440
		Retail—0.1%
	980	World Fuel Services Corp.		45,286
		Software—3.8%
	7,803	Automatic Data Processing, Inc.		349,262
	1,950	Broadridge Financial Solutions, Inc.*		39,078
	6,253	Fidelity National Information Services, Inc.		315,964
	15,002	First Data Corp.		486,065
	2,652	Fiserv, Inc.*		141,007
	2,048	IMS Health, Inc.		60,068
	3,151	Paychex, Inc.		116,902
	1,636	Total System Services, Inc.		50,814
				1,559,160
		Telecommunications—0.2%
	1,049	Anixter International, Inc.*		75,108
		Transportation—12.2%
	1,105	Alexander & Baldwin, Inc.		59,062
	6,366	Burlington Northern Santa Fe Corp.		557,280
	1,446	CH Robinson Worldwide, Inc.		77,303
	1,684	Con-way, Inc.		91,997
	9,006	CSX Corp.		388,789
	1,346	Expeditors International Washington, Inc.		56,263
	4,797	FedEx Corp.		505,796
	2,260	JB Hunt Transport Services, Inc.		61,156
	1,458	Kansas City Southern*		54,165
	7,928	Norfolk Southern Corp.		422,087
	1,064	Overseas Shipholding Group		75,331
	2,775	Ryder System, Inc.		146,076
	2,020	Ship Finance International Ltd. (Bermuda)		60,075
	2,345	Swift Transportation Co., Inc.*		73,352
	1,998	Teekay Shipping Corp. (Marshall Islands)		119,181

See Notes to Financial Statements.
57

Schedule of Investments (Continued)

PowerShares FTSE RAFI Industrials Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	6,147	Union Pacific Corp.	$	702,294
	19,896	United Parcel Service, Inc., Class B		1,401,274
	2,295	Werner Enterprises, Inc.		43,398
	2,878	YRC Worldwide, Inc.*		114,516
				5,009,395
		Trucking & Leasing—0.2%
	1,846	GATX Corp.		90,472
		Total Common Stocks (Cost $37,675,962)		40,581,710
		Money Market Fund—0.1%
	35,802	Liquid Assets Portfolio Private Class** (Cost $35,802)		35,802
		Total Investments (Cost $37,711,764)—99.2%		40,617,512
		Other assets less liabilities—0.8%		310,387
		Net Assets—100.0%	$	40,927,899

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value		Net Assets
United States	$	37,776,974		92.3	%
Bermuda		2,474,340		6.0
Singapore		247,017		0.6
Marshall Islands		119,181		0.3
Total Investments		40,617,512		99.2
Other assets less liabilities		310,387		0.8
Net Assets	$	40,927,899		100.0	%

See Notes to Financial Statements.
58

Schedule of Investments

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—100.1%
		Computers—20.5%
	1,474	Apple, Inc.*	$	147,105
	1,716	Cadence Design Systems, Inc.*		38,095
	3,378	Computer Sciences Corp.*		187,614
	17,424	Dell, Inc.*		439,259
	712	Diebold, Inc.		33,941
	449	DST Systems, Inc.*		35,044
	9,073	Electronic Data Systems Corp.		265,295
	13,239	EMC Corp.*		200,968
	10,043	Gateway, Inc.*		21,994
	14,962	Hewlett-Packard Co.		630,499
	9,309	International Business Machines		951,473
	1,037	Lexmark International, Inc., Class A*		56,517
	1,479	NCR Corp.*		74,542
	695	Network Appliance, Inc.*		25,861
	1,337	Perot Systems Corp., Class A*		23,932
	1,036	SanDisk Corp.*		45,014
	3,189	Seagate Technology (Cayman Islands)		70,636
	25,953	Sun Microsystems, Inc.*		135,475
	961	Synopsys, Inc.*		26,581
	5,999	Unisys Corp.*		47,032
	1,442	Western Digital Corp.*		25,495
				3,482,372
		Distribution/Wholesale—2.2%
	658	CDW Corp.		47,383
	8,442	Ingram Micro, Inc., Class A*		165,631
	3,227	Tech Data Corp.*		114,688
	623	United Stationers, Inc.*		37,081
				364,783
		Holding Companies-Diversified—0.2%
	1,157	Leucadia National Corp.		34,872
		Internet—2.3%
	1,298	Check Point Software Technologies (Israel)*		30,568
	272	Google, Inc., Class A*		128,215
	795	McAfee, Inc.*		25,830
	3,401	Symantec Corp.*		59,858
	1,384	VeriSign, Inc.*		37,852
	3,549	Yahoo!, Inc.*		99,514
				381,837
		Office/Business Equipment—2.1%
	2,946	IKON Office Solutions, Inc.		44,072
	2,462	Pitney Bowes, Inc.		118,176
	10,040	Xerox Corp.*		185,740
				347,988
		Retail—0.1%
	1,263	Insight Enterprises, Inc.*		25,033
		Semiconductors—12.7%
	3,025	Advanced Micro Devices, Inc.*		41,806

Number of Shares			Value
		Common Stocks (Continued)
	1,129	Altera Corp.	$	25,448
	1,856	Amkor Technology, Inc.*		25,965
	1,494	Analog Devices, Inc.		57,698
	6,667	Applied Materials, Inc.		128,140
	4,376	Atmel Corp.*		23,280
	1,048	Broadcom Corp., Class A*		34,112
	1,344	Fairchild Semiconductor International, Inc.*		23,654
	48,790	Intel Corp.		1,048,986
	574	International Rectifier Corp.*		20,251
	865	Intersil Corp., Class A		25,768
	745	Kla-Tencor Corp.		41,385
	489	Lam Research Corp.*		26,298
	1,276	Linear Technology Corp.		47,748
	5,227	LSI Logic Corp.*		44,430
	1,896	Marvell Technology Group Ltd. (Bermuda)*		30,582
	1,506	Maxim Integrated Products, Inc.		47,770
	660	Microchip Technology, Inc.		26,624
	335	Micron Technology, Inc.*		3,842
	1,193	National Semiconductor Corp.		31,376
	883	Novellus Systems, Inc.*		28,583
	1,045	NVIDIA Corp.*		34,370
	2,550	Spansion, Inc., Class A*		25,041
	1,203	Teradyne, Inc.*		20,992
	7,263	Texas Instruments, Inc.		249,630
	1,348	Xilinx, Inc.		39,739
				2,153,518
		Software—18.2%
	889	Adobe Systems, Inc.*		36,947
	1,931	BEA Systems, Inc.*		22,766
	901	BMC Software, Inc.*		29,165
	2,488	CA, Inc.		67,823
	660	Citrix Systems, Inc.*		21,516
	2,839	Compuware Corp.*		28,021
	1,306	Intuit, Inc.*		37,156
	81,833	Microsoft Corp.		2,450,079
	3,175	Novell, Inc.*		23,178
	18,112	Oracle Corp.*		340,506
	1,594	SYNNEX Corp.*		31,163
				3,088,320
		Telecommunications—41.8%
	4,601	ALLTEL Corp.		288,437
	1,124	Amdocs Ltd. (Guernsey)*		41,307
	1,507	American Tower Corp., Class A*		57,266
	2,408	Andrew Corp.*		26,295
	46,854	AT&T, Inc.		1,814,186
	4,697	Avaya, Inc.*		60,685
	1,551	CenturyTel, Inc.		71,424
	4,552	Cincinnati Bell, Inc.*		23,079
	20,096	Cisco Systems, Inc.*		537,367
	6,015	Citizens Communications Co.		93,654
	3,741	Corning, Inc.*		88,737

See Notes to Financial Statements.
59

Schedule of Investments (Continued)

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks (Continued)
	796	Crown Castle International Corp.*	$	27,335
	3,262	Embarq Corp.		195,850
	585	Harris Corp.		30,040
	1,348	JDS Uniphase Corp.*		22,215
	3,951	Juniper Networks, Inc.*		88,344
	3,050	Level 3 Communications, Inc.*		16,958
	20,894	Motorola, Inc.		362,093
	296	NII Holdings, Inc.*		22,718
	4,249	Qualcomm, Inc.		186,106
	18,179	Qwest Communications International, Inc.*		161,430
	35,854	Sprint Nextel Corp.		718,156
	597	Telephone & Data Systems, Inc.		33,999
	670	Telephone & Data Systems, Inc., Special Shares		35,376
	3,756	Tellabs, Inc.*		39,889
	843	US Cellular Corp.*		61,118
	2,426	Utstarcom, Inc.*		17,322
	49,913	Verizon Communications, Inc.		1,905,677
	2,601	Virgin Media, Inc.		65,623
				7,092,686
		Total Common Stocks (Cost $15,774,837)		16,971,409
		Money Market Fund—0.2%
	31,535	Liquid Assets Portfolio Private Class** (Cost $31,535)		31,535
		Total Investments (Cost $15,806,372)—100.3%		17,002,944
		Liabilities in excess of other assets—(0.3%)		(54,744	)
		Net Assets—100.0%	$	16,948,200

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

April 30, 2007 (Unaudited)

	Value			Net Assets
United States	$	16,829,851			99.3	%
Cayman Islands		70,636			0.4
Guernsey		41,307			0.2
Bermuda		30,582			0.2
Israel		30,568			0.2
Total Investments		17,002,944			100.3
Liabilities in excess of other assets		(54,744	)		(0.3	)
Net Assets	$	16,948,200			100.0	%

See Notes to Financial Statements.
60

Schedule of Investments

PowerShares FTSE RAFI Utilities Sector Portfolio

April 30, 2007

Number of Shares			Value
		Common Stocks—99.4%
		Electric—84.4%
	12,844	AES (The) Corp.*	$	282,440
	2,510	Allegheny Energy, Inc.*		134,185
	1,345	ALLETE, Inc.		65,111
	3,613	Alliant Energy Corp.		158,249
	7,193	Ameren Corp.		378,136
	16,757	American Electric Power Co., Inc.		841,537
	29,983	Aquila, Inc.*		123,830
	2,256	Avista Corp.		53,219
	1,234	Black Hills Corp.		49,126
	19,369	CenterPoint Energy, Inc.		364,718
	1,652	Cleco Corp.		46,355
	9,854	CMS Energy Corp.		182,496
	9,573	Consolidated Edison, Inc.		490,712
	3,739	Constellation Energy Group, Inc.		333,220
	9,104	Dominion Resources, Inc.		830,285
	3,246	DPL, Inc.		101,762
	7,684	DTE Energy Co.		388,734
	34,208	Duke Energy Corp.		701,948
	3,061	Duquesne Light Holdings, Inc.		61,036
	9,010	Edison International		471,674
	7,191	Energy East Corp.		174,166
	4,584	Entergy Corp.		518,634
	12,147	Exelon Corp.		916,004
	9,023	FirstEnergy Corp.		617,534
	8,531	FPL Group, Inc.		549,140
	3,301	Great Plains Energy, Inc.		107,745
	3,244	Hawaiian Electric Industries, Inc.		85,382
	1,874	IDACORP, Inc.		64,559
	1,736	Integrys Energy Group, Inc.		97,390
	6,833	Mirant Corp.*		306,597
	5,470	Northeast Utilities		175,970
	1,146	NorthWestern Corp.		40,270
	1,411	NRG Energy, Inc.*		111,413
	3,779	NSTAR		135,666
	7,804	Pepco Holdings, Inc.		230,374
	10,077	PG&E Corp.		509,896
	3,928	Pinnacle West Capital Corp.		189,683
	2,208	PNM Resources, Inc.		71,870
	2,208	Portland General Electric Co.		63,988
	7,247	PPL Corp.		316,042
	10,578	Progress Energy, Inc.		534,718
	6,596	Public Service Enterprise Group, Inc.		570,224
	4,713	Puget Energy, Inc.		121,690
	17,358	Reliant Energy, Inc.*		386,563
	4,055	SCANA Corp.		176,514
	4,739	Sierra Pacific Resources*		86,534
	23,458	Southern Co.		886,477
	8,725	TECO Energy, Inc.		156,614
	6,926	TXU Corp.		454,207
	1,187	UIL Holdings Corp.		40,536
	1,163	Unisource Energy Corp.		44,671

Number of Shares			Value
		Common Stocks (Continued)
	3,223	Westar Energy, Inc.	$	87,730
	3,234	Wisconsin Energy Corp.		157,787
	17,931	Xcel Energy, Inc.		431,958
				15,477,319
		Environmental Control—0.5%
	3,355	Nalco Holding Co.		89,176
		Gas—9.6%
	1,969	AGL Resources, Inc.		85,730
	2,871	Atmos Energy Corp.		91,068
	954	Energen Corp.		53,472
	7,216	KeySpan Corp.		298,815
	946	New Jersey Resources Corp.		50,800
	1,781	Nicor, Inc.		91,258
	13,006	NiSource, Inc.		319,818
	2,243	Piedmont Natural Gas Co.		59,193
	5,416	Sempra Energy		343,808
	2,268	Southern Union Co.		69,083
	1,289	Southwest Gas Corp.		48,840
	3,188	UGI Corp.		90,412
	3,006	Vectren Corp.		87,384
	2,147	WGL Holdings, Inc.		72,654
				1,762,335
		Pipelines—4.7%
	1,435	Equitable Resources, Inc.		74,634
	2,228	National Fuel Gas Co.		104,738
	3,238	ONEOK, Inc.		156,752
	1,096	Questar Corp.		106,454
	16,044	Spectra Energy Corp.		418,749
				861,327
		Water—0.2%
	1,820	Aqua America, Inc.		40,240
		Total Common Stocks (Cost $15,983,137)		18,230,397
		Money Market Fund—0.5%
	98,220	Liquid Assets Portfolio Private Class** (Cost $98,220)		98,220
		Total Investments (Cost $16,081,357)—99.9%		18,328,617
		Other assets less liabilities—0.1%		9,650
		Net Assets—100.0%	$	18,338,267

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
61

Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

April 30, 2007

	FTSE RAFI US 1500 Small-Mid Portfolio			PowerShares FTSE RAFI Basic Materials Sector Portfolio		PowerShares PowerShares Consumer Goods Sector Portfolio			PowerShares FTSE RAFI Consumer Services Sector Portfolio			FTSE RAFI PowerShares FTSE RAFI Energy Sector Portfolio
ASSETS:
Unaffiliated investments at value	$	85,038,865		$	24,535,540	$	16,107,877		$	11,303,825		$	18,825,742
Affiliated investments at value		140,705			121,578		106,031			31,646			46,362
Cash		522,341			450,198		—			42,843			—
Receivables:
Dividends		37,978			13,489		12,433			3,151			2,109
Due from Adviser		13,136			15,312		15,788			15,876			16,608
Investments sold		—			3,201,107		—			314,187			—
Other assets		7,538			7,581		7,358			7,571			7,717
Total Assets		85,760,563			28,344,805		16,249,487			11,719,099			18,898,538
LIABILITIES:
Due to custodian		—			—		9,172			—			51,737
Payables:
Investments purchased		—			3,204,369		—			291,243			—
Accrued advisory fees		33,810			10,283		6,574			4,708			8,864
Accrued expenses		46,877			48,163		46,830			45,583			50,430
Total Liabilities		80,687			3,262,815		62,576			341,534			111,031
NET ASSETS	$	85,679,876		$	25,081,990	$	16,186,911		$	11,377,565		$	18,787,507
NET ASSETS CONSIST OF:
Paid-in capital	$	83,062,195		$	21,598,368	$	14,925,922		$	10,263,449		$	16,681,452
Undistributed net investment income		111,680			100,998		88,655			7,778			14,429
Accumulated net realized gain (loss) on investments		(427,456	)		23,410		(50,153	)		(29,340	)		(30,155	)
Net unrealized appreciation on investments		2,933,457			3,359,214		1,222,487			1,135,678			2,121,781
Net Assets	$	85,679,876		$	25,081,990	$	16,186,911		$	11,377,565		$	18,787,507
Shares outstanding (unlimited amount authorized, $0.01 par value)		1,500,000			400,000		300,000			200,000			300,000
Net asset value	$	57.12		$	62.70	$	53.96		$	56.89		$	62.63
Unaffiliated investments at cost	$	82,105,408		$	21,176,326	$	14,885,390		$	10,168,147		$	16,703,961
Affiliated investments at cost	$	140,705		$	121,578	$	106,031		$	31,646		$	46,362

See Notes to Financial Statements.
62

	PowerShares FTSE RAFI Financials Sector Portfolio			FTSE RAFI Health Care Sector Portfolio			PowerShares PowerShares FTSE RAFI Industrials Sector Portfolio			FTSE RAFI Telecommunications & Technology Sector Portfolio			PowerShares PowerShares FTSE RAFI Utilities Sector Portfolio
ASSETS:
Unaffiliated investments at value	$	16,048,090		$	21,824,909		$	40,581,710		$	16,971,409		$	18,230,397
Affiliated investments at value		17,423			76,365			35,802			31,535			98,220
Cash		248,933			—			330,013			—			17,475
Receivables:
Dividends		12,569			23,274			15,608			37,822			24,582
Due from Adviser		15,317			16,156			15,394			16,231			15,930
Investments sold		1,162,924			515,947			432,614			129,287			—
Other assets		7,583			7,509			7,618			7,593			7,518
Total Assets		17,512,839			22,464,160			41,418,759			17,193,877			18,394,122
LIABILITIES:
Due to custodian		—			2,509			—			59,977			—
Payables:
Investments purchased		1,144,596			499,733			422,317			130,260			—
Accrued advisory fees		4,776			9,360			16,703			7,445			7,490
Accrued expenses		44,507			49,772			51,840			47,995			48,365
Total Liabilities		1,193,879			561,374			490,860			245,677			55,855
NET ASSETS	$	16,318,960		$	21,902,786		$	40,927,899		$	16,948,200		$	18,338,267
NET ASSETS CONSIST OF:
Paid-in capital	$	15,580,514		$	20,430,620		$	38,056,354		$	15,786,765		$	16,004,966
Undistributed net investment income		60,071			15,785			5,984			34,900			92,800
Accumulated net realized gain (loss) on investments		(23,569	)		(48,243	)		(40,187	)		(70,037	)		(6,759	)
Net unrealized appreciation on investments		701,944			1,504,624			2,905,748			1,196,572			2,247,260
Net Assets	$	16,318,960		$	21,902,786		$	40,927,899		$	16,948,200		$	18,338,267
Shares outstanding (unlimited amount authorized, $0.01 par value)		300,000			400,000			700,000			300,000			300,000
Net asset value	$	54.40		$	54.76		$	58.47		$	56.49		$	61.13
Unaffiliated investments at cost	$	15,346,146		$	20,320,285		$	37,675,962		$	15,774,837		$	15,983,137
Affiliated investments at cost	$	17,423		$	76,365		$	35,802		$	31,535		$	98,220

63

Statements of Operations

For the Period September 20, 2006* through April 30, 2007

	FTSE RAFI US 1500 Small-Mid Portfolio			PowerShares FTSE RAFI Basic Materials Sector Portfolio			PowerShares PowerShares Consumer Goods Sector Portfolio			PowerShares FTSE RAFI Consumer Services Sector Portfolio			FTSE RAFI PowerShares FTSE RAFI Energy Sector Portfolio
INVESTMENT INCOME:
Unaffiliated dividend income	$	411,073		$	403,676		$	272,009		$	97,883		$	227,203
Affiliated dividend income		1,748			2,675			1,092			530			927
Foreign withholding taxes		(273	)		—			—			—			—
Total Income		412,548			406,351			273,101			98,413			228,130
EXPENSES:
Advisory fees		132,139			67,884			56,129			46,528			81,131
Licensing		26,428			13,577			11,226			9,306			16,226
Audit		16,500			16,500			16,500			16,500			16,500
Printing		13,822			8,272			7,619			6,906			10,464
Listing fee and expenses		11,395			11,406			11,361			11,386			11,708
Administration fees		9,373			8,357			8,155			7,943			8,800
Accounting		7,934			7,256			7,122			6,980			7,552
Offering costs		6,393			6,396			6,379			6,395			6,407
Custodian & transfer agent fees		2,965			2,584			2,517			2,446			2,732
Registration & filings		2,054			2,053			2,016			2,048			2,053
Legal		1,001			1,001			1,001			1,001			1,001
Trustees		951			435			391			305			666
Other expenses		12,235			13,905			12,235			12,235			12,235
Total Expenses		243,190			159,626			142,651			129,979			177,475
Less fees waived:
Advisory		(51,267	)		(55,988	)		(56,129	)		(46,528	)		(56,949	)
Other fees assumed by Adviser		—			—			(1,028	)		(11,382	)		—
Net Expenses		191,923			103,638			85,494			72,069			120,526
Net Investment Income		220,625			302,713			187,607			26,344			107,604
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(427,456	)		23,410			(50,153	)		(29,340	)		(30,155	)
In-kind redemptions		2,311,893			1,771,191			569,178			1,210,490			3,397,258
Net realized gain		1,884,437			1,794,601			519,025			1,181,150			3,367,103
Net unrealized appreciation on investments		2,933,457			3,359,214			1,222,487			1,135,678			2,121,781
Net realized and unrealized gain on investments		4,817,894			5,153,815			1,741,512			2,316,828			5,488,884
Net increase in net assets resulting from operations	$	5,038,519		$	5,456,528		$	1,929,119		$	2,343,172		$	5,596,488

*  Commencement of Investment Operations.

See Notes to Financial Statements.
64

	PowerShares FTSE RAFI Financials Sector Portfolio			FTSE RAFI Health Care Sector Portfolio			PowerShares PowerShares FTSE RAFI Industrials Sector Portfolio			FTSE RAFI Telecommunications & Technology Sector Portfolio			PowerShares PowerShares FTSE RAFI Utilities Sector Portfolio
INVESTMENT INCOME:
Unaffiliated dividend income	$	210,624		$	317,203		$	362,997		$	234,785		$	397,172
Affiliated dividend income		465			1,487			914			1,499			1,657
Foreign withholding taxes		(38	)		—			—			—			—
Total Income		211,051			318,690			363,911			236,284			398,829
EXPENSES:
Advisory fees		43,426			76,703			101,830			68,577			64,980
Licensing		8,685			15,341			20,366			13,715			12,996
Audit		16,500			16,500			16,500			16,500			16,500
Printing		5,840			9,708			11,452			9,056			8,294
Listing fee and expenses		11,114			11,670			11,395			11,389			11,665
Administration fees		7,851			8,644			9,116			8,475			8,389
Accounting		6,919			7,447			7,762			7,335			7,278
Offering costs		6,396			6,390			6,399			6,397			6,391
Custodian & transfer agent fees		2,416			2,680			2,837			2,624			2,595
Registration & filings		2,055			2,052			2,052			2,046			2,055
Legal		1,001			1,001			1,001			1,001			1,001
Trustees		282			596			804			521			522
Other expenses		12,235			12,235			12,401			12,235			12,235
Total Expenses		124,720			170,967			203,915			159,871			154,901
Less fees waived:
Advisory		(43,426	)		(56,657	)		(54,254	)		(56,931	)		(57,004	)
Other fees assumed by Adviser		(13,567	)		—			—			—			—
Net Expenses		67,727			114,310			149,661			102,940			97,897
Net Investment Income		143,324			204,380			214,250			133,344			300,932
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(23,658	)		(48,243	)		(40,187	)		(70,037	)		(6,759	)
In-kind redemptions		831,064			572,698			2,106,705			1,605,617			1,467,091
Net realized gain		807,406			524,455			2,066,518			1,535,580			1,460,332
Net unrealized appreciation on investments		701,944			1,504,624			2,905,748			1,196,572			2,247,260
Net realized and unrealized gain on investments		1,509,350			2,029,079			4,972,266			2,732,152			3,707,592
Net increase in net assets resulting from operations	$	1,652,674		$	2,233,459		$	5,186,516		$	2,865,496		$	4,008,524

65

Statements of Changes in Net Assets

For the Period September 20, 2006* through April 30, 2007

	FTSE RAFI US 1500 Small-Mid Portfolio			PowerShares FTSE RAFI Basic Materials Sector Portfolio			PowerShares PowerShares Consumer Goods Sector Portfolio			PowerShares FTSE RAFI Consumer Services Sector Portfolio			FTSE RAFI PowerShares FTSE RAFI Energy Sector Portfolio
OPERATIONS:
Net investment income	$	220,625		$	302,713		$	187,607		$	26,344		$	107,604
Net realized gain on investments		1,884,437			1,794,601			519,025			1,181,150			3,367,103
Net unrealized appreciation on investments		2,933,457			3,359,214			1,222,487			1,135,678			2,121,781
Net increase in net assets resulting from operations		5,038,519			5,456,528			1,929,119			2,343,172			5,596,488
Undistributed net investment income (loss) included in the price of units issued and redeemed		40,491			(71,185	)		(23,621	)		1,129			(15,535	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(107,528	)		(203,385	)		(98,952	)		(18,566	)		(93,175	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		102,455,043			42,703,830			29,685,007			30,486,275			47,515,291
Value of shares repurchased		(21,706,158	)		(22,874,983	)		(15,328,263	)		(21,433,316	)		(34,231,097	)
Net income equalization		(40,491	)		71,185			23,621			(1,129	)		15,535
Net increase in net assets resulting from shares transactions		80,708,394			19,900,032			14,380,365			9,051,830			13,299,729
Increase in Net Assets		85,679,876			25,081,990			16,186,911			11,377,565			18,787,507
NET ASSETS:
Beginning of period		—			—			—			—			—
End of period	$	85,679,876		$	25,081,990		$	16,186,911		$	11,377,565		$	18,787,507
Undistributed net investment income at end of period	$	111,680		$	100,998		$	88,655		$	7,778		$	14,429
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,900,000			800,000			600,000			600,000			900,000
Shares repurchased		(400,000	)		(400,000	)		(300,000	)		(400,000	)		(600,000	)
Shares outstanding, beginning of period		—			—			—			—			—
Shares outstanding, end of period		1,500,000			400,000			300,000			200,000			300,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
66

	PowerShares FTSE RAFI Financials Sector Portfolio			FTSE RAFI Health Care Sector Portfolio			PowerShares PowerShares FTSE RAFI Industrials Sector Portfolio			FTSE RAFI Telecommunications & Technology Sector Portfolio			PowerShares PowerShares FTSE RAFI Utilities Sector Portfolio
OPERATIONS:
Net investment income	$	143,324		$	204,380		$	214,250		$	133,344		$	300,932
Net realized gain on investments		807,406			524,455			2,066,518			1,535,580			1,460,332
Net unrealized appreciation on investments		701,944			1,504,624			2,905,748			1,196,572			2,247,260
Net increase in net assets resulting from operations		1,652,674			2,233,459			5,186,516			2,865,496			4,008,524
Undistributed net investment income (loss) included in the price of units issued and redeemed		(25,026	)		(4,231	)		8,755			(11,299	)		(61,710	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(83,164	)		(188,595	)		(208,432	)		(98,444	)		(208,132	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		41,076,550			45,224,207			68,623,129			41,066,412			47,129,478
Value of shares repurchased		(26,327,100	)		(25,366,285	)		(32,673,314	)		(26,885,264	)		(32,591,603	)
Net income equalization		25,026			4,231			(8,755	)		11,299			61,710
Net increase in net assets resulting from shares transactions		14,774,476			19,862,153			35,941,060			14,192,447			14,599,585
Increase in Net Assets		16,318,960			21,902,786			40,927,899			16,948,200			18,338,267
NET ASSETS:
Beginning of period		—			—			—			—			—
End of period	$	16,318,960		$	21,902,786		$	40,927,899		$	16,948,200		$	18,338,267
Undistributed net investment income at end of period	$	60,071		$	15,785		$	5,984		$	34,900		$	92,800
CHANGES IN SHARES OUTSTANDING:
Shares sold		800,000			900,000			1,300,000			800,000			900,000
Shares repurchased		(500,000	)		(500,000	)		(600,000	)		(500,000	)		(600,000	)
Shares outstanding, beginning of period		—			—			—			—			—
Shares outstanding, end of period		300,000			400,000			700,000			300,000			300,000

67

Financial Highlights

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.52
Net investment income**		0.27
Net realized and unrealized gain on investments		6.45
Total from operations		6.72
Undistributed net investment income included in price of units issued and redeemed**		0.05
Distributions to shareholders from:
Net investment income		(0.17	)
Net asset value at end of period	$	57.12
TOTAL RETURN***		13.42	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	85,680
Ratio to average net assets of:
Expenses, net of waivers		0.73	%†
Expenses, prior to waivers		0.92	%†
Net investment income, net of waivers		0.83	%†
Portfolio turnover rate ††		9	%

PowerShares FTSE RAFI Basic Materials Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.27
Net investment income**		0.78
Net realized and unrealized gain on investments		12.49
Total from operations		13.27
Undistributed net investment loss included in price of units issued and redeemed**		(0.18	)
Distributions to shareholders from:
Net investment income		(0.66	)
Net asset value at end of period	$	62.70
TOTAL RETURN***		26.17	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	25,082
Ratio to average net assets of:
Expenses, net of waivers		0.76	%†
Expenses, prior to waivers		1.18	%†
Net investment income, net of waivers		2.23	%†
Portfolio turnover rate ††		15	%

*  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.
68

Financial Highlights (Continued)

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	49.03
Net investment income**		0.54
Net realized and unrealized gain on investments		4.79
Total from operations		5.33
Undistributed net investment loss included in price of units issued and redeemed**		(0.07	)
Distributions to shareholders from:
Net investment income		(0.33	)
Net asset value at end of period	$	53.96
TOTAL RETURN***		10.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	16,187
Ratio to average net assets of:
Expenses, net of waivers		0.76	%†
Expenses, prior to waivers		1.27	%†
Net investment income, net of waivers		1.67	%†
Portfolio turnover rate ††		1	%

PowerShares FTSE RAFI Consumer Services Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.53
Net investment income**		0.10
Net realized and unrealized gain on investments		6.35
Total from operations		6.45
Undistributed net investment income included in price of units issued and redeemed**		—	(a)
Distributions to shareholders from:
Net investment income		(0.09	)
Net asset value at end of period	$	56.89
TOTAL RETURN***		12.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	11,378
Ratio to average net assets of:
Expenses, net of waivers		0.77	%†
Expenses, prior to waivers		1.40	%†
Net investment income, net of waivers		0.28	%†
Portfolio turnover rate ††		4	%

*  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.
69

Financial Highlights (Continued)

PowerShares FTSE RAFI Energy Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	49.16
Net investment income**		0.23
Net realized and unrealized gain on investments		13.48
Total from operations		13.71
Undistributed net investment loss included in price of units issued and redeemed**		(0.03	)
Distributions to shareholders from:
Net investment income		(0.21	)
Net asset value at end of period	$	62.63
TOTAL RETURN***		27.86	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	18,788
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†
Expenses, prior to waivers		1.09	%†
Net investment income, net of waivers		0.66	%†
Portfolio turnover rate ††		1	%

PowerShares FTSE RAFI Financials Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.47
Net investment income**		0.52
Net realized and unrealized gain on investments		3.92
Total from operations		4.44
Undistributed net investment loss included in price of units issued and redeemed**		(0.09	)
Distributions to shareholders from:
Net investment income		(0.42	)
Net asset value at end of period	$	54.40
TOTAL RETURN***		8.62	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	16,319
Ratio to average net assets of:
Expenses, net of waivers		0.78	%†
Expenses, prior to waivers		1.44	%†
Net investment income, net of waivers		1.65	%†
Portfolio turnover rate ††		10	%

*  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.
70

Financial Highlights (Continued)

PowerShares FTSE RAFI Health Care Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.44
Net investment income**		0.42
Net realized and unrealized gain on investments		4.29
Total from operations		4.71
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)
Distributions to shareholders from:
Net investment income		(0.38	)
Net asset value at end of period	$	54.76
TOTAL RETURN***		9.38	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	21,903
Ratio to average net assets of:
Expenses, net of waivers		0.75	%†
Expenses, prior to waivers		1.11	%†
Net investment income, net of waivers		1.33	%†
Portfolio turnover rate ††		5	%

PowerShares FTSE RAFI Industrials Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.27
Net investment income**		0.36
Net realized and unrealized gain on investments		8.15
Total from operations		8.51
Undistributed net investment income included in price of units issued and redeemed**		0.02
Distributions to shareholders from:
Net investment income		(0.33	)
Net asset value at end of period	$	58.47
TOTAL RETURN***		17.01	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	40,928
Ratio to average net assets of:
Expenses, net of waivers		0.73	%†
Expenses, prior to waivers		1.00	%†
Net investment income, net of waivers		1.05	%†
Portfolio turnover rate ††		3	%

*  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.
71

Financial Highlights (Continued)

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	50.60
Net investment income**		0.32
Net realized and unrealized gain on investments		5.85
Total from operations		6.17
Undistributed net investment loss included in price of units issued and redeemed**		(0.03	)
Distributions to shareholders from:
Net investment income		(0.25	)
Net asset value at end of period	$	56.49
TOTAL RETURN***		12.15	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	16,948
Ratio to average net assets of:
Expenses, net of waivers		0.75	%†
Expenses, prior to waivers		1.17	%†
Net investment income, net of waivers		0.97	%†
Portfolio turnover rate ††		4	%

PowerShares FTSE RAFI Utilities Sector Portfolio

	For the period September 20, 2006* through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	49.93
Net investment income**		0.78
Net realized and unrealized gain on investments		11.23
Total from operations		12.01
Undistributed net investment loss included in price of units issued and redeemed**		(0.16	)
Distributions to shareholders from:
Net investment income		(0.65	)
Net asset value at end of period	$	61.13
TOTAL RETURN***		23.87	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	18,338
Ratio to average net assets of:
Expenses, net of waivers		0.75	%†
Expenses, prior to waivers		1.19	%†
Net investment income, net of waivers		2.32	%†
Portfolio turnover rate ††		0	%(a)

*  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 1%.

See Notes to Financial Statements.
72

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 seventy portfolios. This report includes the following portfolios:

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio	"FTSE RAFI US 1500 Small-Mid Portfolio"
PowerShares FTSE RAFI Basic Materials Sector Portfolio	"FTSE RAFI Basic Materials Sector Portfolio"
PowerShares FTSE RAFI Consumer Goods Sector Portfolio	"FTSE RAFI Consumer Goods Sector Portfolio"
PowerShares FTSE RAFI Consumer Services Sector Portfolio	"FTSE RAFI Consumer Services Sector Portfolio"
PowerShares FTSE RAFI Energy Sector Portfolio	"FTSE RAFI Energy Sector Portfolio"
PowerShares FTSE RAFI Financials Sector Portfolio	"FTSE RAFI Financials Sector Portfolio"
PowerShares FTSE RAFI Health Care Sector Portfolio	"FTSE RAFI Health Care Sector Portfolio"
PowerShares FTSE RAFI Industrials Sector Portfolio	"FTSE RAFI Industrials Sector Portfolio"
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio	"FTSE RAFI Telecommunications & Technology Sector Portfolio"
PowerShares FTSE RAFI Utilities Sector Portfolio	"FTSE RAFI Utilities Sector Portfolio"

The Portfolios commenced investment operations on September 20, 2006. Each Portfolio represents a separate series of the Trust (the "Fund" or "Funds"). Each Fund's shares are listed and traded on NASDAQ. The Funds' market prices may differ to some degree from the 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, each 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 the Fund's fees and expenses) of the following equity indices:

Fund	Index
FTSE RAFI US 1500 Small-Mid Portfolio	FTSE US 1500 Small-Mid Index
FTSE RAFI Basic Materials Sector Portfolio	FTSE Basic Materials Sector Index
FTSE RAFI Consumer Goods Sector Portfolio	FTSE Consumer Goods Sector Index
FTSE RAFI Consumer Services Sector Portfolio	FTSE Consumer Services Sector Index
FTSE RAFI Energy Sector Portfolio	FTSE Oil & Gas Index
FTSE RAFI Financials Sector Portfolio	FTSE Financials Sector Index
FTSE RAFI Health Care Sector Portfolio	FTSE Health Care Sector Index
FTSE RAFI Industrials Sector Portfolio	FTSE Industrials Sector Index
FTSE RAFI Telecommunications & Technology Sector Portfolio	FTSE Telecommunications & Technology Sector Index
FTSE RAFI Utilities Sector Portfolio	FTSE Utilities Sector Index

73

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

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 at fair value as determined in good faith by the Trust's Pricing Committee in accordance with procedures adopted by the Board of Trustees. Investments in money market mutual funds are stated at net asset value.

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 and Investment Transactions

Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are calculated on the specific identified cost basis. Corporate actions (including cash dividends) are recorded net of nonreclaimable foreign tax withholdings on the ex-dividend date.

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. Dividends and Distributions to Shareholders

Each Fund declares and pays dividends from net investment income, if any, to its shareholders quarterly and distributes net realized taxable capital gains, if any, annually. Such distributions on a tax basis are determined in conformity with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in each Fund's financial statements as a return of capital.

F. Equalization

All Funds use the accounting practice of equalization. This accounting method is used to keep the continuing shareholder's per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital shares. Equalization is calculated on a per share basis whereby a portion of the proceeds from the sales and cost of repurchases of capital shares is applied to

74

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

undistributed net investment income. The amount of equalization is disclosed in the Statements of Changes in Net Assets as undistributed net investment income included in the price of capital shares issued or redeemed. The distributions to shareholders of amounts so applied may be deemed to be a return of capital for tax purposes to the extent that such distributions exceed taxable income.

Note 3. Advisory and Administration Agreements

PowerShares Capital Management LLC (the "Adviser") has overall responsibility as the Funds' investment adviser for the selection and ongoing monitoring of the Funds' investments, managing the Funds' business affairs and providing certain clerical, bookkeeping and other administrative services. The fees paid by each Fund to the Adviser are accrued daily and are payable at 0.50% per annum on each Fund's average daily net assets.

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, offering costs, taxes and extraordinary expenses) from exceeding 0.60% of average daily net assets per year (the "Expense Cap"), at least until April 30, 2008. Offering costs excluded from the Expense Cap are: (a) legal fees pertaining to the Funds' shares offered for sale; (b) Securities and Exchan ge Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the period ended April 30, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
FTSE RAFI US 1500 Small-Mid Portfolio	$	51,267	$	—
FTSE RAFI Basic Materials Portfolio		55,988		—
FTSE RAFI Consumer Goods Sector Portfolio		56,129		1,028
FTSE RAFI Consumer Services Sector Portfolio		46,528		11,382
FTSE RAFI Energy Sector Portfolio		56,949		—
FTSE RAFI Financials Sector Portfolio		43,426		13,567
FTSE RAFI Health Care Sector Portfolio		56,657		—
FTSE RAFI Industrials Sector Portfolio		54,254		—
FTSE RAFI Telecommunications & Technology Sector Portfolio		56,931		—
FTSE RAFI Utilities Sector Portfolio		57,004		—

The Trust and the Adviser have entered into an Excess Expense Agreement (the "Expense Agreement") in which expenses borne by the Adviser are subject to reimbursement by each 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 as specified above.

During the period ended April 30, 2007, none of the Funds reimbursed expenses to the Adviser under the Expense Agreement.

75

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

The amounts subject to reimbursement to the Adviser at April 30, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
FTSE RAFI US 1500 Small-Mid Portfolio	$	51,267	$	51,267	$	51,267
FTSE RAFI Basic Materials Sector Portfolio		55,988		55,988		55,988
FTSE RAFI Consumer Goods Sector Portfolio		57,157		57,157		57,157
FTSE RAFI Consumer Services Sector Portfolio		57,910		57,910		57,910
FTSE RAFI Energy Sector Portfolio		56,949		56,949		56,949
FTSE RAFI Financials Sector Portfolio		56,993		56,993		56,993
FTSE RAFI Health Care Sector Portfolio		56,657		56,657		56,657
FTSE RAFI Industrials Sector Portfolio		54,254		54,254		54,254
FTSE RAFI Telecommunications & Technology Sector Portfolio		56,931		56,931		56,931
FTSE RAFI Utilities Sector Portfolio		57,004		57,004		57,004

Distribution Agreement

A I M 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 the 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 for certain distribution-related activities. No 12b-1 fees are currently charged to the Funds, and there are no plans to impose these fees.

Licensing Fee Agreements

The Adviser has entered into licensing agreements for each Fund with the FTSE International Ltd. (the "Licensor"). The trademarks are owned by the Licensor. These trademarks have been licensed to the Adviser for use with the Funds. The Funds are not sponsored, endorsed, sold or promoted by the Licensor and the Licensor makes no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the licensing fees, which are shown on the Statements of Operations.

The Bank of New York serves as the administrator, custodian and fund accounting and transfer agent for each Fund.

Note 4. INVESCO Transactions and Transactions with Affiliates

On September 18, 2006, INVESCO PLC (formerly AMVESCAP PLC) and A I M Management Group, Inc., an indirect wholly-owned subsidiary of INVESCO PLC, announced that they had completed their acquisition of the Adviser (the "Acquisition"). The Board of Trustees, including a majority of the independent Trustees, and shareholders of each Fund had previously approved a new advisory agreement with the Adviser that became effective on September 18, 2006.

The Funds are permitted to invest daily available cash balances in affiliated money market funds. The Funds invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by A I M Advisors, Inc., an affiliate of the Adviser.

76

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Note 5. Federal Income Tax

At April 30, 2007, the components of accumulated earnings/loss on a tax basis were as follows:

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
FTSE RAFI US 1500 Small-Mid Portfolio	$	111,680	$	(5,818	)	$	2,670,659	$	5,015,951	$	(2,345,292	)	$	2,776,521
FTSE RAFI Basic Materials Sector Portfolio		124,408		—			3,359,214		3,359,214		—			3,483,622
FTSE RAFI Consumer Goods Sector Portfolio		88,655		—			1,221,365		1,359,851		(138,486	)		1,310,020
FTSE RAFI Consumer Services Sector Portfolio		7,778		(9,952	)		1,135,252		1,191,868		(56,616	)		1,133,078
FTSE RAFI Energy Sector Portfolio		14,429		—			2,121,781		2,156,922		(35,141	)		2,136,210
FTSE RAFI Financials Sector Portfolio		60,071		(4,934	)		683,309		748,971		(65,662	)		738,446
FTSE RAFI Health Care Sector Portfolio		15,785		—			1,504,570		1,753,714		(249,144	)		1,520,355
FTSE RAFI Industrials Sector Portfolio		5,984		—			2,894,544		3,116,833		(222,289	)		2,900,528
FTSE RAFI Telecommunications & Technology Sector Portfolio		34,900		(9	)		1,196,243		1,415,920		(219,677	)		1,231,134
FTSE RAFI Utilities Sector Portfolio		92,800		—			2,247,260		2,267,986		(20,726	)		2,340,060

At April 30, 2007, the cost of investments for Federal income tax purposes was as follows:

FTSE RAFI US 1500 Small-Mid Portfolio	$	82,508,911
FTSE RAFI Basic Materials Sector Portfolio		21,270,492
FTSE RAFI Consumer Goods Sector Portfolio		14,992,543
FTSE RAFI Consumer Services Sector Portfolio		10,200,219
FTSE RAFI Energy Sector Portfolio		16,750,323
FTSE RAFI Financials Sector Portfolio		15,382,204
FTSE RAFI Health Care Sector Portfolio		20,396,704
FTSE RAFI Industrials Sector Portfolio		37,722,968
FTSE RAFI Telecommunications & Technology Sector Portfolio		15,806,701
FTSE RAFI Utilities Sector Portfolio		16,081,357

77

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

Distributions to Shareholders:

The tax character of distributions paid during the period ended April 30, 2007 was as follows:

	Distributions paid from Ordinary Income
FTSE RAFI US 1500 Small-Mid Portfolio	$	107,528
FTSE RAFI Basic Materials Sector Portfolio		203,385
FTSE RAFI Consumer Goods Sector Portfolio		98,952
FTSE RAFI Consumer Services Sector Portfolio		18,566
FTSE RAFI Energy Sector Portfolio		93,175
FTSE RAFI Financials Sector Portfolio		83,164
FTSE RAFI Health Care Sector Portfolio		188,595
FTSE RAFI Industrials Sector Portfolio		208,432
FTSE RAFI Telecommunications & Technology Sector Portfolio		98,444
FTSE RAFI Utilities Sector Portfolio		208,132

At April 30, 2007, 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.

	Capital Loss Available Through										Total
	2011		2012		2013		2014		2015		Amount
FTSE RAFI US 1500 Small-Mid Portfolio		—		—		—		—	$	5,818	$	5,818
FTSE RAFI Consumer Services Sector Portfolio		—		—		—		—		9,952		9,952
FTSE RAFI Financials Sector Portfolio		—		—		—		—		4,934		4,934
FTSE RAFI Telecommunications & Technology Sector Portfolio		—		—		—		—		9		9

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.

During the period ended April 30, 2007, the Funds incurred and will elect to defer net capital losses as follows:

	Post-October Losses
FTSE RAFI US 1500 Small-Mid Portfolio	$	158,840
FTSE RAFI Consumer Goods Sector Portfolio		49,031
FTSE RAFI Consumer Services Sector Portfolio		18,962
FTSE RAFI Energy Sector Portfolio		30,155
FTSE RAFI Health Care Sector Portfolio		48,189
FTSE RAFI Industrials Sector Portfolio		28,983
FTSE RAFI Telecommunications & Technology Sector Portfolio		69,699
FTSE RAFI Utilities Sector Portfolio		6,759

At April 30, 2007, the following reclassifications were made to the capital accounts of the Funds, to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations, which are primarily due to the differences between book and tax treatment of investments in

78

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

real estate investment trusts, investments in partnerships, wash sales from redemptions in-kind transactions, redemption in-kind transactions, return of capital and net investment losses. Net investment income, net realized gains and net assets were not affected by these changes.

	Undistributed Net Investment Income (Loss)			Undistributed Capital Gains/ (Accumulated Losses)			Paid-in Capital
FTSE RAFI US 1500 Small-Mid Portfolio	$	(41,908	)	$	(2,311,893	)	$	2,353,801
FTSE RAFI Basic Materials Sector Portfolio		72,855			(1,771,191	)		1,698,336
FTSE RAFI Consumer Goods Sector Portfolio		23,621			(569,178	)		545,557
FTSE RAFI Consumer Services Sector Portfolio		(1,129	)		(1,210,490	)		1,211,619
FTSE RAFI Energy Sector Portfolio		15,535			(3,397,258	)		3,381,723
FTSE RAFI Financials Sector Portfolio		24,937			(830,975	)		806,038
FTSE RAFI Health Care Sector Portfolio		4,231			(572,698	)		568,467
FTSE RAFI Industrials Sector Portfolio		(8,589	)		(2,106,705	)		2,115,294
FTSE RAFI Telecommunications & Technology Sector Portfolio		11,299			(1,605,617	)		1,594,318
FTSE RAFI Utilities Sector Portfolio		61,710			(1,467,091	)		1,405,381

Note 6. Investment Transactions

For the period ended April 30, 2007, the cost of securities purchased and proceeds from sales of securities, excluding short-term securities and in-kind transactions, were as follows:

	Purchases		Sales
FTSE RAFI US 1500 Small-Mid Portfolio	$	4,061,099	$	5,685,570
FTSE RAFI Basic Materials Sector Portfolio		3,204,369		3,740,031
FTSE RAFI Consumer Goods Sector Portfolio		151,477		549,871
FTSE RAFI Consumer Services Sector Portfolio		663,121		733,739
FTSE RAFI Energy Sector Portfolio		226,470		323,980
FTSE RAFI Financials Sector Portfolio		1,503,824		1,878,101
FTSE RAFI Health Care Sector Portfolio		1,301,356		1,635,342
FTSE RAFI Industrials Sector Portfolio		1,674,790		947,145
FTSE RAFI Telecommunications & Technology Sector Portfolio		822,277		1,014,663
FTSE RAFI Utilities Sector Portfolio		148,273		95,978

For the period ended April 30, 2007 in-kind transactions were as follows:

	Purchases		Sales
FTSE RAFI US 1500 Small-Mid Portfolio	$	101,265,018	$	19,419,576
FTSE RAFI Basic Materials Sector Portfolio		33,445,391		13,528,004
FTSE RAFI Consumer Goods Sector Portfolio		25,737,333		10,972,574
FTSE RAFI Consumer Services Sector Portfolio		26,281,610		17,223,995
FTSE RAFI Energy Sector Portfolio		40,763,583		27,329,215
FTSE RAFI Financials Sector Portfolio		32,359,504		17,446,487
FTSE RAFI Health Care Sector Portfolio		37,190,985		17,061,169
FTSE RAFI Industrials Sector Portfolio		55,569,172		20,687,373
FTSE RAFI Telecommunications & Technology Sector Portfolio		33,707,161		19,275,518
FTSE RAFI Utilities Sector Portfolio		36,766,551		22,296,041

79

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

April 30, 2007

There were no purchases or sales of U.S. government or government agency obligations for the period ended April 30, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

Note 7. Trustees' Fees

The Trust compensates each Trustee who is not an employee of the Adviser or its affiliates. The interested Trustee does not receive any Trustees' fees.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Transaction fees at scheduled amounts ranging from $500 to $7,500 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 9. Risk of Concentration

The Funds concentrate their investments in certain industries, subjecting them to greater risk than funds that invest in a wider range of industries.

Note 10. Indemnifications

Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust believes the risk of loss to be remote.

Note 11. New Accounting Pronouncements

On July 13, 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On December 22, 2006, the Securities and Exchange Commission delayed the effective date of FIN 48, which will result in adoption for the Funds as of October 31, 2007. At this time, management is currently assessing the impact of FIN 48, if any, on the Funds' financial statements.

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurement" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurement. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is currently assessing the impact of FAS 157, if any, on the Funds' financial statements and intends for the Funds to adopt FAS 157 provisions during the fiscal year ending April 30, 2009.

80

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of PowerShares Exchange-Traded Fund Trust:

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the portfolios indicated in Note 1 of the financial statements comprising PowerShares Exchange-Traded Fund Trust (the "Trust") at April 30, 2007, the results of each of their operations, the changes in each of their net assets and the financial highlights, for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of thes e financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
June 25, 2007

81

Supplemental Information (Unaudited)

Federal Income Tax Information

The percentages of investment income (dividend income plus short-term gains, if any) qualify as follows:

	Qualified dividend income			Dividends-received deduction
FTSE RAFI US 1500 Small-Mid Portfolio		100	%		100	%
FTSE RAFI Basic Materials Sector Portfolio		100	%		100	%
FTSE RAFI Consumer Goods Sector Portfolio		100	%		100	%
FTSE RAFI Consumer Services Sector Portfolio		100	%		100	%
FTSE RAFI Energy Sector Portfolio		100	%		100	%
FTSE RAFI Financials Sector Portfolio		100	%		100	%
FTSE RAFI Health Care Sector Portfolio		100	%		100	%
FTSE RAFI Industrials Sector Portfolio		100	%		100	%
FTSE RAFI Telecommunications & Technology Sector Portfolio		100	%		100	%
FTSE RAFI Utilities Sector Portfolio		100	%		100	%

82

Supplemental Information (Unaudited) (Continued)

Trustees and Officers

The Trustees who are not 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 Trustee and the other directorships, if any, held by the Trustee, are shown below.

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Ronn R. Bagge (49) YQA Capital Management, LLC 1755 S. Naperville Rd., Suite 100 Wheaton, IL 60187	Trustee	Since 2003	YQA Capital Management LLC (July 1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider)		79	None
Marc M. Kole (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Controller, Priority Health (September 2005-present); Interim CFO, Priority Health (July 2006-February 2007); formerly Senior Vice President of Finance, United Healthcare (health insurance) (July 2004-July 2005); Senior Vice President of Finance, Oxford Health Plans (June 2000-July 2004)		79	None
D. Mark McMillan (44) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Member, Bell, Boyd & Lloyd LLC (1989- Present)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Marc Kole was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

83

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustees	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustees		Other Directorships Held by Trustees
Philip M. Nussbaum (45) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2003	Chairman, Performance Trust Capital Partners (formerly Betzold, Berg, Nussbaum & Heitman, Inc.); formerly Managing Director, Communication Institute (May 2002-August 2003); Executive Vice President of Finance, Betzold, Berg, Nussbaum & Heitman, Inc. (March 1994-1999)		79	None
Donald H. Wilson (47)** c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (bank holding company) (February 2006-present); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		79	None

  *  This is the date the Trustee began serving the Trust.

  **  At a Board meeting held on December 14, 2006, Donald Wilson was elected to serve as Trustee of the Trust.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

84

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Management Trustee	Position(s) with Trust	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex*** Overseen by Trustee		Other Directorships Held by Trustee
H. Bruce Bond (44)** PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chairman of the Board, Trustee and Chief Executive Officer	Since 2003	Managing Director, PowerShares Capital Management LLC (August 2002- Present); Manager, Nuveen Investments (April 1998- August 2002)		79	None

  *  This is the date the Management Trustee began serving the Trust.

  **  Interested person as defined in Section 2(a)(19) of the 1940 Act.

  ***  Fund Complex includes all open-end funds (including all of their Portfolios) advised by the Adviser. The Fund Complex consists of the Trust's 70 Portfolios and one other exchange-traded fund trust with 9 Portfolios advised by the Adviser.

85

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Officers	Position(s) with Trust	Length of Time Served*	Principal Occupations(s) During Past 5 Years
Bruce T. Duncan (52) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Financial Officer and Treasurer	Since 2006	Senior Vice President of Finance, PowerShares Capital Management LLC (September 2005-Present); Private Practice Attorney (2000-2005); Vice President of Investor Relations, The ServiceMaster Company (1994-2000); Vice President of Taxes, The ServiceMaster Company (1990-2000)
Kevin R. Gustafson (41) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Chief Compliance Officer	Since 2004	General Counsel and Chief Compliance Officer, PowerShares Capital Management LLC (September 2004-Present); Attorney, Nyberg & Gustafson (2001-2004); Attorney, Burke, Warren, McKay & Serritella, P.C. (1997-2000)
Keith Ovitt (44) PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Secretary	Since 2003	Managing Director, PowerShares Capital Management LLC (April 2003-Present); President, Ovitech (2002-2003); Vice President of Information Systems for DFG Foods, LLC (Division of FoodBrands America/Tyson Foods) (1999-2002); Systems Manager, Nabisco Biscuit Company (1997-1999)

  *  This is the period for which the Officers began serving the Trust. Each Officer serves an indefinite term, until his successor is elected.

86

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited)

At a meeting held on April 20, 2007, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust (the "Trust"), including the Independent Trustees, unanimously approved the continuation of the Investment Advisory Agreement between PowerShares Capital Management LLC (the "Adviser") and the Trust for the following series (the "Funds"):

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 and 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 Aerospace & Defense Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Value Line Timeliness Select Portfolio

PowerShares Divided Achievers^TM Portfolio

PowerShares International Dividend Achievers^TM Portfolio

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration and Production Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Oil and Gas Services Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Utilities Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares FTSE RAFI US 1000 Portfolio

PowerShares Water Resources Portfolio

The Trustees reviewed information from the Adviser describing: (i) the nature, extent and quality of services provided, (ii) the investment performance of the Funds and the Adviser, (iii) the costs of services provided and estimated profits realized by the Adviser, (iv) the extent to which economies of scale are realized as the Funds grow, (v) whether fee levels reflect any possible economies of scale for the benefit of Fund shareholders, (vi) comparisons of services rendered and amounts paid to other registered investment companies and (vii) any benefits realized by the Adviser from its relationship with each Fund. Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser's services, the Trustees reviewed information concerning the functions performed by the Adviser for the Funds, information describing the Adviser's current organization, including operations assistance provided

87

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

by the Adviser's new parent organization, AMVESCAP LLC, and the background and experience of the persons responsible for the day-to-day management of the Funds. The Trustees reviewed matters related to the Adviser's portfolio transaction policies and procedures. The Trustees reviewed information on the performance of the Funds and the performance of their benchmark indices. The Trustees also reviewed reports on the correlation and tracking error between the underlying index and each Fund's performance and reviewed a report of a consultant to the Adviser on correlation and tracking error. The Trustees concluded that Funds are correlated to their underlying index and that the tracking error was within a reasonable range.

The Trustees also considered the services provided by the Adviser in its oversight of the Funds' administrator, custodian and transfer agent. They noted the significant amount of time and effort that had been devoted to this oversight function.

Based on their review, the Trustees found that the nature and extent of services provided to the Funds under the Investment Advisory Agreement are appropriate and that the quality is good.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund's expense ratio and the advisory fee, as compared to three categories of comparable funds selected by Lipper Inc., an independent source: exchange-traded index funds ("ETFs"), open-end funds and closed-end funds. The Trustees also reviewed and discussed additional information prepared by Lipper Inc. on expense ratios and advisory fees of a broader universe of ETFs and other index funds. The Adviser supplemented the information prepared by Lipper Inc. with data it compiled on expense ratios and advisory fees of newer ETFs that recently commenced operations. The Trustees noted that the annual advisory fee charged to the Funds was identical (0.50% of average net assets), except for the advisory fee for the PowerShares High Yield Equi ty Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Dividend Achievers^TM Portfolio (for each of which the annual advisory fee was 0.40% of average net assets), and that the Adviser had agreed to waive the fee and/or pay expenses to the extent necessary to prevent the annual operating expenses of each Fund (excluding interest expenses, licensing fees (for all Funds other than the initial two Funds, the PowerShares Dynamic OTC Portfolio and the PowerShares Dynamic Market Portfolio), brokerage commissions and other trading expenses, taxes and extraordinary expenses) from exceeding 0.60% (0.50% for the PowerShares High Yield Equity Dividend Achievers^TM Portfolio, the PowerShares Dividend Achievers^TM Portfolio, the PowerShares High Growth Rate Dividend Achievers^TM Portfolio and the PowerShares International Div idend Achievers^TM Portfolio) at least until April 30, 2008. The Trustees noted that the Adviser does not provide investment management services to clients other than the Trust. The Trustees noted that the advisory fees were at the higher end of the ETF universe, but were generally lower than fees for open-end (non-ETF) funds and closed-end funds, and were reasonable because of the complexity of the indices, which generally require more frequent rebalancing of the portfolios, the distinguishing factors of the Funds, and the higher administrative, operational and management oversight costs for the Adviser. The Board therefore concluded that the advisory fee and expense ratio of each Fund are competitive and that the advisory fee for each Fund is reasonable and appropriate in amount in light of the quality of services provided and the expense cap in place.

In conjunction with their review of fees, the Trustees also considered information provided by the Adviser on the revenues received by the Adviser under the Agreement, as well as the fees waived and expenses

88

Board Considerations Regarding Continuation of Investment Advisory Agreement (Unaudited) (Continued)

reimbursed by the Adviser for the Funds. The Trustees reviewed information provided by the Adviser on its profitability as well as any profits realized by the Adviser from its relationship to each Fund. The Trustees noted the Adviser's statement that its costs of managing the Funds generally exceeded the amount payable as management fees under the Investment Advisory Agreement, and that most of the Funds were operating in a cash loss position. The Trustees concluded that the profitability to the Adviser of the advisory services provided to the Funds is not unreasonable.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale are realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees reviewed each Fund's asset size, expense ratio, expense limitation agreed to by the Adviser and whether the investment process produced economies of scale. The Trustees noted that certain fixed costs associated with the management of the Funds are being reduced on a per-Fund basis as additional Funds are added, and that the gradual reduction of the per-Fund cost enabled the Adviser to operate some of the Funds under the expense cap, which potentially would lower the costs to shareholders. The Trustees noted that the Excess Expense Agreement with the Trust provided that the Adviser was entitled to be reimbursed by each Fund for fees waived or expenses absorbed pursuant to the expense cap for a period of three years from the date the fee or expense was incurred, provided that no reimbursement would be made that would result in a Fund exceeding its expense cap.

The Trustees noted that the Adviser had not identified any further benefits that it derived from its relationship with the Funds, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the continuation of the Investment Advisory Agreement for each Fund listed above. No single factor was determinative in the Board's analysis.

89

PowerShares        Leading the Intelligent ETF Revolution

PowerShares continues to offer new solutions to the complex needs demanded by advisors and investors today. PowerShares is "Leading the Intelligent ETF Revolution" providing investment advisors and investors with institutional-caliber asset management by seeking to replicate enhanced indexes in one of the more benefit-rich investment vehicles available in the marketplace today, the exchange-traded fund (EFT). Each PowerShares fund can be classified into one of three different categories based on the objective and characteristics of its underlying index: Intelligent Index, Intelligent Exposure and Intelligent Access.

For most recent portfolio performance, please visit our website at www.powershares.com.

This page contains advertising materials and should not be viewed as part of the Annual Report.
90

Intelligent Index

PowerShares believes that having insight into a stock's investment merit can have a positive impact on performance. Therefore, most PowerShares ETFs are based on Intelligent Indexes, which seek to provide alpha¹ by identifying stocks with the greatest investment merit. These indexes use proprietary methodologies to identify financially strong, effectively managed and attractively priced companies with strong capital appreciation potential. Because their objective is to maximize performance, Intelligent Indexes may look different from the market.

Exchange-Traded Funds

Intelligent Index

PWC  -  Dynamic Market  

PWO  -  Dynamic OTC  

PIQ  -  Dynamic MagniQuant  

PJF  -  Dynamic Large Cap  

PJG  -  Dynamic Mid Cap  

PJM  -  Dynamic Small Cap  

PWB  -  Dynamic Large Cap Growth  

PWV  -  Dynamic Large Cap Value  

PWJ  -  Dynamic Mid Cap Growth  

PWP  -  Dynamic Mid Cap Value  

PWT  -  Dynamic Small Cap Growth  

PWY  -  Dynamic Small Cap Value  

PGZ  -  Dynamic Aggressive Growth  

PVM  -  Dynamic Deep Value  

PYZ  -  Dynamic Basic Materials Sector  

PEZ  -  Dynamic Consumer Discretionary Sector  

PSL  -  Dynamic Consumer Staples Sector  

PXI  -  Dynamic Energy Sector  

PFI  -  Dynamic Financials Sector  

PTH  -  Dynamic Healthcare Sector  

PRN  -  Dynamic Industrials Sector  

PTF  -  Dynamic Technology Sector  

PTE  -  Dynamic Telecommunications & Wireless  

PUI  -  Dynamic Utilities  

PJB  -  Dynamic Banking  

PBE  -  Dynamic Biotechnology & Genome  

PKB  -  Dynamic Building & Construction  

PXE  -  Dynamic Energy Exploration & Production  

PBJ  -  Dynamic Food & Beverage  

PHW  -  Dynamic Hardware & Consumer Electronics  

PTJ  -  Dynamic Healthcare Services  

PIC  -  Dynamic Insurance  

PEJ  -  Dynamic Leisure and Entertainment  

PBS  -  Dynamic Media  

PXQ  -  Dynamic Networking  

PXJ  -  Dynamic Oil & Gas Services  

PJP  -  Dynamic Pharmaceuticals  

PMR  -  Dynamic Retail  

PSI  -  Dynamic Semiconductors  

PSJ  -  Dynamic Software  

1 Alpha is a measure of risk adjusted performance relative to a benchmark or the market.

This page contains advertising materials and should not be viewed as part of the Annual Report.
91

Intelligent Exposure

For investors looking for more market-like exposure, PowerShares offers a lineup of ETFs that seek to track indexes with an Intelligent Exposure objective. These indexes seek to provide accurate exposure to the economy, yet are constructed using more sophisticated techniques than traditional benchmark indexes, which typically use a weighting structure based on market capitalization. Under this traditional structure, market speculation can lead to significant mispricing of stocks and, therefore, suboptimal weights in the index. But indexes seeking Intelligent Exposure use a weighting structure based on company fundamentals: sales, cash flow, book value and dividends. PowerShares believes these factors paint a truer picture of a company's size and lead to more optimal index weightings.

Exchange-Traded Funds

Intelligent Exposure

PRF  -  FTSE RAFI US 1000  

PRFZ  -  FTSE RAFI US 1500 Small-Mid  

PRFM  -  FTSE RAFI Basic Materials Sector  

PRFG  -  FTSE RAFI Consumer Goods Sector  

PRFS  -  FTSE RAFI Consumer Services Sector  

PRFE  -  FTSE RAFI Energy Sector  

PRFF  -  FTSE RAFI Financials Sector  

PRFH  -  FTSE RAFI Health Care Sector  

PRFN  -  FTSE RAFI Industrials Sector  

PRFQ  -  FTSE RAFI Telecom & Technology Sector  

PRFU  -  FTSE RAFI Utilities Sector  

Intelligent Access

Without targeted investment products, unique market segments such as currency or nanotech may be difficult for investors to access. These segments are the focus of indexes that promote Intelligent Access. PowerShares has a diverse lineup of ETFs based on indexes that offer exposure to specific, unique or previously uncovered market areas.

Exchange-Traded Funds

Intelligent Access

PPA  -  Aerospace & Defense  

ADRA  -  BLDRS Asia 50 ADR Index Fund  

ADRD  -  BLDRS Developed Markets 100 ADR Index Fund  

ADRE  -  BLDRS Emerging Markets 50 ADR Index Fund  

ADRU  -  BLDRS Europe 100 ADR Index Fund  

PKW  -  Buyback Achievers  

PZD  -  Cleantech  

PFM  -  Dividend Achievers  

PDP  -  DWA Technical Lenders  

PGF  -  Financial Preferred  

PGJ  -  Golden Dragon Halter USX China  

PHJ  -  High Growth Rate Dividend Achievers  

PEY  -  High Yield Equity Dividend Achievers  

PID  -  International Dividend Achievers  

PSP  -  Listed Private Equity  

PXN  -  Lux Nanotech  

QQQQ  -  PowerShares QQQ  

PYH  -  Value Line Industry Rotation  

PIV  -  Value Line Timeliness Select  

PHO  -  Water Resources  

PBW  -  WilderHill Clean Energy  

PUW  -  WilderHill Progressive Energy  

PZI  -  Zacks Micro Cap  

PZJ  -  Zacks Small Cap  

This page contains advertising materials and should not be viewed as part of the Annual Report.
92

PowerSharesAsset Class Guide

Domestic Equity

Broad

PWC  Dynamic Market

PWO  Dynamic OTC

PIV  Value Line Timeliness Select

PRF  FTSE RAFI US 1000

PRFZ  FTSE RAFI US 1500

PIQ  Dynamic MagniQuant

QQQQ  PowerShares QQQ

PKW  Buyback Achievers

PDP  DWA Technical Leaders

PVM  Dynamic Deep Value

PGZ  Dynamic Aggressive Growth

Style

PJF  Dynamic Large Cap

PWB  Dynamic Large Cap Growth

PWV  Dynamic Large Cap Value

PJG  Dynamic Mid Cap

PWJ  Dynamic Mid Cap Growth

PWP  Dynamic Mid Cap Value

PJM  Dynamic Small Cap

PWT  Dynamic Small Cap Growth

PWY  Dynamic Small Cap Value

PZJ  Zacks Small Cap

PZI  Zacks Micro Cap

International/Region

Region

PPGJ  Golden Dragon Halter USX China

ADRA  BLDRS Asia 50 ADR Index Fund

ADRD  BLDRS Developed Markets 100 ADR Index Fund

ADRE  BLDRS Emerging Markets 50 ADR Index Fund

ADRU  BLDRS Europe 100 ADR Index Fund

Income

PID  International Dividend Achievers

Income/Dividend

PEY  High Yield Equity Dividend Achievers

PHJ  High Growth Rate Dividend Achievers

PFM  Dividend Achievers

PGF  Financial Preferred

Sector and Industry

Sector

PUI  Dynamic Utilities

PYZ  Dynamic Basic Materials Sector

PEZ  Dynamic Consumer Discretionary Sector

PSL  Dynamic Consumer Staples Sector

PXI  Dynamic Energy Sector

PFI  Dynamic Financial Sector

PTH  Dynamic Healthcare Sector

PRN  Dynamic Industrials Sector

PTF  Dynamic Technology Sector

PTE  Dynamic Telecommunications & Wireless

PRFQ  FTSE RAFI Consumer Goods Sector

PRFS  FTSE RAFI Consumer Services Sector

PRFE  FTSE RAFI Energy Sector

PRFF  FTSE RAFI Financials Sector

PRFH  FTSE RAFI Health Care Sector

PRFN  FTSE RAFI Industrials Sector

PRFM  FTSE RAFI Basic Materials Sector

PRFQ  FTSE RAFI Telecommunications & Technology Sector

PRFU  FTSE RAFI Utilities Sector

Industry

PJB  Dynamic Banking Sector

PBE  Dynamic Biotechnology & Genome

PKB  Dynamic Building & Construction

PXE  Dynamic Energy Exploration & Production

PBJ  Dynamic Food & Beverage

PHW  Dynamic Hardware & Consumer Electronics

PTJ  Dynamic Healthcare Services Sector

PIC  Dynamic Insurance

PEJ  Dynamic Leisure and Entertainment

PBS  Dynamic Media

PXQ  Dynamic Networking

PXJ  Dynamic Oil & Gas Services

PJP  Dynamic Pharmaceuticals

PMR  Dynamic Retail

PSI  Dynamic Semiconductors

PSJ  Dynamic Software

PPA  Aerospace & Defense

PBW  Clean Energy

PZD  Cleantech

PSP  Listed Private Equity

PXN  Nanotech

PUW  Progressive Energy

PYH  Value Line Industry Rotation

PHO  Water Resources

This page contains advertising materials and should not be viewed as part of the Annual Report.
93

PowerSharesRisk Spectrum

Domestic Equity

More Conservative

Dynamic Deep Value

Dynamic Large Cap

Dynamic Mid Cap

Dynamic MagniQuant

Buyback Achievers

DWA Technical Leaders

Dynamic Small Cap

Dynamic Large Cap Value

FTSE RAFI US 1000

Dynamic Mid Cap Value

Dynamic Market

Dynamic Aggressive Growth

Dynamic Small Cap Value

FTSE RAFI US 1500 Small-Mid

Zacks Micro Cap

PowerShares QQQ

Dynamic Large Cap Growth

Dynamic Mid Cap Growth

Zacks Small Cap

Value Line Timeliness Select

Dynamic Small Cap Growth

Dynamic OTC

More Aggressive

International/Region

More Conservative

BLDRS Europe 100 ADR Index Fund

BLDRS Developed Markets 100 ADR Index Fund

BLDRS Asia 50 ADR Index Fund

International Dividend Achievers

BLDRS Emerging Markets 50 ADR Index Fund

Golden Dragon Halter USX China

More Aggressive

Income/Dividend

More Conservative

Financial Preferred

High Yield Equity Dividend Achievers

Dividend Achievers

High Growth Rate Dividend Achievers

More Aggressive

Sector and Industry

More Conservative

Dynamic Consumer Staples Sector

Dynamic Food & Beverage

Dynamic Banking Sector

Dynamic Financial Sector

Dynamic Utilities

Dynamic Insurance

FTSE RAFI Health Care Sector

Dynamic Healthcare Sector

FTSE RAFI Financials Sector

Dynamic Industrials Sector

Dynamic Media

Aerospace & Defense

FTSE RAFI Industrials Sector

Dynamic Pharmaceuticals

Dynamic Consumer Discretionary Sector

Dynamic Healthcare Services Sector

Dynamic Leisure and Entertainment

FTSE RAFI Consumer Goods Sector

FTSE RAFI Utilities Sector

Water Resources

FTSE RAFI Consumer Services Sector

FTSE RAFI Basic Materials Sector

Dynamic Basic Materials Sector

Dynamic Retail

FTSE RAFI Energy Sector

Dynamic Energy Sector

Dynamic Building & Construction

Value Line Industry Rotation

Dynamic Technology Sector

Progressive Energy

Dynamic Biotechnology & Genome

Dynamic Software

Nanotech

Dynamic Energy Exploration & Production

FTSE RAFI Telecommunications & Technology Sector

Dynamic Hardware & Consumer Electronics

Dynamic Telecommunications & Wireless

Dynamic Oil & Gas Services

Cleantech

Listed Private Equity

Clean Energy

Dynamic Networking

Dynamic Semiconductors

More Aggressive

This page contains advertising materials and should not be viewed as part of the Annual Report.
94

Exchange-Traded Funds

ETFs are investment funds that trade like individual stocks on all of the major exchanges, similar to shares of publicly held companies. They can be bought and sold on an exchange at any moment during market hours. Since they are listed and traded on an exchange, you can be confident that you are investing in a well-regulated market.

ETFs are one of the fastest growing investment products in the worldwide financial marketplace. As of 3.31.2007, 432 ETFs were listed in the U.S. with $433 billion in assets, up from two products with only $1 billion in assets in 1995.

ETFs seek investment results that correspond generally to the price and yield (before fees and expenses) of a listed index. While most ETFs share a similar objective, the principal investment strategies of the underlying indexes can have substantial differences. It is important to gain a clear understanding of an ETF's underlying index as the index's objective is inherently passed on to the fund shareholders by seeking to replicate the index.

Indexes

An index is a selection process or appointed committee that groups selected securities together to track their movement in aggregate. While only a few indexes are mentioned on the daily news, there are hundreds of indexes in existence today that differ from each other in diverse ways.

Broad Market

Broad market indexes are what most people think of when an index is mentioned. These indexes are designed to track the performance of the broad market.

Benchmark

Benchmark indexes are created to set a standard by which the performance or movement of individual securities and asset managers can be measured.

Exchange Composite

These indexes are designed to provide a comprehensive measure of the performance of all commons stocks listed on a particular exchange.

Sector or Industry

The aggregate financial marketplace is generally broken down into roughly ten sectors which are further dissected into many specific industries.

Style

Style indexes are created to identify groups of stocks that are either growth (companies currently experiencing appreciation or significant earnings or revenue growth) or value (companies determined to be under priced by fundamental measures) oriented.

Company Size

Market-capitalization indexes group together companies that are similar in size based on the number of outstanding shares times the share price, while fundamentally weighted indexes group together stocks of companies based on their financial fundamental valuation.

International / Country

International indexes group together stocks of companies that are affiliated by location outside of the U.S. or companies located with a specific country or region.

Income / Bond

Income indexes group stocks based on their type of income of securities, while bond indexes are designed to show the average performance of a group of debt securities.

This page contains advertising materials and should not be viewed as part of the Annual Report.
95

Specialty / Enhanced

Many other specialty indexes are created with specific investment management objectives or for customized purposes. These indexes can be created specifically with the intention to be used as the basis for an ETF. Investor targets can be met through an ETF where the index has the objective(s) of capital appreciation, risk control, income or diversification.

Benefits of PowerShares

PowerShares ETFs offer investors a low-cost, tax-efficient investment in a professionally crafted portfolio consisting of some of the best managed companies and most timely investments. See important risk factors in back.

Tax Advantaged Product Design

Taxes may be one of the most critical and overlooked factors in wealth creation over time. The ETF product structure defers some or possibly all capital gains until investors sell their shares.

Low Ownership Cost

ETFs provide lower ownership cost because of their efficient structure. PowerShares have established expense caps to make the cost of ownership clear and straightforward for investors. Ordinary brokerage commissions apply.

Flexibility, Transparency

PowerShares' ETFs offer flexibility as shares can be bought and sold throughout the day through exchange trading. Fund holdings are disclosed every day. Options based on the funds are available, possibly increasing financial management opportunities for advisors and their clients.

Near Instant Liquidity, Trades at or Close to NAV

PowerShares may be bought and sold on the exchange at any time during market hours. Although shares are not individually redeemable directly from the fund itself, authorized participants may acquire shares and tender shares for redemption, through creation unit aggregations. ETFs are not closed-end funds and trade at or near net asset values.

This page contains advertising materials and should not be viewed as part of the Annual Report.
96

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) 337-4246. 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) 337-4246; 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.

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 ETFs are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. PowerShares ETFs 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.

A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

An investor should consider each Fund's investment objective, risks, charges and expenses carefully before investing. For more complete information about PowerShares ETFs call A I M Distributors, Inc. at (800) 337-4246 or visit our website powershares.com for a prospectus. Please read the prospectus carefully before investing.

301 W. Roosevelt Road
Wheaton, IL 60187

800.983.0903
www.powershares.com

P-PS-AR-6

Item 2. Code of Ethics.

The Registrant has adopted a Code of Ethics that applies to the registrant’s principal executive officer and principal financial officer.  This Code is filed as an exhibit to this report on Form N-CSR under Item 12(a)(1).

Item 3. Audit Committee Financial Expert.

The Fund’s Board of Trustees has determined that the Fund has at least one “audit committee financial expert” serving on its audit committee: Mr. Phillip Nussbaum, Mr. Marc Kole, and Mr. Donald Wilson. Each of these audit committee  members is “independent,” meaning that he is not an “interested person”  of the Fund (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940) and he does not accept any consulting, advisory, or other compensatory fee from the Fund (except in the capacity as a Board or committee member).

An “audit committee financial expert” is not an “expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933, as a result of being designated as an “audit committee financial expert.”  Further, the designation of a person as an “audit committee financial expert” does not mean that the person  has any greater duties, obligations, or liability than those imposed on the person without the “audit committee financial expert” designation.  Similarly, the designation of a person as an “audit committee financial expert” does not affect the duties, obligations, or liability of any other member of the audit committee or board of trustees.

Item 4. Principal Accountant Fees and Services.

(a)   Audit Fees.  The aggregate fees billed for the Registrant’s fiscal years ended April 30, 2007 and April 30, 2006 for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for such fiscal periods were $1,088,500 and $636,000, respectively.

(b)   Audit-Related Fees.  The aggregate fees billed for the Registrant’s fiscal years ended April 30, 2007 and April 30, 2006 for professional services rendered by the principal accountant for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported above in Item 4(a) were $456,550 and  $247,675, respectively. These fees principally related to tax return reviews as well as reviews of Trust’s Registration Statements.

(c)   Tax Fees.  The aggregate fees billed for the Registrant’s fiscal years ended April 30, 2007 and April 30, 2006 for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning were $0 and $0, respectively.

(d)    All Other Fees.   All other aggregate fees billed for the Registrant’s fiscal years ended April 30, 2007 and April 30, 2006 were $0 and $0, respectively. All other fees for the fiscal year ended April 30, 2005 related to review of the Trust’s disclosure controls and procedures.

(e)Audit Committee Pre-Approval Policies and Procedures.  In accordance with Rule 2-01(c)(7)(A), the Audit Committee pre-approves all of the Audit and Tax  Fees of the Registrant.  All of the services described in paragraphs (b) and (c) above were approved by the Audit Committee in accordance with paragraph (c) (7) (i) (c) of Rule 2-01 of Regulation S-X.

Item 5. Audit Committee of Listed Registrants.

The Registrant has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act, which consists of the independent trustees.  The Audit Committee members are Phillip Nussbaum, Mark McMillan, Ronn Bagge, Marc M. Kole and Donald H. Wilson.

Items 6. Schedule of Investments.

The Schedules of Investments are 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.

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 Chief Financial Officer (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 second fiscal half-year that have materially affected, or

are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item  12. Exhibits.

(a)(1)Code of Ethics.

(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:		June 27, 2007

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:		June 27, 2007

By:	/s/ Bruce T. Duncan
Name:		Bruce T. Duncan
Title:		Chief Financial Officer
Date:		June 27, 2007

EX-99.CODEETH

EXHIBIT 99.CODEETH

EXHIBIT (a)(1)

POWERSHARES EXCHANGE-TRADED FUND TRUST

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
 SENIOR FINANCIAL OFFICERS

I.This Code of Ethics (the “Code”) for the investment companies advised or managed by PowerShares Capital Management LLC identified in Exhibit A (collectively, “Funds” and each, a “Fund”) applies to each Fund’s Principal Executive Officer, President, Principal Financial Officer and Treasurer (or persons performing similar functions) (“Covered Officers” each of whom are set forth in Exhibit B) for the purpose of promoting:

·honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

·full, fair, accurate, timely and understandable disclosure in reports and documents that a company files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Fund;

·compliance with applicable laws and governmental rules and regulations;

·prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

·accountability for adherence to the Code.

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.  Any question about the application of the Code should be referred to the General Counsel.

II.Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest

Overview.  A “conflict of interest” occurs when a Covered Officer’s private interest interferes, or appears to interfere, with the interests of, or his service to, the Fund.  For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund.

Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”).  For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as “affiliated persons” (as defined in the Investment Company Act) of the Fund.  The Fund’s and its investment adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions.  This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside the parameters of this Code, unless or until the General Counsel determines that any violation of such programs and procedures is also a violation of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between the Fund and its investment adviser of which the Covered Officers are also officers or employees.  As a result, this Code recognizes that the

Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the investment adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Fund and its investment adviser.  The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund.  Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically.  In addition, it is recognized by the Funds’ Board of Trustees (“Board”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act.  The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive.  The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund.

Each Covered Officer must not:

·use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally (directly or indirectly) to the detriment of the Fund;

·cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; or

·use material non-public knowledge of portfolio transactions made or contemplated for, or actions proposed to be taken by, the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions.

Each Covered Officer must, at the time of signing this Code, report to the General Counsel all affiliations or significant business relationships outside of the Funds and must update the report annually.

Conflict of interest situations should always be approved by the General Counsel and communicated to the relevant Fund or Fund’s Board.  Any activity or relationship that would present such a conflict for a Covered Officer would likely also present a conflict for the Covered Officer if an immediate member of the Covered Officer’s family living in the same household engages in such an activity or has such a relationship.  Examples of these include:

·service or significant business relationships as a director on the board of any public or private company;

·accepting directly or indirectly, anything of value, including gifts and gratuities in excess of $100 per year from any person or entity with which the Fund has current or prospective business dealings, not including occasional meals or tickets for theatre or sporting events or other similar entertainment; provided it is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

·any ownership interest in, or any consulting or employment relationship with, any of the Fund’s service providers, other than its investment adviser, principal underwriter, or any affiliated person thereof; and

·a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

III.Disclosure and Compliance

·Each Covered Officer should familiarize himself/herself with the disclosure and compliance requirements generally applicable to the Funds;

·each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund’s Trustees and auditors, or to governmental regulators and self-regulatory organizations;

·each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and their investment adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and

·it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

IV.Reporting and Accountability

Each Covered Officer must:

·upon adoption of the Code (thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he has received, read and understands the Code;

·annually thereafter affirm to the Boards that he has complied with the requirements of the Code;

·not retaliate against any other Covered Officer, other officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and

·notify the General Counsel promptly if he/she knows or suspects of any violation of this Code.  Failure to do so is itself a violation of this Code.

The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation.  However, any waivers(1) sought by a Covered Officer must be considered by the Board of the relevant Fund or Funds.

The Funds will follow these procedures in investigating and enforcing this Code:

(1) Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics.”

·the General Counsel will take all appropriate action to investigate any potential violations reported to him;

·if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action;

·any matter that the General Counsel believes is a violation will be reported to the relevant Fund’s Audit Committee;

·if the Independent Trustees of the relevant Fund concur that a violation has occurred, they will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer or other appropriate disciplinary actions;

·the Independent Trustees of the relevant Fund will be responsible for granting waivers of this Code, as appropriate; and

·any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

V.Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder.  Insofar as other policies or procedures of the Funds, the Funds’ investment adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code unless any provision of this Code conflicts with any applicable federal or state law, in which case the requirements of such law will govern.  The Funds’ and their investment adviser’s and principal underwriter’s codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VI.Amendments

Any amendments to this Code, other than amendments to Exhibits A or B, must be approved or ratified by a majority vote of the Board of each Fund, including a majority of Independent Trustees.

VII.Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly.  Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Independent Directors/Trustees of the relevant Fund or Funds and their counsel, the relevant Fund or Funds and their counsel and the relevant investment adviser and its counsel.

VIII.Internal Use

The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion

I have read and understand the terms of the above Code.  I recognize the responsibilities and obligations incurred by me as a result of my being subject to the Code.  I hereby agree to abide by the above Code.

Date: August 22, 2003

Exhibit A

PowerShares Dynamic Market Portfolio

PowerShares Dynamic OTC Portfolio

PowerShares Dynamic MagniQuant Portfolio

PowerShares FTSE RAFI US 1000 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 Large Cap Portfolio

PowerShares Dynamic Mid Cap Portfolio

PowerShares Dynamic Small Cap Portfolio

PowerShares Dynamic Aggressive Growth Portfolio

PowerShares Dynamic Deep Value Portfolio

PowerShares Zacks Micro Cap Portfolio

PowerShares Zacks Small Cap Portfolio

PowerShares Aerospace & Defense Portfolio

PowerShares Cleantech™ Portfolio

PowerShares Golden Dragon Halter USX China Portfolio

PowerShares Listed Private Equity Portfolio

PowerShares Lux Nanotech Portfolio

PowerShares Value Line Timeliness™ Select Portfolio

PowerShares Value Line Industry Rotation Portfolio

PowerShares Water Resources Portfolio

PowerShares Wilderhill Clean Energy Portfolio

PowerShares WilderHill Progressive Energy Portfolio

PowerShares DWA Technical Leaders™ Portfolio

PowerShares Dividend AchieversTM Portfolio

PowerShares High Yield Equity Dividend Acheivers™ Portfolio

PowerShares High Growth Rate Dividend Achievers™ Portfolio

PowerShares International Dividend Achievers™ Portfolio

PowerShares Buyback Achievers™ Portfolio

PowerShares Financial Preferred Portfolio

PowerShares Dynamic Banking Portfolio

PowerShares Dynamic Biotechnology & Genome Portfolio

PowerShares Dynamic Building & Construction Portfolio

PowerShares Dynamic Energy Exploration & Production Portfolio

PowerShares Dynamic Food & Beverage Portfolio

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

PowerShares Dynamic Healthcare Services Portfolio

PowerShares Dynamic Insurance Portfolio

PowerShares Dynamic Leisure and Entertainment Portfolio

PowerShares Dynamic Media Portfolio

PowerShares Dynamic Networking Portfolio

PowerShares Dynamic Oil & Gas Services Portfolio

PowerShares Dynamic Pharmaceuticals Portfolio

PowerShares Dynamic Retail Portfolio

PowerShares Dynamic Semiconductors Portfolio

PowerShares Dynamic Software Portfolio

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

PowerShares FTSE RAFI Basic Materials Sector Portfolio

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

PowerShares FTSE RAFI Consumer Servies Sector Portfolio

PowerShares FTSE RAFI Energy Sector Portfolio

PowerShares FTSE RAFI Financials Sector Portfolio

PowerShares FTSE RAFI Health Care Sector Portfolio

PowerShares FTSE RAFI Industrials Sector Portfolio

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

PowerShares FTSE RAFI Utilities Sector Portfolio

PowerShares Dynamic Basic Materials Sector Portfolio

PowerShares Dynamic Consumer Discretionary Sector Portfolio

PowerShares Dynamic Consumer Staples Sector Portfolio

PowerShares Dynamic Energy Sector Portfolio

PowerShares Dynamic Financial Sector Portfolio

PowerShares Dynamic Healthcare Sector Portfolio

PowerShares Dynamic Industrials Sector Portfolio

PowerShares Dynamic Technology Sector Portfolio

PowerShares Dynamic Telecommunications & Wireless Portfolio

PowerShares Dynamic Utilities Portfolio

Exhibit B

Persons Covered by this Code of Ethics

Chairman and Chief Executive Officer – H. Bruce Bond

Chief Financial Officer – Bruce T. Duncan

EX-99.CERT

EXHIBIT 99.CERT

EXHIBIT (a)(2)

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 most recent 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:  June 27, 2007

/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, Bruce T. Duncan, 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 most recent 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:  June 27, 2007

/s/ Bruce T. Duncan

Bruce T. Duncan,

Chief Financial Officer

EX-99.906CERT

EXHIBIT 99.906CERT

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 year ended April 30, 2007 (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:  June 27, 2007
/s/ H. Bruce Bond
Name:	H. Bruce Bond
Title:	Chairman and Chief Executive Officer
Dated:  June 27, 2007
/s/ Bruce T. Duncan
Name:	Bruce T. Duncan,
Title:	Chief Financial Officer

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.