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:	October 31, 2007

Item 1. Reports to Stockholders.

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

2007 Semi-Annual Report to Shareholders

31 October 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
Supplemental Information	50

My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management – Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500^® Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potential recession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25 to 4.75%, the first cut in four years, and the discount rate moved from 5.75 to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

3

Manager's Analysis

PowerShares Dynamic Market Portfolio (ticker: PWC)

The PowerShares Dynamic Market Portfolio returned 0.36% over the reporting period, while the S&P 500^® Index returned 5.49%. The Fund outperformed the market in financials, but heavily underperformed the technology sector. Benefiting from the right allocation of financial stocks, the Fund outperformed the market in this sector by owning insurance companies but not holding diversified financials or commercial banks which were hit more heavily by the sub-prime meltdown. However, the absence of the large growth companies within technology hampered returns. The Fund didn't hold Apple, Google or Cisco and was underallocated in Microsoft.

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 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) as of 31 October 2007

Financials	18.2
Information Technology	15.8
Consumer Discretionary	12.0
Industrials	11.6
Energy	11.4
Health Care	11.4
Consumer Staples	8.2
Materials	4.0
Utilities	3.9
Telecommunications Services	3.4
Other	0.1

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	35.2
Large-Cap Value	27.6
Mid-Cap Growth	15.6
Large-Cap Growth	13.2
Small-Cap Value	5.5
Small-Cap Growth	2.9

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Noble Energy, Inc.	4.6
Chevron Corp.	3.7
Altria Group, Inc.	3.0
Deere & Co.	2.9
Republic Services, Inc.	2.8
Owens-Illinois, Inc.	2.8
Kellogg Co.	2.7
Constellation Energy Group, Inc.	2.7
Rockwell Automation, Inc.	2.5
Principal Financial Group, Inc.	2.4
Total	30.1

4

Manager's Analysis (Continued)

PowerShares Dynamic Market Portfolio (ticker: PWC)

Fund Performance History (%)     As of 31 October 2007

Index

			Avg. Ann.†				Fund Inception
	6 Month		1 Year		3 Year		Avg. Ann.†		Cumulative
Dynamic Market IntellidexSM Index		0.55		10.60		14.90		17.70		108.71
S&P 500® Index		5.49		14.56		13.16		14.38		83.42
Russell 3000® Index		5.17		14.53		13.81		15.32		90.35

Fund

NAV Return	0.36	10.12	14.46	17.08	103.33
Share Price Return	0.24	10.01	14.44	17.02	102.96

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 0.62%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.59% while the Fund's gross annualized total operating expense ratio was 0.60%. 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, 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 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 2,918 common stocks, respectively.

^† Average annualized.

5

Manager's Analysis

PowerShares Dynamic OTC Portfolio (ticker: PWO)

The PowerShares Dynamic OTC Portfolio returned 4.43% over the reporting period, while the NASDAQ Composite Index returned 13.23%. The Fund suffered under-performance to the NASDAQ Composite by being under-allocated to large cap growth stocks, namely Microsoft, Google, Apple and Research in Motion. The under-performance in these names was mainly due to the portfolio construction, which restricts overweighting one particular stock. This construction strategy protects the Fund on the downside. On the flip side, the Fund enjoyed success in the model's stock selection within the health care sector. Within the health care sector, equipment services stock Dade Behring and Express Scripts had solid performance. An underweighting in pharmaceuticals and biotech stocks, particularly Amgen, aided the Fund as well, as these stocks underperformed during the period.

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) as of 31 October 2007

Information Technology	53.9
Consumer Discretionary	13.7
Health Care	11.9
Financials	8.6
Industrials	5.7
Consumer Staples	2.4
Telecommunications Services	1.7
Energy	1.2
Materials	0.9
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	30.8
Large-Cap Growth	22.0
Small-Cap Value	14.7
Small-Cap Growth	14.4
Mid-Cap Value	12.9
Large-Cap Value	5.2

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
BEA Systems, Inc.	4.1
Fiserv, Inc.	3.5
Adobe Systems, Inc.	3.3
Oracle Corp.	3.2
Dell, Inc.	3.2
Apollo Group, Inc.	3.2
eBay, Inc.	3.1
Autodesk, Inc.	3.1
Intel Corp.	3.1
Nividia Corp.	3.1
Total	32.9

6

Manager's Analysis (Continued)

PowerShares Dynamic OTC Portfolio (ticker: PWO)

Fund Performance History (%)     As of 31 October 2007

Index

			Avg. Ann.†				Fund Inception
	6 Month		1 Year		3 Year		Avg. Ann.†		Cumulative
Dynamic OTC IntellidexSM Index		4.65		12.18		13.25		17.46		106.82
NASDAQ Composite Index		13.23		20.81		13.12		15.83		94.16
NASDAQ-100 Index		20.12		29.82		15.12		17.16		104.43

Fund

NAV Return	4.43	11.59	12.80	16.83	101.43
Share Price Return	4.38	11.61	12.82	16.78	101.13

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 0.68%. In the Financial Highlights section of this Semi-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 0.65%. 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, 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 NASDAQ-100 Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 3,087 and 100 common stocks, respectively.

^† Average annualized.

7

Manager's Analysis

PowerShares Dynamic MagniQuant Portfolio (ticker: PIQ)

The PowerShares Dynamic MagniQuant Portfolio returned 1.25% during the reporting period while the S&P 500^® Index returned 5.49% and the S&P 500^® Equal Weight Index returned 0.36%. The Fund is equal-weighted itself and so it compares more closely to the latter index, though both equal-weighted indexes are designed to appreciate greater in the long-term than the former, market cap-weighted index. As expected, then, the Fund's performance suffered from a low allocation to large cap stocks, but performance was aided by its mid cap allocation.

The Fund experienced drag on its performance from poor-performing technology stocks CMGI, Compuware and Brocade and by not holding the super-performing Apple. Performance was aided by under-allocation to commercial banks within the financials sector and over-allocation to healthy performing capital market stocks Eaton Vance, A.G. Edwards and T. Rowe Price. The Fund had no exposure to poor-performing E*Trade, Bear Stearns, Legg Mason, and Morgan Stanley.

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) as of 31 October 2007

Financials	27.7
Industrials	21.1
Consumer Discretionary	11.3
Information Technology	9.6
Materials	8.4
Health Care	7.9
Energy	7.2
Consumer Staples	3.4
Telecommunications Services	1.8
Utilities	1.6
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	38.9
Mid-Cap Growth	18.3
Large-Cap Value	16.2
Small-Cap Value	14.3
Large-Cap Growth	8.7
Small-Cap Growth	3.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Terra Industries, Inc.	0.7
CF Industries Holdings, Inc.	0.7
Eaton Vance Corp.	0.6
State Street Corp.	0.6
Comtech Telecommunications Corp.	0.6
Noble Energy, Inc.	0.6
McDermott International, Inc. (Panama)	0.6
AK Steel Holding Corp.	0.6
T. Rowe Price Group, Inc.	0.6
Borg Warner, Inc.	0.6
Total	6.2

8

Manager's Analysis (Continued)

PowerShares Dynamic MagniQuant Portfolio (ticker: PIQ)

Fund Performance History (%)     As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Top 200 IntellidexSM Index		1.62		12.03		12.17		12.86
S&P 500® Index		5.49		14.56		15.00		15.87
Russell 3000® Index		5.17		14.53		14.94		15.80

Fund

NAV Return	1.25	11.26	11.42	12.04
Share Price Return	1.10	11.18	11.43	12.06

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 0.95%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.69% while the Fund's gross annualized total operating expense ratio was 0.76%. 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, 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 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 2,918 common stocks, respectively.

^† Average annualized.

9

Manager's Analysis

PowerShares FTSE RAFI US 1000 Portfolio (ticker: PRF)

The PowerShares FTSE RAFI US 1000 Portfolio returned 2.84%, while the Russell 1000^® Index returned 5.44%.

Energy, technology and materials stocks were the strongest performing sectors while financials and consumer discretionary stocks lagged. Relative to the Russell 1000^® Index, the Fund gained the most out-performance in health care and telecom stocks. However, the Fund underperformed relative to that index by under-allocating to a soaring technology sector and over-allocating to a plummeting financials sector. Specifically, the Fund is under-allocated to Apple, Google and Cisco and slightly over-allocated to Washington Mutual, Genworth and Freddie Mac.

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 1000 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) as of 31 October 2007

Financials	18.9
Consumer Discretionary	12.8
Consumer Staples	11.7
Industrials	11.2
Energy	10.8
Information Technology	10.4
Health Care	9.0
Utilities	6.5
Telecommunications Services	4.2
Materials	4.1
Money Market Fund	0.2
Other	0.2

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	57.0
Mid-Cap Value	18.9
Large-Cap Growth	15.5
Mid-Cap Growth	5.2
Small-Cap Value	3.0
Small-Cap Growth	0.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Exxon Mobil Corp.	3.3
General Electric Co.	3.0
Kraft Foods, Inc., Class A	2.2
Microsoft Corp.	1.9
Chevron Corp.	1.8
Verizon Communications, Inc.	1.8
Bank of America Corp.	1.5
General Motors Corp.	1.4
Wal-Mart Stores, Inc.	1.4
Ford Motor Co.	1.3
Total	19.6

10

Manager's Analysis (Continued)

PowerShares FTSE RAFI US 1000 Portfolio (ticker: PRF)

Fund Performance History (%)     As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE RAFI US 1000 Index		3.27		13.32		15.00		29.92
S&P 500® Index		5.49		14.56		13.74		27.28
Russell 1000® Index		5.44		15.03		13.84		27.49

Fund

NAV Return	2.84	12.35	14.17	28.05
Share Price Return	2.80	12.39	14.35	28.43

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 0.77%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.67% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) 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, 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 Russell 1000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 1,000 common stocks, respectively.

^† Average annualized.

11

Funds' Distribution History (Unaudited)

	Ex-Dividend	10/15/07		9/21/07		9/14/07		8/15/07		7/13/07		6/15/07		5/15/07
	Record	10/17/07		9/25/07		9/18/07		8/17/07		7/17/07		6/19/07		5/17/07
	Payable	10/31/07		9/28/07		9/28/07		8/31/07		7/31/07		6/29/07		5/31/07
Fund	Ticker
PowerShares Dynamic Market Portfolio	PWC		—		0.09524		—		—		—		0.21355		—
PowerShares Dynamic OTC Portfolio	PWO		—		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio	PIQ		—		0.04741		—		—		—		0.09166		—
PowerShares FTSE RAFI US 1000 Portfolio	PRF		—		0.11421		—		—		—		0.23386		—
	Ex-Dividend	9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	Record	9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	Payable	9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund	Ticker
PowerShares Dynamic Market Portfolio	PWC		0.04994		—		—		0.04868		—		—		0.04452
PowerShares Dynamic OTC Portfolio	PWO		—		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio	PIQ		—		—		—		—		—		—		—
PowerShares FTSE RAFI US 1000 Portfolio	PRF		0.13450		—		—		0.14583		—		—		0.12172
	Ex-Dividend	9/17/04		6/18/04		3/19/04		12/24/03		9/19/03		6/20/03
	Record	9/21/04		6/22/04		3/23/04		12/29/03		9/23/03		6/24/03
	Payable	10/29/04		7/30/04		4/30/04		1/30/04		10/31/03		7/31/03
Fund	Ticker
PowerShares Dynamic Market Portfolio	PWC		0.03096		0.07211		0.05300		0.03646		0.04418		0.16848
PowerShares Dynamic OTC Portfolio	PWO		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio	PIQ		—		—		—		—		—		—
PowerShares FTSE RAFI US 1000 Portfolio	PRF		—		—		—		—		—		—

12

	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06		10/13/06
	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06		10/17/06
	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06		10/31/06
Fund
PowerShares Dynamic Market Portfolio		—		0.06501		—		—		—		0.16017		—		—
PowerShares Dynamic OTC Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio		—		0.02020		—		—		—		0.03317		—		—
PowerShares FTSE RAFI US 1000 Portfolio		—		0.12360		—		—		—		0.20592		—		—
	12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05		12/31/04		12/17/04
	1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05		1/4/05		12/21/04
	1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05		1/31/05		1/31/05
Fund
PowerShares Dynamic Market Portfolio		—		0.13055		0.04739		0.10797		—		0.02900		—		0.08784
PowerShares Dynamic OTC Portfolio		—		—		0.05663		—		—		—		—		—
PowerShares Dynamic MagniQuant Portfolio		—		—		—		—		—		—		—		—
PowerShares FTSE RAFI US 1000 Portfolio		—		—		—		—		—		—		—		—
Fund
PowerShares Dynamic Market Portfolio
PowerShares Dynamic OTC Portfolio
PowerShares Dynamic MagniQuant Portfolio
PowerShares FTSE RAFI US 1000 Portfolio

13

Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 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		1021		620		63		11		—		—		—
PWO	PowerShares Dynamic OTC Portfolio	5/1/03		1021		526		32		11		—		—		—
PIQ	PowerShares Dynamic MagniQuant Portfolio	10/12/06		265		130		7		—		—		—		—
PRF	PowerShares FTSE RAFI US 1000 Portfolio	12/19/05		461		260		7		1		—		—		—

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		324		3		—		—		—		—
PWO		438		12		2		—		—		—
PIQ		128		—		—		—		—		—
PRF		183		4		6		—		—		—

15

Fees and Expenses (Unaudited)

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust, you incur advisory fees and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month period ended October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	1,003.56		0.59	%	$	2.97
Hypothetical (5% return before expenses)	$	1,000.00	$	1,022.17		0.59	%	$	3.00
PowerShares Dynamic OTC Portfolio Actual	$	1,000.00	$	1,044.34		0.60	%	$	3.08
Hypothetical (5% return before expenses)	$	1,000.00	$	1,022.12		0.60	%	$	3.05
PowerShares Dynamic MagniQuant Portfolio Actual	$	1,000.00	$	1,012.47		0.69	%	$	3.49
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.69	%	$	3.51
PowerShares FTSE RAFI US 1000 Portfolio Actual	$	1,000.00	$	1,028.36		0.69	%	$	3.52
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.69	%	$	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 October 31, 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 184 and then dividing the result by 366.

16

Schedule of Investments

PowerShares Dynamic Market Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Consumer Discretionary—12.0%
	34,749	BorgWarner, Inc.	$	3,673,317
	101,809	Brinker International, Inc.		2,584,930
	70,576	Darden Restaurants, Inc.		3,034,768
	67,574	Dollar Tree Stores, Inc.*		2,588,084
	98,006	Hanesbrands, Inc.*		3,042,106
	26,746	ITT Educational Services, Inc.*		3,401,824
	57,941	Men's Wearhouse (The), Inc.		2,448,587
	52,520	Meredith Corp.		3,269,370
	33,626	Mohawk Industries, Inc.*		2,869,643
	303,995	NIKE, Inc., Class B		20,142,708
	53,195	Pre-Paid Legal Services, Inc.*		3,170,422
	248,185	Sherwin-Williams (The) Co.		15,863,985
	214,495	VF Corp.		18,688,949
	509,736	Walt Disney (The) Co.		17,652,158
				102,430,851
		Consumer Staples—8.2%
	149,821	Alberto-Culver Co.		3,893,848
	350,089	Altria Group, Inc.		25,531,990
	99,185	BJ's Wholesale Club, Inc.*		3,558,758
	45,606	Carolina Group		3,912,083
	135,016	ConAgra Foods, Inc.		3,203,930
	442,386	Kellogg Co.		23,353,557
	94,584	NBTY, Inc.*		3,367,190
	208,865	Sara Lee Corp.		3,454,627
				70,275,983
		Energy—11.4%
	348,537	Chevron Corp.		31,894,621
	509,214	Noble Energy, Inc.		38,975,240
	74,648	SEACOR Holdings, Inc.*		6,841,489
	89,619	Sunoco, Inc.		6,595,958
	132,871	Tesoro Corp.		8,042,682
	126,436	Western Refining, Inc.		4,637,672
				96,987,662
		Financials—18.2%
	70,682	Assurant, Inc.		4,130,656
	332,477	Chubb (The) Corp.		17,737,648
	65,179	Erie Indemnity Co., Class A		3,708,685
	35,762	Everest Re Group Ltd. (Bermuda)		3,810,083
	191,197	Hartford Financial Services Group (The), Inc.		18,551,845
	188,352	Horace Mann Educators Corp.		3,897,003
	279,231	Lincoln National Corp.		17,415,637
	7,657	Markel Corp.*		4,159,436
	68,063	Nationwide Financial Services, Inc., Class A		3,651,580
	306,361	Principal Financial Group, Inc.		20,731,450
	67,072	Reinsurance Group of America, Inc.		3,831,823
	143,591	SEI Investments Co.		4,540,347
	77,339	StanCorp Financial Group, Inc.		4,263,699
	59,180	Torchmark Corp.		3,856,169
	51,434	Transatlantic Holdings, Inc.		3,833,376
	336,360	Travelers (The) Cos., Inc.		17,561,356

Number of Shares			Value
		Common Stocks (Continued)
	121,869	W.R. Berkley Corp.	$	3,667,038
	223,092	XL Capital Ltd., Class A (Cayman Islands)		16,051,469
				155,399,300
		Health Care—11.4%
	312,865	Aetna, Inc.		17,573,627
	65,701	Amedisys, Inc.*		2,789,007
	93,220	Apria Healthcare Group, Inc.*		2,253,127
	44,312	Arthrocare Corp.*		2,873,190
	290,873	Baxter International, Inc.		17,455,289
	47,306	Charles River Laboratories International, Inc.*		2,743,748
	308,212	CIGNA Corp.		16,178,048
	43,162	DaVita, Inc.*		2,813,731
	63,043	Dentsply International, Inc.		2,615,024
	290,929	Express Scripts, Inc.*		18,357,620
	45,307	Health Net, Inc.*		2,428,908
	41,291	Kinetic Concepts, Inc.*		2,481,589
	68,969	Lincare Holdings, Inc.*		2,398,052
	38,855	Manor Care, Inc.		2,586,966
	39,390	Techne Corp.*		2,569,804
				98,117,730
		Industrials—11.6%
	102,984	Administaff, Inc.		4,107,002
	73,293	Con-way, Inc.		3,123,015
	162,484	Deere & Co.		25,168,771
	89,029	Gardner Denver, Inc.*		3,216,618
	211,616	GrafTech International Ltd.*		3,999,542
	170,163	Labor Ready, Inc.*		2,991,466
	82,616	Landstar System, Inc.		3,477,307
	49,388	Lincoln Electric Holdings, Inc.		3,568,283
	711,080	Republic Services, Inc.		24,311,825
	313,766	Rockwell Automation, Inc.		21,612,202
	60,069	Toro (The) Co.		3,343,441
				98,919,472
		Information Technology—15.8%
	301,773	Amkor Technology, Inc.*		3,419,088
	82,851	Arrow Electronics, Inc.*		3,312,383
	385,269	Autodesk, Inc.*		18,839,654
	582,805	BMC Software, Inc.*		19,722,121
	61,428	CommScope, Inc.*		2,897,559
	318,950	Computer Sciences Corp.*		18,623,491
	81,688	Comtech Telecommunications Corp.*		4,431,574
	58,002	Factset Research Systems, Inc.		4,090,301
	103,372	Hewitt Associates, Inc., Class A*		3,646,964
	102,241	j2 Global Communications, Inc.*		3,444,499
	499,178	McAfee, Inc.*		20,641,011
	36,860	Mettler Toledo International, Inc.*		3,920,061
	521,183	Texas Instruments, Inc.		16,990,566
	241,914	United Online, Inc.		4,257,686
	131,581	Verigy Ltd. (Singapore)*		3,025,047
	94,230	Wright Express Corp.*		3,646,701
				134,908,706

See Notes to Financial Statements.
17

Schedule of Investments (Continued)

PowerShares Dynamic Market Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Materials—4.0%
	77,989	AK Steel Holding Corp.*	$	3,909,589
	188,838	Headwaters, Inc.*		2,709,825
	49,063	Lubrizol (The) Corp.		3,330,396
	542,934	Owens-Illinois, Inc.*		24,117,129
				34,066,939
		Telecommunication Services—3.4%
	250,830	AT&T, Inc.		10,482,186
	59,544	CenturyTel, Inc.		2,622,913
	45,769	Embarq Corp.		2,422,095
	29,371	U.S. Cellular Corp.*		2,765,280
	238,782	Verizon Communications, Inc.		11,000,687
				29,293,161
		Utilities—3.9%
	243,804	Constellation Energy Group, Inc.		23,088,239
	80,697	Energen Corp.		5,164,608
	111,195	Mirant Corp.*		4,710,220
				32,963,067
		Total Investments (Cost $806,870,207)—99.9%		853,362,871
		Other assets less liabilities—0.1%		440,539
		Net Assets—100.0%	$	853,803,410

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	830,476,272		97.3	%
Cayman Islands		16,051,469		1.9
Bermuda		3,810,083		0.4
Singapore		3,025,047		0.3
Total investments		853,362,871		99.9
Other assets less liabilities		440,539		0.1
Net Assets	$	853,803,410		100.0	%

See Notes to Financial Statements.
18

Schedule of Investments

PowerShares Dynamic OTC Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—13.7%
	63,358	Apollo Group, Inc., Class A*	$	5,021,755
	36,206	Conn's, Inc.*		925,787
	85,553	Dollar Tree Stores, Inc.*		3,276,680
	119,781	Exide Technologies*		1,000,171
	130,581	Gemstar-TV Guide International, Inc.*		899,703
	39,748	Gentex Corp.		825,963
	26,419	JOS. A. Bank Clothiers, Inc.*		771,699
	28,079	Monarch Casino & Resort, Inc.*		858,937
	14,689	NutriSystem, Inc.*		442,139
	107,125	PetSmart, Inc.		3,208,394
	25,894	Sears Holdings Corp.*		3,490,252
	22,824	Warnaco Group (The), Inc.*		928,709
				21,650,189
		Consumer Staples—2.4%
	42,572	Hansen Natural Corp.*		2,894,896
	21,517	USANA Health Sciences, Inc.*		878,109
				3,773,005
		Energy—1.2%
	55,513	Global Industries Ltd.*		1,366,730
	10,116	Lufkin Industries, Inc.		601,497
				1,968,227
		Financials—8.6%
	9,756	American Physicians Capital, Inc.		424,971
	23,673	Amtrust Financial Services, Inc.		330,238
	8,594	Bancfirst Corp.		390,511
	53,646	Cincinnati Financial Corp.		2,134,038
	10,480	City Holding Co.		396,249
	40,448	Erie Indemnity Co., Class A		2,301,492
	11,638	James River Group, Inc.		399,183
	7,076	Midland (The), Co.		450,175
	11,822	National Interstate Corp.		378,304
	7,150	Navigators Group (The), Inc.*		431,145
	89,107	SEI Investments Co.		2,817,564
	124,553	TD Ameritrade Holding Corp.*		2,383,945
	17,909	United America Indemnity Ltd., Class A (Cayman Islands)*		394,893
	10,201	United Fire & Casualty Co.		326,840
				13,559,548
		Health Care—11.9%
	26,321	Align Technology, Inc.*		544,845
	15,836	Amedisys, Inc.*		672,238
	10,679	Arthrocare Corp.*		692,426
	79,759	Dentsply International, Inc.		3,308,403
	8,259	Dionex Corp.*		726,792
	98,523	Endo Pharmaceuticals Holdings, Inc.*		2,886,724
	54,988	eResearch Technology, Inc.*		610,367
	57,368	Express Scripts, Inc.*		3,619,922
	21,291	LifePoint Hospitals, Inc.*		649,801
	87,272	Lincare Holdings, Inc.*		3,034,447
	23,189	Meridian Bioscience, Inc.		767,324

Number of Shares			Value
		Common Stocks (Continued)
	28,061	Res-Care, Inc.*	$	689,178
	9,495	Techne Corp.*		619,454
				18,821,921
		Industrials—5.7%
	9,295	Advisory Board (The), Co.*		596,832
	11,415	Heidrick & Struggles International, Inc.		493,356
	72,529	Landstar System, Inc.		3,052,746
	43,362	Lincoln Electric Holdings, Inc.		3,132,904
	16,696	McGrath Rentcorp		572,339
	16,480	Waste Industries USA, Inc.		593,280
	28,734	Werner Enterprises, Inc.		546,521
				8,987,978
		Information Technology—53.9%
	38,496	ADC Telecommunications, Inc.*		719,875
	108,944	Adobe Systems, Inc.*		5,218,418
	26,355	Adtran, Inc.		634,365
	195,607	Altera Corp.		3,837,809
	61,153	Amkor Technology, Inc.*		692,863
	21,264	Ansys, Inc.*		825,256
	46,409	Arris Group, Inc.*		533,704
	53,694	Aspen Technology, Inc.*		936,423
	100,548	Autodesk, Inc.*		4,916,797
	381,751	BEA Systems, Inc.*		6,451,593
	16,891	Blue Coat Systems, Inc.*		685,606
	16,885	Cabot Microelectronics Corp.*		669,997
	47,153	Chordiant Software, Inc.*		678,532
	145,907	Cisco Systems, Inc.*		4,823,685
	451,588	CMGI, Inc.*		636,739
	49,093	Cogent, Inc.*		725,104
	16,553	Comtech Telecommunications Corp.*		898,000
	30,470	CSG Systems International, Inc.*		625,549
	18,441	DealerTrack Holdings, Inc.*		905,269
	164,864	Dell, Inc.*		5,044,838
	136,580	eBay, Inc.*		4,930,538
	100,115	Fiserv, Inc.*		5,546,371
	50,466	Informatica Corp.*		861,959
	29,700	Insight Enterprises, Inc.*		820,908
	180,870	Intel Corp.		4,865,403
	20,720	j2 Global Communications, Inc.*		698,057
	26,848	Jack Henry & Associates, Inc.		784,499
	37,000	LoJack Corp.*		650,090
	24,394	Manhattan Associates, Inc.*		735,723
	48,787	Methode Electronics, Inc.		611,789
	64,336	Micrel, Inc.		582,241
	16,725	MTS Systems Corp.		744,095
	22,315	National Instruments, Corp.		723,899
	104,367	NIC, Inc.*		759,792
	136,553	Nvidia Corp.*		4,831,245
	229,654	Oracle Corp.*		5,091,429
	88,443	Palm, Inc.		797,756
	60,836	Photronics, Inc.*		665,546

See Notes to Financial Statements.
19

Schedule of Investments (Continued)

PowerShares Dynamic OTC Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	10,112	Rofin-Sinar Technologies, Inc.*	$	795,005
	90,317	S1 Corp.*		760,469
	28,010	Stratasys, Inc.*		729,100
	247,600	Symantec Corp.*		4,649,928
	49,023	United Online, Inc.		862,805
	26,665	Verigy Ltd. (Singapore)*		613,028
	36,109	Vignette Corp.*		622,519
	40,792	Zoran Corp.*		1,040,196
				85,234,812
		Materials—0.9%
	6,257	Schnitzer Steel Industries, Inc., Class A		413,400
	19,041	Sigma-Aldrich Corp.		983,848
				1,397,248
		Telecommunication Services—1.7%
	56,074	SBA Communications Corp., Class A*		1,996,235
	42,421	USA Mobility, Inc.*		663,464
				2,659,699
		Total Investments (Cost $149,265,526)—100.0%		158,052,627
		Liabilities in excess of other assets—(0.0%)		(6,632	)
		Net Assets—100.0%	$	158,045,995

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	157,044,706			99.4	%
Singapore		613,028			0.4
Cayman Islands		394,893			0.2
Total investments		158,052,627			100.0
Liabilities in excess of other assets		(6,632	)		(0.0	)
Net Assets	$	158,045,995			100.0	%

See Notes to Financial Statements.
20

Schedule of Investments

PowerShares Dynamic MagniQuant Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—11.3%
	3,642	AutoZone, Inc.*	$	453,101
	5,091	Black & Decker (The) Corp.		457,732
	5,227	BorgWarner, Inc.		552,546
	15,312	Brinker International, Inc.		388,772
	9,916	Coach, Inc.*		362,529
	10,615	Darden Restaurants, Inc.		456,445
	10,164	Dollar Tree Stores, Inc.*		389,281
	11,245	Drew Industries, Inc.*		445,077
	15,082	Family Dollar Stores, Inc.		382,329
	14,739	Hanesbrands, Inc.*		457,499
	11,568	International Game Technology		504,480
	4,021	ITT Educational Services, Inc.*		511,431
	11,713	Johnson Controls, Inc.		512,092
	8,713	Men's Wearhouse (The), Inc.		368,211
	7,901	Meredith Corp.		491,837
	5,058	Mohawk Industries, Inc.*		431,650
	7,837	NIKE, Inc., Class B		519,280
	8,002	Pre-Paid Legal Services, Inc.*		476,919
	6,399	Sherwin-Williams (The) Co.		409,024
	7,782	Stanley Works (The)		447,854
	5,530	VF Corp.		481,829
	13,144	Walt Disney (The) Co.		455,177
	12,654	Warnaco Group (The), Inc.*		514,891
				10,469,986
		Consumer Staples—3.4%
	19,058	Alberto-Culver Co.		495,317
	6,362	Altria Group, Inc.		463,981
	12,618	BJ's Wholesale Club, Inc.*		452,734
	5,801	Carolina Group		497,610
	17,175	ConAgra Foods, Inc.		407,563
	8,039	Kellogg Co.		424,379
	26,571	Sara Lee Corp.		439,484
				3,181,068
		Energy—7.2%
	5,400	Cameron International Corp.*		525,744
	5,033	Chevron Corp.		460,570
	5,863	Devon Energy Corp.		547,604
	5,151	Exxon Mobil Corp.		473,840
	7,196	Hess Corp.		515,306
	8,195	Marathon Oil Corp.		484,570
	7,351	Noble Energy, Inc.		562,645
	7,790	Occidental Petroleum Corp.		537,900
	5,030	SEACOR Holdings, Inc.*		461,000
	6,038	Sunoco, Inc.		444,397
	8,953	Tesoro Corp.		541,925
	6,748	Tidewater, Inc.		368,913
	6,447	Valero Energy Corp.		454,062
	8,519	Western Refining, Inc.		312,477
				6,690,953

Number of Shares			Value
		Common Stocks (Continued)
		Financials—27.7%
	7,645	ACE Ltd. (Cayman Islands)	$	463,363
	8,284	AFLAC, Inc.		520,070
	8,067	Allstate (The) Corp.		422,711
	15,659	American Financial Group, Inc.		468,204
	3,504	American National Insurance		453,067
	7,239	Ameriprise Financial, Inc.		455,912
	10,194	Aon Corp.		461,992
	6,148	Arch Capital Group Ltd. (Bermuda)*		459,686
	8,567	Assurant, Inc.		500,655
	8,591	Bank of Hawaii Corp.		456,698
	8,636	Chubb (The) Corp.		460,731
	10,478	Cincinnati Financial Corp.		416,815
	13,851	Commerce (The) Group, Inc.		505,423
	10,958	Delphi Financial Group, Inc., Class A		424,623
	11,502	Eaton Vance Corp.		575,444
	7,902	Erie Indemnity Co., Class A		449,624
	4,335	Everest Re Group Ltd. (Bermuda)		461,851
	11,286	FBL Financial Group, Inc., Class A		456,857
	12,578	Federated Investors, Inc., Class B		540,854
	3,350	Franklin Resources, Inc.		434,428
	8,219	GAMCO Investors, Inc., Class A		508,838
	4,966	Hartford Financial Services Group (The), Inc.		481,851
	15,994	HCC Insurance Holdings, Inc.		478,061
	22,833	Horace Mann Educators Corp.		472,415
	7,253	Lincoln National Corp.		452,370
	9,393	Loews Corp.		461,102
	929	Markel Corp.*		504,651
	8,383	Mercury General Corp.		430,132
	6,894	MetLife, Inc.		474,652
	8,251	Nationwide Financial Services, Inc., Class A		442,666
	8,148	Navigators Group (The), Inc.*		491,324
	12,193	Odyssey Re Holdings Corp.		453,336
	6,073	PartnerRe Ltd. (Bermuda)		505,577
	11,035	Philadelphia Consolidated Holding Co.*		450,228
	7,959	Principal Financial Group, Inc.		538,586
	8,397	ProAssurance Corp.*		463,011
	10,565	Protective Life Corp.		452,922
	4,919	Prudential Financial, Inc.		475,766
	8,132	Reinsurance Group of America, Inc.		464,581
	7,343	RLI Corp.		427,142
	7,611	Safeco Corp.		440,677
	17,407	SEI Investments Co.		550,409
	9,376	StanCorp Financial Group, Inc.		516,899
	7,197	State Street Corp.		574,104
	8,604	T. Rowe Price Group, Inc.		552,721
	24,331	TD Ameritrade Holding Corp.*		465,695
	7,174	Torchmark Corp.		467,458
	6,234	Transatlantic Holdings, Inc.		464,620
	8,737	Travelers (The) Cos., Inc.		456,159
	20,408	United America Indemnity Ltd., Class A (Cayman Islands)*		449,996

See Notes to Financial Statements.
21

Schedule of Investments (Continued)

PowerShares Dynamic MagniQuant Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	11,625	United Fire & Casualty Co.	$	372,465
	18,046	Unum Group		421,194
	14,774	W.R. Berkley Corp.		444,550
	5,794	XL Capital Ltd., Class A (Cayman Islands)		416,878
	10,244	Zenith National Insurance Corp.		411,604
				25,823,648
		Health Care—7.9%
	8,674	Aetna, Inc.		487,219
	9,228	AmerisourceBergen Corp.		434,731
	16,582	Apria Healthcare Group, Inc.*		400,787
	8,065	Baxter International, Inc.		483,981
	5,739	Becton, Dickinson & Co.		478,977
	15,149	Bristol-Myers Squibb Co.		454,319
	8,545	CIGNA Corp.		448,527
	7,698	Coventry Health Care, Inc.*		464,266
	11,214	Dentsply International, Inc.		465,157
	8,067	Express Scripts, Inc.*		509,027
	8,060	Health Net, Inc.*		432,097
	7,346	Kinetic Concepts, Inc.*		441,495
	12,270	Lincare Holdings, Inc.*		426,628
	6,913	Manor Care, Inc.		460,268
	7,719	McKesson Corp.		510,225
	5,167	Medco Health Solutions, Inc.*		487,661
				7,385,365
		Industrials—21.1%
	4,853	3M Co.		419,105
	12,800	Administaff, Inc.		510,464
	4,193	Alliant Techsystems, Inc.*		462,865
	34,581	Allied Waste Industries, Inc.*		437,104
	9,005	C.H. Robinson Worldwide, Inc.		449,530
	15,440	CDI Corp.		425,526
	6,110	Ceradyne, Inc.*		417,985
	9,109	Con-way, Inc.		388,134
	8,629	Cooper Industries Ltd., Class A (Bermuda)		452,073
	9,859	Crane Co.		467,711
	3,729	Cummins, Inc.		447,331
	3,246	Deere & Co.		502,805
	8,970	Emerson Electric Co.		468,862
	3,473	Fluor Corp.		548,734
	11,066	Gardner Denver, Inc.*		399,815
	5,622	General Dynamics Corp.		511,377
	6,991	Goodrich Corp.		486,993
	26,302	GrafTech International Ltd.*		497,108
	7,936	Harsco Corp.		481,080
	9,425	Heidrick & Struggles International, Inc.		407,349
	7,591	Illinois Tool Works, Inc.		434,661
	6,495	ITT Corp.		434,645
	4,482	L-3 Communications Holdings, Inc.		491,406
	21,149	Labor Ready, Inc.*		371,799
	10,268	Landstar System, Inc.		432,180
	6,138	Lincoln Electric Holdings, Inc.		443,471

Number of Shares			Value
		Common Stocks (Continued)
	4,454	Lockheed Martin Corp.	$	490,118
	11,110	Manitowoc (The) Co., Inc.		547,279
	6,286	Manpower, Inc.		469,816
	9,200	McDermott International, Inc. (Panama)*		561,752
	6,163	Parker Hannifin Corp.		495,320
	7,803	Perini Corp.*		447,502
	7,200	Raytheon Co.		457,992
	14,205	Republic Services, Inc.		485,669
	13,826	Robert Half International, Inc.		416,024
	6,267	Rockwell Automation, Inc.		431,671
	6,413	Rockwell Collins, Inc.		479,757
	5,678	Teleflex, Inc.		415,686
	7,466	Toro Co.		415,558
	5,918	United Technologies Corp.		453,260
	4,821	W.W. Grainger, Inc.		433,504
	11,723	Waste Management, Inc.		426,600
	23,729	Werner Enterprises, Inc.		451,326
				19,668,947
		Information Technology—9.6%
	38,333	Amkor Technology, Inc.*		434,313
	10,524	Arrow Electronics, Inc.*		420,750
	9,533	Autodesk, Inc.*		466,164
	14,422	BMC Software, Inc.*		488,040
	7,803	CommScope, Inc.*		368,068
	7,893	Computer Sciences Corp.*		460,872
	10,377	Comtech Telecommunications Corp.*		562,951
	7,369	Factset Research Systems, Inc.		519,662
	13,131	Hewitt Associates, Inc., Class A*		463,262
	8,949	Hewlett-Packard Co.		462,484
	12,987	j2 Global Communications, Inc.*		437,532
	12,353	McAfee, Inc.*		510,797
	7,190	MEMC Electronic Materials, Inc.*		526,452
	4,682	Mettler Toledo International, Inc.*		497,931
	21,775	Oracle Corp.*		482,752
	12,897	Texas Instruments, Inc.		420,442
	30,731	United Online, Inc.		540,865
	16,714	Verigy Ltd. (Singapore)*		384,255
	11,970	Wright Express Corp.*		463,239
				8,910,831
		Materials—8.4%
	11,039	AK Steel Holding Corp.*		553,385
	7,386	Ashland, Inc.		433,706
	8,432	Ball Corp.		418,059
	6,973	CF Industries Holdings, Inc.		612,927
	6,616	Eastman Chemical Co.		440,559
	16,411	H.B. Fuller Co.		482,976
	26,731	Headwaters, Inc.*		383,590
	12,578	International Paper Co.		464,883
	6,946	Lubrizol (The) Corp.		471,494
	17,664	Nalco Holding Co.		439,127
	20,597	Olin Corp.		469,200

See Notes to Financial Statements.
22

Schedule of Investments (Continued)

PowerShares Dynamic MagniQuant Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	10,979	Owens-Illinois, Inc.*	$	487,687
	16,952	Packaging Corp. of America		539,752
	9,857	Sigma-Aldrich Corp.		509,311
	17,005	Terra Industries, Inc.*		627,314
	4,673	United States Steel Corp.		504,217
				7,838,187
		Telecommunication Services—1.8%
	9,204	CenturyTel, Inc.		405,436
	7,076	Embarq Corp.		374,462
	4,540	US Cellular Corp.*		427,441
	10,544	Verizon Communications, Inc.		485,762
				1,693,101
		Utilities—1.6%
	5,325	Constellation Energy Group, Inc.		504,278
	8,224	Energen Corp.		526,335
	11,332	Mirant Corp.*		480,024
				1,510,637
		Total Investments (Cost $89,276,780)—100.0%		93,172,723
		Liabilities in excess of other assets—(0.0%)		(3,508	)
		Net Assets—100.0%	$	93,169,215

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	89,017,292			95.6	%
Bermuda		1,879,187			2.0
Cayman Islands		1,330,237			1.4
Panama		561,752			0.6
Singapore		384,255			0.4
Total investments		93,172,723			100.0
Liabilities in excess of other assets		(3,508	)		(0.0	)
Net Assets	$	93,169,215			100.0	%

See Notes to Financial Statements.
23

Schedule of Investments

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.6%
		Consumer Discretionary—12.8%
	3,210	Abercrombie & Fitch Co., Class A	$	254,232
	8,990	Advance Auto Parts, Inc.		306,739
	9,324	Amazon.com, Inc.*		831,235
	11,714	American Axle & Manufacturing Holdings, Inc.		321,666
	6,515	American Eagle Outfitters, Inc.		154,927
	9,151	American Greetings Corp., Class A		241,037
	5,139	AnnTaylor Stores Corp.*		159,258
	5,196	Apollo Group, Inc., Class A*		411,835
	26,353	ArvinMeritor, Inc.		390,815
	12,649	Asbury Automotive Group, Inc.		231,856
	9,431	Autoliv, Inc.		595,851
	63,882	AutoNation, Inc.*		1,130,073
	4,223	AutoZone, Inc.*		525,383
	8,292	Barnes & Noble (The), Inc.		320,403
	7,138	Beazer Homes USA, Inc.		80,160
	12,041	Bed Bath & Beyond, Inc.*		408,672
	15,321	Belo Corp., Class A		283,439
	28,860	Best Buy Co., Inc.		1,400,287
	12,308	Big Lots, Inc.*		295,146
	5,746	Black & Decker (The) Corp.		516,623
	75,162	Blockbuster, Inc., Class A*		395,352
	44,347	Blockbuster, Inc., Class B*		206,214
	11,399	Borders Group, Inc.		175,773
	4,624	BorgWarner, Inc.		488,803
	4,593	Boyd Gaming Corp.		192,079
	9,542	Brinker International, Inc.		242,271
	12,847	Brunswick Corp.		286,617
	7,956	Burger King Holdings, Inc.		210,357
	12,774	Cablevision Systems Corp., Class A*		374,661
	6,792	Career Education Corp.*		242,746
	8,099	CarMax, Inc.*		169,026
	48,591	Carnival Corp. (Panama)		2,331,396
	3,867	CBRL Group, Inc.		154,293
	105,288	CBS Corp., Class B		3,021,766
	17,728	Centex Corp.		444,264
	18,266	Charming Shoppes, Inc.*		135,534
	113,779	Charter Communications, Inc., Class A*		235,523
	27,167	Circuit City Stores, Inc.		215,434
	40,495	Clear Channel Communications, Inc.		1,529,496
	13,583	Clear Channel Outdoor Holdings, Inc., Class A*		345,280
	4,858	Coach, Inc.*		177,609
	7,546	Collective Brands, Inc.*		139,526
	141,185	Comcast Corp., Class A*		2,971,944
	70,854	Comcast Corp., Special Class A*		1,478,723
	18,089	Cooper Tire & Rubber Co.		403,023
	37,808	D.R. Horton, Inc.		479,784
	8,882	Darden Restaurants, Inc.		381,926
	14,903	Dillard's, Inc., Class A		343,216
	45,961	DIRECTV Group (The), Inc.*		1,217,047

Number of Shares			Value
		Common Stocks (Continued)
	22,147	Discovery Holding Co., Class A*	$	631,411
	8,242	Dollar Tree Stores, Inc.*		315,669
	7,379	Dow Jones & Co., Inc.		441,338
	66,615	Eastman Kodak Co.		1,909,186
	13,772	EchoStar Communications Corp., Class A*		674,277
	8,427	E.W. Scripps Co., Class A		379,299
	25,476	Expedia, Inc.*		832,046
	13,750	Family Dollar Stores, Inc.		348,563
	18,535	Foot Locker, Inc.		275,986
	1,859,638	Ford Motor Co.*		16,494,988
	11,824	Fortune Brands, Inc.		990,496
	12,110	Furniture Brands International, Inc.		145,926
	8,227	GameStop Corp., Class A*		487,203
	25,059	Gannett Co., Inc.		1,062,752
	73,305	Gap (The), Inc.		1,385,465
	3,537	Garmin Ltd. (Cayman Islands)		379,874
	453,968	General Motors Corp.		17,791,005
	19,201	Genuine Parts Co.		942,193
	3,215	Getty Images, Inc.*		90,824
	42,853	Goodyear Tire & Rubber (The) Co.*		1,292,018
	6,660	Group 1 Automotive, Inc.		206,793
	32,278	H&R Block, Inc.		703,660
	19,689	Hanesbrands, Inc.*		611,147
	11,084	Harley-Davidson, Inc.		570,826
	2,068	Harman International Industries, Inc.		174,126
	10,376	Harrah's Entertainment, Inc.		915,682
	12,444	Hasbro, Inc.		371,453
	8,406	Hearst-Argyle Television, Inc.		187,454
	134,592	Home Depot (The), Inc.		4,240,993
	13,703	Hovnanian Enterprises, Inc., Class A*		155,803
	27,405	IAC/InterActiveCorp*		807,351
	44,008	Idearc, Inc.		1,187,336
	10,277	International Game Technology		448,180
	43,100	Interpublic Group of Cos., Inc.*		446,085
	19,280	J. C. Penney Co., Inc.		1,084,307
	5,256	Jack in the Box, Inc.*		164,881
	87,795	Johnson Controls, Inc.		3,838,397
	14,504	Jones Apparel Group, Inc.		303,714
	11,512	KB Home		318,192
	5,396	Kellwood Co.		89,412
	18,557	Kohl's Corp.*		1,020,078
	4,163	Lamar Advertising Co., Class A		222,554
	2,289	Las Vegas Sands Corp.*		304,620
	12,203	La-Z-Boy, Inc.		96,282
	25,852	Lear Corp.*		918,522
	23,282	Leggett & Platt, Inc.		452,369
	20,023	Lennar Corp., Class A		457,526
	13,245	Liberty Global, Inc., Series A*		519,866
	13,765	Liberty Global, Inc., Series C*		504,900
	3,028	Liberty Media Corp. Capital, Series A*		378,439
	60,290	Liberty Media Corp. Interactive, Series A*		1,279,957
	43,252	Limited Brands, Inc.		951,977

See Notes to Financial Statements.
24

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	8,907	Live Nation, Inc.*	$	182,059
	9,087	Liz Claiborne, Inc.		258,707
	88,503	Lowe's Cos., Inc.		2,379,846
	7,154	M.D.C. Holdings, Inc.		289,809
	36,251	Macy's, Inc.		1,161,120
	11,197	Marriott International, Inc., Class A		460,309
	27,476	Mattel, Inc.		573,974
	6,265	McClatchy Co., Class A		103,936
	73,096	McDonald's Corp.		4,363,830
	15,065	McGraw-Hill (The) Cos., Inc.		753,853
	2,773	Meredith Corp.		172,619
	5,095	Meritage Homes Corp.*		81,979
	11,630	MGM MIRAGE*		1,065,424
	7,328	Mohawk Industries, Inc.*		625,372
	19,197	New York Times (The) Co., Class A		375,493
	29,541	Newell Rubbermaid, Inc.		861,416
	94,934	News Corp., Class A		2,057,220
	42,928	News Corp., Class B		984,339
	26,086	NIKE, Inc., Class B		1,728,458
	10,694	Nordstrom, Inc.		421,771
	640	NVR, Inc.*		304,480
	29,124	Office Depot, Inc.*		546,366
	10,995	OfficeMax, Inc.		347,992
	19,600	Omnicom Group, Inc.		999,208
	6,375	O'Reilly Automotive, Inc.*		210,503
	19,204	Penske Automotive Group, Inc.		427,865
	10,258	PEP Boys-Manny, Moe & Jack		150,895
	7,513	PetSmart, Inc.		225,014
	26,500	Pier 1 Imports, Inc.*		134,885
	3,382	Polaris Industries, Inc.		166,327
	3,187	Polo Ralph Lauren Corp.		219,266
	33,019	Pulte Homes, Inc.		490,002
	15,511	RadioShack Corp.		319,837
	61,234	Regal Entertainment Group, Class A		1,382,051
	13,783	Rent-A-Center, Inc.*		220,528
	8,986	Ross Stores, Inc.		242,802
	21,470	Royal Caribbean Cruises Ltd. (Liberia)		920,634
	6,640	Ryland Group, Inc.		188,775
	26,635	Saks, Inc.		563,597
	24,732	Sally Beauty Holdings, Inc.*		228,771
	9,361	Scholastic Corp.*		370,508
	12,873	Sears Holdings Corp.*		1,735,152
	21,518	Service Corp. International		311,365
	8,960	Sherwin-Williams (The) Co.		572,723
	32,535	Six Flags, Inc.*		105,413
	5,392	Snap-On, Inc.		269,115
	12,086	Sonic Automotive, Inc., Class A		305,292
	10,925	Standard-Pacific Corp.*		52,440
	7,559	Stanley Works (The)		435,020
	38,395	Staples, Inc.		896,139
	17,535	Starbucks Corp.*		467,834

Number of Shares			Value
		Common Stocks (Continued)
	13,440	Starwood Hotels & Resorts Worldwide, Inc.	$	764,198
	1,980	Station Casinos, Inc.		177,804
	59,686	Sun-Times Media Group, Inc., Class A		131,906
	7,102	Talbots (The), Inc.		104,470
	61,829	Target Corp.		3,793,827
	11,922	Tenneco, Inc.*		364,932
	6,987	Tiffany & Co.		378,556
	5,464	Tim Hortons, Inc.		207,086
	6,043	Timberland (The) Co., Class A*		117,899
	364,121	Time Warner, Inc.		6,648,848
	35,183	TJX (The) Cos., Inc.		1,017,844
	18,641	Toll Brothers, Inc.*		427,065
	24,737	Tribune Co.		748,542
	70,081	TRW Automotive Holdings Corp.*		2,080,705
	7,737	Tupperware Brands Corp.		279,306
	8,826	VF Corp.		769,009
	38,966	Viacom, Inc., Class B*		1,608,906
	22,154	Virgin Media, Inc.		489,825
	88,459	Visteon Corp.*		561,715
	3,909	WABCO Holdings, Inc.		198,655
	111,445	Walt Disney (The) Co.		3,859,340
	11,468	Warner Music Group Corp.		116,744
	607	Washington Post (The) Co., Class B		515,343
	11,044	WCI Communities, Inc.*		60,300
	11,580	Wendy's International, Inc.		402,521
	10,816	Whirlpool Corp.		856,411
	8,941	Williams-Sonoma, Inc.		281,105
	11,326	Wyndham Worldwide Corp.		371,833
	25,104	Yum! Brands, Inc.		1,010,938
	8,978	Zale Corp.*		189,256
				159,899,943
		Consumer Staples—11.7%
	14,109	Alberto-Culver Co.		366,693
	202,419	Altria Group, Inc.		14,762,418
	52,535	Anheuser-Busch Cos., Inc.		2,693,995
	60,103	Archer-Daniels-Midland Co.		2,150,485
	23,758	Avon Products, Inc.		973,603
	14,316	BJ's Wholesale Club, Inc.*		513,658
	1,895	Brown-Forman Corp., Class A		145,536
	4,133	Brown-Forman Corp., Class B		305,759
	14,760	Bunge Ltd. (Bermuda)		1,700,204
	25,597	Campbell Soup Co.		946,577
	14,931	Carolina Group		1,280,781
	13,091	Chiquita Brands International, Inc.*		245,456
	10,365	Clorox (The) Co.		648,538
	140,590	Coca-Cola (The) Co.		8,682,838
	78,979	Coca-Cola Enterprises, Inc.		2,038,448
	25,266	Colgate-Palmolive Co.		1,927,038
	84,546	ConAgra Foods, Inc.		2,006,277
	18,709	Constellation Brands, Inc., Class A*		469,970

See Notes to Financial Statements.
25

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	7,369	Corn Products International, Inc.	$	313,477
	41,052	Costco Wholesale Corp.		2,761,158
	101,593	CVS Corp.		4,243,540
	17,125	Dean Foods Co.		475,561
	25,364	Del Monte Foods Co.		262,264
	3,074	Energizer Holdings, Inc.*		320,618
	13,516	Estee Lauder (The) Cos., Inc., Class A		593,352
	13,728	Fresh Del Monte Produce, Inc. (Cayman Islands)		498,052
	29,504	General Mills, Inc.		1,703,266
	14,036	Great Atlantic & Pacific Tea Co., Inc.*		454,345
	33,997	H.J. Heinz Co.		1,590,380
	13,403	Hershey (The) Co.		577,803
	11,666	Hormel Foods Corp.		425,576
	4,603	J.M. Smucker (The) Co.		245,938
	31,487	Kellogg Co.		1,662,199
	36,297	Kimberly-Clark Corp.		2,573,094
	821,827	Kraft Foods, Inc., Class A		27,457,241
	145,706	Kroger (The) Co.		4,282,299
	5,765	Longs Drug Stores Corp.		302,720
	8,153	McCormick & Co., Inc.		285,600
	16,174	Molson Coors Brewing Co., Class B		925,638
	6,411	Nash Finch Co.		240,092
	3,403	NBTY, Inc.*		121,147
	4,355	Pantry (The), Inc.*		122,027
	20,673	Pathmark Stores, Inc.*		270,816
	25,453	Pepsi Bottling Group (The), Inc.		1,096,515
	16,022	PepsiAmericas, Inc.		572,306
	78,972	PepsiCo, Inc.		5,821,816
	11,053	Performance Food Group Co.*		298,320
	8,297	Pilgrim's Pride Corp.		246,421
	131,913	Procter & Gamble (The) Co.		9,170,592
	33,991	Reynolds American, Inc.		2,190,040
	154,840	Rite Aid Corp.*		605,424
	7,044	Ruddick Corp.		239,496
	59,781	Safeway, Inc.		2,032,554
	127,770	Sara Lee Corp.		2,113,316
	84	Seaboard Corp.		137,088
	26,260	Smithfield Foods, Inc.*		752,874
	18,928	Spectrum Brands, Inc.*		81,580
	32,142	SUPERVALU, Inc.		1,245,503
	55,129	Sysco Corp.		1,890,373
	79,421	Tyson Foods, Inc., Class A		1,254,852
	5,333	Universal Corp.		259,930
	13,667	UST, Inc.		728,724
	52,579	Walgreen Co.		2,084,757
	371,849	Wal-Mart Stores, Inc.		16,811,294
	4,330	Weis Markets, Inc.		190,044
	5,690	Whole Foods Market, Inc.		281,883
	14,418	Wm. Wrigley Jr. Co.		889,158
				145,561,337

Number of Shares			Value
		Common Stocks (Continued)
		Energy—10.8%
	47,433	Anadarko Petroleum Corp.	$	2,799,496
	23,832	Apache Corp.		2,474,000
	6,024	Arch Coal, Inc.		246,984
	14,678	Baker Hughes, Inc.		1,272,876
	13,100	BJ Services Co.		329,989
	4,658	Cameron International Corp.*		453,503
	23,470	Chesapeake Energy Corp.		926,596
	243,100	Chevron Corp.		22,246,081
	9,072	Cimarex Energy Co.		367,507
	8,675	CNX Gas Corp.*		276,906
	159,748	ConocoPhillips		13,572,190
	7,054	CONSOL Energy, Inc.		398,551
	33,127	Devon Energy Corp.		3,094,062
	3,877	Diamond Offshore Drilling, Inc.		438,993
	10,255	Dresser-Rand Group, Inc.*		396,869
	120,296	El Paso Corp.		2,124,427
	5,334	ENSCO International, Inc.		295,984
	10,106	EOG Resources, Inc.		895,392
	5,050	Exterran Holdings, Inc.*		425,210
	441,177	Exxon Mobil Corp.		40,583,872
	6,230	FMC Technologies, Inc.*		377,725
	13,371	Forest Oil Corp.*		649,697
	7,195	Foundation Coal Holdings, Inc.		307,370
	5,339	Frontier Oil Corp.		244,473
	8,780	GlobalSantaFe Corp. (Cayman Islands)		711,443
	3,858	Grant Prideco, Inc.*		189,659
	45,863	Halliburton Co.		1,807,919
	33,692	Hess Corp.		2,412,684
	74,693	Marathon Oil Corp.		4,416,597
	7,348	Massey Energy Co.		232,785
	14,588	Murphy Oil Corp.		1,074,114
	17,988	Nabors Industries Ltd. (Bermuda)*		505,103
	14,576	National Oilwell Varco, Inc.*		1,067,546
	11,197	Newfield Exploration Co.*		602,846
	8,298	Noble Corp. (Cayman Islands)		439,379
	6,890	Noble Energy, Inc.		527,361
	64,445	Occidental Petroleum Corp.		4,449,927
	4,410	Overseas Shipholding Group, Inc.		328,104
	8,692	Patterson-UTI Energy, Inc.		173,318
	9,135	Peabody Energy Corp.		509,276
	9,820	Pioneer Natural Resources Co.		501,016
	6,822	Pogo Producing Co.		406,318
	13,254	Pride International, Inc.*		489,073
	5,832	Rowan Cos., Inc.		227,331
	37,361	Schlumberger Ltd. (Netherlands)		3,607,952
	1,619	SEACOR Holdings, Inc.*		148,381
	7,550	Ship Finance International Ltd. (Bermuda)		206,719
	8,026	Smith International, Inc.		530,117
	4,289	Southwestern Energy Co.*		221,870
	66,867	Spectra Energy Corp.		1,737,205
	6,657	Stone Energy Corp.*		296,769

See Notes to Financial Statements.
26

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	17,400	Sunoco, Inc.	$	1,280,640
	7,467	Teekay Shipping Corp. (Marshall Islands)		417,779
	12,839	Tesoro Corp.		777,145
	3,724	Tidewater, Inc.		203,591
	9,837	Transocean, Inc. (Cayman Islands)*		1,174,243
	15,595	USEC, Inc.*		137,236
	47,043	Valero Energy Corp.		3,313,238
	18,336	Weatherford International Ltd. (Bermuda)*		1,190,190
	53,948	Williams (The) Cos., Inc.		1,968,563
	3,662	World Fuel Services Corp.		162,190
	11,354	XTO Energy, Inc.		753,679
				134,398,059
		Financials—18.9%
	27,507	ACE Ltd. (Cayman Islands)		1,667,199
	27,599	AFLAC, Inc.		1,732,665
	495	Alleghany Corp.*		194,545
	20,091	Allied Capital Corp.		592,283
	7,812	Allied World Assurance Holdings Ltd. (Bermuda)		374,273
	59,942	Allstate (The) Corp.		3,140,961
	7,555	AMB Property Corp.		493,719
	6,650	AMBAC Financial Group, Inc.		244,920
	13,641	American Capital Strategies Ltd.		592,156
	56,941	American Express Co.		3,470,554
	11,488	American Financial Group, Inc.		343,491
	15,273	American Financial Realty Trust		102,940
	184,524	American International Group, Inc.		11,647,154
	3,612	American National Insurance		467,032
	13,295	AmeriCredit Corp.*		187,592
	18,490	Ameriprise Financial, Inc.		1,164,500
	52,335	Annaly Capital Management, Inc.		894,405
	29,463	Aon Corp.		1,335,263
	10,812	Apartment Investment & Management Co., Class A		505,245
	4,877	Arch Capital Group Ltd. (Bermuda)*		364,653
	7,703	Arthur J. Gallagher & Co.		204,977
	8,092	Aspen Insurance Holdings Ltd. (Bermuda)		221,397
	11,441	Associated Banc-Corp		330,187
	10,231	Assurant, Inc.		597,900
	10,443	Astoria Financial Corp.		271,414
	4,003	AvalonBay Communities, Inc.		490,968
	9,991	Axis Capital Holdings Ltd. (Bermuda)		397,042
	8,380	BancorpSouth, Inc.		203,299
	388,063	Bank of America Corp.		18,735,681
	4,053	Bank of Hawaii Corp.		215,457
	78,194	Bank of New York Mellon (The) Corp.		3,819,777
	55,862	BB&T Corp.		2,065,218
	9,180	Bear Stearns (The) Cos., Inc.		1,042,848
	1,062	Berkshire Hathaway, Inc., Class B*		4,687,668
	3,644	BOK Financial Corp.		198,744
	7,924	Boston Properties, Inc.		858,486

Number of Shares			Value
		Common Stocks (Continued)
	5,127	Brandywine Realty Trust	$	132,635
	3,451	BRE Properties, Inc.		189,115
	4,253	Camden Property Trust		265,175
	21,796	Capital One Financial Corp.		1,429,600
	6,030	CB Richard Ellis Group, Inc., Class A*		147,011
	5,668	CBL & Associates Properties, Inc.		187,667
	41,807	Charles Schwab (The) Corp.		971,595
	33,047	Chubb (The) Corp.		1,763,057
	15,193	Cincinnati Financial Corp.		604,378
	19,372	CIT Group, Inc.		682,669
	245,685	Citigroup, Inc.		10,294,201
	3,627	City National Corp.		245,185
	586	CME Group, Inc.		390,423
	23,220	CNA Financial Corp.		920,209
	11,894	Colonial BancGroup (The), Inc.		228,127
	4,787	Colonial Properties Trust		149,977
	19,094	Comerica, Inc.		891,308
	9,809	Commerce Bancorp, Inc.		399,717
	4,983	Commerce Bancshares, Inc.		235,048
	7,910	Commerce Group (The), Inc.		288,636
	34,345	Conseco, Inc.*		542,308
	64,700	Countrywide Financial Corp.		1,004,144
	4,905	Cousins Properties, Inc.		141,215
	3,908	Cullen/Frost Bankers, Inc.		207,827
	7,289	Developers Diversified Realty Corp.		367,366
	41,493	Discover Financial Services		800,815
	2,489	Downey Financial Corp.		101,377
	15,013	Duke Realty Corp.		482,668
	22,212	E*Trade Financial Corp.*		247,442
	5,541	Endurance Specialty Holdings Ltd. (Bermuda)		217,263
	3,095	Equity Lifestyle Properties, Inc.		155,493
	6,345	Equity One, Inc.		166,112
	23,026	Equity Residential		962,026
	4,674	Erie Indemnity Co., Class A		265,951
	1,298	Essex Property Trust, Inc.		160,212
	4,461	Everest Re Group Ltd. (Bermuda)		475,275
	2,750	Federal Realty Investment Trust		242,605
	5,345	Federated Investors, Inc., Class B		229,835
	21,175	Fidelity National Title Group, Inc., Class A		325,883
	54,773	Fifth Third Bancorp		1,713,299
	11,808	First American (The) Corp.		355,421
	14,850	First Horizon National Corp.		387,288
	6,239	First Industrial Realty Trust, Inc.		254,239
	11,983	FirstMerit Corp.		254,040
	7,635	Franklin Resources, Inc.		990,107
	80,257	Freddie Mac		4,191,823
	23,254	Fremont General Corp.		64,414
	47,046	Friedman Billings Ramsey Group, Inc., Class A		202,298
	15,901	Fulton Financial Corp.		208,462

See Notes to Financial Statements.
27

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	10,098	General Growth Properties, Inc.	$	548,927
	86,453	Genworth Financial, Inc., Class A		2,360,167
	6,413	Glimcher Realty Trust		142,369
	21,560	Goldman Sachs Group (The), Inc.		5,345,155
	5,769	Hanover Insurance Group (The), Inc.		265,778
	25,339	Hartford Financial Services Group (The), Inc.		2,458,643
	6,502	HCC Insurance Holdings, Inc.		194,345
	12,729	HCP, Inc.		433,295
	6,775	Health Care REIT, Inc.		300,065
	6,591	Healthcare Realty Trust, Inc.		174,266
	6,827	Highwoods Properties, Inc.		245,499
	4,303	Home Properties, Inc.		221,260
	10,876	Hospitality Properties Trust		430,690
	17,074	Host Hotels & Resorts, Inc.		378,360
	29,456	HRPT Properties Trust		276,592
	34,764	Hudson City Bancorp, Inc.		544,404
	37,389	Huntington Bancshares, Inc.		669,637
	43,316	IMPAC Mortgage Holdings, Inc.		48,514
	7,735	IndyMac Bancorp, Inc.		103,804
	13,992	iStar Financial, Inc.		426,896
	11,564	Janus Capital Group, Inc.		399,074
	6,669	Jefferies Group, Inc.		178,262
	289,293	JPMorgan Chase & Co.		13,596,770
	44,294	KeyCorp		1,260,164
	11,597	Kimco Realty Corp.		481,507
	3,369	LandAmerica Financial Group, Inc.		93,625
	8,933	Lazard Ltd., Class A (Bermuda)		448,437
	3,560	Legg Mason, Inc.		295,266
	34,706	Lehman Brothers Holdings, Inc.		2,198,278
	9,712	Leucadia National Corp.		492,010
	9,723	Liberty Property Trust		365,779
	15,013	Lincoln National Corp.		936,361
	32,088	Loews Corp.		1,575,200
	6,915	M&T Bank Corp.		687,904
	3,498	Macerich (The) Co.		299,814
	9,558	Mack-Cali Realty Corp.		378,401
	511	Markel Corp.*		277,585
	71,856	Marsh & McLennan Cos., Inc.		1,860,352
	17,259	Marshall & Ilsley Corp.		736,959
	12,753	MBIA, Inc.		548,889
	6,246	Mercury General Corp.		320,482
	215,544	Merrill Lynch & Co., Inc.		14,230,214
	58,776	MetLife, Inc.		4,046,728
	7,852	MGIC Investment Corp.		152,015
	14,394	Montpelier Re Holdings Ltd. (Bermuda)		257,653
	4,054	Moody's Corp.		177,241
	83,507	Morgan Stanley		5,616,680
	77,372	National City Corp.		1,876,271
	12,425	Nationwide Financial Services, Inc., Class A		666,601
	6,880	Nationwide Health Properties, Inc.		214,794

Number of Shares			Value
		Common Stocks (Continued)
	34,221	New York Community Bancorp, Inc.	$	636,853
	6,553	Newcastle Investment Corp.		97,312
	11,918	Northern Trust Corp.		896,353
	6,724	Novastar Financial, Inc.		35,503
	3,397	Nuveen Investments, Inc., Class A		220,126
	11,430	NYSE Euronext		1,072,934
	5,334	Odyssey Re Holdings Corp.		198,318
	32,028	Old Republic International Corp.		490,989
	5,970	PartnerRe Ltd. (Bermuda)		497,003
	4,018	Pennsylvania REIT		153,287
	17,772	People's United Financial, Inc.		315,986
	15,958	Phoenix (The) Cos., Inc.		219,901
	18,352	Plum Creek Timber Co., Inc.		819,784
	7,606	PMI Group (The), Inc.		121,924
	30,192	PNC Financial Services Group, Inc.		2,178,655
	35,893	Popular, Inc.		378,671
	4,694	Post Properties, Inc.		192,454
	3,995	Potlatch Corp.		190,402
	16,240	Principal Financial Group, Inc.		1,098,961
	45,730	Progressive (The) Corp.		846,005
	12,327	ProLogis		884,339
	7,212	Protective Life Corp.		309,178
	34,320	Prudential Financial, Inc.		3,319,430
	6,320	Public Storage, Inc.		511,730
	6,323	Radian Group, Inc.		79,607
	6,848	Raymond James Financial, Inc.		255,088
	6,628	Rayonier, Inc.		320,066
	8,013	Realty Income Corp.		236,704
	5,255	Redwood Trust, Inc.		138,469
	3,933	Regency Centers Corp.		281,131
	42,748	Regions Financial Corp.		1,159,326
	5,613	Reinsurance Group of America, Inc.		320,671
	5,006	RenaissanceRe Holdings Ltd. (Bermuda)		292,050
	11,466	Safeco Corp.		663,881
	8,296	Senior Housing Properties Trust		185,996
	5,956	Simon Property Group, Inc.		620,079
	1,391	SL Green Realty Corp.		167,838
	25,924	SLM Corp.		1,222,576
	6,395	South Financial Group (The), Inc.		132,121
	24,941	Sovereign Bancorp, Inc.		359,899
	4,646	StanCorp Financial Group, Inc.		256,134
	18,295	State Street Corp.		1,459,392
	10,444	Strategic Hotels & Resorts, Inc.		228,097
	1,608	Student Loan Corp.		267,057
	30,713	SunTrust Banks, Inc.		2,229,764
	22,155	Synovus Financial Corp.		584,006
	8,692	T. Rowe Price Group, Inc.		558,374
	11,990	TCF Financial Corp.		273,012
	13,906	TD Ameritrade Holding Corp.*		266,161
	18,146	Thornburg Mortgage, Inc.		190,533
	7,656	Torchmark Corp.		498,865
	5,023	Transatlantic Holdings, Inc.		374,364

See Notes to Financial Statements.
28

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	48,584	Travelers (The) Cos., Inc.	$	2,536,571
	5,592	Trustmark Corp.		150,928
	155,187	U.S. Bancorp		5,146,001
	10,220	UDR, Inc.		242,623
	13,374	UnionBanCal Corp.		722,330
	9,487	Unitrin, Inc.		439,343
	50,530	Unum Group		1,179,370
	10,737	Valley National Bancorp		219,894
	5,753	Ventas, Inc.		246,746
	8,326	Vornado Realty Trust		930,181
	5,180	W.P. Carey & Co. LLC		181,041
	11,708	W.R. Berkley Corp.		352,294
	150,254	Wachovia Corp.		6,871,114
	9,491	Washington Federal, Inc.		229,303
	118,914	Washington Mutual, Inc.		3,315,322
	4,807	Webster Financial Corp.		174,206
	6,513	Weingarten Realty Investors		249,187
	276,436	Wells Fargo & Co.		9,401,587
	356	Wesco Financial Corp.		141,688
	728	White Mountains Insurance Group Ltd. (Bermuda)		391,380
	5,813	Whitney Holding Corp.		149,162
	8,081	Willis Group Holdings Ltd. (Bermuda)		342,069
	5,663	Wilmington Trust Corp.		205,963
	16,328	XL Capital Ltd., Class A (Cayman Islands)		1,174,800
	6,973	Zions Bancorp		412,174
				234,940,172
		Health Care—9.0%
	93,577	Abbott Laboratories		5,111,176
	4,351	Advanced Medical Optics, Inc.*		119,435
	34,911	Aetna, Inc.		1,960,951
	8,887	Alcon, Inc. (Switzerland)		1,352,690
	6,105	Allergan, Inc.		412,576
	31,725	AmerisourceBergen Corp.		1,494,565
	42,775	Amgen, Inc.*		2,485,655
	8,885	Applera Corp. - Applied Biosystems Group		329,989
	5,685	Apria Healthcare Group, Inc.*		137,406
	4,261	Barr Pharmaceuticals, Inc.*		244,241
	31,240	Baxter International, Inc.		1,874,712
	4,284	Beckman Coulter, Inc.		303,393
	10,480	Becton, Dickinson & Co.		874,661
	12,637	Biogen Idec, Inc.*		940,698
	55,696	Boston Scientific Corp.*		772,504
	229,892	Bristol-Myers Squibb Co.		6,894,460
	3,641	C.R. Bard, Inc.		304,424
	41,443	Cardinal Health, Inc.		2,819,367
	4,867	Charles River Laboratories International, Inc.*		282,286
	28,736	CIGNA Corp.		1,508,353
	9,984	Community Health Systems, Inc.*		328,773
	9,404	Coventry Health Care, Inc.*		567,155

Number of Shares			Value
		Common Stocks (Continued)
	41,340	Covidien Ltd. (Bermuda)	$	1,719,744
	3,824	Dade Behring Holdings, Inc.		294,180
	5,693	DaVita, Inc.*		371,127
	6,786	DENTSPLY International, Inc.		281,483
	81,275	Eli Lilly & Co.		4,401,041
	21,438	Express Scripts, Inc.*		1,352,738
	10,590	Forest Laboratories, Inc.*		413,751
	13,702	Genentech, Inc.*		1,015,729
	10,119	Genzyme Corp.*		768,740
	11,183	Gilead Sciences, Inc.*		516,543
	18,876	Health Management Associates, Inc., Class A		124,770
	13,228	Health Net, Inc.*		709,153
	6,165	Henry Schein, Inc.*		369,284
	5,179	Hillenbrand Industries, Inc.		285,984
	9,596	Hospira, Inc.*		396,603
	14,056	Humana, Inc.*		1,053,497
	7,519	IMS Health, Inc.		189,554
	3,880	Invitrogen Corp.*		352,576
	172,360	Johnson & Johnson		11,232,700
	8,545	Kindred Healthcare, Inc.*		181,496
	19,996	King Pharmaceuticals, Inc.*		211,958
	5,388	Laboratory Corp. of America Holdings*		370,425
	5,556	LifePoint Hospitals, Inc.*		169,569
	6,149	Lincare Holdings, Inc.*		213,801
	4,633	Magellan Health Services, Inc.*		195,049
	4,989	Manor Care, Inc.		332,168
	47,108	McKesson Corp.		3,113,839
	33,360	Medco Health Solutions, Inc.*		3,148,517
	39,936	Medtronic, Inc.		1,894,564
	217,028	Merck & Co., Inc.		12,644,050
	14,863	Mylan Laboratories, Inc.		223,540
	9,369	Omnicare, Inc.		276,386
	6,725	Owens & Minor, Inc.		272,632
	6,469	Patterson Cos., Inc.*		253,003
	9,877	PerkinElmer, Inc.		271,815
	608,874	Pfizer, Inc.		14,984,388
	5,790	PharMerica Corp.*		92,351
	10,754	Quest Diagnostics, Inc.		571,898
	92,400	Schering-Plough Corp.		2,820,048
	11,437	St. Jude Medical, Inc.*		465,829
	9,006	Stryker Corp.		639,426
	151,875	Tenet Healthcare Corp.*		533,081
	9,213	Thermo Fisher Scientific, Inc.*		541,817
	53,658	UnitedHealth Group, Inc.		2,637,291
	5,209	Universal Health Services, Inc., Class B		253,939
	3,434	Varian Medical Systems, Inc.*		167,476
	13,091	Watson Pharmaceuticals, Inc.*		400,061
	40,398	WellPoint, Inc.*		3,200,734
	86,459	Wyeth		4,204,501
	7,822	Zimmer Holdings, Inc.*		543,551
				112,797,870

See Notes to Financial Statements.
29

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Industrials—11.2%
	52,978	3M Co.	$	4,575,180
	13,728	ACCO Brands Corp.*		294,328
	3,035	Acuity Brands, Inc.		145,073
	7,709	AGCO Corp.*		460,073
	5,382	Alaska Air Group, Inc.*		136,703
	4,128	Alexander & Baldwin, Inc.		216,225
	2,768	Alliant Techsystems, Inc.*		305,560
	96,471	Allied Waste Industries, Inc.*		1,219,393
	2,951	AMERCO*		190,428
	11,749	American Standard Cos., Inc.		437,885
	24,505	AMR Corp.*		588,120
	9,142	Avery Dennison Corp.		529,322
	100,406	Avis Budget Group, Inc.*		2,095,473
	50,680	Boeing Co.		4,996,540
	7,068	Briggs & Stratton Corp.		159,101
	4,104	Brink's (The) Co.		257,116
	11,309	Builders FirstSource, Inc.*		81,990
	23,556	Burlington Northern Santa Fe Corp.		2,052,905
	5,331	C.H. Robinson Worldwide, Inc.		266,124
	4,640	Carlisle Cos., Inc.		183,048
	47,089	Caterpillar, Inc.		3,513,310
	4,672	ChoicePoint, Inc.*		183,703
	9,805	Cintas Corp.		358,863
	15,202	Continental Airlines, Inc., Class B*		522,189
	6,031	Con-way, Inc.		256,981
	13,269	Cooper Industries Ltd., Class A (Bermuda)		695,163
	6,945	Corrections Corp. of America*		196,474
	4,877	Crane Co.		231,365
	33,868	CSX Corp.		1,516,270
	8,364	Cummins, Inc.		1,003,345
	10,286	Danaher Corp.		881,202
	16,030	Deere & Co.		2,483,047
	8,958	Deluxe Corp.		361,366
	5,058	Dollar Thrifty Automotive Group*		174,501
	14,264	Dover Corp.		656,144
	1,996	Dun & Bradstreet (The) Corp.		193,313
	11,684	Eaton Corp.		1,081,705
	8,940	EMCOR Group, Inc.*		307,804
	59,252	Emerson Electric Co.		3,097,102
	5,928	Equifax, Inc.		228,228
	5,027	Expeditors International of Washington, Inc.		254,618
	18,038	FedEx Corp.		1,864,047
	4,605	Flowserve Corp.		363,611
	6,961	Fluor Corp.		1,099,838
	6,722	GATX Corp.		275,400
	24,577	General Dynamics Corp.		2,235,524
	915,665	General Electric Co.		37,688,770
	11,037	Goodrich Corp.		768,837
	6,743	Harsco Corp.		408,761

Number of Shares			Value
		Common Stocks (Continued)
	3,847	HNI Corp.	$	166,806
	63,083	Honeywell International, Inc.		3,810,844
	5,886	Hubbell, Inc., Class B		323,730
	23,951	IKON Office Solutions, Inc.		316,153
	34,417	Illinois Tool Works, Inc.		1,970,717
	24,186	Ingersoll-Rand Co. Ltd., Class A (Bermuda)		1,217,765
	10,265	ITT Corp.		686,934
	7,914	J.B. Hunt Transport Services, Inc.		219,376
	8,099	Jacobs Engineering Group, Inc.*		705,828
	5,551	Kansas City Southern*		214,768
	10,413	Kelly Services, Inc., Class A		218,985
	3,342	Kennametal, Inc.		304,824
	7,157	L-3 Communications Holdings, Inc.		784,693
	6,641	Lennox International, Inc.		237,084
	25,756	Lockheed Martin Corp.		2,834,190
	9,001	Manpower, Inc.		672,735
	46,756	Masco Corp.		1,125,884
	3,367	Monster Worldwide, Inc.*		136,633
	6,140	Mueller Industries, Inc.		220,794
	1,417	NACCO Industries, Inc., Class A		146,787
	29,815	Norfolk Southern Corp.		1,539,945
	37,425	Northrop Grumman Corp.		3,129,479
	3,148	Oshkosh Truck Corp.		170,622
	27,129	PACCAR, Inc.		1,507,287
	7,880	Pall Corp.		315,752
	17,230	Parker Hannifin Corp.		1,384,775
	10,005	Pentair, Inc.		354,077
	17,478	PHH Corp.*		390,808
	20,391	Pitney Bowes, Inc.		816,456
	3,161	Precision Castparts Corp.		473,549
	10,675	Quanta Services, Inc.*		352,275
	23,914	R.R. Donnelley & Sons Co.		963,495
	40,388	Raytheon Co.		2,569,081
	12,804	Republic Services, Inc.		437,769
	5,277	Robert Half International, Inc.		158,785
	8,655	Rockwell Automation, Inc.		596,156
	5,492	Rockwell Collins, Inc.		410,857
	10,215	Ryder System, Inc.		488,788
	1,191	Sequa Corp., Class A*		207,020
	253	Sequa Corp., Class B*		43,832
	8,109	Shaw Group (The), Inc.*		604,931
	51,600	Southwest Airlines Co.		733,236
	5,995	SPX Corp.		607,294
	15,915	Steelcase, Inc., Class A		284,401
	7,491	Tecumseh Products Co., Class A*		135,362
	2,127	Tecumseh Products Co., Class B*		34,479
	3,845	Teleflex, Inc.		281,492
	5,139	Terex Corp.*		381,417
	22,991	Textron, Inc.		1,591,207
	12,875	Timken (The) Co.		428,223
	4,518	Trinity Industries, Inc.		163,281

See Notes to Financial Statements.
30

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	41,340	Tyco International Ltd. (Bermuda)	$	1,701,968
	23,116	Union Pacific Corp.		2,959,773
	77,121	United Parcel Service, Inc., Class B		5,791,786
	17,268	United Rentals, Inc.*		590,393
	4,743	United Stationers, Inc.*		274,667
	62,198	United Technologies Corp.		4,763,745
	7,137	URS Corp.*		441,138
	4,685	USG Corp.*		186,229
	6,539	W.W. Grainger, Inc.		587,987
	3,935	Washington Group International, Inc.*		383,072
	48,464	Waste Management, Inc.		1,763,605
	8,289	Werner Enterprises, Inc.		157,657
	3,296	WESCO International, Inc.*		153,758
	10,753	YRC Worldwide, Inc.*		264,309
				139,983,816
		Information Technology—10.4%
	38,907	Accenture Ltd., Class A (Bermuda)		1,519,318
	9,812	Activision, Inc.*		232,054
	7,466	Adobe Systems, Inc.*		357,621
	46,140	Advanced Micro Devices, Inc.*		603,511
	10,572	Affiliated Computer Services, Inc., Class A*		535,578
	19,303	Agilent Technologies, Inc.*		711,316
	2,976	Alliance Data Systems Corp.*		239,270
	9,093	Altera Corp.		178,405
	9,435	Amdocs Ltd. (Guernsey)*		324,564
	16,028	Amkor Technology, Inc.*		181,597
	12,307	Analog Devices, Inc.		411,792
	19,767	Andrew Corp.*		289,784
	3,748	Anixter International, Inc.*		269,294
	12,610	Apple, Inc.*		2,395,270
	55,997	Applied Materials, Inc.		1,087,462
	19,205	Arrow Electronics, Inc.*		767,816
	36,760	Atmel Corp.*		179,756
	29,155	Automatic Data Processing, Inc.		1,444,922
	15,597	Avnet, Inc.*		650,707
	15,341	AVX Corp.		237,018
	16,223	BEA Systems, Inc.*		274,169
	8,141	Benchmark Electronics, Inc.*		166,972
	7,406	BMC Software, Inc.*		250,619
	8,708	Broadcom Corp., Class A*		283,445
	7,371	Broadridge Financial Solutions, Inc.		147,420
	20,490	CA, Inc.		541,961
	14,409	Cadence Design Systems, Inc.*		282,416
	7,232	Ceridian Corp.*		259,918
	13,434	Check Point Software Technologies (Israel)*		339,343
	4,235	CheckFree Corp.*		201,290
	169,860	Cisco Systems, Inc.*		5,615,572
	5,549	Citrix Systems, Inc.*		238,552
	28,554	Computer Sciences Corp.*		1,667,268

Number of Shares			Value
		Common Stocks (Continued)
	22,148	Compuware Corp.*	$	221,480
	12,912	Convergys Corp.*		236,677
	31,904	Corning, Inc.		774,310
	147,275	Dell, Inc.*		4,506,615
	5,981	Diebold, Inc.		250,245
	3,615	DST Systems, Inc.*		306,227
	34,045	eBay, Inc.*		1,229,025
	10,253	Electronic Arts, Inc.*		626,663
	74,824	Electronic Data Systems Corp.		1,615,450
	106,652	EMC Corp.*		2,707,894
	11,515	Fairchild Semiconductor International, Inc., Class A*		210,149
	23,368	Fidelity National Information Services, Inc.		1,077,732
	9,441	Fiserv, Inc.*		523,031
	178,645	Flextronics International Ltd. (Singapore)*		2,199,120
	2,280	Google, Inc., Class A*		1,611,960
	4,919	Harris Corp.		297,895
	9,054	Hewitt Associates, Inc., Class A*		319,425
	169,936	Hewlett-Packard Co.		8,782,292
	74,525	Ingram Micro, Inc., Class A*		1,582,911
	10,793	Insight Enterprises, Inc.*		298,319
	373,768	Intel Corp.		10,054,358
	96,986	International Business Machines Corp.		11,262,013
	4,889	International Rectifier Corp.*		163,195
	7,010	Intersil Corp., Class A		212,683
	10,699	Intuit, Inc.*		344,187
	10,808	Iron Mountain, Inc.*		375,362
	18,405	Jabil Circuit, Inc.		399,941
	11,440	JDS Uniphase Corp.*		174,574
	30,425	Juniper Networks, Inc.*		1,095,300
	6,008	KLA-Tencor Corp.		316,321
	3,581	Lam Research Corp.*		179,766
	8,408	Lexmark International, Inc., Class A*		353,052
	9,090	Linear Technology Corp.		300,152
	41,221	LSI Logic Corp.*		272,059
	15,925	Marvell Technology Group Ltd. (Bermuda)*		287,128
	3,442	Mastercard, Inc., Class A		652,431
	6,672	McAfee, Inc.*		275,887
	1,831	Mettler Toledo International, Inc.*		194,727
	5,682	Microchip Technology, Inc.		188,472
	73,061	Micron Technology, Inc.*		767,871
	658,769	Microsoft Corp.		24,249,286
	6,225	Molex, Inc.		177,786
	5,291	Molex, Inc., Class A		144,444
	5,356	MoneyGram International, Inc.		85,428
	169,098	Motorola, Inc.		3,177,351
	8,490	National Semiconductor Corp.		213,439
	12,578	NCR Corp.*		347,027
	5,657	Network Appliance, Inc.*		178,139
	27,397	Novell, Inc.*		207,121

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	7,447	Novellus Systems, Inc.*	$	211,569
	13,533	NVIDIACorp.*		478,798
	150,247	Oracle Corp.*		3,330,976
	11,777	Paychex, Inc.		492,043
	11,441	Perot Systems Corp., Class A*		167,039
	35,692	QUALCOMM, Inc.		1,525,119
	8,874	SanDisk Corp.*		394,006
	194,581	Sanmina-SCI Corp.*		430,024
	26,784	Seagate Technology (Cayman Islands)		745,667
	22,364	Spansion, Inc., Class A*		157,666
	217,996	Sun Microsystems, Inc.*		1,244,757
	27,274	Symantec Corp.*		512,206
	13,563	SYNNEX Corp.*		303,404
	8,068	Synopsys, Inc.*		228,002
	27,099	Tech Data Corp.*		1,065,804
	31,237	Tellabs, Inc.*		275,198
	12,578	Teradata Corp.*		358,850
	9,783	Teradyne, Inc.*		120,722
	59,311	Texas Instruments, Inc.		1,933,539
	6,112	Total System Services, Inc.		183,116
	41,340	Tyco Electronics Ltd. (Bermuda)		1,474,598
	51,454	Unisys Corp.*		312,840
	20,375	UTStarcom, Inc.*		65,200
	11,811	VeriSign, Inc.*		402,637
	28,210	Vishay Intertechnology, Inc.*		355,164
	12,242	Western Digital Corp.*		317,313
	21,217	Western Union (The) Co.		467,623
	83,329	Xerox Corp.*		1,453,258
	10,166	Xilinx, Inc.		248,050
	29,455	Yahoo!, Inc.*		916,051
				129,084,159
		Materials—4.1%
	6,793	AbitibiBowater, Inc.		232,714
	14,699	Air Products & Chemicals, Inc.		1,438,297
	4,337	Airgas, Inc.		218,888
	9,284	AK Steel Holding Corp.*		465,407
	4,488	Albemarle Corp.		214,347
	93,229	Alcoa, Inc.		3,690,936
	2,153	Allegheny Technologies, Inc.		219,972
	9,897	Ashland, Inc.		581,152
	8,218	Ball Corp.		407,448
	10,307	Bemis Co., Inc.		290,245
	5,913	Cabot Corp.		207,014
	18,270	Celanese Corp., Series A		766,609
	25,079	Chemtura Corp.		233,736
	9,007	Commercial Metals Co.		282,640
	23,319	Crown Holdings, Inc.*		578,311
	3,327	Cytec Industries, Inc.		221,944
	112,651	Dow Chemical (The) Co.		5,073,800
	87,272	E.I. du Pont de Nemours & Co.		4,320,836
	11,871	Eastman Chemical Co.		790,490

Number of Shares			Value
		Common Stocks (Continued)
	11,306	Ecolab, Inc.	$	533,304
	7,119	FMC Corp.		409,343
	18,696	Freeport-McMoRan Copper & Gold, Inc., Class B		2,200,145
	38,272	Graphic Packaging Corp.*		188,298
	2,465	Greif, Inc., Class A		156,774
	725	Greif, Inc., Class B		42,282
	10,350	Hercules, Inc.		194,684
	48,115	Huntsman Corp.		1,267,830
	6,475	International Flavors & Fragrances, Inc.		338,060
	73,737	International Paper Co.		2,725,320
	16,288	Louisiana-Pacific Corp.		268,100
	6,858	Lubrizol (The) Corp.		465,521
	25,514	Lyondell Chemical Co.		1,210,639
	1,869	Martin Marietta Materials, Inc.		241,755
	28,101	MeadWestvaco Corp.		945,318
	18,794	Monsanto Co.		1,834,858
	11,939	Mosaic (The) Co.*		833,342
	14,162	Nalco Holding Co.		352,067
	22,091	Newmont Mining Corp.		1,123,548
	15,180	Nucor Corp.		941,464
	11,093	Olin Corp.		252,699
	28,796	Owens-Illinois, Inc.*		1,279,118
	9,032	Packaging Corp. of America		287,579
	11,144	Pactiv Corp.*		306,126
	19,230	PPG Industries, Inc.		1,437,250
	16,422	Praxair, Inc.		1,403,753
	4,346	Reliance Steel & Aluminum Co.		253,589
	7,973	Rockwood Holdings, Inc.*		311,665
	19,150	Rohm & Haas Co.		993,502
	12,590	RPM International, Inc.		269,804
	3,884	Scotts Miracle-Gro (The) Co., Class A		178,237
	14,444	Sealed Air Corp.		360,089
	6,098	Sigma-Aldrich Corp.		315,084
	3,335	Silgan Holdings, Inc.		181,991
	59,162	Smurfit-Stone Container Corp.*		716,452
	10,799	Sonoco Products Co.		333,905
	11,175	Southern Copper Corp.		1,561,148
	4,080	Steel Dynamics, Inc.		217,138
	8,685	Temple-Inland, Inc.		466,124
	8,530	United States Steel Corp.		920,387
	7,569	Valhi, Inc.		202,017
	9,250	Valspar (The) Corp.		231,528
	4,472	Vulcan Materials Co.		382,401
	25,786	Weyerhaeuser Co.		1,957,415
	12,445	Worthington Industries, Inc.		311,125
				51,637,564
		Telecommunication Services—4.2%
	37,292	ALLTEL Corp.		2,653,326
	12,219	American Tower Corp., Class A*		539,835
	387,111	AT&T, Inc.		16,177,368

See Notes to Financial Statements.
32

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	12,282	CenturyTel, Inc.	$	541,022
	38,233	Cincinnati Bell, Inc.*		207,223
	53,290	Citizens Communications Co.		701,296
	6,365	Crown Castle International Corp.*		261,411
	28,218	Embarq Corp.		1,493,297
	30,206	Level 3 Communications, Inc.*		91,524
	2,787	NII Holdings, Inc.*		161,646
	149,475	Qwest Communications International, Inc.*		1,073,231
	300,145	Sprint Nextel Corp.		5,132,480
	5,126	Telephone & Data Systems, Inc.		357,795
	5,629	Telephone & Data Systems, Inc., Special Shares		370,670
	7,154	United States Cellular Corp.*		673,549
	475,847	Verizon Communications, Inc.		21,922,270
				52,357,943
		Utilities—6.5%
	53,194	AES (The) Corp.*		1,138,884
	8,156	AGL Resources, Inc.		322,407
	10,393	Allegheny Energy, Inc.*		630,439
	5,627	ALLETE, Inc.		245,844
	14,332	Alliant Energy Corp.		573,280
	30,320	Ameren Corp.		1,639,099
	70,574	American Electric Power Co., Inc.		3,402,372
	7,541	Aqua America, Inc.		175,404
	124,182	Aquila, Inc.*		519,081
	11,890	Atmos Energy Corp.		333,515
	9,495	Avista Corp.		209,365
	5,806	Black Hills Corp.		257,903
	82,462	CenterPoint Energy, Inc.		1,382,063
	7,105	Cleco Corp.		187,217
	41,367	CMS Energy Corp.		701,998
	42,135	Consolidated Edison, Inc.		1,984,137
	15,641	Constellation Energy Group, Inc.		1,481,203
	31,316	Dominion Resources, Inc.		2,869,484
	13,440	DPL, Inc.		390,298
	30,732	DTE Energy Co.		1,524,307
	142,568	Duke Energy Corp.		2,733,028
	107,596	Dynegy, Inc., Class A*		990,959
	37,551	Edison International		2,183,591
	3,906	Energen Corp.		249,984
	32,131	Energy East Corp.		895,812
	18,012	Entergy Corp.		2,159,098
	5,945	Equitable Resources, Inc.		334,822
	50,628	Exelon Corp.		4,190,985
	35,912	FirstEnergy Corp.		2,503,066
	35,554	FPL Group, Inc.		2,432,605
	14,641	Great Plains Energy, Inc.		436,887
	13,624	Hawaiian Electric Industries, Inc.		316,077
	7,978	IDACORP, Inc.		278,352
	7,297	Integrys Energy Group, Inc.		392,652

Number of Shares			Value
		Common Stocks (Continued)
	16,090	MDU Resources Group, Inc.	$	453,094
	28,299	Mirant Corp.*		1,198,746
	9,224	National Fuel Gas Co.		447,272
	3,918	New Jersey Resources Corp.		192,962
	7,377	Nicor, Inc.		319,203
	54,554	NiSource, Inc.		1,115,629
	22,655	Northeast Utilities		698,454
	4,800	NorthWestern Corp.		132,384
	11,459	NRG Energy, Inc.*		523,218
	15,653	NSTAR		550,359
	12,845	OGE Energy Corp.		491,964
	12,644	ONEOK, Inc.		631,441
	32,802	Pepco Holdings, Inc.		934,529
	41,995	PG&E Corp.		2,054,815
	9,118	Piedmont Natural Gas Co., Inc.		232,783
	16,267	Pinnacle West Capital Corp.		657,187
	9,234	PNM Resources, Inc.		230,942
	18,285	Portland General Electric Co.		514,723
	30,800	PPL Corp.		1,592,360
	45,119	Progress Energy, Inc.		2,165,712
	27,911	Public Service Enterprise Group, Inc.		2,668,292
	19,732	Puget Energy, Inc.		557,429
	9,069	Questar Corp.		517,659
	402,815	Reliant Energy, Inc.*		11,085,468
	16,798	SCANA Corp.		681,831
	22,753	Sempra Energy		1,399,537
	19,627	Sierra Pacific Resources		331,107
	99,356	Southern (The) Co.		3,642,390
	9,394	Southern Union Co.		295,911
	5,404	Southwest Gas Corp.		160,823
	36,591	TECO Energy, Inc.		615,827
	13,398	UGI Corp.		356,655
	4,918	UIL Holdings Corp.		173,015
	4,818	Unisource Energy Corp.		152,827
	11,788	Vectren Corp.		330,536
	14,096	Westar Energy, Inc.		375,236
	8,890	WGL Holdings, Inc.		301,549
	13,395	Wisconsin Energy Corp.		641,353
	78,006	Xcel Energy, Inc.		1,759,035
				81,250,475
		Total Common Stocks (Cost $1,167,927,688)		1,241,911,338
		Investment Company—0.0%
		Financials—0.0%
	8,143	Tri-Continental Corp. (Cost $184,435)		199,015

See Notes to Financial Statements.
33

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1000 Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Money Market Fund—0.2%
	2,728,210	Liquid Assets Portfolio Private Class** (Cost $2,728,210)	$	2,728,210
		Total Investments (Cost $1,170,840,333)—99.8%		1,244,838,563
		Other assets less liabilities —0.2%		2,518,645
		Net Assets—100.0%	$	1,247,357,208

REIT Real Estate Investment Trust.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	1,210,058,033		97.0	%
Bermuda		16,496,395		1.3
Cayman Islands		6,790,657		0.6
Netherlands		3,607,952		0.3
Panama		2,331,396		0.2
Singapore		2,199,120		0.2
Switzerland		1,352,690		0.1
Liberia		920,634		0.1
Marshall Islands		417,779		0.0
Israel		339,343		0.0
Guernsey		324,564		0.0
Total investments		1,244,838,563		99.8
Other assets less liabilities		2,518,645		0.2
Net Assets	$	1,247,357,208		100.0	%

See Notes to Financial Statements.
34

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Statements of Assets and Liabilities

October 31, 2007 (Unaudited)

	PowerShares Dynamic Market Portfolio			PowerShares Dynamic OTC Portfolio			PowerShares Dynamic MagniQuant Portfolio			PowerShares FTSE RAFI US 1000 Portfolio
ASSETS:
Unaffiliated investments at value	$	853,362,871		$	158,052,627		$	93,172,723		$	1,242,110,353
Affiliated investments at value		—			—			—			2,728,210
Cash		543,960			126,201			65,274			1,922,527
Receivables:
Dividends		495,987			7,070			39,772			1,212,871
Expense waivers due from Adviser		—			2,588			2,505			—
Capital stock sold		—			—			—			6,199,788
Investments sold		—			—			—			158,686
Other assets		11,533			1,861			998			12,907
Total Assets		854,414,351			158,190,347			93,281,272			1,254,345,342
LIABILITIES:
Payables:
Investments purchased		—			—			—			6,078,334
Expense reimbursements due to Adviser		—			—			—			6,192
Accrued advisory fees		363,376			66,170			40,792			520,075
Accrued expenses		247,565			78,182			71,265			383,533
Total Liabilities		610,941			144,352			112,057			6,988,134
NET ASSETS	$	853,803,410		$	158,045,995		$	93,169,215		$	1,247,357,208
NET ASSETS CONSIST OF:
Paid-in capital	$	893,971,421		$	179,980,653		$	90,046,454		$	1,157,673,156
Undistributed net investment income		409,970			262,470			17,290			3,876,353
Accumulated net realized gain (loss) on investments		(87,070,645	)		(30,984,229	)		(790,472	)		11,809,469
Net unrealized appreciation on investments		46,492,664			8,787,101			3,895,943			73,998,230
Net Assets	$	853,803,410		$	158,045,995		$	93,169,215		$	1,247,357,208
Shares outstanding (unlimited amount authorized, $0.01 par value)		16,050,000			2,750,000			3,300,000			20,000,000
Net asset value	$	53.20		$	57.47		$	28.23		$	62.37
Unaffiliated investments at cost	$	806,870,207		$	149,265,526		$	89,276,780		$	1,168,112,123
Affiliated investments at cost	$	—		$	—		$	—		$	2,728,210

See Notes to Financial Statements.
36

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	PowerShares Dynamic Market Portfolio			PowerShares Dynamic OTC Portfolio			PowerShares Dynamic MagniQuant Portfolio			PowerShares FTSE RAFI US 1000 Portfolio
INVESTMENT INCOME:
Unaffiliated dividend income	$	6,302,168		$	721,067		$	575,937		$	12,240,027
Affiliated dividend income		10,316			—			—			52,022
Foreign withholding tax		—			—			—			(6,624	)
Total Income		6,312,484			721,067			575,937			12,285,425
EXPENSES:
Advisory fees		2,315,404			391,501			234,194			2,985,210
Sub-licensing		138,924			23,490			23,419			597,042
Administration & Accounting fees		135,329			42,911			37,385			173,037
Printing		113,413			18,736			9,272			118,788
Custodian & transfer agent fees		27,841			7,028			4,815			33,993
Trustees		20,052			5,425			4,353			23,745
Legal		18,386			2,730			1,351			18,012
Audit		8,319			8,319			8,319			8,319
Listing fees and expenses		5,825			5,171			5,106			1,972
Registration & filings		—			—			4,424			21,977
Offering costs		—			—			17,885			—
Other expenses		10,677			6,019			4,459			18,211
Total Expenses		2,794,170			511,330			354,982			4,000,306
Net expenses reimbursed to the Adviser under the Expense Agreement		—			—			—			118,831
Less fees waived:
Advisory.		(48,609	)		(41,529	)		(32,645	)		—
Net Expenses		2,745,561			469,801			322,337			4,119,137
Net Investment Income		3,566,923			251,266			253,600			8,166,288
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(26,792,770	)		(5,797,734	)		(4,357,122	)		(1,691,727	)
In-kind redemptions		46,408,899			13,898,977			4,460,859			14,690,199
Net realized gain		19,616,129			8,101,243			103,737			12,998,472
Net change in unrealized appreciation/ depreciation on investments		(25,468,574	)		(1,923,564	)		580,591			9,630,787
Net realized and unrealized gain (loss) on investments		(5,852,445	)		6,177,679			684,328			22,629,259
Net increase (decrease) in net assets resulting from operations	$	(2,285,522	)	$	6,428,945		$	937,928		$	30,795,547

See Notes to Financial Statements.
37

Statements of Changes in Net Assets

	PowerShares Dynamic Market Portfolio						PowerShares Dynamic OTC Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	3,566,923		$	8,003,691		$	251,266		$	(265,225	)
Net realized gain on investments		19,616,129			66,688,243			8,101,243			7,164,567
Net change in unrealized appreciation/depreciation of investments		(25,468,574	)		29,944,772			(1,923,564	)		(5,390,297	)
Net increase (decrease) in net assets resulting from operations		(2,285,522	)		104,636,706			6,428,945			1,509,045
Undistributed net investment income (loss) included in the price of units issued and redeemed		(78,041	)		4,323			11,204			91,702
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(5,473,510	)		(6,116,430	)		—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		696,446,823			1,426,914,403			141,621,361			259,930,591
Value of shares repurchased		(807,988,993	)		(1,471,486,113	)		(149,603,256	)		(324,280,921	)
Net income equalization		78,041			(4,323	)		(11,204	)		(91,702	)
Net increase (decrease) in net assets resulting from shares transactions		(111,464,129	)		(44,576,033	)		(7,993,099	)		(64,442,032	)
Increase (decrease) in Net Assets		(119,301,202	)		53,948,566			(1,552,950	)		(62,841,285	)
NET ASSETS:
Beginning of period		973,104,612			919,156,046			159,598,945			222,440,230
End of period	$	853,803,410		$	973,104,612		$	158,045,995		$	159,598,945
Undistributed net investment income at end of period	$	409,970		$	2,394,598		$	262,470		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		13,150,000			29,700,000			2,550,000			5,150,000
Shares repurchased		(15,350,000	)		(30,650,000	)		(2,700,000	)		(6,400,000	)
Shares outstanding, beginning of period		18,250,000			19,200,000			2,900,000			4,150,000
Shares outstanding, end of period		16,050,000			18,250,000			2,750,000			2,900,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
38

	PowerShares Dynamic MagniQuant Portfolio						PowerShares FTSE RAFI US 1000 Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	253,600		$	303,423		$	8,166,288		$	6,345,432
Net realized gain on investments		103,737			1,471,982			12,998,472			20,651,459
Net change in unrealized appreciation/depreciation of investments		580,591			3,315,352			9,630,787			61,838,256
Net increase (decrease) in net assets resulting from operations		937,928			5,090,757			30,795,547			88,835,147
Undistributed net investment income (loss) included in the price of units issued and redeemed		26,403			34,154			692,860			2,687,242
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(459,247	)		(106,889	)		(6,657,382	)		(4,798,111	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		89,545,202			118,994,387			272,205,549			1,023,566,925
Value of shares repurchased		(78,123,671	)		(42,709,252	)		(104,175,116	)		(157,298,357	)
Net income equalization		(26,403	)		(34,154	)		(692,860	)		(2,687,242	)
Net increase (decrease) in net assets resulting from shares transactions		11,395,128			76,250,981			167,337,573			863,581,326
Increase (decrease) in Net Assets		11,900,212			81,269,003			192,168,598			950,305,604
NET ASSETS:
Beginning of period		81,269,003			—			1,055,188,610			104,883,006
End of period	$	93,169,215		$	81,269,003		$	1,247,357,208		$	1,055,188,610
Undistributed net investment income at end of period	$	17,290		$	196,534		$	3,876,353		$	1,674,587
CHANGES IN SHARES OUTSTANDING:
Shares sold		3,200,000			4,500,000			4,400,000			18,000,000
Shares repurchased		(2,800,000	)		(1,600,000	)		(1,700,000	)		(2,700,000	)
Shares outstanding, beginning of period		2,900,000			—			17,300,000			2,000,000
Shares outstanding, end of period		3,300,000			2,900,000			20,000,000			17,300,000

39

Financial Highlights

PowerShares Dynamic Market Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,									For the Year May 1, 2003* Through
	(Unaudited)			2007			2006			2005			April 30, 2004
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	53.32		$	47.87		$	39.11		$	35.05		$	26.99	†
Net investment income**		0.20			0.42			0.34			0.26			0.15	†
Net realized and unrealized gain (loss) on investments		(0.01	)		5.35			8.75			4.02			8.09	†
Total from operations .		0.19			5.77			9.09			4.28			8.24	†
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—	(a)		—			—			—
Distributions to shareholders from:
Net investment income		(0.31	)		(0.32	)		(0.33	)		(0.22	)		(0.18	)†
Net asset value at end of period	$	53.20		$	53.32		$	47.87		$	39.11		$	35.05	†
TOTAL RETURN***		0.36	%		12.12	%		23.30	%		12.23	%		30.50	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted) .	$	853,803		$	973,105		$	919,156		$	283,620		$	85,946
Ratio to average net assets of:
Expenses, net of waivers		0.59	%††		0.60	%		0.60	%		0.60	%		0.60	%
Expenses, prior to waivers		0.60	%††		0.62	%		0.63	%		0.70	%		1.26	%
Net investment income, net of waivers		0.77	%††		0.87	%		0.76	%		0.68	%		0.46	%
Portfolio turnover rate †††		61	%		114	%		103	%		94	%		58	%

PowerShares Dynamic OTC Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,									For the Year May 1, 2003* Through
	(Unaudited)			2007			2006			2005			April 30, 2004
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	55.03		$	53.60		$	42.38		$	36.59		$	28.57	†
Net investment income (loss)**		0.09			(0.07	)		(0.02	)		(0.03	)		(0.04	)†
Net realized and unrealized gain on investments		2.35			1.47			11.30			5.82			8.06	†
Total from operations		2.44			1.40			11.28			5.79			8.02	†
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		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	$	57.47		$	55.03		$	53.60		$	42.38		$	36.59	†
TOTAL RETURN***		4.43	%		2.67	%		26.63	%		15.81	%		28.07	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	158,046		$	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	%		0.60	%
Expenses, prior to waivers		0.65	%††		0.69	%		0.69	%		1.06	%		1.66	%
Net investment income (loss), net of waivers		0.32	%††		(0.15	)%		(0.04	)%		(0.06	)%		(0.10	)%
Portfolio turnover rate †††		35	%		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).

††  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.
40

Financial Highlights (Continued)

PowerShares Dynamic MagniQuant Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.02		$	25.37
Net investment income**		0.08			0.15
Net realized and unrealized gain on investments		0.26			2.53
Total from operations		0.34			2.68
Undistributed net investment income included in price of units issued and redeemed**		0.01			0.02
Distributions to shareholders from:
Net investment income		(0.14	)		(0.05	)
Net asset value at end of period	$	28.23		$	28.02
TOTAL RETURN***		1.25	%		10.67	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	93,169		$	81,269
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.69	%†		0.67	%†
Expenses, prior to waivers and reimbursements		0.76	%†(a)		0.84	%†
Net investment income, net of waivers and reimbursements		0.54	%†		1.04	%†
Portfolio turnover rate ††		39	%		23	%

PowerShares FTSE RAFI US 1000 Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	60.99		$	52.44		$	49.64
Net investment income**		0.43			0.78			0.24
Net realized and unrealized gain on investments		1.26			8.05			2.68
Total from operations		1.69			8.83			2.92
Undistributed net investment income included in price of units issued and redeemed**		0.04			0.33			—
Distributions to shareholders from:
Net investment income		(0.35	)		(0.61	)		(0.12	)
Net asset value at end of period	$	62.37		$	60.99		$	52.44
TOTAL RETURN***		2.84	%		17.60	%		5.89	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	1,247,357		$	1,055,189		$	104,883
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.69	%†		0.70	%		0.76	%†
Expenses, prior to waivers and reimbursements		0.67	%†(b)		0.71	%(b)		1.00	%†
Net investment income, net of waivers and reimbursements		1.37	%†		1.40	%		1.38	%†
Portfolio turnover rate ††		2	%		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.

(a)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

(b)   The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007 and for the year ended April 30, 2007.

See Notes to Financial Statements.
41

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of 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"

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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

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.

42

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

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

43

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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, sub-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 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 six months ended October 31, 2007, the Adviser waived the following fees:

	Fees Waived
Dynamic Market Portfolio	$	48,609
Dynamic OTC Portfolio		41,529
Dynamic MagniQuant Portfolio		32,645

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 six months ended October 31, 2007, details of expense waivers and reimbursements to the Adviser under the Expense Agreement was as follows:

	Gross Waivers			Gross Reimbursements		Net (Waiver) Reimbursement
Dynamic MagniQuant Portfolio	$	(32,771	)	$	126	$	(32,645	)
FTSE RAFI US 1000 Portfolio		(6,311	)		125,142		118,831

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

The amounts subject to reimbursement to the Adviser at October 31, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dynamic MagniQuant Portfolio	$	81,782	$	81,782	$	81,782

44

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 1940Act. 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 Licensorsand the Licensors make no representation regarding the advisability of investing in any of these Funds. The Funds are required to pay the sub-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. Effective July 2, 2007, The Bank of New York became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

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 may 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

October 31, 2007 (Unaudited)

Note 5. Federal Income Tax

At October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation		Gross Unrealized Appreciation		Gross Unrealized Depreciation
Dynamic Market Portfolio	$	806,870,207	$	46,492,664	$	65,227,623	$	(18,734,959	)
Dynamic OTC Portfolio		149,265,526		8,787,101		15,376,982		(6,589,881	)
Dynamic MagniQuant Portfolio		89,276,780		3,895,943		6,553,626		(2,657,683	)
FTSE RAFI US 1000 Portfolio		1,170,840,333		73,998,230		129,752,772		(55,754,542	)

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

46

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

	Distributions paid from Return of Capital
Dynamic OTC Portfolio	$	107,644

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

October 31, 2007 (Unaudited)

Note 6. Investment Transactions

For the six months ended October 31, 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	$	560,501,095	$	557,575,092
Dynamic OTC Portfolio		53,907,009		57,787,511
Dynamic MagniQuant Portfolio		35,548,134		44,747,719
FTSE RAFI US 1000 Portfolio		22,431,698		31,772,982

For the six months ended October 31, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Market Portfolio	$	587,745,352	$	704,035,607
Dynamic OTC Portfolio		144,442,051		148,526,389
Dynamic MagniQuant Portfolio		87,267,826		66,649,104
FTSE RAFI US 1000 Portfolio		266,579,667		91,506,664

There were no purchases or sales of U.S. government or government agency obligations for the six months ended October 31, 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.

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferral Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

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). Only authorized participants are permitted to create or redeem from the Funds. 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

48

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.

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 Pronouncement

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.

Note 13. Subsequent Event

Effective December 31, 2007, the FTSE RAFI US 1000 Portfolio will transfer its primary listing to the NYSE Arca, Inc. and will not be listed on the New York Stock Exchange.

49

Supplemental Information (Unaudited)

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)		89	None
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006-February 2007); 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

50

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
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)		89	None
Philip M. Nussbaum (46) 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

51

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent 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
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007-Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006-August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995- February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

52

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)		89	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 19 Portfolios advised by the Adviser.

53

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 (53) 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 (42) 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 (45) 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.

54

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 Semi-Annual Report.
55

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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56

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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57

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 Semi-Annual Report.
58

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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59

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 Semi-Annual Report.
60

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 Semi-Annual Report.
61

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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the fund's independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-2

2007 Semi-Annual Report to Shareholders

31 October 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	36
PowerShares Dynamic Large Cap Value Portfolio	37
PowerShares Dynamic Mid Cap Growth Portfolio	38
PowerShares Dynamic Mid Cap Value Portfolio	40
PowerShares Dynamic Small Cap Growth Portfolio	42
PowerShares Dynamic Small Cap Value Portfolio	44
PowerShares Dynamic Large Cap Portfolio	46
PowerShares Dynamic Mid Cap Portfolio	48
PowerShares Dynamic Small Cap Portfolio	50
PowerShares Dynamic Aggressive Growth Portfolio	53
PowerShares Dynamic Deep Value Portfolio	55
PowerShares Zacks Micro Cap Portfolio	57
PowerShares Zacks Small Cap Portfolio	62
Statements of Assets and Liabilities	66
Statements of Operations	68
Statements of Changes in Net Assets	70
Financial Highlights	75
Notes to Financial Statements	82
Supplemental Information (Unaudited)	93

To My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management – Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500 Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potentialrecession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25 to 4.75%, the first cut in four years, and the discount rate moved from 5.75 to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

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

The PowerShares Dynamic Large Cap Growth Portfolio posted a return of 9.79% over the reporting period. During this time, growth stocks outperformed value stocks. The Fund outperformed the S&P Citigroup Large Cap Growth Index which returned 7.95%. Energy and materials had the best performance of any sectors with information technology being the largest contributor to return due to strong performance of Apple which was up 90.3% and MasterCard which was up 70.4%. Consumer discretionary was the biggest laggard for the fund due to Amgen and Zimmer holdings, each down during the period and contributing -0.5% and -0.4% to the Funds performance.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Information Technology	39.5
Health Care	17.4
Industrials	10.5
Consumer Discretionary	8.7
Energy	6.0
Consumer Staples	5.6
Materials	4.8
Utilities	4.4
Financials	2.9
Money Market Fund	0.1
Other	0.1

Style Allocation (%)

as of 31 October 2007

Large-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Google, Inc., Class A	4.2
Apple, Inc.	4.2
Oracle Corp.	3.4
QUALCOMM, Inc.	3.3
News Corp., Class A	3.3
eBay, Inc.	3.3
Hewlett-Packard Co.	3.2
Cisco systems, Inc.	3.2
Bristol-Myers Squibb Co.	3.2
Boeing Co.	3.2
Total	34.5

4

Manager's Analysis (Continued)

PowerShares Dynamic Large Cap Growth Portfolio (ticker: PWB)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Large Cap Growth IntellidexSM Index		10.18		18.52		10.91		31.83
Russell 1000® Growth Index		9.97		19.23		12.25		36.14
S&P Citigroup Large Cap Growth Index		7.95		15.60		10.24		29.72

Fund

NAV Return	9.79	17.74	10.18	29.44
Share Price Return	9.96	17.81	10.18	29.46

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 0.68%. In the Financial Highlights section of this Semi-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 0.60%. 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, 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 Russell 1000^® Growth Index and the S&P Citigroup Large Cap Growth Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 691 and 318, 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 which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Large Cap Value Portfolio performed well over the reporting period posting a 3.85% return relative to the S&P Citigroup Large Cap Value Index which was up 3.15% and the Russell 1000^® Value which was up only 0.95%. Due to the strong increase in energy prices, the energy sector which is the second largest by weight was the best performing sector returning 25.4% and adding 2.7% to the overall return. The sector was led by Chevron, Exxon Mobil and Apache Corporation. Telecommunication services which also contributed positively were led by Verizon Communications, up 23% for the period, and AT&T which was up 9.79%. Financials, the largest sector in the fund at 40% weight was the worst performing of the group and negatively contributed to the Fund. Citigroup, Genworth Financial and AIG were the laggards for the period.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	40.0
Energy	16.1
Health Care	9.2
Consumer Staples	7.4
Telecommunication Services	6.7
Utilities	6.0
Materials	5.8
Industrials	5.5
Information Technology	3.1
Other	0.2

Style Allocation (%)

as of 31 October 2007

Large-Cap Value 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Goldman Sachs Group (The), Inc.	4.4
Verizon Communications, Inc.	3.4
Morgan Stanley	3.4
Exxon Mobil Corp.	3.4
JPMorgan Chase & Co.	3.3
Johnson & Johnson	3.3
Altria Group, Inc.	3.3
AT&T, Inc.	3.3
Chevron Corp.	3.3
International Business Machines Corp.	3.1
Total	34.2

6

Manager's Analysis (Continued)

PowerShares Dynamic Large Cap Value Portfolio (ticker: PWV)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Large Cap Value IntellidexSM Index		4.32		14.97		16.65		50.84
Russell 1000® Value Index		0.95		10.83		12.17		35.88
S&P Citigroup Large Cap Value Index		3.15		13.54		13.21		39.28

Fund

NAV Return	3.85	14.11	15.85	47.98
Share Price Return	3.82	13.96	15.80	47.79

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 0.66%. In the Financial Highlights section of this Semi-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 0.62%. 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, 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 Russell 1000^® Value Index and the S&P Citigroup Large Cap Value Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 617 and 346, 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 which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Mid Cap Growth Portfolio continues its strong performance posting a solid 17.54% return for the reporting period beating the Russell Mid Cap Growth Index which returned 7.11% and the S&P Citigroup Mid Cap Growth Index which was up 8.31%. The highest contributing sectors were industrials, consumer discretionary, and information technology. Within Industrials, Fluor Corporation, McDermott International led the way while Garmin Ltd. and Apollo Group within consumer discretionary contributed positively to performance. NVIDIA was up 61.4% for the period within information technology adding to the Funds solid returns. Consumer staples was the only underperforming sector for the fund; however its weight was only 0.51%.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Information Technology	23.0
Industrials	21.1
Consumer Discretionary	15.5
Health Care	11.1
Energy	8.9
Financials	6.2
Telecommunication Services	5.9
Materials	4.4
Utilities	3.4
Consumer Staples	0.5

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Apollo Group, Inc., Class A	3.9
McDermott International, Inc. (Panama)	3.7
T. Rowe Price Group, Inc.	3.6
Fluor Corp.	3.6
Cameron International Corp.	3.6
MEMC Electronic Materials, Inc.	3.5
Allegheny Energy, Inc.	3.4
Express Scripts, Inc.	3.3
International Game Technology	3.3
Ecolab, Inc.	3.3
Total	35.2

8

Manager's Analysis (Continued)

PowerShares Dynamic Mid Cap Growth Portfolio (ticker: PWJ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Mid Cap Growth IntellidexSM Index		17.84		32.83		21.78		69.19
Russell Mid Cap Growth Index		7.11		19.72		14.57		43.77
S&P Citigroup Mid Cap Growth Index		8.31		21.05		13.37		39.80

Fund

NAV Return	17.54	32.03	21.00	66.15
Share Price Return	17.48	31.97	20.91	65.81

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 0.72%. In the Financial Highlights section of this Semi-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 0.61%. 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, 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 Russell Mid Cap Growth Index and the S&P Citigroup Mid Cap Growth Index are unmanaged indexes used as a measurements of change in stock market conditions based on the average performance of approximately 548 and 258, 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 which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Mid Cap Value Portfolio was down -1.57% during the period. The Fund underperformed the S&P Citigroup Mid Cap Value Index which was up 0.74% but it outperformed the Russell Mid Cap Value Index which was down -2.70%. The leading sectors which contributed to performance were industrials and materials. Parker Hanninfin and Cummins, within industrials were the leaders. The financial sector was the worst performing sector for the period with the laggards being Ambac Financial down 59.69%, Synovus Financial down 15.35% and CNA Financial down 14.70%.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	28.0
Consumer Discretionary	17.2
Industrials	16.0
Consumer Staples	13.9
Materials	6.5
Energy	6.2
Health Care	3.8
Information Technology	3.8
Telecommunication Services	3.2
Utilities	1.3
Other	0.1

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Noble Energy, Inc.	4.0
United States Steel Corp.	3.5
Loews Corp. - Carolina Group	3.5
Parker Hannifin Corp.	3.5
VF Corp.	3.4
Coventry Health Care, Inc.	3.3
Clorox Co.	3.3
AON Corp.	3.3
Computer Sciences Corp.	3.2
Autozone, Inc.	3.2
Total	34.2

10

Manager's Analysis (Continued)

PowerShares Dynamic Mid Cap Value Portfolio (ticker: PWP)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Mid Cap Value IntellidexSM Index		-1.19		12.70		13.18		39.15
Russell Mid Cap Value Index		-2.70		9.73		13.32		39.63
S&P Citigroup Mid Cap Value Index		0.74		12.97		12.94		38.37

Fund

NAV Return	-1.57	11.90	12.24	35.99
Share Price Return	-1.55	11.99	12.20	35.89

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 0.79%. In the Financial Highlights section of this Semi-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, 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 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 Russell Mid Cap Value Index and the S&P Citigroup Mid Cap Value Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 483 and 285, 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 which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Small Cap Growth Portfolio underperformed during the period posting a return of 1.51% relative to the S&P Citigroup Small Cap Growth Index which was up 7.67% and the Russell 2000^® Growth Index up 8.66%. Health care and industrials were the leading contributors to performance for the fund. Being underweight in the energy sector and poor stock selection within the information technology sector negatively impacted the Fund.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Information Technology	25.7
Industrials	23.3
Health Care	20.3
Consumer Discretionary	16.3
Energy	6.6
Financials	6.5
Materials	0.9
Telecommunication Services	0.5
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
MGI Pharma, Inc.	3.1
Greenhill & Co., Inc.	2.9
optionsXpress Holdings, Inc.	2.9
Myriad Genetics, Inc.	2.8
Curtiss-Wright Corp.	2.8
OSI Pharmaceuticals, Inc.	2.7
Quest Software, Inc.	2.7
Atheros Communications, Inc.	2.6
Ansys, Inc.	2.6
Warnaco Group (The), Inc.	2.6
Total	27.7

12

Manager's Analysis (Continued)

PowerShares Dynamic Small Cap Growth Portfolio (ticker: PWT)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Small Cap Growth IntellidexSM Index		1.61		6.50		9.10		26.17
Russell 2000® Growth Index		8.66		16.73		13.09		38.87
S&P Citigroup Small Cap Growth Index		7.67		18.27		12.21		36.00

Fund

NAV Return	1.51	6.07	8.70	24.88
Share Price Return	1.51	6.16	8.64	24.68

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 0.81%. In the Financial Highlights section of this Semi-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, 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 Russell 2000^® Growth Index and the S&P Citigroup Small Cap Growth Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 1,245 and 362 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 which seeks to provide capital appreciation while maintaining consistent and stylistically accurate exposure.

The PowerShares Dynamic Small Cap Value Portfolio posted a -2.11% return over the reporting period. Small cap stocks underperformed during the period and growth outperformed value. The Fund was led by energy and materials which posted the largest returns and contributed the most to performance. Global Industries Ltd was a leading contributor up 18.59% in the energy sector while Terra Industries was up a solid 109.13% during the period in the materials sector. Consumer discretionary was the biggest laggard due to overweight positions in Collective Brands, Timberland and Regis Corp.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	27.8
Consumer Discretionary	19.9
Industrials	15.9
Materials	12.2
Information Technology	9.4
Health Care	5.5
Energy	4.6
Consumer Staples	3.0
Telecommunication Services	1.4
Utilities	0.5
Other	(0.2	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Value 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
W&T Offshore, Inc.	2.8
Tupperware Brands Corp.	2.7
Bio-Rad Laboratories, Inc., Class A	2.6
Commerce (The) Group, Inc.	2.6
Palm, Inc.	2.6
Schnitzer Steel Industries, Inc.	2.5
H.B. Fuller Co.	2.5
LifePoint Hospitals, Inc.	2.5
SAIC, Inc.	2.5
Flowers Foods, Inc.	2.4
Total	25.7

14

Manager's Analysis (Continued)

PowerShares Dynamic Small Cap Value Portfolio (ticker: PWY)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Small Cap Value IntellidexSM Index		-2.03		6.25		8.83		25.35
Russell 2000® Value Index		-4.05		2.05		9.84		28.47
S&P Citigroup Small Cap Value Index		-1.40		5.62		10.31		29.94

Fund

NAV Return	-2.11	5.75	8.14	23.17
Share Price Return	-2.14	5.73	8.08	22.98

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 0.78%. In the Financial Highlights section of this Semi-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, 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 Russell 2000^® Value Index and the S&P Citigroup Small Cap Value Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 1,279 and 467, 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 which 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 6.22% return over the past six months through October 31, 2007 underperforming the S&P 100^® Index which was up 7.59%. Information technology, industrials, materials and energy had the largest contribution to return for the fund. Good stock selection within the financial sector boosted the Fund's performance, specifically an overweight in Goldman Sachs and State Street. An overweight in Merrill Lynch contributed negatively to financials during the period. Consumer discretionary was the biggest laggard for the period down 2.39%.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	20.6
Health Care	15.7
Information Technology	15.1
Industrials	13.9
Energy	12.7
Consumer Staples	6.0
Consumer Discretionary	5.2
Materials	4.9
Telecommunication Services	3.3
Utilities	2.2
Money Market Fund	0.3
Other	0.1

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	61.7
Large-Cap Growth	38.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Goldman Sachs Group (The), Inc.	2.2
Microsoft Corp.	2.0
Merck & Co., Inc.	1.8
Verizon Communications, Inc.	1.7
Oracle Corp.	1.7
Dell, Inc.	1.7
Exxon Mobil Corp.	1.7
Procter & Gamble (The) Co.	1.6
JPMorgan Chase & Co.	1.6
Altria Group, Inc.	1.6
Total	17.6

16

Manager's Analysis (Continued)

PowerShares Dynamic Large Cap Portfolio (ticker: PJF)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Dynamic Large Cap IntellidexSM Index		5.96		13.46
S&P 100® Index		7.59		13.85
Russell Top 200® Index		6.64		13.52

Fund

NAV Return	6.22	14.24
Share Price Return	6.18	14.17

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 1.96%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.84% while the Fund's gross annualized total operating expense ratio was 0.95%. 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, 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 S&P 100^® Index and the Russell Top 200^® Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 100 and 205, 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 which 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 a 1.86% return over the last six months through October 31, 2007 underperforming the S&P Mid Cap 400 Index which was up 4.50% and Russell Mid Cap Index which was up 2.67%. Since the Fund's inception mid cap stocks have continued to perform well. An overweight in industrials which were up 13.99% for the period contributed positively to performance. Consumer discretionary and consumer staples led the underperformance for the period. Underweight and poor stock selections within the energy sector led to the Fund underperformance for the period.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Industrials	27.0
Financials	20.2
Consumer Discretionary	13.7
Information Technology	9.4
Health Care	7.1
Energy	6.6
Consumer Staples	5.4
Materials	5.4
Telecommunications	3.0
Utilities	2.0
Money Market Fund	0.3
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	70.7
Mid-Cap Growth	29.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Noble Energy, Inc.	1.9
McDermott International, Inc.	1.9
T. Rowe Price Group, Inc.	1.9
Fluor Corp.	1.9
Northern Trust Corp.	1.9
MEMC Electronic Materials, Inc.	1.8
Cameron International Corp.	1.8
Express Scripts, Inc.	1.8
International Game Technology	1.7
United States Steel Corp.	1.7
Total	18.3

18

Managers' Analysis (Continued)

PowerShares Dynamic Mid Cap Portfolio (ticker: PJG)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Dynamic Mid Cap IntellidexSM Index		2.30		13.90
S&P Mid Cap 400® Index		4.50		13.35
Russell Mid Cap Index		2.67		11.50

Fund

NAV Return	1.86	13.10
Share Price Return	1.73	13.07

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 2.12%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.82% while the Fund's gross annualized total operating expense ratio was 1.68%. 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, 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 S&P Mid Cap 400^® Index and the Russell Mid Cap Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 400 and 796, 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 which 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 -1.55% return over the last six months through October 31, 2007. The Fund underperformed the S&P Small Cap 600^® Index which was up 2.89% for the period. The Fund was impacted by an overweight in consumer discretionary and from poor stock selection within the information technology sector. Good stock selection within the materials and financial sectors contributed positively to the Funds performance.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Industrials	23.2
Consumer Discretionary	18.8
Financials	18.5
Information Technology	13.4
Health Care	8.5
Energy	7.2
Materials	6.7
Consumer Staples	1.9
Telecommunication Services	0.7
Money Market Fund	0.6
Utilities	0.4
Other	0.1

Style Allocation (%)

as of 31 October 2007

Small-Cap Value	67.5
Small-Cap Growth	32.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Massey Energy Co.	1.7
Greenhill & Co., Inc.	1.5
optionsXpress Holdings, Inc.	1.5
W&T Offshore, Inc.	1.4
Tupperware Brands Corp.	1.3
Ansys, Inc.	1.3
Warnaco Group (The), Inc.	1.3
Bio-Rad Laboratories, Inc., Class A	1.3
Commerce (The) Group, Inc.	1.3
Rollins, Inc.	1.3
Total	13.9

20

Manager's Analysis (Continued)

PowerShares Dynamic Small Cap Portfolio (ticker: PJM)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Dynamic Small Cap IntellidexSM Index		-1.56		4.47
S&P Small Cap 600® Index		2.89		9.03
Russell 2000® Index		2.25		7.14

Fund

NAV Return	-1.55	4.36
Share Price Return	-1.66	4.27

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 2.09%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.94% while the Fund's gross annualized total operating expense ratio was 2.61%. 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, 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 S&P Small Cap 600^® Index and the Russell 2000^® Index are unmanaged indexes used as a measurement 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 which 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 solid 13.88% return over the last six months through October 31, 2007. Growth stocks have outperformed value during this period. The fund had outstanding performance relative to the S&P 500^® Pure Growth Index which was up 4.39% and the Russell 3000^® Growth Index which was up 9.85%. Industrials, consumer discretionary and information technology all made significant contributions to the Fund's performance. There were no sectors which contributed negatively to the Funds performance for the reporting period.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Information Technology	23.7
Industrials	23.0
Consumer Discretionary	17.0
Health Care	16.4
Energy	8.8
Financials	5.6
Telecommunications	1.8
Consumer Staples	1.4
Materials	1.3
Utilities	1.1
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

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) as of 31 October 2007

Security
DeVry, Inc.	1.5
Hansen Natural Corp.	1.4
Nasdaq Stock Market (The), Inc.	1.3
FLIR Systems, Inc.	1.3
Monsanto Co.	1.3
Mastercard, Inc., Class A	1.3
Apple, Inc.	1.3
Jacobs Engineering Group, Inc.	1.2
Eaton Vance Corp.	1.2
Meridian Bioscience, Inc.	1.2
Total	13.0

22

Manager's Analysis (Continued)

PowerShares Dynamic Aggressive Growth Portfolio (ticker: PGZ)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Dynamic Aggressive Growth IntellidexSM Index		14.48		21.79
Russell 3000® Growth Index		9.85		15.69
S&P 500® Pure Growth Index		4.39		10.35

Fund

NAV Return	13.88	20.84
Share Price Return	13.70	20.65

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 2.37%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 1.03% while the Fund's gross annualized total operating expense ratio was 2.66%. 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, 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 Russell 3000^® Growth Index and the S&P 500^® Pure Growth Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 1,936 and 154, 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 which 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 -0.85% return over the last six months through October 31, 2007. The Fund outperformed the S&P 500^® Pure Value Index which was down -3.48%. Energy and industrials were the leading contributors to performance during the period. Within energy, Apache and Occidential Petroleum along with Deere & Co. and Applied Industrial Technologies in industrials contributed positively to performance. Consumer discretionary and financials were the laggards. PMI Group and Ambac Financial were the largest laggards in financials.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	44.1
Energy	11.8
Industrials	10.7
Materials	9.3
Consumer Discretionary	6.8
Telecommunication Services	4.9
Consumer Staples	4.8
Information Technology	3.2
Utilities	2.2
Health Care	1.8
Money Market Fund	0.3
Other	0.1

Style Allocation (%)

as of 31 October 2007

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) as of 31 October 2007

Security
CF Industries Holdings, Inc.	1.4
Apache Corp.	1.2
Premiere Global Services, Inc.	1.2
Tesoro Corp.	1.2
United Online, Inc.	1.2
Occidental Petroleum Corp.	1.2
Devon Energy Corp.	1.1
Principal Financial Group, Inc.	1.1
Energen Corp.	1.1
StanCorp Financial Group, Inc.	1.1
Total	11.8

24

Manager's Analysis (Continued)

PowerShares Dynamic Deep Value Portfolio (ticker: PVM)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Dynamic Deep Value IntellidexSM Index		-0.34		5.46
Russell 3000® Value Index		0.53		5.36
S&P 500® Pure Value Index		-3.48		3.93

Fund

NAV Return	-0.85	4.69
Share Price Return	-1.02	4.53

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 2.03%. In the Financial Highlights section of this Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.86% while the Fund's gross annualized total operating expense ratio was 1.67%. 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, 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 Russell 3000^® Value Index and the S&P 500^® Pure Value Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 1,896 and 138, 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, which 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 -5.57% over the past six months underperforming the Russell Micro Cap Index which returned -1.39% over the same period.

The industrial and health care sectors provided significant contributions to the Fund's performance with consumer discretionary and financials being the laggards. Overweight and stock selections within consumer discretionary and financials led to the Fund's underperformance.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Information Technology	22.3
Financials	21.0
Consumer Discretionary	17.7
Industrials	13.6
Health Care	10.1
Materials	5.8
Energy	4.8
Consumer Staples	2.5
Telecommunication Services	1.0
Utilities	0.7
Other	0.4
Money Market Fund	0.1

Style Allocation (%)

as of 31 October 2007

Small-Cap Value	58.3
Small-Cap Growth	41.7

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
SIFCO Industires, Inc.	0.4
NetScout Systems, Inc.	0.4
China Yuchai International Ltd. (Bermuda)	0.4
Amtech Systems, Inc.	0.3
AsiaInfo Holdings, Inc.	0.3
Columbus McKinnon Corp.	0.3
Authorize.Net Holdings, Inc.	0.3
Exide Technologies	0.3
Bottomline Technologies, Inc.	0.3
Triquint Semiconductor, Inc.	0.3
Total	3.3

26

Manager's Analysis (Continued)

PowerShares Zacks Micro Cap Portfolio (ticker: PZI)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.		Fund Inception
	6 Month		1 Year		Avg Ann		Cumulative
Zacks Micro Cap Index		-5.98		1.03		7.23		16.65
Russell Micro Cap Index		-1.39		5.05		9.70		22.66
S&P 500® Index		5.49		14.56		13.54		32.36

Fund

NAV Return	-5.57	1.17	7.47	17.19
Share Price Return	-5.51	0.70	7.26	16.69

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 0.76%. 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, 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 Russell Micro Cap Index and the S&P 500^® Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 2,000 and 500 common stocks, respectively.

^† Average annualized.

27

Manager's Analysis

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.

The PowerShares Zacks Small Cap Portfolio returned 4.25%, outpacing the S&P Small Cap 600 Index which was up 2.89% and the Russell 2000^® Index which was up 2.25%. The Fund outperformed due to positive stock selection within the health care, industrials and information technology sectors. Being overweight in the consumer discretionary sector caused a drag on performance for the past six months. Financials were a drag on the Fund's performance due to the credit market situation during the middle and late part of the year.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Information Technology	17.6
Consumer Discretionary	16.4
Industrials	15.7
Health Care	15.4
Financials	14.7
Energy	7.8
Materials	4.8
Consumer Staples	3.4
Utilities	2.4
Telecommunication Services	1.3
Money Market Fund	0.6
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	50.6
Small-Cap Value	49.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Overstock.com, Inc.	0.8
Pharmion Corp.	0.7
Aegean Marine Petroleum Network, Inc. (Marshall Islands)	0.7
Isis Pharmaceuticals, Inc.	0.6
Blue Coat Systems, Inc.	0.6
TBS International Ltd. , Class A (Bermuda)	0.6
ExlService Holdings, Inc.	0.6
Double-Take Software, Inc.	0.6
BioMarin Pharmaceuticals, Inc	0.6
Koppers Holdings, Inc.	0.5
Total	6.3

28

Manager's Analysis (Continued)

PowerShares Zacks Small Cap Portfolio (ticker: PZJ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.		Fund Inception
	6 Month		1 Year		Avg Ann		Cumulative
Zacks Small Cap Index		4.26		10.72		7.34		12.85
S&P Small Cap600® Index		2.89		11.55		9.15		16.13
Russell 2000® Index		2.25		9.27		8.76		15.41

Fund

NAV Return	4.25	10.75	7.50	13.12
Share Price Return	4.22	10.76	7.37	12.89

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 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 0.70% 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, 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 S&P Small Cap 600^® Index and the Russell 2000^® Index are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 600 and 2,000 common stocks, respectively.

^† Average annualized.

29

Funds' Distribution History (Unaudited)

	Ex-Dividend	10/15/07		9/21/07		9/14/07		8/15/07		7/13/07		6/15/07		5/15/07
	Record	10/17/07		9/25/07		9/18/07		8/17/07		7/17/07		6/19/07		5/17/07
	Payable	10/31/07		9/28/07		9/28/07		8/31/07		7/31/07		6/29/07		5/31/07
Fund	Ticker
PowerShares Dynamic Large Cap Growth Portfolio	PWB		—		—		—		—		—		—		—
PowerShares Dynamic Large Cap Value Portfolio	PWV		—		0.12283		—		—		—		0.15210		—
PowerShares Dynamic Mid Cap Growth Portfolio	PWJ		—		—		—		—		—		—		—
PowerShares Dynamic Mid Cap Value Portfolio	PWP		—		0.05149		—		—		—		0.09609		—
PowerShares Dynamic Small Cap Growth Portfolio	PWT		—		—		—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio	PWY		—		0.03122		—		—		—		0.04787		—
PowerShares Dynamic Large Cap Portfolio	PJF		—		0.06897		—		—		—		0.08510		—
PowerShares Dynamic Mid Cap Portfolio	PJG		—		0.02150		—		—		—		0.05902		—
PowerShares Dynamic Small Cap Portfolio	PJM		—		—		—		—		—		0.14483		—
PowerShares Dynamic Aggressive Growth Portfolio	PGZ		—		—		—		—		—		—		—
PowerShares Dynamic Deep Value Portfolio	PVM		—		0.09118		—		—		—		0.20027		—
PowerShares Zacks Micro Cap Portfolio	PZI		—		0.02290		—		—		—		0.03004		—
PowerShares Zacks Small Cap Portfolio	PZJ		—		—		—		—		—		—		—
	Ex-Dividend					9/15/06		8/15/06		7/14/06		6/16/06		6/15/06
	Record					9/16/06		8/17/06		7/18/06		6/20/06		6/19/06
	Payable					9/29/06		8/31/06		7/31/06		6/30/06		6/30/06
Fund	Ticker
PowerShares Dynamic Large Cap Growth Portfolio	PWB					—		—		—		0.00120		—
PowerShares Dynamic Large Cap Value Portfolio	PWV					0.05101		—		—		0.05675		—
PowerShares Dynamic Mid Cap Growth Portfolio	PWJ					—		—		—		0.01708		—
PowerShares Dynamic Mid Cap Value Portfolio	PWP					0.03813		—		—		0.05155		—
PowerShares Dynamic Small Cap Growth Portfolio	PWT					—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio	PWY					0.02539		—		—		0.02139		—
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					—		—		—		—		—
PowerShares Zacks Small Cap Portfolio	PZJ					—		—		—		—		—

30

	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06		10/13/06
	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06		10/17/06
	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06		10/31/06
Fund
PowerShares Dynamic Large Cap Growth Portfolio		—		—		—		—		—		0.01906		—		—
PowerShares Dynamic Large Cap Value Portfolio		—		0.06823		—		—		—		0.11068		—		—
PowerShares Dynamic Mid Cap Growth Portfolio		—		—		—		—		—		0.09682		—		—
PowerShares Dynamic Mid Cap Value Portfolio		—		0.03230		—		—		—		0.11224		—		—
PowerShares Dynamic Small Cap Growth Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio		—		0.03120		—		—		—		0.05147		—		—
PowerShares Dynamic Large Cap Portfolio		—		0.05700		—		—		—		0.01958		—		—
PowerShares Dynamic Mid Cap Portfolio		—		0.02010		—		—		—		0.04345		—		—
PowerShares Dynamic Small Cap Portfolio		—		—		—		—		—		0.00194		—		—
PowerShares Dynamic Aggressive Growth Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Deep Value Portfolio		—		0.07260		—		—		—		—		—		—
PowerShares Zacks Micro Cap Portfolio		—		—		—		—		—		0.02151		—		—
PowerShares Zacks Small Cap Portfolio		—		0.01358		—		—		—		0.01065		—		—
	5/15/06		3/17/06		12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05
	5/17/06		3/21/06		1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05
	5/31/06		3/30/06		1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05
Fund
PowerShares Dynamic Large Cap Growth Portfolio	—		—		—		0.00241		—		—		—		—
PowerShares Dynamic Large Cap Value Portfolio	—		0.04783		—		0.07647		0.05490		0.06233		—		0.01222
PowerShares Dynamic Mid Cap Growth Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Mid Cap Value Portfolio	—		0.03356		—		0.12251		0.04806		0.04852		—		0.02010
PowerShares Dynamic Small Cap Growth Portfolio	—		—		—		—		—		—		—		—
PowerShares Dynamic Small Cap Value Portfolio	—		0.01644		—		0.02879		0.02835		0.03471		—		—
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	—		—		—		0.01012		—		—		—		—
PowerShares Zacks Small Cap Portfolio	—		—		—		—		—		—		—		—

31

Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 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		672		399		28		1		—		—		—
PWV	PowerShares Dynamic Large Cap Value Portfolio	3/3/05		672		435		22		7		—		—		—
PWJ	PowerShares Dynamic Mid Cap Growth Portfolio	3/3/05		672		351		14		4		—		—		—
PWP	PowerShares Dynamic Mid Cap Value Portfolio	3/3/05		672		352		10		2		—		—		—
PWT	PowerShares Dynamic Small Cap Growth Portfolio	3/3/05		672		339		30		4		—		—		—
PWY	PowerShares Dynamic Small Cap Value Portfolio	3/3/05		672		348		24		5		—		—		—
PJF	PowerShares Dynamic Large Cap Portfolio	12/1/06		230		90		3		1		—		—		—
PJG	PowerShares Dynamic Mid Cap Portfolio	12/1/06		230		101		13		—		—		—		—
PJM	PowerShares Dynamic Small Cap Portfolio	12/1/06		230		71		3		—		—		—		—
PGZ	PowerShares Dynamic Aggressive Growth Portfolio	12/20/06		217		55		9		2		—		—		—
PVM	PowerShares Dynamic Deep Value Portfolio	12/20/06		217		93		2		—		—		—		—
PZI	PowerShares Zacks Micro Cap Portfolio	8/18/05		555		216		18		7		—		—		—
PZJ	PowerShares Zacks Small Cap Portfolio	2/16/06		429		206		7		1		—		—		—

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		235		8		1		—		—		—
PWV		197		7		4		—		—		—
PWJ		296		6		1		—		—		—
PWP		305		3		—		—		—		—
PWT		280		16		3		—		—		—
PWY		280		11		4		—		—		—
PJF		136		—		—		—		—		—
PJG		115		1		—		—		—		—
PJM		152		4		—		—		—		—
PGZ		139		12		—		—		—		—
PVM		122		—		—		—		—		—
PZI		301		12		1		—		—		—
PZJ		212		3		—		—		—		—

33

Fees and Expenses (Unaudited)

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust, you incur advisory fees and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month period ended October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	1,097.94		0.63	%	$	3.32
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Large Cap Value Portfolio Actual	$	1,000.00	$	1,038.53		0.63	%	$	3.23
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Mid Cap Growth Portfolio Actual	$	1,000.00	$	1,175.44		0.63	%	$	3.45
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Mid Cap Value Portfolio Actual	$	1,000.00	$	984.30		0.63	%	$	3.14
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20

34

Fees and Expenses (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 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	$	1,015.06		0.63	%	$	3.19
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Small Cap Value Portfolio Actual	$	1,000.00	$	978.90		0.63	%	$	3.13
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Large Cap Portfolio Actual	$	1,000.00	$	1,062.17		0.84	%	$	4.35
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.91		0.84	%	$	4.27
PowerShares Mid Cap Portfolio Actual	$	1,000.00	$	1,018.57		0.82	%	$	4.16
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.01		0.82	%	$	4.17
PowerShares Small Cap Portfolio Actual	$	1,000.00	$	984.50		0.94	%	$	4.69
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.41		0.94	%	$	4.77
PowerShares Dynamic Aggressive Growth Portfolio Actual	$	1,000.00	$	1,138.76		1.03	%	$	5.54
Hypothetical (5% return before expenses)	$	1,000.00	$	1,019.96		1.03	%	$	5.23
PowerShares Dynamic Deep Value Portfolio Actual	$	1,000.00	$	991.49		0.86	%	$	4.31
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.81		0.86	%	$	4.37
PowerShares Zacks Micro Cap Portfolio Actual	$	1,000.00	$	944.32		0.70	%	$	3.42
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56
PowerShares Zacks Small Cap Portfolio Actual	$	1,000.00	$	1,042.52		0.70	%	$	3.59
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended October 31, 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 184 and then dividing the result by 366.

35

Schedule of Investments

PowerShares Dynamic Large Cap Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—8.7%
	186,759	Coach, Inc.*	$	6,827,909
	356,412	DIRECTV Group (The), Inc.*		9,437,790
	220,564	Johnson Controls, Inc.		9,643,058
	164,813	McGraw-Hill (The) Companies, Inc.		8,247,243
	959,127	News Corp., Class A		20,784,282
				54,940,282
		Consumer Staples—5.6%
	125,364	Colgate-Palmolive Co.		9,561,512
	430,487	Walgreen Co.		17,068,810
	142,736	WM Wrigley Jr. Co.		8,802,529
				35,432,851
		Energy—6.0%
	79,060	Diamond Offshore Drilling, Inc.		8,951,964
	129,906	National Oilwell Varco, Inc.*		9,514,315
	201,046	Schlumberger Ltd. (Netherlands)		19,415,012
				37,881,291
		Financials—2.9%
	418,684	Charles Schwab (The) Corp.		9,730,216
	63,118	Franklin Resources, Inc.		8,185,142
				17,915,358
		Health Care—17.4%
	151,840	Baxter International, Inc.		9,111,918
	108,096	Becton, Dickinson & Co.		9,021,692
	665,628	Bristol-Myers Squibb Co.		19,962,184
	259,351	Genentech, Inc.*		19,225,690
	145,328	McKesson Corp.		9,606,181
	97,321	Medco Health Solutions, Inc.*		9,185,156
	367,190	Medtronic, Inc.		17,419,494
	276,999	Schering-Plough Corp.		8,454,009
	106,171	Zimmer Holdings, Inc.*		7,377,823
				109,364,147
		Industrials—10.5%
	200,645	Boeing Co.		19,781,591
	202,835	CSX Corp.		9,080,923
	107,098	Danaher Corp.		9,175,086
	63,835	Precision Castparts Corp.		9,563,121
	135,593	Raytheon Co.		8,625,071
	74,508	Union Pacific Corp.		9,540,004
				65,765,796
		Information Technology—39.5%
	194,494	Adobe Systems, Inc.*		9,316,263
	228,455	Agilent Technologies, Inc.*		8,418,567
	140,087	Apple, Inc.*		26,609,526
	389,314	Applied Materials, Inc.		7,560,478
	181,823	Automatic Data Processing, Inc.		9,011,148
	607,853	Cisco Systems, Inc.*		20,095,620
	355,804	Corning, Inc.		8,635,363
	569,015	eBay, Inc.*		20,541,441

Number of Shares			Value
		Common Stocks (Continued)
	422,949	EMC Corp.*	$	10,738,675
	37,666	Google, Inc., Class A*		26,629,861
	393,157	Hewlett-Packard Co.		20,318,354
	60,690	Mastercard, Inc., Class A		11,503,790
	243,826	NVIDIA Corp.*		8,626,564
	956,757	Oracle Corp.*		21,211,303
	486,422	QUALCOMM, Inc.		20,784,812
	566,694	Texas Instruments, Inc.		18,474,224
				248,475,989
		Materials—4.8%
	92,397	Air Products & Chemicals, Inc.		9,041,046
	119,252	Monsanto Co.		11,642,573
	109,888	Praxair, Inc.		9,393,226
				30,076,845
		Utilities—4.4%
	100,269	Constellation Energy Group, Inc.		9,495,474
	172,328	PPL Corp.		8,909,358
	97,824	Public Service Enterprise Group, Inc.		9,351,974
				27,756,806
		Total Common Stocks (Cost $576,623,680)		627,609,365
		Money Market Fund—0.1%
	497,740	Liquid Assets Portfolio Private Class** (Cost $497,740)		497,740
		Total Investments (Cost $577,121,420)—99.9%		628,107,105
		Other assets less liabilities—0.1%		745,452
		Net Assets—100.0%	$	628,852,557

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	608,692,093		96.8	%
Netherlands		19,415,012		3.1
Total investments		628,107,105		99.9
Other assets less liabilities		745,452		0.1
Net Assets	$	628,852,557		100.0	%

See Notes to Financial Statements.

36

Schedule of Investments

PowerShares Dynamic Large Cap Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Staples—7.4%
	120,778	Altria Group, Inc.	$	8,808,339
	64,296	General Mills, Inc.		3,711,808
	52,304	Kimberly-Clark Corp.		3,707,831
	54,339	Reynolds American, Inc.		3,501,062
				19,729,040
		Energy—16.1%
	46,430	Apache Corp.		4,819,898
	95,525	Chevron Corp.		8,741,493
	47,706	Devon Energy Corp.		4,455,740
	97,787	Exxon Mobil Corp.		8,995,427
	58,543	Hess Corp.		4,192,264
	66,669	Marathon Oil Corp.		3,942,138
	63,376	Occidental Petroleum Corp.		4,376,113
	52,443	Valero Energy Corp.		3,693,560
				43,216,633
		Financials—40.0%
	62,202	ACE Ltd. (Cayman Islands)		3,770,063
	67,394	AFLAC, Inc.		4,230,995
	65,621	Allstate (The) Corp.		3,438,540
	127,019	American International Group, Inc.		8,017,439
	58,890	Ameriprise Financial, Inc.		3,708,892
	165,416	Bank of America Corp.		7,986,285
	70,267	Chubb (The) Corp.		3,748,744
	178,824	Citigroup, Inc.		7,492,726
	47,630	Goldman Sachs Group (The), Inc.		11,808,430
	40,410	Hartford Financial Services Group (The), Inc.		3,920,982
	188,305	JPMorgan Chase & Co.		8,850,335
	59,015	Lincoln National Corp.		3,680,766
	76,426	Loews Corp.		3,751,752
	56,095	MetLife, Inc.		3,862,141
	134,411	Morgan Stanley		9,040,484
	64,747	Principal Financial Group, Inc.		4,381,430
	40,018	Prudential Financial, Inc.		3,870,541
	71,089	Travelers (The) Cos., Inc.		3,711,557
	229,426	Wells Fargo & Co.		7,802,778
				107,074,880
		Health Care—9.2%
	69,520	CIGNA Corp.		3,649,105
	135,673	Johnson & Johnson		8,841,810
	337,492	Pfizer, Inc.		8,305,678
	77,599	Wyeth		3,773,639
				24,570,232

Number of Shares			Value
		Common Stocks (Continued)
		Industrials—5.5%
	26,406	Deere & Co.	$	4,090,289
	45,570	Northrop Grumman Corp.		3,810,563
	62,994	Paccar, Inc.		3,499,947
	95,376	Waste Management, Inc.		3,470,733
				14,871,532
		Information Technology—3.1%
	71,843	International Business Machines Corp.		8,342,409
		Materials—5.8%
	84,279	Dow Chemical (The) Co.		3,795,926
	73,699	E.I. du Pont de Nemours & Co.		3,648,837
	102,332	International Paper Co.		3,782,191
	67,917	Nucor Corp.		4,212,213
				15,439,167
		Telecommunication Services—6.7%
	210,264	AT&T, Inc.		8,786,932
	200,172	Verizon Communications, Inc.		9,221,924
				18,008,856
		Utilities—6.0%
	195,901	Duke Energy Corp.		3,755,422
	68,162	Edison International		3,963,620
	34,674	Entergy Corp.		4,156,373
	58,477	FirstEnergy Corp.		4,075,847
				15,951,262
		Total Investments (Cost $248,326,618)—99.8%		267,204,011
		Other assets less liabilities—0.2%		419,590
		Net Assets—100.0%	$	267,623,601

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	263,433,948		98.4	%
Cayman Islands		3,770,063		1.4
Total investments		267,204,011		99.8
Other assets less liabilities		419,590		0.2
Net Assets	$	267,623,601		100.0	%

See Notes to Financial Statements.

37

Schedule of Investments

PowerShares Dynamic Mid Cap Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—15.5%
	175,734	Apollo Group, Inc., Class A*	$	13,928,677
	44,901	Boyd Gaming Corp.		1,877,760
	77,371	Burger King Holdings, Inc.		2,045,689
	53,128	DeVry, Inc.		2,905,570
	300,685	Gemstar-TV Guide International, Inc.*		2,071,720
	91,542	Gentex Corp.		1,902,243
	270,114	International Game Technology		11,779,672
	16,711	ITT Educational Services, Inc.*		2,125,472
	36,189	Men's Wearhouse (The), Inc.		1,529,347
	52,865	PetSmart, Inc.		1,583,307
	31,499	Phillips-Van Heusen Corp.		1,505,652
	136,513	Polo Ralph Lauren Corp.		9,392,094
	63,483	Tempur-Pedic International, Inc.		2,285,388
				54,932,591
		Consumer Staples—0.5%
	49,990	NBTY, Inc.*		1,779,644
		Energy—8.9%
	126,097	Cameron International Corp.*		12,276,804
	49,748	Dresser-Rand Group, Inc.*		1,925,248
	38,745	FMC Technologies, Inc.*		2,349,109
	75,870	Global Industries Ltd.*		1,867,920
	210,160	Noble Corp. (Cayman Islands)		11,127,972
	52,158	Pride International, Inc.*		1,924,630
				31,471,683
		Financials—6.2%
	68,148	Brown & Brown, Inc.		1,716,648
	47,776	Eaton Vance Corp.		2,390,233
	56,164	Nasdaq Stock Market (The), Inc.*		2,622,859
	72,312	SEI Investments Co.		2,286,505
	200,936	T. Rowe Price Group, Inc.		12,908,129
				21,924,374
		Health Care—11.1%
	34,942	Charles River Laboratories International, Inc.*		2,026,636
	25,017	Covance, Inc.*		2,063,903
	31,887	DaVita, Inc.*		2,078,714
	46,587	DENTSPLY International, Inc.		1,932,429
	37,984	Edwards Lifesciences Corp.*		1,907,556
	188,351	Express Scripts, Inc.*		11,884,947
	30,505	Kinetic Concepts, Inc.*		1,833,351
	132,765	Laboratory Corp. of America Holdings*		9,127,593
	28,713	Manor Care, Inc.		1,911,712
	29,122	Techne Corp.*		1,899,919
	29,788	Waters Corp.*		2,293,080
	18,587	WellCare Health Plans, Inc.*		449,620
				39,409,460

Number of Shares			Value
		Common Stocks (Continued)
		Industrials—21.1%
	42,460	AGCO Corp.*	$	2,534,013
	45,879	AMETEK, Inc.		2,156,313
	210,237	C.H. Robinson Worldwide, Inc.		10,495,031
	62,511	Copart, Inc.*		2,399,172
	18,805	Dun & Bradstreet (The) Corp.		1,821,264
	81,102	Fluor Corp.		12,814,116
	36,339	IHS, Inc., Class A*		2,291,174
	27,756	Jacobs Engineering Group, Inc.*		2,418,935
	46,161	Manitowoc (The) Co., Inc.		2,273,891
	26,117	Manpower, Inc.		1,951,985
	214,825	McDermott International, Inc. (Panama)*		13,117,215
	35,416	MSC Industrial Direct Co., Class A		1,725,113
	48,101	Pall Corp.		1,927,407
	57,442	Robert Half International, Inc.		1,728,430
	149,731	Rockwell Collins, Inc.		11,201,376
	33,122	Thomas & Betts Corp.*		1,855,163
	60,302	Waste Connections, Inc.*		2,038,811
				74,749,409
		Information Technology—23.0%
	50,789	Amphenol Corp., Class A		2,248,429
	279,609	Analog Devices, Inc.		9,355,717
	222,630	Autodesk, Inc.*		10,886,607
	150,367	BEA Systems, Inc.*		2,541,202
	409,305	CA, Inc.		10,826,118
	32,413	CommScope, Inc.*		1,528,921
	50,355	Dolby Laboratories, Inc., Class A*		2,087,718
	450,425	Electronic Data Systems Corp.		9,724,676
	30,610	Factset Research Systems, Inc.		2,158,617
	217,512	Fidelity National Information Services, Inc.		10,031,653
	54,531	Hewitt Associates, Inc., Class A*		1,923,854
	167,896	MEMC Electronic Materials, Inc.*		12,293,346
	19,452	Mettler Toledo International, Inc.*		2,068,720
	58,092	National Instruments, Corp.		1,884,504
	66,122	Total System Services, Inc.		1,981,015
				81,541,097
		Materials—4.4%
	247,488	Ecolab, Inc.		11,674,009
	73,378	Nalco Holding Co.		1,824,177
	45,605	Owens-Illinois, Inc.*		2,025,774
				15,523,960
		Telecommunication Services—5.9%
	159,243	Telephone & Data Systems, Inc.		11,115,161
	106,017	United States Cellular Corp.*		9,981,501
				21,096,662

See Notes to Financial Statements.

38

Schedule of Investments (Continued)

PowerShares Dynamic Mid Cap Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Utilities—3.4%
	199,805	Allegheny Energy, Inc.*	$	12,120,171
		Total Investments (Cost $321,594,812)—100.0%		354,549,051
		Liabilities in excess of other assets—(0.0%)		(113,883	)
		Net Assets—100.0%	$	354,435,168

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	330,303,864			93.2	%
Panama		13,117,215			3.7
Cayman Islands		11,127,972			3.1
Total investments		354,549,051			100.0
Liabilities in excess of other assets		(113,883	)		(0.0	)
Net Assets	$	354,435,168			100.0	%

See Notes to Financial Statements.

39

Schedule of Investments

PowerShares Dynamic Mid Cap Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Consumer Discretionary—17.2%
	27,449	AutoZone, Inc.*	$	3,414,931
	6,828	Black & Decker (The) Corp.		613,905
	7,009	BorgWarner, Inc.		740,921
	20,538	Brinker International, Inc.		521,460
	14,238	Darden Restaurants, Inc.		612,234
	67,015	Genuine Parts Co.		3,288,427
	10,596	Meredith Corp.		659,601
	6,783	Mohawk Industries, Inc.*		578,861
	22,967	Newell Rubbermaid, Inc.		669,718
	48,244	Sherwin-Williams (The) Co.		3,083,756
	10,439	Stanley Works (The)		600,764
	41,696	VF Corp.		3,632,972
				18,417,550
		Consumer Staples—13.9%
	25,562	Alberto-Culver Co.		664,356
	16,922	BJ's Wholesale Club, Inc.*		607,161
	43,739	Carolina Group		3,751,932
	55,676	Clorox (The) Co.		3,483,647
	129,498	ConAgra Foods, Inc.		3,072,988
	200,324	Sara Lee Corp.		3,313,359
				14,893,443
		Energy—6.2%
	55,425	Noble Energy, Inc.		4,242,229
	6,746	SEACOR Holdings, Inc.*		618,271
	8,098	Sunoco, Inc.		596,013
	12,007	Tesoro Corp.		726,784
	9,048	Tidewater, Inc.		494,654
				6,677,951
		Financials—28.0%
	21,003	American Financial Group, Inc.		627,990
	4,699	American National Insurance		607,581
	76,855	AON Corp.		3,483,068
	8,245	Arch Capital Group Ltd. (Bermuda)*		616,479
	11,492	Assurant, Inc.		671,592
	11,522	Bank of Hawaii Corp.		612,510
	14,056	Cincinnati Financial Corp.		559,148
	79,347	CNA Financial Corp.		3,144,522
	10,598	Erie Indemnity Co., Class A		603,026
	5,813	Everest Re Group Ltd. (Bermuda)		619,317
	13,846	Hanover Insurance Group (The), Inc.		637,885
	21,453	HCC Insurance Holdings, Inc.		641,230
	1,246	Markel Corp.*		676,852
	11,244	Mercury General Corp.		576,930
	62,209	Nationwide Financial Services, Inc., Class A		3,337,513
	16,352	Odyssey Re Holdings Corp.		607,967
	32,562	Old Republic International Corp.		499,175
	8,146	PartnerRe Ltd. (Bermuda)		678,155
	14,169	Protective Life Corp.		607,425

Number of Shares			Value
		Common Stocks (Continued)
	10,906	Reinsurance Group of America, Inc.	$	623,060
	10,208	Safeco Corp.		591,043
	12,575	StanCorp Financial Group, Inc.		693,260
	9,622	Torchmark Corp.		626,970
	8,362	Transatlantic Holdings, Inc.		623,220
	136,059	Unum Group		3,175,617
	19,816	W.R. Berkley Corp.		596,263
	43,693	XL Capital Ltd., Class A (Cayman Islands)		3,143,711
				29,881,509
		Health Care—3.8%
	58,034	Coventry Health Care, Inc.*		3,500,030
	10,811	Health Net, Inc.*		579,578
				4,079,608
		Industrials—16.0%
	46,382	Allied Waste Industries, Inc.*		586,269
	12,218	Con-Way, Inc.		520,609
	13,224	Crane Co.		627,347
	35,335	Eaton Corp.		3,271,314
	14,841	Gardner Denver, Inc.*		536,205
	46,468	Parker Hannifin Corp.		3,734,633
	74,532	Pitney Bowes, Inc.		2,984,261
	19,050	Republic Services, Inc.		651,320
	7,616	Teleflex, Inc.		557,567
	41,680	Terex Corp.*		3,093,490
	10,012	Toro Co.		557,268
				17,120,283
		Information Technology—3.8%
	51,413	Amkor Technology, Inc.*		582,509
	59,507	Computer Sciences Corp.*		3,474,614
				4,057,123
		Materials—6.5%
	9,906	Ashland, Inc.		581,680
	11,309	Ball Corp.		560,700
	9,353	CF Industries Holdings, Inc.		822,129
	8,873	Eastman Chemical Co.		590,853
	9,315	Lubrizol (The) Corp.		632,302
	35,239	United States Steel Corp.		3,802,289
				6,989,953
		Telecommunication Services—3.2%
	12,344	CenturyTel, Inc.		543,753
	53,338	Embarq Corp.		2,822,647
				3,366,400

See Notes to Financial Statements.

40

Schedule of Investments (Continued)

PowerShares Dynamic Mid Cap Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Utilities—1.3%
	11,030	Energen Corp.	$	705,920
	12,643	ONEOK, Inc.		631,391
				1,337,311
		Total Investments (Cost $104,376,666)—99.9%		106,821,131
		Other assets less liabilities—0.1%		67,380
		Net Assets—100.0%	$	106,888,511

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	101,763,469		95.2	%
Cayman Islands		3,143,711		2.9
Bermuda		1,913,951		1.8
Total investments		106,821,131		99.9
Other assets less liabilities		67,380		0.1
Net Assets	$	106,888,511		100.0	%

See Notes to Financial Statements.

41

Schedule of Investments

PowerShares Dynamic Small Cap Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Consumer Discretionary—16.3%
	26,358	1-800-FLOWERS.COM, Inc., Class A*	$	316,032
	73,693	Aeropostale, Inc.*		1,687,570
	7,227	Ambassadors Group, Inc.		131,315
	30,612	Arbitron, Inc.		1,549,579
	3,319	Blue Nile, Inc.*		262,334
	7,063	Bright Horizons Family Solutions, Inc.*		274,044
	548,718	Charter Communications, Inc., Class A*		1,135,846
	41,632	Crown Media Holdings, Inc., Class A*		328,060
	9,202	DSW, Inc., Class A*		207,045
	31,097	Entravision Communications Corp., Class A*		282,983
	67,497	Marvel Entertainment, Inc.*		1,669,876
	28,128	NutriSystem, Inc.*		846,653
	15,548	Universal Technical Institute, Inc.*		292,769
	43,709	Warnaco Group (The), Inc.*		1,778,519
	9,517	WMS Industries, Inc.*		329,954
				11,092,579
		Energy—6.6%
	60,533	Alliance Holdings GP LP		1,576,279
	15,600	Bois d'Arc Energy, Inc.*		342,264
	32,415	Dril-Quip, Inc.*		1,728,693
	5,611	NATCO Group, Inc., Class A*		299,122
	8,569	NuStar GP Holdings LLC		276,950
	8,918	Penn Virginia GP Holdings LP		294,294
				4,517,602
		Financials—6.5%
	26,346	Greenhill & Co., Inc.		1,949,076
	16,074	MarketAxess Holdings, Inc.*		251,880
	64,856	optionsXpress Holdings, Inc.		1,930,115
	8,107	Signature Bank*		276,854
				4,407,925
		Health Care—20.3%
	67,111	Align Technology, Inc.*		1,389,198
	7,416	Amedisys, Inc.*		314,809
	15,713	AMN Healthcare Services, Inc.*		298,704
	4,057	Analogic Corp.		231,858
	5,002	Arthrocare Corp.*		324,330
	3,868	Dionex Corp.*		340,384
	54,364	Emergency Medical Services Corp., Class A*		1,651,035
	10,252	KV Pharmaceutical Co., Class A*		321,298
	9,546	MedCath Corp.*		264,711
	34,210	Mentor Corp.		1,456,320
	10,860	Meridian Bioscience, Inc.		359,357
	64,719	MGI Pharma, Inc.*		2,108,544
	34,701	Myriad Genetics, Inc.*		1,921,047
	11,606	Omnicell, Inc.*		306,398
	44,721	OSI Pharmaceuticals, Inc.*		1,859,052

Number of Shares			Value
		Common Stocks (Continued)
	6,515	Parexel International Corp.*	$	299,690
	5,807	SurModics, Inc.*		329,489
				13,776,224
		Industrials—23.3%
	8,923	AAR Corp.*		285,982
	8,122	Administaff, Inc.		323,905
	4,870	Advisory Board Co. (The)*		312,703
	11,131	Apogee Enterprises, Inc.		261,912
	7,088	Cubic Corp.		318,960
	33,453	Curtiss-Wright Corp.		1,883,069
	13,007	DynCorp International, Inc., Class A*		294,478
	5,980	Heidrick & Struggles International, Inc.		258,456
	8,396	Hub Group, Inc., Class A*		213,007
	4,242	Huron Consulting Group, Inc.*		296,431
	8,980	II-VI, Inc.*		311,965
	15,531	Interface, Inc., Class A		297,108
	82,949	Knight Transportation, Inc.		1,324,696
	5,675	Layne Christensen Co.*		323,135
	3,810	Middleby (The) Corp.*		248,298
	26,952	Perini Corp.*		1,545,697
	14,825	Pike Electric Corp.*		292,053
	6,876	Raven Industries, Inc.		297,112
	7,892	RBC Bearings, Inc.*		317,179
	50,848	Resources Connection, Inc.		1,157,809
	4,053	United Industrial Corp.		327,563
	17,105	Valmont Industries, Inc.		1,637,291
	40,711	Wabtec Corp.		1,527,884
	25,973	Woodward Governor Co.		1,740,191
				15,796,884
		Information Technology—25.7%
	17,263	Advanced Energy Industries, Inc.*		276,208
	46,044	Ansys, Inc.*		1,786,968
	31,839	Ariba, Inc.*		411,997
	51,000	Atheros Communications, Inc.*		1,790,099
	7,161	Bankrate, Inc.*		329,048
	6,707	Blackboard, Inc.*		334,679
	6,719	Blue Coat Systems, Inc.*		272,724
	6,716	Cabot Microelectronics Corp.*		266,491
	19,525	Cogent, Inc.*		288,384
	6,583	Comtech Telecommunications Corp.*		357,128
	57,348	Cree, Inc.*		1,605,744
	7,335	DealerTrack Holdings, Inc.*		360,075
	9,489	Dycom Industries, Inc.*		268,064
	25,241	Global Cash Access Holdings, Inc.*		252,158
	20,070	Informatica Corp.*		342,796
	44,866	j2 Global Communications, Inc.*		1,511,536
	13,503	JDA Software Group, Inc.*		337,035
	20,391	Magma Design Automation, Inc.*		303,622
	6,549	MAXIMUS, Inc.		313,828
	25,588	Micrel, Inc.		231,571
	12,267	Novatel Wireless, Inc.*		318,942

See Notes to Financial Statements.

42

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	86,623	Parametric Technology Corp.*	$	1,654,499
	104,769	Quest Software, Inc.*		1,822,980
	6,876	SPSS, Inc.*		261,288
	16,991	Sykes Enterprises, Inc.*		299,891
	8,105	Syntel, Inc.		345,111
	10,606	Verigy Ltd. (Singapore)*		243,832
	14,361	Vignette Corp.*		247,584
	26,558	Wind River Systems, Inc.*		332,241
	7,595	Wright Express Corp.*		293,927
				17,460,450
		Materials—0.9%
	11,279	Innospec, Inc.		240,130
	12,541	WR Grace & Co.*		371,213
				611,343
		Telecommunication Services—0.5%
	10,463	NTELOS Holdings Corp.		315,878
		Total Investments (Cost $64,147,578)—100.1%		67,978,885
		Liabilities in excess of other assets—(0.1%)		(39,370	)
		Net Assets—100.0%	$	67,939,515

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	67,735,053			99.7	%
Singapore		243,832			0.4
Total investments		67,978,885			100.1
Liabilities in excess of other assets		(39,370	)		(0.1	)
Net Assets	$	67,939,515			100.0	%

See Notes to Financial Statements.

43

Schedule of Investments

PowerShares Dynamic Small Cap Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.2%
		Consumer Discretionary—19.9%
	16,213	Aftermarket Technology Corp.*	$	559,673
	20,794	American Axle & Manufacturing Holdings, Inc.		571,003
	19,602	American Greetings Corp., Class A		516,317
	84,244	AnnTaylor Stores Corp.*		2,610,722
	21,687	Blyth, Inc.		414,005
	14,532	Bob Evans Farms, Inc.		409,512
	21,973	Cato (The) Corp., Class A		441,218
	111,730	Collective Brands, Inc.*		2,065,888
	22,043	Conn's, Inc.*		563,640
	27,711	Dress Barn (The), Inc.*		454,183
	12,349	Drew Industries, Inc.*		488,773
	21,411	Helen of Troy Ltd. (Bermuda)*		385,398
	7,714	IHOP Corp.		488,528
	84,865	Jack in the Box, Inc.*		2,662,215
	79,982	Regis Corp.		2,687,395
	21,893	Ruby Tuesday, Inc.		349,631
	18,231	Sonic Automotive, Inc., Class A		460,515
	68,594	Speedway Motorsports, Inc.		2,489,962
	67,633	Stewart Enterprises, Inc., Class A		613,431
	85,749	Tupperware Brands Corp.		3,095,538
	18,445	Wolverine World Wide, Inc.		472,930
				22,800,477
		Consumer Staples—3.0%
	127,917	Flowers Foods, Inc.		2,806,499
	18,418	Fresh Del Monte Produce, Inc. (Cayman Islands)		668,205
				3,474,704
		Energy—4.6%
	17,685	Delek US Holdings, Inc.		424,263
	10,576	GulfMark Offshore, Inc.*		492,630
	62,250	Parker Drilling Co.*		525,390
	13,029	Swift Energy Co.*		617,965
	118,447	W&T Offshore, Inc.		3,176,749
				5,236,997
		Financials—27.8%
	18,523	Advanta Corp., Class B		292,663
	29,622	Amtrust Financial Services, Inc.		413,227
	10,756	BancFirst Corp.		488,753
	13,113	City Holding Co.		495,803
	27,001	CNA Surety Corp.*		534,350
	82,817	Commerce (The) Group, Inc.		3,021,992
	65,514	Delphi Financial Group, Inc., Class A		2,538,667
	8,569	Downey Financial Corp.		349,015
	25,890	Employers Holdings, Inc.		496,052
	12,393	FBL Financial Group, Inc., Class A		501,669
	48,252	First BanCorp		424,135
	14,895	First Citizens BancShares, Inc., Class A		2,425,353
	9,651	FirstFed Financial Corp.*		412,870

Number of Shares			Value
		Common Stocks (Continued)
	9,025	GAMCO Investors, Inc., Class A	$	558,738
	15,031	Harleysville Group, Inc.		468,516
	25,075	Horace Mann Educators Corp.		518,802
	11,696	Infinity Property & Casualty Corp.		470,413
	114,693	International Bancshares Corp.		2,507,189
	8,854	Midland (The) Co.		563,291
	8,946	Navigators Group (The), Inc.*		539,444
	51,699	Ocwen Financial Corp.*		385,675
	190,628	Phoenix (The) Cos., Inc.		2,626,854
	58,620	Potlatch Corp.		2,793,829
	50,214	ProAssurance Corp.*		2,768,800
	8,062	RLI Corp.		468,967
	22,982	Selective Insurance Group		558,692
	16,208	State Auto Financial Corp.		446,044
	59,597	UMB Financial Corp.		2,503,074
	22,409	United America Indemnity Ltd., Class A (Cayman Islands)*		494,118
	12,764	United Fire & Casualty Co.		408,959
	11,249	Zenith National Insurance Corp.		451,985
				31,927,939
		Health Care—5.5%
	18,210	Apria Healthcare Group, Inc.*		440,136
	31,311	Bio-Rad Laboratories, Inc., Class A*		3,024,016
	93,956	LifePoint Hospitals, Inc.*		2,867,537
				6,331,689
		Industrials—15.9%
	15,163	Applied Industrial Technologies, Inc.		537,529
	13,508	Arkansas Best Corp.		370,795
	9,557	Atlas Air Worldwide Holdings, Inc.*		559,945
	6,588	Cascade Corp.		414,912
	69,442	Deluxe Corp.		2,801,290
	18,651	Encore Wire Corp.		391,671
	11,604	EnPro Industries, Inc.*		475,880
	11,643	G&K Services, Inc., Class A		472,007
	31,146	Heartland Express, Inc.		434,175
	188,049	IKON Office Solutions, Inc.		2,482,247
	23,224	Labor Ready, Inc.*		408,278
	52,271	Regal-Beloit Corp.		2,563,370
	25,469	Republic Airways Holdings, Inc.*		542,235
	44,733	United Stationers, Inc.*		2,590,488
	55,806	Watson Wyatt Worldwide, Inc., Class A		2,660,272
	26,058	Werner Enterprises, Inc.		495,623
				18,200,717
		Information Technology—9.4%
	98,773	Adtran, Inc.		2,377,466
	20,974	CSG Systems International, Inc.*		430,596
	20,445	Insight Enterprises, Inc.*		565,100
	11,514	MTS Systems Corp.		512,258
	331,404	Palm, Inc.		2,989,265
	17,075	Plantronics, Inc.		467,001

See Notes to Financial Statements.

44

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	144,195	SAIC, Inc.*	$	2,842,083
	33,747	United Online, Inc.		593,947
				10,777,716
		Materials—12.2%
	31,146	Buckeye Technologies, Inc.*		558,136
	98,112	H.B. Fuller Co.		2,887,436
	29,355	Headwaters, Inc.*		421,244
	7,357	Minerals Technologies, Inc.		516,609
	123,144	Olin Corp.		2,805,220
	9,817	OM Group, Inc.*		520,105
	60,960	Quanex Corp.		2,510,942
	16,728	Rock-Tenn Co., Class A		487,788
	45,185	Schnitzer Steel Industries, Inc.		2,985,374
	22,387	Spartech Corp.		344,088
				14,036,942
		Telecommunication Services—1.4%
	37,075	Premiere Global Services, Inc.*		610,996
	34,320	Syniverse Holdings, Inc.*		572,801
	26,284	USA Mobility, Inc.		411,082
				1,594,879
		Utilities—0.5%
	10,437	Northwest Natural Gas Co.		502,750
		Total Investments (Cost $118,480,420)—100.2%		114,884,810
		Liabilities in excess of other assets—(0.2%)		(185,529	)
		Net Assets—100.0%	$	114,699,281

*  Non-income producing security.

COUNTRY BREAKDOWN

October, 2007 (Unaudited)

	Value			Net Assets
United States	$	113,337,089			98.8	%
Cayman Islands		1,162,323			1.0
Bermuda		385,398			0.4
Total invetments		114,884,810			100.2
Liabilities in excess of other assets		(185,529	)		(0.2	)
Net Assets	$	114,699,281			100.0	%

See Notes to Financial Statements.

45

Schedule of Investments

PowerShares Dynamic Large Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.6%
		Consumer Discretionary—5.2%
	2,126	Coach, Inc.*	$	77,727
	2,511	Johnson Controls, Inc.		109,781
	1,681	NIKE, Inc., Class B		111,383
	1,859	Omnicom Group, Inc.		94,772
	6,575	Walt Disney (The) Co.		227,692
	2,894	Yum! Brands, Inc.		116,541
				737,896
		Consumer Staples—6.0%
	3,183	Altria Group, Inc.		232,136
	1,724	Kellogg Co.		91,010
	1,378	Kimberly-Clark Corp.		97,686
	3,562	Kroger (The) Co.		104,687
	3,383	Procter & Gamble (The) Co.		235,187
	1,432	Reynolds American, Inc.		92,264
				852,970
		Energy—12.7%
	1,224	Apache Corp.		127,063
	2,517	Chevron Corp.		230,331
	2,698	ConocoPhillips		229,222
	1,257	Devon Energy Corp.		117,404
	900	Diamond Offshore Drilling, Inc.		101,907
	2,577	Exxon Mobil Corp.		237,058
	1,543	Hess Corp.		110,494
	1,757	Marathon Oil Corp.		103,891
	1,670	Occidental Petroleum Corp.		115,314
	2,289	Schlumberger Ltd. (Netherlands)		221,049
	1,382	Valero Energy Corp.		97,334
	1,742	XTO Energy, Inc.		115,634
				1,806,701
		Financials—20.6%
	1,639	ACE Ltd. (Cayman Islands)		99,340
	1,776	AFLAC, Inc.		111,497
	1,729	Allstate (The) Corp.		90,600
	3,769	American Express Co.		229,721
	3,347	American International Group, Inc.		211,263
	1,552	Ameriprise Financial, Inc.		97,745
	4,359	Bank of America Corp.		210,453
	2,342	Bank of New York Mellon (The) Corp.		114,407
	1,852	Chubb (The) Corp.		98,804
	718	Franklin Resources, Inc.		93,110
	1,255	Goldman Sachs Group (The), Inc.		311,140
	1,065	Hartford Financial Services Group (The), Inc.		103,337
	4,962	JPMorgan Chase & Co.		233,213
	1,555	Lincoln National Corp.		96,985
	2,014	Loews Corp.		98,867
	2,997	Merrill Lynch & Co., Inc.		197,862
	1,478	MetLife, Inc.		101,760
	1,706	Principal Financial Group, Inc.		115,445
	1,055	Prudential Financial, Inc.		102,040

Number of Shares			Value
		Common Stocks (Continued)
	1,543	State Street Corp.	$	123,085
	1,873	Travelers Cos.(The), Inc.		97,789
				2,938,463
		Health Care—15.7%
	4,256	Abbott Laboratories		232,463
	1,860	Aetna, Inc.		104,476
	1,729	Baxter International, Inc.		103,757
	1,231	Becton, Dickinson & Co.		102,739
	3,248	Bristol-Myers Squibb Co.		97,408
	1,832	CIGNA Corp.		96,162
	1,651	Eli Lilly & Co.		89,402
	3,575	Johnson & Johnson		232,983
	1,655	McKesson Corp.		109,396
	1,108	Medco Health Solutions, Inc.*		104,573
	1,792	Medtronic, Inc.		85,012
	4,403	Merck & Co., Inc.		256,518
	4,417	UnitedHealth Group, Inc.		217,096
	1,175	WellPoint, Inc.*		93,095
	4,771	Wyeth		232,014
	1,215	Zimmer Holdings, Inc.*		84,430
				2,241,524
		Industrials—13.9%
	2,428	3M Co.		209,682
	2,285	Boeing Co.		225,278
	1,219	Danaher Corp.		104,432
	696	Deere & Co.		107,810
	1,923	Emerson Electric Co.		100,515
	1,205	General Dynamics Corp.		109,607
	1,686	Honeywell International, Inc.		101,851
	1,628	Illinois Tool Works, Inc.		93,219
	955	Lockheed Martin Corp.		105,088
	1,201	Northrop Grumman Corp.		100,428
	1,660	PACCAR, Inc.		92,230
	727	Precision Castparts Corp.		108,912
	1,543	Raytheon Co.		98,150
	849	Union Pacific Corp.		108,706
	2,960	United Technologies Corp.		226,707
	2,513	Waste Management, Inc.		91,448
				1,984,063
		Information Technology—15.1%
	2,601	Agilent Technologies, Inc.*		95,847
	6,921	Cisco Systems, Inc.*		228,808
	4,051	Corning, Inc.		98,318
	7,820	Dell, Inc.*		239,292
	2,777	eBay, Inc.*		100,250
	4,477	Hewlett-Packard Co.		231,371
	8,579	Intel Corp.		230,775
	1,893	International Business Machines Corp.		219,815
	7,689	Microsoft Corp.		283,032
	10,893	Oracle Corp.*		241,498

See Notes to Financial Statements.

46

Schedule of Investments (Continued)

PowerShares Dynamic Large Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	5,033	Symantec Corp.*	$	94,520
	2,765	Texas Instruments, Inc.		90,139
				2,153,665
		Materials—4.9%
	2,221	Dow Chemical (The) Co.		100,034
	1,083	Freeport-McMoRan Copper & Gold, Inc., Class B		127,447
	2,697	International Paper Co.		99,681
	1,358	Monsanto Co.		132,582
	1,790	Nucor Corp.		111,016
	900	Southern Copper Corp.		125,730
				696,490
		Telecommunication Services—3.3%
	5,541	AT&T, Inc.		231,558
	5,275	Verizon Communications, Inc.		243,019
				474,577
		Utilities—2.2%
	1,142	Constellation Energy Group, Inc.		108,147
	1,796	Edison International		104,437
	1,541	FirstEnergy Corp.		107,408
				319,992
		Total Common Stocks (Cost $13,006,181)		14,206,341
		Money Market Fund—0.3%
	41,462	Liquid Assets Portfolio Private Class** (Cost $41,462)		41,462
		Total Investments (Cost $13,047,643)—99.9%		14,247,803
		Other assets less liabilities—0.1%		11,276
		Net Assets—100.0%	$	14,259,079

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	13,927,414		97.7	%
Netherlands		221,049		1.5
Cayman Islands		99,340		0.7
Total investments		14,247,803		99.9
Other assets less liabilities		11,276		0.1
Net Assets	$	14,259,079		100.0	%

See Notes to Financial Statements.

47

Schedule of Investments

PowerShares Dynamic Mid Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—13.7%
	1,290	Advance Auto Parts, Inc.	$	44,015
	2,126	AutoZone, Inc.*		264,496
	529	Black & Decker (The) Corp.		47,562
	543	BorgWarner, Inc.		57,401
	1,590	Brinker International, Inc.		40,370
	1,934	Burger King Holdings, Inc.		51,135
	1,103	Darden Restaurants, Inc.		47,429
	1,056	Dollar Tree Stores, Inc.*		40,445
	1,566	Family Dollar Stores, Inc.		39,698
	5,189	Genuine Parts Co.		254,624
	1,531	Hanesbrands, Inc.*		47,522
	6,754	International Game Technology		294,543
	418	ITT Educational Services, Inc.*		53,165
	905	Men's Wearhouse (The), Inc.		38,245
	820	Meredith Corp.		51,045
	525	Mohawk Industries, Inc.*		44,804
	1,778	Newell Rubbermaid, Inc.		51,846
	1,322	PetSmart, Inc.		39,594
	3,736	Sherwin-Williams (The) Co.		238,805
	808	Stanley Works (The)		46,500
	1,587	Tempur-Pedic International, Inc.		57,132
	3,229	VF Corp.		281,343
	2,674	Whirlpool Corp.		211,727
				2,343,446
		Consumer Staples—5.4%
	1,979	Alberto-Culver Co.		51,434
	1,310	BJ's Wholesale Club, Inc.*		47,003
	3,387	Carolina Group		290,538
	10,028	ConAgra Foods, Inc.		237,964
	1,250	NBTY, Inc.*		44,500
	15,512	Sara Lee Corp.		256,568
				928,007
		Energy—6.6%
	3,153	Cameron International Corp.*		306,976
	1,897	Global Industries Ltd.*		46,704
	4,292	Noble Energy, Inc.		328,510
	522	SEACOR Holdings, Inc.*		47,841
	3,525	Sunoco, Inc.		259,440
	930	Tesoro Corp.		56,293
	701	Tidewater, Inc.		38,324
	885	Western Refining, Inc.		32,462
				1,116,550
		Financials—20.2%
	1,626	American Financial Group, Inc.		48,617
	364	American National Insurance		47,065
	5,951	AON Corp.		269,699
	638	Arch Capital Group Ltd. (Bermuda)*		47,703
	890	Assurant, Inc.		52,011
	892	Bank of Hawaii Corp.		47,419

Number of Shares			Value
		Common Stocks (Continued)
	1,088	Cincinnati Financial Corp.	$	43,281
	6,144	CNA Financial Corp.		243,487
	1,195	Eaton Vance Corp.		59,786
	821	Erie Indemnity Co., Class A		46,715
	450	Everest Re Group Ltd. (Bermuda)		47,943
	1,306	Federated Investors, Inc., Class B		56,158
	1,072	Hanover Insurance Group (The), Inc.		49,387
	1,661	HCC Insurance Holdings, Inc.		49,647
	96	Markel Corp.*		52,149
	871	Mercury General Corp.		44,691
	4,817	Nationwide Financial Services, Inc., Class A		258,432
	4,195	Northern Trust Corp.		315,506
	1,266	Odyssey Re Holdings Corp.		47,070
	2,521	Old Republic International Corp.		38,647
	631	PartnerRe Ltd. (Bermuda)		52,531
	1,146	Philadelphia Consolidated Holding Co.*		46,757
	1,097	Protective Life Corp.		47,028
	845	Reinsurance Group of America, Inc.		48,275
	790	Safeco Corp.		45,741
	1,808	SEI Investments Co.		57,169
	974	StanCorp Financial Group, Inc.		53,697
	5,024	T. Rowe Price Group, Inc.		322,742
	14,205	TD Ameritrade Holding Corp.*		271,884
	745	Torchmark Corp.		48,544
	648	Transatlantic Holdings, Inc.		48,295
	10,536	Unum Group		245,910
	1,534	W.R. Berkley Corp.		46,158
	3,383	XL Capital Ltd., Class A (Cayman Islands)		243,407
				3,443,551
		Health Care—7.1%
	5,388	AmerisourceBergen Corp.		253,829
	874	Charles River Laboratories International, Inc.*		50,692
	4,494	Coventry Health Care, Inc.*		271,033
	797	DaVita, Inc.*		51,956
	1,165	DENTSPLY International, Inc.		48,324
	4,709	Express Scripts, Inc.*		297,138
	837	Health Net, Inc.*		44,872
	763	Kinetic Concepts, Inc.*		45,856
	1,274	Lincare Holdings, Inc.*		44,297
	718	Manor Care, Inc.		47,804
	728	Techne Corp.*		47,495
				1,203,296
		Industrials—27.0%
	436	Alliant Techsystems, Inc.*		48,130
	3,592	Allied Waste Industries, Inc.*		45,403
	1,147	Ametek, Inc.		53,909
	5,257	C.H. Robinson Worldwide, Inc.		262,429
	635	Ceradyne, Inc.*		43,440
	946	Con-way, Inc.		40,309
	5,038	Cooper Industries Ltd., Class A (Bermuda)		263,941

See Notes to Financial Statements.

48

Schedule of Investments (Continued)

PowerShares Dynamic Mid Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	1,563	Copart, Inc.*	$	59,988
	1,024	Crane Co.		48,579
	2,177	Cummins, Inc.		261,153
	2,736	Eaton Corp.		253,299
	2,028	Fluor Corp.		320,424
	1,149	Gardner Denver, Inc.*		41,513
	1,052	GATX Corp.		43,100
	726	Goodrich Corp.		50,573
	824	Harsco Corp.		49,951
	3,792	ITT Corp.		253,761
	2,617	L-3 Communications Holdings, Inc.		286,928
	1,066	Landstar System, Inc.		44,868
	638	Lincoln Electric Holdings, Inc.		46,096
	1,154	Manitowoc (The) Co., Inc.		56,846
	653	Manpower, Inc.		48,805
	5,372	McDermott International, Inc. (Panama)*		328,014
	3,598	Parker Hannifin Corp.		289,171
	5,772	Pitney Bowes, Inc.		231,111
	1,475	Republic Services, Inc.		50,430
	1,436	Robert Half International, Inc.		43,209
	3,659	Rockwell Automation, Inc./DE		252,032
	3,743	Rockwell Collins, Inc.		280,014
	590	Teleflex, Inc.		43,194
	3,227	Terex Corp.*		239,508
	828	Thomas & Betts Corp.*		46,376
	1,290	Timken (The) Co.		42,905
	775	Toro Co.		43,137
	501	W.W. Grainger, Inc.		45,050
	1,508	Waste Connections, Inc.*		50,986
				4,608,582
		Information Technology—9.4%
	2,506	ADC Telecommunications, Inc.*		46,862
	3,981	Amkor Technology, Inc.*		45,105
	1,093	Arrow Electronics, Inc.*		43,698
	5,566	Autodesk, Inc.*		272,177
	1,498	BMC Software, Inc.*		50,692
	10,235	CA, Inc.		270,716
	810	CommScope, Inc.*		38,208
	4,608	Computer Sciences Corp.*		269,061
	2,738	Convergys Corp.*		50,188
	765	Factset Research Systems, Inc.		53,948
	1,364	Hewitt Associates, Inc., Class A*		48,122
	1,283	McAfee, Inc.*		53,052
	4,198	MEMC Electronic Materials, Inc.*		307,377
	486	Mettler Toledo International, Inc.*		51,686
				1,600,892
		Materials—5.4%
	1,147	AK Steel Holding Corp.*		57,499
	767	Ashland, Inc.		45,038
	876	Ball Corp.		43,432
	724	CF Industries Holdings, Inc.		63,640

Number of Shares			Value
		Common Stocks (Continued)
	687	Eastman Chemical Co.	$	45,747
	721	Lubrizol (The) Corp.		48,941
	1,835	Nalco Holding Co.		45,618
	1,140	Owens-Illinois, Inc.*		50,639
	1,761	Packaging Corp. of America		56,070
	1,431	Rockwood Holdings, Inc.*		55,938
	1,024	Sigma-Aldrich Corp.		52,910
	1,766	Terra Industries, Inc.*		65,148
	2,729	United States Steel Corp.		294,460
				925,080
		Telecommunication Services—3.0%
	956	CenturyTel, Inc.		42,112
	4,130	Embarq Corp.		218,560
	2,651	United States Cellular Corp.*		249,591
				510,263
		Utilities—2.0%
	854	Energen Corp.		54,656
	6,616	Mirant Corp.*		280,254
				334,910
		Total Common Stocks (Cost $16,073,727)		17,014,577
		Money Market Fund—0.3%
	46,680	Liquid Assets Portfolio Private Class** (Cost $46,680)		46,680
		Total Investments (Cost $16,120,407)—100.1%		17,061,257
		Liabilities in excess of other assets—(0.1%)		(9,447	)
		Net Assets—100.0%	$	17,051,810

*  Non-income producing security.

**  Affiliated investment

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	16,077,718			94.3	%
Bermuda		412,118			2.4
Panama		328,014			1.9
Cayman Islands		243,407			1.5
Total investments		17,061,257			100.1
Liabilities in excess of other assets		(9,447	)		(0.1	)
Net Assets	$	17,051,810			100.0	%

See Notes to Financial Statements.

49

Schedule of Investments

PowerShares Dynamic Small Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.3%
		Consumer Discretionary—18.8%
	638	Aaron Rents, Inc.	$	13,513
	4,293	Aeropostale, Inc.*		98,309
	546	Aftermarket Technology Corp.*		18,848
	700	American Axle & Manufacturing Holdings, Inc.		19,222
	660	American Greetings Corp., Class A		17,384
	2,835	AnnTaylor Stores Corp.*		87,857
	328	Arbitron, Inc.		16,603
	193	Blue Nile, Inc.*		15,255
	730	Blyth, Inc.		13,936
	489	Bob Evans Farms, Inc.		13,780
	411	Bright Horizons Family Solutions, Inc.*		15,947
	1,000	Callaway Golf Co.		17,320
	740	Cato (The) Corp., Class A		14,859
	31,965	Charter Communications, Inc., Class A*		66,168
	3,761	Collective Brands, Inc.*		69,541
	742	Conn's, Inc.*		18,973
	668	Cooper Tire & Rubber Co.		14,883
	933	Dress Barn (The), Inc.*		15,292
	416	Drew Industries, Inc.*		16,465
	721	Helen of Troy Ltd. (Bermuda)*		12,978
	260	IHOP Corp.		16,466
	2,856	Jack in the Box, Inc.*		89,593
	541	Jos. A. Bank Clothiers, Inc.*		15,803
	3,932	Marvel Entertainment, Inc.*		97,277
	932	NetFlix, Inc.*		24,670
	1,639	NutriSystem, Inc.*		49,334
	1,861	Polaris Industries, Inc.		91,524
	296	Pre-Paid Legal Services, Inc.*		17,642
	737	Ruby Tuesday, Inc.		11,770
	614	Sonic Automotive, Inc., Class A		15,510
	2,309	Speedway Motorsports, Inc.		83,817
	2,799	Tenneco, Inc.*		85,677
	1,845	Tractor Supply Co.*		76,457
	2,886	Tupperware Brands Corp.		104,184
	2,546	Warnaco Group (The), Inc.*		103,596
	621	Wolverine World Wide, Inc.		15,922
				1,476,375
		Consumer Staples—1.9%
	4,305	Flowers Foods, Inc.		94,451
	620	Fresh Del Monte Produce, Inc. (Cayman Islands) *		22,494
	429	USANA Health Sciences, Inc.*		17,507
	745	Vector Group Ltd.		16,301
				150,753
		Energy—7.2%
	3,526	Alliance Holdings GP LP		91,817
	909	Bois d'Arc Energy, Inc.*		19,943
	2,279	Copano Energy LLC		88,220
	595	Delek US Holdings, Inc.		14,274
	2,458	Grey Wolf, Inc.*		13,839
	356	GulfMark Offshore, Inc.*		16,582

Number of Shares			Value
		Common Stocks (Continued)
	287	Lufkin Industries, Inc.	$	17,065
	4,283	Massey Energy Co.		135,686
	2,095	Parker Drilling Co.*		17,682
	439	Swift Energy Co.*		20,822
	3,987	W&T Offshore, Inc.		106,931
	423	World Fuel Services Corp.		18,735
				561,596
		Financials—18.5%
	623	Advanta Corp., Class B		9,843
	997	Amtrust Financial Services, Inc.		13,908
	362	BancFirst Corp.		16,449
	441	City Holding Co.		16,674
	909	CNA Surety Corp.*		17,989
	2,787	Commerce Group,(The) Inc.		101,698
	2,205	Delphi Financial Group, Inc., Class A		85,444
	288	Downey Financial Corp.		11,730
	871	Employers Holdings, Inc.		16,688
	417	FBL Financial Group, Inc., Class A		16,880
	1,624	First BanCorp		14,275
	501	First Citizens BancShares, Inc., Class A		81,578
	325	FirstFed Financial Corp.*		13,904
	304	GAMCO Investors, Inc., Class A		18,821
	1,535	Greenhill & Co., Inc.		113,560
	506	Harleysville Group, Inc.		15,772
	844	Horace Mann Educators Corp.		17,462
	394	Infinity Property & Casualty Corp.		15,847
	3,860	International Bancshares Corp.		84,380
	936	MarketAxess Holdings, Inc.*		14,667
	298	Midland (The) Co.		18,959
	63	National Western Life Insurance Co., Class A		13,689
	301	Navigators Group (The), Inc.*		18,150
	1,740	Ocwen Financial Corp.*		12,980
	3,778	optionsXpress Holdings, Inc.		112,433
	6,416	Phoenix (The) Cos., Inc.		88,412
	318	Portfolio Recovery Associates, Inc. *		14,345
	1,973	Potlatch Corp.		94,033
	1,690	ProAssurance Corp.*		93,187
	271	RLI Corp.		15,764
	464	S&T Bancorp, Inc.		15,368
	774	Selective Insurance Group		18,816
	546	State Auto Financial Corp.		15,026
	1,786	SVB Financial Group*		92,497
	2,006	UMB Financial Corp.		84,252
	754	United America Indemnity Ltd., Class A (Cayman Islands)*		16,626
	430	United Fire & Casualty Co.		13,777
	379	Zenith National Insurance Corp.		15,228
				1,451,111
		Health Care—8.5%
	3,910	Align Technology, Inc.*		80,937
	432	Amedisys, Inc.*		18,338

See Notes to Financial Statements.

50

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	613	Apria Healthcare Group, Inc.*	$	14,816
	291	Arthrocare Corp.*		18,869
	1,054	Bio-Rad Laboratories, Inc., Class A*		101,796
	225	Dionex Corp.*		19,800
	3,167	Emergency Medical Services Corp., Class A*		96,182
	329	Haemonetics Corp.*		16,907
	3,162	LifePoint Hospitals, Inc.*		96,504
	2,189	Magellan Health Services, Inc.*		92,157
	556	MedCath Corp.*		15,418
	633	Meridian Bioscience, Inc.		20,946
	479	Molina Healthcare, Inc.*		18,255
	380	Parexel International Corp.*		17,480
	766	Res-Care, Inc.*		18,813
	786	Universal American Financial Corp.*		19,068
				666,286
		Industrials—23.2%
	1,457	Actuant Corp., Class A		100,503
	473	Administaff, Inc.		18,863
	284	Advisory Board (The) Co.*		18,236
	510	Applied Industrial Technologies, Inc.		18,080
	455	Arkansas Best Corp.		12,490
	322	Atlas Air Worldwide Holdings, Inc.*		18,866
	222	Cascade Corp.		13,982
	571	CDI Corp.		15,737
	2,295	Clarcor, Inc.		83,676
	413	Cubic Corp.		18,585
	2,337	Deluxe Corp.		94,274
	628	Encore Wire Corp.		13,188
	391	EnPro Industries, Inc.*		16,035
	392	G&K Services, Inc., Class A		15,892
	1,225	Genlyte Group, Inc.*		79,748
	3,799	Goodman Global, Inc.*		93,644
	5,293	GrafTech International Ltd.*		100,037
	1,048	Heartland Express, Inc.		14,609
	348	Heidrick & Struggles International, Inc.		15,041
	489	Hub Group, Inc., Class A*		12,406
	523	II-VI, Inc.*		18,169
	6,329	IKON Office Solutions, Inc.		83,543
	1,683	Kaydon Corp.		90,528
	1,072	Kforce, Inc.*		12,907
	735	Korn/Ferry International*		14,083
	782	Labor Ready, Inc.*		13,748
	289	M&F Worldwide Corp.*		15,164
	510	McGrath Rentcorp.		17,483
	222	Middleby (The) Corp.*		14,468
	567	Old Dominion Freight Line, Inc.*		12,809
	1,570	Perini Corp.*		90,039
	864	Pike Electric Corp.*		17,021
	401	Raven Industries, Inc.		17,327
	460	RBC Bearings, Inc.*		18,487
	1,759	Regal-Beloit Corp.		86,261

Number of Shares			Value
		Common Stocks (Continued)
	857	Republic Airways Holdings, Inc.*	$	18,246
	2,962	Resources Connection, Inc.		67,445
	3,346	Rollins, Inc.		101,617
	236	United Industrial Corp.		19,074
	1,506	United Stationers, Inc.*		87,212
	457	Viad Corp.		16,196
	2,372	Wabtec Corp.		89,021
	339	Watsco, Inc.		14,116
	1,878	Watson Wyatt Worldwide, Inc., Class A		89,524
	877	Werner Enterprises, Inc.		16,681
				1,815,061
		Information Technology—13.4%
	3,324	Adtran, Inc.		80,009
	2,682	Ansys, Inc.*		104,089
	5,854	Arris Group, Inc.*		67,321
	1,244	Aspen Technology, Inc.*		21,695
	392	Blue Coat Systems, Inc.*		15,911
	586	Checkpoint Systems, Inc.*		17,727
	1,137	Cogent, Inc.*		16,793
	383	Comtech Telecommunications Corp.*		20,778
	706	CSG Systems International, Inc.*		14,494
	427	DealerTrack Holdings, Inc.*		20,961
	553	Dycom Industries, Inc.*		15,622
	4,548	Emulex Corp.*		98,510
	1,169	Informatica Corp.*		19,967
	688	Insight Enterprises, Inc.*		19,016
	2,614	j2 Global Communications, Inc.*		88,066
	565	Manhattan Associates, Inc.*		17,040
	1,104	MasTec, Inc.*		17,432
	1,130	Methode Electronics, Inc.		14,170
	1,491	Micrel, Inc.		13,494
	1,186	MPS Group, Inc.*		14,481
	388	MTS Systems Corp.		17,262
	11,166	Palm, Inc.*		100,717
	1,409	Photronics, Inc.*		15,414
	575	Plantronics, Inc.		15,726
	234	Rofin-Sinar Technologies, Inc.*		18,397
	4,853	SAIC, Inc.*		95,653
	1,136	United Online, Inc.		19,994
	618	Verigy Ltd. (Singapore)*		14,208
	837	Vignette Corp.*		14,430
	442	Wright Express Corp.*		17,105
	945	Zoran Corp.*		24,098
				1,050,580
		Materials—6.7%
	758	A. Schulman, Inc.		17,896
	1,048	Buckeye Technologies, Inc.*		18,780
	3,302	H.B. Fuller Co.		97,178
	988	Headwaters, Inc.*		14,178
	248	Minerals Technologies, Inc.		17,415
	4,145	Olin Corp.		94,423

See Notes to Financial Statements.

51

Schedule of Investments (Continued)

PowerShares Dynamic Small Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	330	OM Group, Inc.*	$	17,483
	2,052	Quanex Corp.		84,522
	563	Rock-Tenn Co., Class A		16,417
	1,521	Schnitzer Steel Industries, Inc., Class A		100,492
	754	Spartech Corp.		11,589
	731	W.R. Grace & Co.*		21,638
	1,453	Wausau Paper Corp.		14,545
				526,556
		Telecommunication Services—0.7%
	1,248	Premiere Global Services, Inc.*		20,567
	1,155	Syniverse Holdings, Inc.*		19,277
	885	USA Mobility, Inc.		13,841
				53,685
		Utilities—0.4%
	333	New Jersey Resources Corp.		16,400
	351	Northwest Natural Gas Co.		16,908
				33,308
		Total Common Stocks (Cost $7,808,577)		7,785,311
		Money Market Fund—0.6%
	47,466	Liquid Assets Portfolio Private Class** (Cost $47,466)		47,466
		Total Investments (Cost $7,856,043)—99.9%		7,832,777
		Other assets less liabilities—0.1%		5,190
		Net Assets—100.0%	$	7,837,967

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	7,766,471		99.1	%
Cayman Islands		39,120		0.5
Singapore		14,208		0.2
Bermuda		12,978		0.1
Total Investments		7,832,777		99.9
Other assets less liabilities		5,190		0.1
Net Assets	$	7,837,967		100.0	%

See Notes to Financial Statements.

52

Schedule of Investments

PowerShares Dynamic Aggressive Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Consumer Discretionary—17.0%
	2,770	Arbitron, Inc.	$	140,217
	1,635	Blue Nile, Inc.*		129,230
	3,480	Bright Horizons Family Solutions, Inc.*		135,024
	5,820	Burger King Holdings, Inc.		153,881
	49,641	Charter Communications, Inc., Class A*		102,757
	3,100	Coach, Inc.*		113,336
	3,996	DeVry, Inc.		218,541
	4,252	Dick's Sporting Goods, Inc.*		141,889
	22,624	Gemstar-TV Guide International, Inc.*		155,879
	1,256	ITT Educational Services, Inc.*		159,751
	2,770	J. Crew Group, Inc.*		103,598
	2,140	Morningstar, Inc.*		159,259
	2,545	NutriSystem, Inc.*		76,605
	1,826	Polo Ralph Lauren Corp.		125,629
	3,189	Sotheby's		172,748
	865	Strayer Education, Inc.		161,288
	2,414	Vail Resorts, Inc.*		146,506
	3,973	Warnaco Group (The), Inc.*		161,661
				2,557,799
		Consumer Staples—1.4%
	3,074	Hansen Natural Corp.*		209,032
		Energy—8.8%
	1,815	Atwood Oceanics, Inc.*		152,896
	1,689	Cameron International Corp.*		164,441
	3,744	Dresser-Rand Group, Inc.*		144,893
	3,755	Energy Transfer Equity, LP		133,640
	1,780	Exterran Holdings, Inc.*		149,876
	2,915	FMC Technologies, Inc.*		176,737
	1,430	Schlumberger Ltd. (Netherlands)		138,095
	2,060	Smith International, Inc.		136,063
	3,555	Superior Energy Services, Inc.*		131,819
				1,328,460
		Financials—5.6%
	6,970	Charles Schwab (The) Corp.		161,983
	3,595	Eaton Vance Corp.		179,858
	7,916	MarketAxess Holdings, Inc.*		124,044
	4,225	Nasdaq Stock Market (The), Inc.*		197,307
	5,866	optionsXpress Holdings, Inc.		174,572
				837,764
		Health Care—16.4%
	6,071	Align Technology, Inc.*		125,670
	3,654	Amedisys, Inc.*		155,112
	2,464	Arthrocare Corp.*		159,766
	1,881	Covance, Inc.*		155,183
	1,905	Dionex Corp.*		167,640
	4,919	Emergency Medical Services Corp., Class A*		149,390
	2,520	Express Scripts, Inc.*		159,012
	2,155	Gen-Probe, Inc.*		150,893
	1,235	Idexx Laboratories, Inc.*		150,398

Number of Shares			Value
		Common Stocks (Continued)
	4,701	MedCath Corp.*	$	130,359
	5,350	Meridian Bioscience, Inc.		177,031
	3,209	Parexel International Corp.*		147,614
	4,596	Schering-Plough Corp.		140,270
	3,375	VCA Antech, Inc.*		155,419
	7,446	Warner Chilcott Ltd., Class A (Bermuda)*		137,974
	2,241	Waters Corp.*		172,512
	1,399	WellCare Health Plans, Inc.*		33,842
				2,468,085
		Industrials—23.0%
	2,400	Advisory Board Co. (The)*		154,104
	2,815	C.H. Robinson Worldwide, Inc.		140,525
	2,029	Corporate Executive Board Co.		144,566
	5,379	Corrections Corp. of America*		152,172
	3,490	Cubic Corp.		157,050
	1,085	Fluor Corp.		171,430
	4,135	Hub Group, Inc., Class A*		104,905
	2,735	IHS, Inc., Class A*		172,442
	4,424	II-VI, Inc.*		153,690
	2,089	Jacobs Engineering Group, Inc.*		182,055
	3,605	Kirby Corp.*		164,676
	3,470	Manitowoc (The) Co., Inc.		170,932
	2,878	McDermott International, Inc. (Panama)*		175,731
	1,876	Middleby (The) Corp.*		122,259
	2,665	MSC Industrial Direct Co., Class A		129,812
	1,060	Precision Castparts Corp.		158,799
	3,886	RBC Bearings, Inc.*		156,178
	4,600	Resources Connection, Inc.		104,742
	2,180	Roper Industries, Inc.		154,366
	2,765	Stericycle, Inc.*		161,282
	4,719	TeleTech Holdings, Inc.*		117,645
	1,996	United Industrial Corp.		161,317
	3,684	Wabtec Corp.		138,261
				3,448,939
		Information Technology—23.7%
	5,795	Altera Corp.		113,698
	3,821	Amphenol Corp., Class A		169,156
	4,165	Ansys, Inc.*		161,644
	996	Apple, Inc.*		189,190
	3,310	Blue Coat Systems, Inc.*		134,353
	9,616	Cogent, Inc.*		142,028
	2,439	CommScope, Inc.*		115,048
	3,244	Comtech Telecommunications Corp.*		175,987
	3,614	DealerTrack Holdings, Inc.*		177,411
	3,789	Dolby Laboratories, Inc., Class A*		157,092
	4,674	Dycom Industries, Inc.*		132,041
	4,046	eBay, Inc.*		146,061
	7,020	EMC Corp.*		178,238
	2,304	Factset Research Systems, Inc.		162,478
	2,804	FLIR Systems, Inc.*		194,569
	9,885	Informatica Corp.*		168,836

See Notes to Financial Statements.

53

Schedule of Investments (Continued)

PowerShares Dynamic Aggressive Growth Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	4,060	j2 Global Communications, Inc.*	$	136,781
	1,006	Mastercard, Inc., Class A		190,686
	2,246	MEMC Electronic Materials, Inc.*		164,452
	4,371	National Instruments, Corp.		141,795
	4,044	NVIDIACorp.*		143,077
	3,460	QUALCOMM, Inc.		147,846
	2,480	Varian Semiconductor Equipment Associates, Inc.*		114,130
				3,556,597
		Materials—1.3%
	1,980	Monsanto Co.		193,307
		Telecommunication Services—1.8%
	10,926	Dobson Communications Corp., Class A*		141,382
	1,420	United States Cellular Corp.*		133,693
				275,075
		Utilities—1.1%
	2,675	Allegheny Energy, Inc.*		162,266
		Total Investments (Cost $13,414,343)—100.1%		15,037,324
		Liabilities in excess of other assets—(0.1%)		(15,026	)
		Net Assets—100.0%	$	15,022,298

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	14,585,524			97.1	%
Panama		175,731			1.2
Netherlands		138,095			0.9
Bermuda		137,974			0.9
Total investments		15,037,324			100.1
Liabilities in excess of other assets		(15,026	)		(0.1	)
Net Assets	$	15,022,298			100.0	%

See Notes to Financial Statements.

54

Schedule of Investments

PowerShares Dynamic Deep Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.6%
		Consumer Discretionary—6.8%
	1,692	Black & Decker (The) Corp.	$	152,128
	5,090	Brinker International, Inc.		129,235
	3,529	Darden Restaurants, Inc.		151,747
	1,681	Mohawk Industries, Inc.*		143,457
	5,692	Newell Rubbermaid, Inc.		165,978
	2,587	Stanley Works (The)		148,882
	1,839	VF Corp.		160,232
				1,051,659
		Consumer Staples—4.8%
	2,115	Altria Group, Inc.		154,247
	1,929	Carolina Group		165,469
	5,710	ConAgra Foods, Inc.		135,498
	2,220	Reynolds American, Inc.		143,035
	8,833	Sara Lee Corp.		146,098
				744,347
		Energy—11.8%
	1,897	Apache Corp.		196,928
	1,673	Chevron Corp.		153,096
	1,949	Devon Energy Corp.		182,037
	1,712	Exxon Mobil Corp.		157,487
	2,392	Hess Corp.		171,291
	2,724	Marathon Oil Corp.		161,070
	2,590	Occidental Petroleum Corp.		178,840
	1,672	SEACOR Holdings, Inc.*		153,239
	2,007	Sunoco, Inc.		147,715
	2,976	Tesoro Corp.		180,137
	2,143	Valero Energy Corp.		150,931
				1,832,771
		Financials—44.1%
	2,542	ACE Ltd. (Cayman Islands)		154,071
	2,754	AFLAC, Inc.		172,897
	2,681	Allstate (The) Corp.		140,484
	5,206	American Financial Group, Inc.		155,659
	2,406	Ameriprise Financial, Inc.		151,530
	3,389	AON Corp.		153,589
	2,044	Arch Capital Group Ltd. (Bermuda)*		152,830
	2,848	Assurant, Inc.		166,437
	2,856	Bank of Hawaii Corp.		151,825
	2,871	Chubb (The) Corp.		153,168
	3,484	Cincinnati Financial Corp.		138,593
	3,970	City Holding Co.		150,106
	3,499	CNA Financial Corp.		138,665
	8,174	CNA Surety Corp.*		161,763
	4,605	Commerce Group (The), Inc.		168,036
	3,643	Delphi Financial Group, Inc., Class A		141,166
	1,441	Everest Re Group Ltd. (Bermuda)		153,524
	3,752	FBL Financial Group, Inc., Class A		151,881
	3,432	Hanover Insurance Group (The), Inc.		158,112
	1,651	Hartford Financial Services Group (The), Inc.		160,197

Number of Shares			Value
		Common Stocks (Continued)
	7,591	Horace Mann Educators Corp.	$	157,058
	2,411	Lincoln National Corp.		150,374
	3,123	Loews Corp.		153,308
	2,787	Mercury General Corp.		143,001
	2,292	MetLife, Inc.		157,804
	2,743	Nationwide Financial Services, Inc., Class A		147,162
	4,053	Odyssey Re Holdings Corp.		150,691
	8,071	Old Republic International Corp.		123,728
	2,019	PartnerRe Ltd. (Bermuda)		168,082
	2,646	Principal Financial Group, Inc.		179,056
	2,792	ProAssurance Corp.*		153,951
	3,512	Protective Life Corp.		150,559
	1,635	Prudential Financial, Inc.		158,137
	2,703	Reinsurance Group of America, Inc.		154,422
	2,441	RLI Corp.		141,993
	2,530	Safeco Corp.		146,487
	3,117	StanCorp Financial Group, Inc.		171,840
	2,385	Torchmark Corp.		155,407
	2,905	Travelers (The) Cos., Inc.		151,670
	6,784	United America Indemnity Ltd., Class A (Cayman Islands)*		149,587
	3,864	United Fire & Casualty Co.		123,803
	5,999	Unum Group		140,017
	4,912	W.R. Berkley Corp.		147,802
	1,927	XL Capital Ltd., Class A (Cayman Islands)		138,648
	3,405	Zenith National Insurance Corp.		136,813
				6,825,933
		Health Care—1.8%
	2,841	CIGNA Corp.		149,124
	2,560	Eli Lilly & Co.		138,624
				287,748
		Industrials—10.7%
	4,591	Applied Industrial Technologies, Inc.		162,751
	3,028	Con-way, Inc.		129,023
	3,278	Crane Co.		155,508
	1,079	Deere & Co.		167,138
	1,558	Eaton Corp.		144,240
	1,862	Northrop Grumman Corp.		155,700
	2,574	PACCAR, Inc.		143,011
	2,049	Parker Hannifin Corp.		164,678
	4,128	Timken (The) Co.		137,297
	3,897	Waste Management, Inc.		141,812
	7,889	Werner Enterprises, Inc.		150,049
				1,651,207
		Information Technology—3.2%
	2,624	Computer Sciences Corp.*		153,215
	8,765	Convergys Corp.*		160,662
	10,216	United Online, Inc.		179,802
				493,679

See Notes to Financial Statements.

55

Schedule of Investments (Continued)

PowerShares Dynamic Deep Value Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Materials—9.3%
	2,318	CF Industries Holdings, Inc.	$	203,752
	3,444	Dow Chemical (The) Co.		155,118
	2,199	Eastman Chemical Co.		146,431
	5,456	H.B. Fuller Co.		160,570
	8,887	Headwaters, Inc.*		127,528
	4,181	International Paper Co.		154,530
	6,847	Olin Corp.		155,975
	2,513	Schnitzer Steel Industries, Inc., Class A		166,034
	1,554	United States Steel Corp.		167,677
				1,437,615
		Telecommunication Services—4.9%
	3,682	AT&T, Inc.		153,871
	3,060	CenturyTel, Inc.		134,793
	2,352	Embarq Corp.		124,468
	11,224	Premiere Global Services, Inc.*		184,972
	3,505	Verizon Communications, Inc.		161,475
				759,579
		Utilities—2.2%
	2,734	Energen Corp.		174,976
	2,389	FirstEnergy Corp.		166,513
				341,489
		Total Common Stocks (Cost $14,930,421)		15,426,027
		Money Market Fund—0.3%
	44,499	Liquid Assets Portfolio Private Class** (Cost $44,499)		44,499
		Total Investments (Cost $14,974,920)—99.9%		15,470,526
		Other assets less liabilities—0.1%		11,804
		Net Assets—100.0%	$	15,482,330

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	14,553,784		94.0	%
Bermuda		474,436		3.1
Cayman Islands		442,306		2.8
Total investments		15,470,526		99.9
Other assets less liabilities		11,804		0.1
Net Assets	$	15,482,330		100.0	%

See Notes to Financial Statements.

56

Schedule of Investments

PowerShares Zacks Micro Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.5%
		Consumer Discretionary—17.7%
	32,979	1-800-FLOWERS.COM, Inc., Class A*	$	395,418
	21,743	4Kids Entertainment, Inc.*		370,718
	12,026	Aftermarket Technology Corp.*		415,138
	19,277	Asbury Automotive Group, Inc.		353,347
	7,647	Avatar Holdings, Inc.*		355,968
	46,797	Carriage Services, Inc.*		447,847
	11,388	Cavco Industries, Inc.*		447,662
	7,647	Churchill Downs, Inc.		388,850
	16,010	Conn's, Inc.*		409,376
	10,835	Core-Mark Holding Co., Inc.*		375,975
	10,635	CSS Industries, Inc.		421,146
	22,345	Delta Apparel, Inc.		364,224
	16,210	DG Fastchannel, Inc.*		398,604
	10,355	Duckwall-ALCO Stores, Inc.*		378,268
	44,446	Eddie Bauer Holdings, Inc.*		334,234
	58,786	Exide Technologies.*		490,862
	7,647	Fisher Communications, Inc.*		369,121
	21,385	Fuel Systems Solutions, Inc.*		402,252
	15,888	Gaiam, Inc., Class A*		369,396
	49,068	GameTech International, Inc.*		426,401
	70,654	Gander Mountain Co.*		360,335
	19,392	G-III Apparel Group Ltd.*		315,508
	88,060	Gottschalks, Inc.*		388,345
	45,005	Gray Television, Inc.		425,747
	30,908	Great Wolf Resorts, Inc.*		403,658
	77,984	Hartmarx Corp.*		401,618
	43,572	Haverty Furniture Cos., Inc.		370,362
	91,881	Hayes Lemmerz International, Inc.*		427,247
	19,794	Helen of Troy Ltd. (Bermuda)*		356,292
	19,077	Hooker Furniture Corp.		410,919
	14,297	JAKKS Pacific, Inc.*		378,871
	18,123	Jo-Ann Stores, Inc.*		349,230
	11,430	JOS. A. Bank Clothiers, Inc.*		333,870
	40,304	Journal Communications, Inc., Class A		359,109
	40,104	Lakes Entertainment, Inc.*		332,863
	14,455	Landry's Restaurants, Inc.		415,148
	21,821	Libbey, Inc.		392,560
	29,390	Lin TV Corp., Class A*		428,212
	77,820	LJ International, Inc. (British Virgin Islands)*		329,957
	32,378	Lodgian, Inc.*		394,040
	34,692	Luby's, Inc.*		383,347
	30,987	Man Sang Holdings, Inc.		303,982
	20,310	McCormick & Schmick's Seafood Restaurants, Inc.*		344,864
	27,240	Monaco Coach Corp.		315,984
	11,989	Movado Group, Inc.		360,749
	40,104	MTR Gaming Group, Inc.*		349,306
	7,209	National Presto Industries, Inc.		396,062
	101,641	Navarre Corp.*		381,154
	25,211	O'Charleys, Inc.		404,132

Number of Shares			Value
		Common Stocks (Continued)
	30,629	Palm Harbor Homes, Inc.*	$	435,851
	24,495	PC Mall, Inc.*		428,663
	27,240	PEP Boys-Manny, Moe & Jack		400,700
	13,781	Perry Ellis International, Inc.*		319,719
	39,587	R.G. Barry Corp.*		336,490
	37,121	Red Lion Hotels Corp.*		364,528
	19,757	Rex Stores Corp.*		351,279
	22,739	Russ Berrie & Co., Inc.*		397,933
	72,245	Silverleaf Resorts, Inc.*		469,592
	40,662	Standard Motor Products, Inc.		339,934
	25,448	Steak N Shake (The) Co.*		385,537
	12,906	Steinway Musical Instruments		386,535
	50,143	Stewart Enterprises, Inc., Class A		454,797
	15,415	StoneMor Partners L.P.		404,798
	37,480	Stoneridge, Inc.*		385,669
	21,348	Sturm, Ruger & Co., Inc.*		199,604
	17,601	Superior Industries International, Inc.		355,716
	93,915	Syntax-Brillian Corp.*		423,557
	18,676	Systemax, Inc.		437,018
	31,103	Triarc Cos., Inc., Class A		351,775
	10,407	UniFirst Corp.		391,615
	11,746	Universal Electronics, Inc.*		424,031
	33,095	West Marine, Inc.*		357,095
				27,530,714
		Consumer Staples—2.5%
	58,427	Alliance One International, Inc.*		381,528
	15,135	Cal-Maine Foods, Inc.		362,332
	24,136	Chiquita Brands International, Inc.*		452,550
	14,176	Elizabeth Arden, Inc.*		352,982
	15,372	Farmer Bros. Co.		382,609
	9,596	Nash Finch Co.		359,370
	42,217	Omega Protein Corp.*		422,170
	34,807	Prestige Brands Holdings, Inc.*		364,081
	16,210	PriceSmart, Inc.		461,013
	7,367	Village Super Market, Inc., Class A		402,165
				3,940,800
		Energy—4.8%
	20,194	Allis-Chalmers Energy, Inc.*		354,809
	27,440	Callon Petroleum Co.*		400,075
	4,938	Dawson Geophysical Co.*		394,102
	7,689	Enbridge Energy Management LLC*		421,511
	16,368	Geokinetics, Inc.*		343,728
	13,101	Global Partners L.P.		407,572
	9,955	Gulf Island Fabrication, Inc.		347,629
	7,726	Hiland Partners, L.P.		396,035
	9,797	K-Sea Transportation Partners L.P.		389,039
	10,434	Martin Midstream Partners, L.P.		393,362
	154,127	Meridian Resource (The) Corp.*		389,941
	71,291	Newpark Resources, Inc.*		446,994
	8,600	Petroleum Development Corp.*		390,612
	12,663	PHI, Inc.*		438,140

See Notes to Financial Statements.

57

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	22,187	StealthGas, Inc. (Marshall Islands)	$	402,694
	8,959	T-3 Energy Services, Inc.*		425,732
	54,680	Top Tankers, Inc. (Marshall Islands)*		330,814
	11,588	TransMontaigne Partners L.P.		375,567
	31,065	Union Drilling, Inc.*		414,096
				7,462,452
		Financials—21.0%
	33,252	Affirmative Insurance Holdings, Inc.		361,782
	40,504	AmCOMP, Inc.*		402,205
	13,064	American Campus Communities, Inc.		371,540
	35,883	American Equity Investment Life Holding Co.		350,577
	9,797	American Physicians Capital, Inc.		426,757
	20,790	American Physicians Service Group, Inc.		412,889
	19,277	American Safety Insurance Holdings Ltd. (Bermuda)*		390,166
	19,478	AmericanWest Bancorp.		376,510
	23,098	Amerisafe, Inc.*		373,495
	20,231	Arbor Realty Trust, Inc.		381,961
	8,801	Argo Group International Holdings, Ltd. (Bermuda)*		375,011
	13,981	Baldwin & Lyons, Inc., Class B		368,679
	21,027	Banco Latinoamericano de Exportaciones, S.A., Class E (Panama)		409,396
	32,421	Bank Mutual Corp.		360,197
	24,173	BankFinancial Corp.		384,834
	12,627	Berkshire Hills Bancorp, Inc.		351,914
	21,707	Cadence Financial Corp.		352,088
	3,104	Capital Southwest Corp.		379,185
	37,200	Capstead Mortgage Corp.		432,264
	27,124	CFS Bancorp, Inc.		384,347
	49,943	Citizens, Inc.*		429,510
	19,593	Community Bank System, Inc.		409,690
	23,814	Compass Diversified Holdings		383,644
	67,428	Consumer Portfolio Services, Inc.*		329,723
	27,641	Cowen Group, Inc.*		335,562
	23,578	Crescent Banking Co.		341,174
	22,739	Crystal River Capital, Inc.		330,852
	17,686	Darwin Professional Underwriters, Inc.*		401,118
	24,731	Eastern Insurance Holdings, Inc.		398,169
	28,315	Education Realty Trust, Inc.		366,396
	14,698	EMC Insurance Group, Inc.		386,998
	13,022	Federal Agricultural Mortgage Corp., Class C		382,196
	50,538	Feldman Mall Properties, Inc.		202,657
	21,148	Financial Institutions, Inc.		407,099
	17,723	First Merchants Corp.		390,792
	8,880	FPIC Insurance Group, Inc.*		371,006
	20,431	Gladstone Commercial Corp.		381,038
	29,748	Gladstone Investment Corp.		364,116
	15,172	Gramercy Capital Corp.		400,086

Number of Shares			Value
		Common Stocks (Continued)
	27,203	Hallmark Financial Services*	$	455,649
	28,795	Hercules Technology Growth Capital, Inc.		369,440
	38,591	Hersha Hospitality Trust		417,169
	32,536	Hilltop Holdings, Inc.*		391,083
	35,409	Investors Real Estate Trust		384,188
	8,685	Kansas City Life Insurance Co.		404,982
	20,310	Kite Realty Group Trust		368,017
	21,664	Mainsource Financial Group, Inc.		364,172
	25,491	MarketAxess Holdings, Inc.*		399,444
	35,087	Medallion Financial Corp.		370,168
	28,673	Medical Properties Trust, Inc.		376,476
	21,585	Mercer Insurance Group, Inc.		394,790
	31,461	Mission West Properties		377,217
	41,264	National Atlantic Holdings Corp., Class A*		377,566
	56,873	NexCen Brands, Inc.*		349,200
	23,535	NGP Capital Resources Co.		376,795
	38,476	NorthStar Realty Finance Corp.		359,751
	13,738	NYMAGIC, Inc.		396,204
	12,226	Oak Hill Financial, Inc.		359,322
	19,636	One Liberty Properties, Inc.		401,556
	9,201	Oppenheimer Holdings, Inc., Class A (Canada)		393,067
	33,216	Oriental Financial Group		414,868
	28,594	Patriot Capital Funding, Inc.		357,997
	19,119	Peoples Financial Corp.		405,323
	9,201	Pico Holdings, Inc.*		379,541
	40,225	PMA Capital Corp., Class A*		398,228
	36,320	Primus Guaranty Ltd. (Bermuda)*		332,691
	26,128	ProCentury Corp.		388,523
	29,153	Provident New York Bancorp		370,535
	41,100	RAM Holdings Ltd. (Bermuda)*		284,001
	32,263	Resource Capital Corp.		332,954
	17,164	SCPIE Holdings, Inc.*		466,002
	22,381	SeaBright Insurance Holdings, Inc.*		373,315
	14,498	Simmons First National Corp., Class A		392,026
	54,601	Specialty Underwriters' Alliance, Inc.*		384,937
	11,151	Stewart Information Services Corp.		323,379
	50,702	Supertel Hospitality, Inc.		370,125
	21,585	SWS Group, Inc.		409,899
	13,702	Taylor Capital Group, Inc.		354,334
	26,322	Thomas Weisel Partners Group, Inc.*		418,783
	17,765	United America Indemnity Ltd., Class A (Cayman Islands)*		391,718
	52,931	United Community Financial Corp.		338,758
	18,081	United Western Bancorp, Inc.		388,742
	53,526	Universal Insurance Holdings, Inc.		439,448
	24,695	Urstadt Biddle Properties, Inc., Class A		410,431
	39,350	Westfield Financial, Inc.		400,583
	56,794	Winthrop Realty Trust		310,095
				32,581,115

See Notes to Financial Statements.

58

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Health Care—10.1%
	25,333	Albany Molecular Research, Inc.*	$	458,274
	159,904	Allied Healthcare International, Inc.*		431,741
	54,443	Allion Healthcare, Inc.*		409,956
	21,106	Almost Family, Inc.*		468,765
	13,659	American Dental Partners, Inc.*		338,607
	20,273	AngioDynamics, Inc.*		405,460
	28,637	BioMimetic Therapeutics, Inc.*		394,331
	59,539	BioScrip, Inc.*		466,190
	24,495	Cantel Medical Corp.*		438,950
	37,917	Cardiac Science Corp.*		401,920
	21,865	Cross Country Healthcare, Inc.*		343,499
	68,625	Cyclacel Pharmaceuticals, Inc.*		377,438
	10,355	Cynosure, Inc., Class A*		393,594
	27,920	Cypress Bioscience, Inc.*		376,641
	85,309	Genitope Corp.*		283,226
	19,915	Gentiva Health Services, Inc.*		377,987
	14,376	Greatbatch, Inc.*		357,387
	33,732	Hanger Orthopedic Group, Inc.*		419,963
	74,954	HealthTronics, Inc.*		356,781
	82,205	ImmunoGen, Inc.*		397,872
	100,566	I-trax, Inc.*		382,151
	76,271	Kosan Biosciences, Inc.*		388,219
	13,902	MedCath Corp.*		385,502
	18,676	MEDTOX Scientific, Inc.*		323,842
	61,853	Microtek Medical Holdings, Inc.*		387,200
	50,817	Osteotech, Inc.*		353,686
	13,186	PharmaNet Development Group, Inc.*		427,226
	67,428	Poniard Pharmaceuticals, Inc.*		312,866
	28,199	Possis Medical, Inc.*		403,528
	13,022	Providence Service (The) Corp.*		413,969
	35,646	Regeneration Technologies, Inc.*		378,204
	21,743	RehabCare Group, Inc.*		450,950
	16,727	Res-Care, Inc.*		410,815
	21,069	Rochester Medical Corp.*		327,412
	41,701	Sonic Innovations, Inc.*		428,686
	22,903	Symmetry Medical, Inc.*		392,786
	17,723	Synovis Life Technologies, Inc.*		423,225
	85,109	Theragenics Corp.*		402,566
	24,057	Vnus Medical Technologies*		364,464
	14,734	Zoll Medical Corp.*		360,394
				15,616,273
		Industrials—13.6%
	31,546	Accuride Corp.*		321,769
	42,454	Aceto Corp.		373,171
	15,530	Alamo Group, Inc.		336,690
	12,347	Axsys Technologies, Inc.*		486,224
	10,951	AZZ, Inc.*		373,429
	22,940	Bowne & Co., Inc.		398,697
	13,702	CDI Corp.		377,627
	38,512	China Yuchai International Ltd. (Bermuda)		531,465

Number of Shares			Value
		Common Stocks (Continued)
	8,406	CIRCOR International, Inc.	$	422,233
	15,372	Columbus McKinnon Corp.*		510,042
	16,210	Cornell Cos., Inc.*		403,305
	11,831	Ducommun, Inc.*		470,046
	17,006	Eastern (The) Co.		338,419
	17,328	Ennis, Inc.		354,184
	15,214	Exponent, Inc.*		459,615
	61,731	Frontier Airlines Holdings, Inc.*		435,204
	56,794	Frozen Food Express Industries, Inc.		323,726
	17,127	Gehl Co.*		327,640
	34,449	GP Strategies Corp.*		378,595
	10,993	Hardinge, Inc.		355,404
	25,527	Herley Industries, Inc.*		390,308
	30,028	Hudson Highland Group, Inc.*		344,721
	7,088	Hurco Cos., Inc.*		404,725
	14,935	Integrated Electrical Services, Inc.*		348,135
	18,403	International Shipholding Corp.*		399,345
	13,301	Jinpan International Ltd. (British Virgin Islands)		383,734
	13,659	Kadant, Inc.*		443,508
	12,706	Key Technology, Inc.*		383,086
	19,757	L.S. Starrett Co., Class A		373,210
	41,179	Lydall, Inc.*		443,086
	41,938	Metalico, Inc.*		475,996
	21,427	MFRI, Inc.*		350,546
	7,805	Michael Baker Corp.*		412,026
	50,301	North American Galvanizing & Coatings, Inc.*		436,613
	10,118	Northwest Pipe Co.*		373,557
	14,734	Park-Ohio Holdings Corp.*		351,701
	144,216	Perma-Fix Environmental Services, Inc.*		413,900
	23,857	Pinnacle Airlines Corp.*		377,895
	10,076	Powell Industries, Inc.*		424,099
	58,348	RCM Technologies, Inc.*		445,779
	22,639	Rush Enterprises, Inc., Class A*		383,731
	24,015	Rush Enterprises, Inc., Class B*		385,201
	16,927	Schawk, Inc.		384,581
	24,173	SIFCO Industries, Inc.*		547,517
	46,280	Spherion Corp.*		403,562
	44,446	Sypris Solutions, Inc.		365,791
	19,873	Tecumseh Products Co., Class A*		359,105
	36,204	TRC Cos., Inc.*		426,845
	22,144	Tredegar Corp.		385,748
	25,053	USA Truck, Inc.*		342,976
	8,084	VSE Corp.		479,300
	39,350	Waste Services, Inc.*		360,446
	47,313	WCA Waste Corp.*		330,718
				21,108,976
		Information Technology—22.3%
	73,800	ActivIdentity Corp.*		343,170
	100,042	Adaptec, Inc.*		353,148

See Notes to Financial Statements.

59

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	22,624	Agilysys, Inc.	$	391,395
	203,318	Alliance Fiber Optic Products, Inc.*		412,736
	41,537	American Software, Inc., Class A		336,865
	29,748	Amtech Systems, Inc.*		518,805
	42,175	AsiaInfo Holdings, Inc.*		515,800
	21,664	Authorize.Net Holdings, Inc.*		506,288
	117,250	Autobytel, Inc.*		302,505
	61,731	AXT, Inc.*		282,728
	61,452	Bell Microproducts, Inc.*		368,097
	8,922	Black Box Corp.		356,702
	20,747	Bluephoenix Solutions Ltd. (Israel)*		441,704
	30,507	Bottomline Technologies, Inc.*		489,942
	72,245	Captaris, Inc.*		334,494
	42,497	CEVA, Inc.*		403,297
	63,803	ChipMOS TECHNOLOGIES Ltd. (Bermuda)*		358,573
	48,947	Ciber, Inc.*		381,297
	20,389	Cohu, Inc.		334,380
	123,706	Credence Systems Corp.*		377,303
	26,845	Digi International, Inc.*		430,594
	42,339	Digimarc Corp.*		381,898
	126,135	Dot Hill Systems Corp.*		379,666
	34,212	Dynamics Research Corp.*		382,832
	43,887	Edgewater Technology, Inc.*		315,109
	15,973	Electro Scientific Industries, Inc.*		348,531
	15,573	EMS Technologies, Inc.*		436,667
	20,310	EPIQ Systems, Inc.*		393,811
	29,274	Exar Corp.*		355,972
	56,715	Exfo Electro-Optical Engineering, Inc. (Canada)*		364,677
	21,786	Fundtech Ltd. (Israel)*		372,758
	28,837	Globecomm Systems, Inc.*		445,243
	25,053	Greenfield Online, Inc.*		382,309
	33,811	GSI Group, Inc. (Canada)*		317,823
	15,530	Hutchinson Technology, Inc.*		368,527
	44,604	iGate Corp.*		391,177
	23,341	Immersion Corp.*		377,891
	60,656	Integrated Silicon Solutions, Inc.*		402,149
	26,960	Internap Network Services Corp.*		449,154
	31,862	Internet Capital Group, Inc.*		409,108
	32,378	Internet Gold-Golden Lines Ltd. (Israel)*		419,295
	26,845	Interwoven, Inc.*		380,931
	72,925	Iomega Corp.*		286,595
	36,642	IXYS Corp.*		386,573
	18,482	JDA Software Group, Inc.*		461,311
	60,377	Jupitermedia Corp.*		320,602
	52,014	KEMET Corp.*		367,739
	27,841	Keynote Systems, Inc.*		408,984
	44,167	Mattson Technology, Inc.*		383,370
	25,412	Methode Electronics, Inc.		318,666
	80,966	MIVA, Inc.*		257,472
	19,836	Moldflow Corp.*		302,301

Number of Shares			Value
		Common Stocks (Continued)
	116,891	Napster, Inc.*	$	379,896
	20,194	NCI, Inc., Class A*		386,513
	35,008	Ness Technologies, Inc.*		409,594
	35,050	NetScout Systems, Inc.*		541,874
	100,024	NetSol Technologies, Inc.*		446,107
	26,365	Network Equipment Technologies, Inc.*		392,840
	16,884	Novatel Wireless, Inc.*		438,984
	24,695	O2Micro International Ltd. ADR* (Cayman Islands)		428,705
	16,962	OSI Systems, Inc.*		424,559
	30,586	PC Connection, Inc.*		449,614
	32,099	Pegasystems, Inc.		375,879
	26,523	Perceptron, Inc.*		381,931
	32,621	Pericom Semiconductor Corp.*		487,358
	33,496	Photronics, Inc.*		366,446
	34,571	Qiao Xing Universal Telephone, Inc.* (British Virgin Island)		374,058
	112,433	Quantum Corp.*		449,732
	24,373	RADWARE Ltd. (Israel)*		412,391
	55,798	Richardson Electronics, Ltd.		422,391
	42,217	S1 Corp.*		355,467
	166,912	Safeguard Scientifics, Inc.*		392,243
	39,271	Secure Computing Corp.*		388,783
	13,380	SI International, Inc.*		377,450
	18,123	Sierra Wireless, Inc.* (Canada)		428,971
	26,365	Spectrum Control, Inc.*		452,687
	52,135	SRS Labs, Inc.*		335,749
	65,436	SupportSoft, Inc.*		314,093
	18,597	SYNNEX Corp.*		416,015
	15,372	Telvent GIT, S.A. (Spain)		379,535
	254,815	Think Partnership, Inc.*		433,186
	37,480	Tier Technologies, Inc., Class B*		394,664
	37,752	Tollgrade Communications, Inc.*		303,526
	77,820	Triquint Semiconductor, Inc.*		487,931
	26,007	Ultra Clean Holdings, Inc.*		333,930
	19,035	Vignette Corp.*		328,163
	36,921	WPCS International, Inc.*		422,745
	26,487	X-Rite, Inc.*		368,434
	29,311	Zygo Corp.*		344,697
				34,636,105
		Materials—5.8%
	11,710	AM Castle & Co.		352,471
	24,452	American Pacific Corp.		458,964
	25,248	Buckeye Technologies, Inc.*		452,444
	27,361	Calgon Carbon Corp.*		407,679
	25,770	Glatfelter		414,124
	27,161	ICO, Inc.*		393,291
	16,769	Innospec, Inc.		357,012
	14,619	KMG Chemicals, Inc.		221,478
	36,004	Material Sciences Corp.*		315,395
	40,462	Mercer International, Inc.*		380,343

See Notes to Financial Statements.

60

Schedule of Investments (Continued)

PowerShares Zacks Micro Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	14,060	Olympic Steel, Inc.	$	365,982
	10,155	Penford Corp.		358,167
	51,176	PolyOne Corp.*		408,896
	16,247	Quaker Chemical Corp.		350,610
	16,411	Schweitzer-Mauduit International, Inc.		459,836
	12,347	Stepan Co.		427,700
	18,123	Synalloy Corp.		325,851
	41,100	Tronox, Inc., Class A		349,761
	42,339	Tronox, Inc., Class B		348,450
	57,990	U.S. Concrete, Inc.*		287,630
	86,663	U.S. Energy Corp.		480,980
	9,596	Universal Stainless & Alloy Products, Inc.*		357,451
	60,971	US Gold Corp.*		284,735
	19,794	Wheeling-Pittsburgh Corp.*		389,348
				8,948,598
		Telecommunication Services—1.0%
	10,513	Atlantic Tele-Network, Inc.		377,522
	26,882	D&E Communications, Inc.		401,617
	37,480	Gilat Satellite Networks Ltd. (Israel)*		417,152
	15,293	SureWest Communications		404,959
				1,601,250
		Utilities—0.7%
	10,477	Central Vermont Public Service Corp.		332,959
	11,831	Laclede Group (The), Inc.		411,601
	84,190	Star Gas Partners, L.P.*		385,590
				1,130,150
		Total Common Stocks (Cost $155,842,773)		154,556,433
		Money Market Fund—0.1%
	122,036	Liquid Assets Portfolio Private Class** (Cost $122,036)		122,036
		Total Investments (Cost $155,964,809)—99.6%		154,678,469
		Other assets less liabilities—0.4%		547,441
		Net Assets—100.0%	$	155,225,910

ADR American Depositary Receipt.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	145,051,821		93.5	%
Bermuda		2,628,199		1.7
Israel		2,063,300		1.3
Canada		1,504,538		1.0
British Virgin Islands		1,087,749		0.7
Cayman Islands		820,423		0.5
Marshall Islands		733,508		0.5
Panama		409,396		0.2
Spain		379,535		0.2
Total investments		154,678,469		99.6
Other assets less liabilities		547,441		0.4
Net Assets	$	155,225,910		100.0	%

See Notes to Financial Statements.

61

Schedule of Investments

PowerShares Zacks Small Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.5%
		Consumer Discretionary—16.4%
	26,070	1-800-FLOWERS.COM, Inc., Class A*	$	312,579
	9,790	American Greetings Corp., Class A		257,869
	13,391	Arctic Cat, Inc.		193,098
	10,847	Blyth, Inc.		207,069
	7,475	Bob Evans Farms, Inc.		210,646
	15,388	Books-A-Million, Inc.		206,045
	11,580	Brown Shoe Co., Inc.		236,232
	6,942	Buckle (The), Inc.		299,200
	5,618	Buffalo Wild Wings, Inc.*		172,248
	20,380	Carrols Restaurant Group, Inc.*		227,033
	20,654	Champion Enterprises, Inc.*		244,956
	10,557	Cooper Tire & Rubber Co.		235,210
	2,356	Deckers Outdoor Corp.*		329,345
	13,660	DG Fastchannel, Inc.*		335,899
	8,628	Dick's Sporting Goods, Inc.*		287,916
	13,335	Dress Barn (The), Inc.*		218,561
	6,960	Drew Industries, Inc.*		275,477
	7,298	DSW, Inc., Class A*		164,205
	20,117	Eddie Bauer Holdings, Inc.*		151,280
	14,692	FTD Group, Inc.		206,423
	15,090	Gaiam, Inc., Class A*		350,843
	18,257	Great Wolf Resorts, Inc.*		238,436
	21,710	Haverty Furniture Cos., Inc.		184,535
	11,070	Heelys, Inc.*		82,029
	3,711	IHOP Corp.		235,018
	13,572	iRobot Corp.*		245,517
	10,889	K-Swiss, Inc., Class A		254,803
	24,231	La-Z-Boy, Inc.		191,183
	12,164	Libbey, Inc.		218,830
	7,719	LodgeNet Entertainment Corp.*		166,499
	19,017	Lodgian, Inc.*		231,437
	9,879	M/I Homes, Inc.		163,991
	13,491	Maidenform Brands, Inc.*		200,341
	9,480	Modine Manufacturing Co.		220,505
	8,573	Movado Group, Inc.		257,962
	23,100	Multimedia Games, Inc.*		203,742
	12,898	Noble International, Ltd.		240,806
	12,966	Overstock.com, Inc.*		507,359
	8,008	Riviera Holdings Corp.*		223,423
	9,401	Shutterfly, Inc.*		313,711
	18,598	Sinclair Broadcast Group, Inc., Class A		223,920
	16,372	Standard-Pacific Corp.		78,586
	34,607	Stewart Enterprises, Inc., Class A		313,885
	12,437	Sturm, Ruger & Co., Inc.*		116,286
	9,327	Tupperware Brands Corp.		336,705
	6,724	Warnaco Group (The), Inc.*		273,600
				10,845,243
		Consumer Staples—3.4%
	5,659	Andersons (The), Inc.		280,969
	5,939	Boston Beer Co., Inc., Class A*		310,313

Number of Shares			Value
		Common Stocks (Continued)
	28,924	Darling International, Inc.*	$	290,975
	11,263	Elizabeth Arden, Inc.*		280,449
	9,465	Fresh Del Monte Produce, Inc. (Cayman Islands)		343,390
	8,190	Green Mountain Coffee Roasters, Inc.*		305,487
	9,014	Imperial Sugar Co.		232,471
	6,072	Sanderson Farms, Inc.		211,306
				2,255,360
		Energy—7.8%
	10,115	Allis-Chalmers Energy, Inc.*		177,721
	41,452	American Oil & Gas, Inc.*		319,180
	7,069	Bill Barrett Corp.*		330,829
	14,888	Bois d'Arc Energy, Inc.*		326,643
	17,278	Callon Petroleum Co.*		251,913
	4,443	Dawson Geophysical Co.*		354,595
	4,865	DCP Midstream Partners, LP		209,390
	22,968	ENGlobal Corp.*		318,796
	33,437	FX Energy, Inc.*		235,731
	7,675	GMX Resources, Inc.*		295,564
	5,165	GulfMark Offshore, Inc.*		240,586
	21,553	Harvest Natural Resources, Inc.*		296,569
	7,737	Inergy LP		269,867
	10,506	Matrix Service Co.*		309,822
	6,110	Nordic American Tanker Shipping Ltd. (Bermuda)		236,396
	19,259	Pacific Ethanol, Inc.*		154,650
	25,749	Parker Drilling Co.*		217,322
	13,441	Rosetta Resources, Inc.*		255,379
	6,843	Trico Marine Services, Inc.*		222,055
	14,445	USEC, Inc.*		127,116
				5,150,124
		Financials—14.7%
	13,700	Alfa Corp.		249,340
	6,398	American Physicians Capital, Inc.		278,697
	14,454	Amerisafe, Inc.*		233,721
	16,501	Amtrust Financial Services, Inc.		230,189
	5,712	Argo Group International Holdings, Ltd. (Bermuda)*		243,388
	13,015	Banco Latinoamericano de Exportaciones, S.A., Class E (Panama)		253,402
	23,616	Brookline Bancorp, Inc.		254,108
	14,351	CNA Surety Corp.*		284,006
	14,888	Corus Bankshares, Inc.		164,066
	12,364	eHealth, Inc.*		345,450
	23,480	Encore Capital Group, Inc.*		267,907
	20,142	EZCORP, Inc., Class A*		265,069
	16,695	FBR Capital Markets Corp.*		213,696
	6,972	FPIC Insurance Group, Inc.*		291,290
	4,673	GAMCO Investors, Inc., Class A		289,305
	4,174	Greenhill & Co., Inc.		308,793
	37,416	LaBranche & Co., Inc.*		205,040

See Notes to Financial Statements.

62

Schedule of Investments (Continued)

PowerShares Zacks Small Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	3,167	LandAmerica Financial Group, Inc.	$	88,011
	7,010	Life Partners Holdings, Inc.		255,795
	14,608	MarketAxess Holdings, Inc.*		228,907
	9,292	Max Capital Group Ltd. (Bermuda)		262,871
	16,760	MCG Capital Corp.		234,808
	27,007	Meadowbrook Insurance Group, Inc.*		260,077
	7,510	MI Developments, Inc., Class A (Canada)		240,846
	5,094	Midland (The) Co.		324,080
	19,730	NewStar Financial, Inc.*		198,089
	6,667	NYMAGIC, Inc.		192,276
	17,591	Phoenix (The) Cos., Inc.		242,404
	26,958	PMA Capital Corp., Class A*		266,884
	4,911	ProAssurance Corp.*		270,793
	8,452	Provident Bankshares Corp.		208,511
	17,169	Provident Financial Services, Inc.		271,957
	17,748	Provident New York Bancorp		225,577
	18,173	RAM Holdings Ltd. (Bermuda)*		125,575
	4,183	RLI Corp.		243,325
	13,381	SeaBright Insurance Holdings, Inc.*		223,195
	6,484	UMB Financial Corp.		272,328
	11,292	United America Indemnity Ltd., Class A (Cayman Islands)*		248,989
	7,049	United Fire & Casualty Co.		225,850
	6,010	Zenith National Insurance Corp.		241,482
				9,730,097
		Health Care—15.4%
	12,801	Accuray, Inc.*		257,300
	6,354	Air Methods Corp.*		342,925
	16,457	Albany Molecular Research, Inc.*		297,707
	9,299	Align Technology, Inc.*		192,489
	17,033	Alkermes, Inc.*		275,935
	27,230	Alliance Imaging, Inc.*		269,849
	3,655	Analogic Corp.		208,883
	20,179	Applera Corp. - Celera Group*		329,119
	17,786	Aspect Medical Systems, Inc.*		243,490
	21,199	Bentley Pharmaceuticals, Inc.*		293,394
	13,438	BioMarin Pharmaceuticals, Inc.*		372,637
	21,056	Cypress Bioscience, Inc.*		284,045
	2,656	eV3, Inc.*		38,990
	8,621	Given Imaging Ltd. (Israel)*		245,957
	15,779	GTx, Inc.*		248,993
	6,838	inVentiv Health, Inc.*		288,769
	5,014	Inverness Medical Innovations, Inc.*		301,291
	23,307	Isis Pharmaceuticals, Inc.*		410,670
	9,473	Martek Biosciences Corp.*		289,400
	8,011	MedCath Corp.*		222,145
	9,697	MGI Pharma, Inc.*		315,928
	6,476	Myriad Genetics, Inc.*		358,511
	31,771	Nektar Therapeutics*		189,991
	14,342	Obagi Medical Products, Inc.*		313,229
	8,456	Omrix Biopharmaceuticals, Inc.*		294,607

Number of Shares			Value
		Common Stocks (Continued)
	30,295	OraSure Technologies, Inc.*	$	274,776
	28,889	Pain Therapeutics, Inc.*		296,401
	9,955	Pharmion Corp.*		479,036
	9,239	Providence Service (The) Corp.*		293,708
	16,307	Quidel Corp.*		336,740
	22,582	Regeneration Technologies, Inc.*		239,595
	20,493	Savient Pharmaceuticals, Inc.*		288,541
	8,571	SonoSite, Inc.*		301,613
	15,130	TriZetto Group (The), Inc.*		247,224
	14,052	Volcano Corp.*		240,149
	10,022	Wright Medical Group, Inc.*		265,583
				10,149,620
		Industrials—15.7%
	5,001	A.O. Smith Corp.		186,987
	12,141	AAON, Inc.		221,695
	8,133	AAR Corp.*		260,663
	9,642	ABM Industries, Inc.		226,780
	11,590	Aegean Marine Petroleum Network, Inc. (Marshall Islands)		474,841
	9,398	Apogee Enterprises, Inc.		221,135
	13,994	Bowne & Co., Inc.		243,216
	35,626	CBIZ, Inc.*		320,634
	8,763	Chart Industries, Inc.*		287,426
	4,418	Copa Holdings S.A., Class A (Panama)		167,045
	11,007	Cornell Cos., Inc.*		273,854
	6,426	Deluxe Corp.		259,225
	8,708	Ducommun, Inc.*		345,969
	11,397	DynCorp International, Inc., Class A*		258,028
	7,924	Encore Wire Corp.		166,404
	6,161	EnPro Industries, Inc.*		252,663
	4,524	Esterline Technologies Corp.*		247,825
	20,481	GenCorp, Inc.*		241,266
	9,458	Genesee & Wyoming, Inc., Class A*		277,309
	15,627	GrafTech International Ltd.*		295,350
	11,161	Hexcel Corp.*		279,360
	9,413	Houston Wire & Cable Co.		165,386
	11,738	ICF International, Inc.*		364,465
	8,019	L.B. Foster Co., Class A*		345,218
	5,374	Layne Christensen Co.*		305,996
	6,084	Macquarie Infrastructure Co. LLC		254,068
	8,109	McGrath Rentcorp.		277,977
	10,133	OceanFreight, Inc. (Marshall Islands)		269,943
	24,185	On Assignment, Inc.*		201,703
	3,954	Perini Corp.*		226,762
	12,223	Pike Electric Corp.*		240,793
	7,135	Raven Industries, Inc.		308,303
	15,181	Rush Enterprises, Inc., Class A*		257,318
	6,858	Seaspan Corp. (Marshall Islands)		218,907
	15,853	Taser International, Inc.*		263,952
	6,309	TBS International Ltd. , Class A (Bermuda)*		396,458
	3,186	Triumph Group, Inc.		253,669

See Notes to Financial Statements.

63

Schedule of Investments (Continued)

PowerShares Zacks Small Cap Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	3,808	United Stationers, Inc.*	$	220,521
	19,310	Vicor Corp.		271,112
				10,350,226
		Information Technology—17.6%
	18,861	Acacia Research - Acacia Technologies*		311,395
	6,366	Advent Software, Inc.*		352,231
	23,660	Alvarion Ltd. (Israel)*		297,643
	18,002	ASE Test Ltd. (Singapore)*		261,029
	7,557	Avid Technology, Inc.*		222,100
	9,936	Blue Coat Systems, Inc.*		403,301
	18,043	C-COR, Inc.*		221,207
	10,518	Checkpoint Systems, Inc.*		318,170
	16,930	Chordiant Software, Inc.*		243,623
	12,136	Cohu, Inc.		199,030
	7,294	Dolby Laboratories, Inc., Class A*		302,409
	15,864	Double-Take Software, Inc.*		378,039
	12,312	Echelon Corp.*		271,480
	14,342	ExlService Holdings, Inc.*		387,233
	23,346	FalconStor Software, Inc.*		327,544
	6,503	FARO Technologies, Inc.*		187,026
	8,455	FEI Co.*		245,280
	14,940	Greenfield Online, Inc.*		227,984
	11,229	Imergent, Inc.		270,843
	11,656	InfoSpace, Inc.		225,310
	16,460	Internap Network Services Corp.*		274,224
	14,920	Intevac, Inc.*		262,144
	25,863	Ixia*		270,527
	16,150	Keynote Systems, Inc.*		237,244
	15,685	Liquidity Services, Inc.*		194,965
	11,354	LoJack Corp.*		199,490
	18,002	Marchex, Inc., Class B		203,243
	12,531	Mellanox Technologies Ltd. (Israel)*		295,857
	22,148	Mercury Computer Systems, Inc.*		346,395
	18,651	MSC.Software Corp.*		257,384
	18,054	PC Connection, Inc.*		265,394
	22,721	Pericom Semiconductor Corp.*		339,452
	33,299	S1 Corp.*		280,378
	21,311	Sirenza Microdevices, Inc.*		352,484
	17,769	Smith Micro Software, Inc.*		273,820
	27,384	SonicWALL, Inc.*		283,151
	19,305	Ultratech, Inc.*		223,745
	7,104	VistaPrint Ltd. (Bermuda)*		337,937
	8,643	Vocus, Inc.*		310,975
	5,297	WebMD Health Corp., Class A*		243,503
	25,323	Wind River Systems, Inc.*		316,791
	10,914	Xyratex Ltd. (Bermuda)*		186,411
				11,608,391
		Materials—4.8%
	6,843	Arch Chemicals, Inc.		312,178
	15,834	Buckeye Technologies, Inc.*		283,745
	22,007	Calgon Carbon Corp.*		327,904

Number of Shares			Value
		Common Stocks (Continued)
	15,033	Headwaters, Inc.*	$	215,724
	8,204	Koppers Holdings, Inc.		367,540
	21,076	Landec Corp.*		313,189
	11,632	Olin Corp.		264,977
	4,997	OM Group, Inc.*		264,741
	7,895	Rock-Tenn Co., Class A		230,218
	4,478	Schnitzer Steel Industries, Inc., Class A		295,861
	11,696	Worthington Industries, Inc.		292,400
				3,168,477
		Telecommunication Services—1.3%
	16,880	Alaska Communications Systems Group, Inc.		274,638
	8,319	Atlantic Tele-Network, Inc.		298,735
	6,860	Cbeyond, Inc.*		268,363
				841,736
		Utilities—2.4%
	12,238	Avista Corp.		269,848
	6,490	Black Hills Corp.		288,286
	10,404	El Paso Electric Co.*		253,337
	5,151	New Jersey Resources Corp.		253,687
	9,015	Portland General Electric Co.		253,772
	5,053	Suburban Propane Partners L.P.		243,302
				1,562,232
		Total Common Stocks (Cost $62,192,540)		65,661,506
		Money Market Fund—0.6%
	388,861	Liquid Assets Portfolio Private Class** (Cost $388,861)		388,861
		Total Investments (Cost $62,581,401)—100.1%		66,050,367
		Liabilities in excess of other assets—(0.1%)		(82,628	)
		Net Assets—100.0%	$	65,967,739

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	60,943,482			92.4	%
Bermuda		1,789,036			2.7
Marshall Islands		963,691			1.4
Israel		839,457			1.3
Cayman Islands		592,379			0.9
Panama		420,447			0.6
Singapore		261,029			0.4
Canada		240,846			0.4
Total investments		66,050,367			100.1
Liabilities in excess of other assets		(82,628	)		(0.1	)
Net Assets	$	65,967,739			100.0	%

See Notes to Financial Statements.

64

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Statements of Assets and Liabilities

October 31, 2007 (Unaudited)

	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	$	627,609,365		$	267,204,011	$	354,549,051		$	106,821,131	$	67,978,885		$	114,884,810		$	14,206,341
Affiliated investment at value		497,740			—		—			—		—			—			41,462
Cash		606,234			374,791		78,175			83,412		24,189			—			45,320
Receivables:
Dividends		490,726			291,558		20,650			78,684		1,601			81,582			16,849
Capital stock sold		3,781,066			—		2,443,683			—		—			—			—
Expense waivers due from Adviser		—			—		—			2,281		5,604			1,766			9,030
Investments sold		—			—		—			—		—			—			—
Other assets		3,339			3,545		2,285			1,317		700			1,417			133
Total Assets		632,988,470			267,873,905		357,093,844			106,986,825		68,010,979			114,969,575			14,319,135
LIABILITIES:
Due to custodian		—			—		—			—		—			163,028			—
Payables:
Investments purchased		3,777,198			—		2,443,968			—		—			—			—
Expense reimbursements due to Adviser		24,489			9,220		4,261			—		—			—			—
Accrued advisory fees		237,352			113,164		143,749			47,050		28,298			49,956			5,960
Accrued expenses		96,874			127,920		66,698			51,264		43,166			57,310			54,096
Total Liabilities		4,135,913			250,304		2,658,676			98,314		71,464			270,294			60,056
NET ASSETS	$	628,852,557		$	267,623,601	$	354,435,168		$	106,888,511	$	67,939,515		$	114,699,281		$	14,259,079
NET ASSETS CONSIST OF:
Paid-in capital	$	585,362,993		$	240,934,783	$	305,090,047		$	104,207,976	$	78,730,212		$	120,821,537		$	12,833,559
Undistributed net investment income (loss)/ distributions in excess of net investment income		1,032,618			355,454		(257,878	)		37,774		(127,155	)		2,732,620			10,402
Accumulated net realized gain (loss) on investments		(8,528,739	)		7,455,971		16,648,760			198,296		(14,494,849	)		(5,259,266	)		214,958
Net unrealized appreciation (depreciation) on investments		50,985,685			18,877,393		32,954,239			2,444,465		3,831,307			(3,595,610	)		1,200,160
Net Assets	$	628,852,557		$	267,623,601	$	354,435,168		$	106,888,511	$	67,939,515		$	114,699,281		$	14,259,079
Shares outstanding (unlimited amount authorized, $0.01 par value)		32,800,000			12,600,000		14,300,000			5,400,000		3,600,000			6,300,000			500,000
Net asset value	$	19.17		$	21.24	$	24.79		$	19.79	$	18.87		$	18.21		$	28.52
Unaffiliated investments at cost	$	576,623,680		$	248,326,618	$	321,594,812		$	104,376,666	$	64,147,578		$	118,480,420		$	13,006,181
Affiliated investments at cost	$	497,740		$	—	$	—		$	—	$	—		$	—		$	41,462

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	$	17,014,577		$	7,785,311		$	15,037,324		$	15,426,027		$	154,556,433		$	65,661,506
Affiliated investment at value		46,680			47,466			—			44,499			122,036			388,861
Cash		38,104			49,221			31,251			49,628			666,462			—
Receivables:
Dividends		4,525			4,899			1,469			9,793			28,251			22,110
Capital stock sold		—			—			—			—			—			—
Expense waivers due from Adviser		8,791			9,525			8,980			8,969			—			5,895
Investments sold		—			—			—			—			12,889			—
Other assets		138			98			130			194			2,293			854
Total Assets		17,112,815			7,896,520			15,079,154			15,539,110			155,388,364			66,079,226
LIABILITIES:
Due to custodian		—			—			—			—			—			21,664
Payables:
Investments purchased		—			—			—			—			—			—
Expense reimbursements due to Adviser		—			—			—			—			5,553			—
Accrued advisory fees		7,202			3,304			6,293			6,489			70,862			27,895
Accrued expenses		53,803			55,249			50,563			50,291			86,039			61,928
Total Liabilities		61,005			58,553			56,856			56,780			162,454			111,487
NET ASSETS	$	17,051,810		$	7,837,967		$	15,022,298		$	15,482,330		$	155,225,910		$	65,967,739
NET ASSETS CONSIST OF:
Paid-in capital	$	15,976,773		$	8,137,235		$	13,032,972		$	15,234,712		$	175,211,906		$	68,015,047
Undistributed net investment income (loss)/ distributions in excess of net investment income		(6,339	)		54,800			(56,866	)		6,142			525,875			310,900
Accumulated net realized gain (loss) on investments		140,526			(330,802	)		423,211			(254,130	)		(19,225,531	)		(5,827,174	)
Net unrealized appreciation (depreciation) on investments		940,850			(23,266	)		1,622,981			495,606			(1,286,340	)		3,468,966
Net Assets	$	17,051,810		$	7,837,967		$	15,022,298		$	15,482,330		$	155,225,910		$	65,967,739
Shares outstanding (unlimited amount authorized, $0.01 par value)		600,000			300,000			500,000			600,000			9,000,000			2,300,000
Net asset value	$	28.42		$	26.13		$	30.04		$	25.80		$	17.25		$	28.68
Unaffiliated investments at cost	$	16,073,727		$	7,808,577		$	13,414,343		$	14,930,421		$	155,842,773		$	62,192,540
Affiliated investments at cost	$	46,680		$	47,466		$	—		$	44,499		$	122,036		$	388,861

67

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	2,050,993		$	3,813,431		$	628,124		$	926,057		$	102,474		$	3,656,153		$	105,440
Affiliated dividend income		5,930			6,419			—			2,625			—			3,967			1,058
Foreign withholding tax		—			—			—			—			—			(648	)		—
Total Income		2,056,923			3,819,850			628,124			928,682			102,474			3,659,472			106,498
EXPENSES:
Advisory fees		1,023,234			704,899			633,925			292,233			156,689			305,735			29,662
Sub-licensing		61,394			42,294			38,035			17,534			9,401			18,344			2,966
Administration & Accounting fees		56,361			42,912			42,912			42,912			42,912			42,912			43,655
Printing		35,835			35,063			22,944			12,460			7,303			13,334			1,254
Custodian & transfer agent fees		12,121			9,746			8,596			5,115			4,109			5,978			3,673
Legal		4,924			5,353			3,222			1,871			1,065			1,985			182
Trustees		8,541			7,881			6,628			4,939			3,751			5,043			2,893
Audit		8,319			8,319			8,319			8,319			8,319			8,319			8,319
Listing fee and expenses		5,262			5,284			5,185			5,128			5,091			5,133			5,051
Offering costs		—			—			—			—			—			—			11,544
Registration & filings		—			—			—			740			—			—			837
Other expenses		6,474			6,161			5,835			5,320			5,220			5,404			4,150
Total Expenses		1,222,465			867,912			775,601			396,571			243,860			412,187			114,186
Net expenses reimbursed to the Adviser under the Expense Agreement		66,810			20,261			23,144			—			—			—			—
Less fees waived:
Advisory		—			—			—			(28,357	)		(46,432	)		(26,962	)		(29,662	)
Other fees assumed by the Adviser		—			—			—			—			—			—			(34,419	)
Net Expenses		1,289,275			888,173			798,745			368,214			197,428			385,225			50,105
Net Investment Income (Loss)		767,648			2,931,677			(170,621	)		560,468			(94,954	)		3,274,247			56,393
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(11,549,092	)		(2,707,425	)		(2,611,131	)		(4,310,578	)		(4,125,885	)		(7,322,826	)		(70,480	)
In-kind redemptions		16,849,410			11,892,655			30,344,384			8,232,149			6,121,942			9,495,175			302,883
Net realized gain (loss)		5,300,318			9,185,230			27,733,253			3,921,571			1,996,057			2,172,349			232,403
Net change in unrealized appreciation/depreciation on investments		30,459,754			(2,658,849	)		14,839,465			(7,579,536	)		(825,062	)		(8,694,499	)		563,923
Net realized and unrealized gain (loss) on investments		35,760,072			6,526,381			42,572,718			(3,657,965	)		1,170,995			(6,522,150	)		796,326
Net increase (decrease) in net assets resulting from operations	$	36,527,720		$	9,458,058		$	42,402,097		$	(3,097,497	)	$	1,076,041		$	(3,247,903	)	$	852,719

*  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
INVESTMENT INCOME:
Unaffiliated dividend income	$	72,913		$	134,396		$	12,506		$	157,445		$	1,542,697		$	571,309
Affiliated dividend income		1,046			1,201			27			1,713			10,613			7,666
Foreign withholding tax		—			(21	)		—			—			(3,242	)		(328	)
Total Income		73,959			135,576			12,533			159,158			1,550,068			578,647
EXPENSES:
Advisory fees		36,301			19,981			20,158			38,841			453,725			166,711
Sub-licensing		3,630			1,998			2,016			3,884			90,745			33,342
Administration & Accounting fees		43,681			43,704			43,692			43,588			42,912			42,912
Printing		1,309			1,271			1,256			1,853			23,093			8,591
Custodian & transfer agent fees		3,679			4,515			3,537			3,516			9,465			5,033
Legal		191			185			183			269			3,435			1,277
Trustees		2,912			2,810			2,851			2,956			6,169			3,986
Audit		8,319			8,319			8,319			8,319			8,319			8,319
Listing fee and expenses		5,051			5,051			5,051			5,054			5,202			5,100
Offering costs		12,071			11,544			15,324			16,571			—			—
Registration & filings		830			838			820			827			—			—
Other expenses		4,151			3,994			4,149			4,168			5,568			6,350
Total Expenses		122,125			104,210			107,356			129,846			648,633			281,621
Net expenses reimbursed to the Adviser under the Expense Agreement		—			—			—			—			—			—
Less fees waived:
Advisory		(36,301	)		(19,981	)		(20,158	)		(38,841	)		(13,418	)		(48,209	)
Other fees assumed by the Adviser		(26,562	)		(46,709	)		(45,669	)		(23,941	)		—			—
Net Expenses		59,262			37,520			41,529			67,064			635,215			233,412
Net Investment Income (Loss)		14,697			98,056			(28,996	)		92,094			914,853			345,235
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(574,136	)		(652,406	)		(296,752	)		(1,082,473	)		(10,121,715	)		(4,086,127	)
In-kind redemptions		791,810			742,389			921,859			881,169			13,000,683			5,032,208
Net realized gain (loss)		217,674			89,983			625,107			(201,304	)		2,878,968			946,081
Net change in unrealized appreciation/depreciation on investments		173,578			(311,759	)		991,205			(19,208	)		(14,699,425	)		1,135,442
Net realized and unrealized gain (loss) on investments		391,252			(221,776	)		1,616,312			(220,512	)		(11,820,457	)		2,081,523
Net increase (decrease) in net assets resulting from operations	$	405,949		$	(123,720	)	$	1,587,316		$	(128,418	)	$	(10,905,604	)	$	2,426,758

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
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	767,648		$	240,165		$	2,931,677		$	5,109,774		$	(170,621	)	$	(173,222	)
Net realized gain (loss) on investments		5,300,318			(286,076	)		9,185,230			24,650,239			27,733,253			2,676,199
Net change in unrealized appreciation/ depreciation of investments		30,459,754			16,420,488			(2,658,849	)		16,864,450			14,839,465			13,821,191
Net increase (decrease) in net assets resulting from operations		36,527,720			16,374,577			9,458,058			46,624,463			42,402,097			16,324,168
Undistributed net investment income included in the price of units issued and redeemed		264,970			32,897			(77,179	)		339,753			(87,257	)		117,894
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			(240,165	)		(3,747,254	)		(3,984,387	)		—			(711,633	)
Tax return of capital		—			(3,527	)		—			—			—			(9,929	)
Total distributions to shareholders		—			(243,692	)		(3,747,254	)		(3,984,387	)		—			(721,562	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		517,985,378			289,938,897			82,504,078			482,570,049			316,677,938			199,694,174
Value of shares repurchased		(203,258,090	)		(177,221,894	)		(112,721,179	)		(323,612,201	)		(194,438,926	)		(128,827,369	)
Net income equalization		(264,970	)		(32,897	)		77,179			(339,753	)		87,257			(117,894	)
Net increase (decrease) in net assets resulting from shares transactions		314,462,318			112,684,106			(30,139,922	)		158,618,095			122,326,269			70,748,911
Increase (Decrease) in Net Assets		351,255,008			128,847,888			(24,506,297	)		201,597,924			164,641,109			86,469,411
NET ASSETS:
Beginning of period		277,597,549			148,749,661			292,129,898			90,531,974			189,794,059			103,324,648
End of period	$	628,852,557		$	277,597,549		$	267,623,601		$	292,129,898		$	354,435,168		$	189,794,059
Undistributed net investment income (loss)/distributions in excess of net investment income at end of period	$	1,032,618		$	—		$	355,454		$	1,248,210		$	(257,878	)	$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		28,200,000			17,800,000			3,900,000			25,900,000			13,900,000			10,400,000
Shares repurchased		(11,300,000	)		(11,000,000	)		(5,400,000	)		(17,000,000	)		(8,600,000	)		(6,900,000	)
Shares outstanding, beginning of period		15,900,000			9,100,000			14,100,000			5,200,000			9,000,000			5,500,000
Shares outstanding, end of period		32,800,000			15,900,000			12,600,000			14,100,000			14,300,000			9,000,000

*  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
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	560,468		$	1,145,574		$	(94,954	)	$	(210,147	)	$	3,274,247		$	575,488
Net realized gain (loss) on investments		3,921,571			4,692,328			1,996,057			(3,356,204	)		2,172,349			6,596,561
Net change in unrealized appreciation/ depreciation of investments		(7,579,536	)		7,757,823			(825,062	)		(1,366,638	)		(8,694,499	)		1,084,508
Net increase (decrease) in net assets resulting from operations		(3,097,497	)		13,595,725			1,076,041			(4,932,989	)		(3,247,903	)		8,256,557
Undistributed net investment income included in the price of units issued and redeemed		15,306			54,435			(32,201	)		(92,734	)		(43,505	)		48,335
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(836,057	)		(891,950	)		—			—			(523,659	)		(591,897	)
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(836,057	)		(891,950	)		—			—			(523,659	)		(591,897	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		83,757,471			136,706,085			63,714,117			98,612,408			80,793,925			136,778,591
Value of shares repurchased		(82,291,735	)		(96,868,606	)		(58,197,374	)		(150,797,541	)		(80,002,944	)		(93,102,785	)
Net income equalization		(15,306	)		(54,435	)		32,201			92,734			43,505			(48,335	)
Net increase (decrease) in net assets resulting from shares transactions		1,450,430			39,783,044			5,548,944			(52,092,399	)		834,486			43,627,471
Increase (Decrease) in Net Assets		(2,467,818	)		52,541,254			6,592,784			(57,118,122	)		(2,980,581	)		51,340,466
NET ASSETS:
Beginning of period		109,356,329			56,815,075			61,346,731			118,464,853			117,679,862			66,339,396
End of period	$	106,888,511		$	109,356,329		$	67,939,515		$	61,346,731		$	114,699,281		$	117,679,862
Undistributed net investment income (loss)/distributions in excess of net investment income at end of period	$	37,774		$	298,057		$	(127,155	)	$	—		$	2,732,620		$	25,537
CHANGES IN SHARES OUTSTANDING:
Shares sold		4,100,000			7,500,000			3,500,000			5,700,000			4,300,000			7,800,000
Shares repurchased		(4,100,000	)		(5,400,000	)		(3,200,000	)		(8,800,000	)		(4,300,000	)		(5,400,000	)
Shares outstanding, beginning of period		5,400,000			3,300,000			3,300,000			6,400,000			6,300,000			3,900,000
Shares outstanding, end of period		5,400,000			5,400,000			3,600,000			3,300,000			6,300,000			6,300,000

71

Statements of Changes in Net Assets (Continued)

	PowerShares Dynamic Large Cap Portfolio						PowerShares Dynamic Mid Cap Portfolio						PowerShares Dynamic Small Cap Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007
OPERATIONS:
Net investment income (loss)	$	56,393		$	64,349		$	14,697		$	50,583		$	98,056		$	2,160
Net realized gain (loss) on investments		232,403			265,497			217,674			594,502			89,983			353,397
Net change in unrealized appreciation/ depreciation of investments		563,923			636,237			173,578			767,272			(311,759	)		288,493
Net increase (decrease) in net assets resulting from operations		852,719			966,083			405,949			1,412,357			(123,720	)		644,050
Undistributed net investment income included in the price of units issued and redeemed		3,948			(6,528	)		(1,001	)		(1,941	)		—			(1,680	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(68,525	)		(45,948	)		(36,508	)		(34,110	)		(43,449	)		(1,164	)
Total distributions to shareholders		(68,525	)		(45,948	)		(36,508	)		(34,110	)		(43,449	)		(1,164	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		8,138,920			20,205,371			14,025,015			23,082,797			5,329,158			20,297,119
Value of shares repurchased		(5,462,512	)		(10,327,029	)		(8,533,064	)		(13,270,626	)		(5,329,158	)		(12,934,869	)
Net income equalization		(3,948	)		6,528			1,001			1,941			—			1,680
Net increase (decrease) in net assets resulting from shares transactions		2,672,460			9,884,870			5,492,952			9,814,112			—			7,363,930
Increase (Decrease) in Net Assets		3,460,602			10,798,477			5,861,392			11,190,418			(167,169	)		8,005,136
NET ASSETS:
Beginning of period		10,798,477			—			11,190,418			—			8,005,136			—
End of period	$	14,259,079		$	10,798,477		$	17,051,810		$	11,190,418		$	7,837,967		$	8,005,136
Undistributed net investment income (loss)/distributions in excess of net investment income at end of period	$	10,402		$	18,586		$	(6,339	)	$	16,473		$	54,800		$	193
CHANGES IN SHARES OUTSTANDING:
Shares sold		300,000			800,000			500,000			900,000			200,000			800,000
Shares repurchased		(200,000	)		(400,000	)		(300,000	)		(500,000	)		(200,000	)		(500,000	)
Shares outstanding, beginning of period		400,000			—			400,000			—			300,000			—
Shares outstanding, end of period		500,000			400,000			600,000			400,000			300,000			300,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

72

	PowerShares Dynamic Aggressive Growth Portfolio						PowerShares Dynamic Deep Value Portfolio						PowerShares Zacks Micro Cap Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period December 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	(28,996	)	$	(22,598	)	$	92,094		$	131,829		$	914,853		$	577,806
Net realized gain (loss) on investments		625,107			205,154			(201,304	)		234,101			2,878,968			6,289,128
Net change in unrealized appreciation/ depreciation of investments		991,205			631,776			(19,208	)		514,814			(14,699,425	)		1,294,918
Net increase (decrease) in net assets resulting from operations		1,587,316			814,332			(128,418	)		880,744			(10,905,604	)		8,161,852
Undistributed net investment income included in the price of units issued and redeemed		(27,870	)		3,814			—			1,491			(117,616	)		53,014
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			—			(174,870	)		(43,560	)		(529,252	)		(206,496	)
Total distributions to shareholders		—			—			(174,870	)		(43,560	)		(529,252	)		(206,496	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		13,668,747			19,881,714			7,912,292			19,997,872			75,250,452			139,710,391
Value of shares repurchased		(10,785,471	)		(10,144,340	)		(7,912,292	)		(5,049,438	)		(100,899,876	)		(114,331,138	)
Net income equalization		27,870			(3,814	)		—			(1,491	)		117,616			(53,014	)
Net increase (decrease) in net assets resulting from shares transactions		2,911,146			9,733,560			—			14,946,943			(25,531,808	)		25,326,239
Increase (Decrease) in Net Assets		4,470,592			10,551,706			(303,288	)		15,785,618			(37,084,280	)		33,334,609
NET ASSETS:
Beginning of period		10,551,706			—			15,785,618			—			192,310,190			158,975,581
End of period	$	15,022,298		$	10,551,706		$	15,482,330		$	15,785,618		$	155,225,910		$	192,310,190
Undistributed net investment income (loss)/distributions in excess of net investment income at end of period	$	(56,866	)	$	—		$	6,142		$	88,918		$	525,875		$	257,890
CHANGES IN SHARES OUTSTANDING:
Shares sold		500,000			800,000			300,000			800,000			4,100,000			8,100,000
Shares repurchased		(400,000	)		(400,000	)		(300,000	)		(200,000	)		(5,600,000	)		(6,700,000	)
Shares outstanding, beginning of period		400,000			—			600,000			—			10,500,000			9,100,000
Shares outstanding, end of period		500,000			400,000			600,000			600,000			9,000,000			10,500,000

73

Statements of Changes in Net Assets (Continued)

	PowerShares Zacks Small Cap Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income	$	345,235		$	121,243
Net realized gain on investments		946,081			1,615,443
Net change in unrealized appreciation/depreciation of investments		1,135,442			(234,214	)
Net increase in net assets resulting from operations		2,426,758			1,502,472
Undistributed net investment income included in the price of units issued and redeemed		(34,335	)		7,230
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			(126,531	)
Tax return of capital		—			(10,819	)
Total distributions to shareholders		—			(137,350	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		46,570,661			82,223,254
Value of shares repurchased		(54,559,619	)		(70,924,589	)
Net income equalization		34,335			(7,230	)
Net increase (decrease) in net assets resulting from shares transactions		(7,954,623	)		11,291,435
Increase (Decrease) in Net Assets		(5,562,200	)		12,663,787
NET ASSETS:
Beginning of period		71,529,939			58,866,152
End of period	$	65,967,739		$	71,529,939
Undistributed net investment income at end of period	$	310,900		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,700,000			3,100,000
Shares repurchased		(2,000,000	)		(2,700,000	)
Shares outstanding, beginning of period		2,600,000			2,200,000
Shares outstanding, end of period		2,300,000			2,600,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

74

Financial Highlights

PowerShares Dynamic Large Cap Growth Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	17.46		$	16.35		$	14.11		$	14.83
Net investment income (loss)**		0.03			0.02			(0.01	)		—	(a)
Net realized and unrealized gain (loss) on investments		1.67			1.11			2.25			(0.72	)
Total from operations		1.70			1.13			2.24			(0.72	)
Undistributed net investment income included in price of units issued and redeemed**		0.01			—	(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	$	19.17		$	17.46		$	16.35		$	14.11
TOTAL RETURN***		9.79	%		6.92	%		15.89	%		(4.87	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	628,853		$	277,598		$	148,750		$	8,467
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.64	%		0.63	%†
Expenses, prior to waivers and reimbursements		0.60	%†(b)		0.68	%(b)		0.80	%		2.45	%†
Net investment income (loss), net of waivers and reimbursements		0.38	%†		0.13	%		(0.04	)%		0.13	%†
Portfolio turnover rate ††		21	%		57	%		73	%		2	%

PowerShares Dynamic Large Cap Value Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	20.72		$	17.41		$	14.52		$	15.00
Net investment income**		0.22			0.39			0.28			0.05
Net realized and unrealized gain (loss) on investments		0.58			3.18			2.85			(0.52	)
Total from operations		0.80			3.57			3.13			(0.47	)
Undistributed net investment income included in price of units issued and redeemed**		(0.01	)		0.03			—			—
Distributions to shareholders from:
Net investment income		(0.27	)		(0.29	)		(0.24	)		(0.01	)
Net asset value at end of period	$	21.24		$	20.72		$	17.41		$	14.52
TOTAL RETURN***		3.85	%		20.85	%		21.71	%		(3.11	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	267,624		$	292,130		$	90,532		$	10,166
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.65	%		0.63	%†
Expenses, prior to waivers and reimbursements		0.62	%†(c)		0.67	%(c)		0.94	%		2.16	%†
Net investment income, net of waivers and reimbursements		2.08	%†		2.00	%		1.75	%		1.99	%†
Portfolio turnover rate ††		12	%		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.

(a)  Amount represents less than $0.005.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of 0.03% and less than 0.01% for the six months ended October 31, 2007 and for the year ended April 30, 2007, respectively.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of 0.02% for the six months ended October 31, 2007 and for the year ended April 30, 2007.

See Notes to Financial Statements.

75

Financial Highlights (Continued)

PowerShares Dynamic Mid Cap Growth Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	21.09		$	18.79		$	13.92		$	15.01
Net investment income (loss)**		(0.02	)		(0.03	)		0.28			(0.01	)
Net realized and unrealized gain (loss) on investments		3.73			2.42			4.59			(1.08	)
Total from operations		3.71			2.39			4.87			(1.09	)
Undistributed net investment income included in price of units issued and redeemed**		(0.01	)		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	$	24.79		$	21.09		$	18.79		$	13.92
TOTAL RETURN***		17.54	%		12.91	%		34.99	%		(7.30	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	354,435		$	189,794		$	103,325		$	8,349
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.65	%		0.63	%†
Expenses, prior to waivers and reimbursements		0.61	%†(b)		0.73	%(b)		0.90	%		2.45	%†
Net investment income (loss), net of waivers and reimbursements		(0.13	)%†		(0.15	)%		1.56	%		(0.20	)%†
Portfolio turnover rate ††		29	%		69	%		86	%		1	%

PowerShares Dynamic Mid Cap Value Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	20.25		$	17.22		$	14.47		$	15.10
Net investment income**		0.10			0.29			0.22			0.15
Net realized and unrealized gain (loss) on investments		(0.41	)		2.96			2.78			(0.76	)
Total from operations		(0.31	)		3.25			3.00			(0.61	)
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.15	)		(0.23	)		(0.25	)		(0.02	)
Net asset value at end of period	$	19.79		$	20.25		$	17.22		$	14.47
TOTAL RETURN***		(1.57	)%		19.14	%		20.85	%		(4.07	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	106,889		$	109,356		$	56,815		$	10,126
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.67	%		0.63	%†
Expenses, prior to waivers and reimbursements		0.68	%†(c)		0.82	%		1.13	%		2.14	%†
Net investment income, net of waivers and reimbursements		0.96	%†		1.64	%		1.33	%		6.34	%†
Portfolio turnover rate ††		24	%		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.

(a)  Amount represents less than $0.005.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of 0.03% and less than 0.01% for the six months ended October 31, 2007 and for the year ended April 30, 2007, respectively.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of less than 0.01% and for the six months ended October 31, 2007.

See Notes to Financial Statements.

76

Financial Highlights (Continued)

PowerShares Dynamic Small Cap Growth Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.59		$	18.51		$	13.90		$	15.11
Net investment income (loss)**		(0.03	)		(0.05	)		0.11			(0.01	)
Net realized and unrealized gain (loss) on investments		0.32			0.15			4.50			(1.20	)
Total from operations		0.29			0.10			4.61			(1.21	)
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		(0.02	)		—			—
Net asset value at end of period	$	18.87		$	18.59		$	18.51		$	13.90
TOTAL RETURN***		1.51	%		0.43	%		33.17	%		(8.02	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	67,940		$	61,347		$	118,465		$	9,727
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.65	%		0.63	%†
Expenses, prior to waivers and reimbursements		0.78	%†(a)		0.84	%		0.90	%		2.34	%†
Net investment income (loss), net of waivers and reimbursements		(0.30	)%†		(0.32	)%		0.65	%		(0.48	)%†
Portfolio turnover rate ††		42	%		114	%		120	%		0	%

PowerShares Dynamic Small Cap Value Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	18.68		$	17.01		$	13.79		$	15.06
Net investment income**		0.50			0.13			0.11			0.01
Net realized and unrealized gain (loss) on investments		(0.88	)		1.66			3.22			(1.28	)
Total from operations		(0.38	)		1.79			3.33			(1.27	)
Undistributed net investment income included in price of units issued and redeemed**		(0.01	)		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.08	)		(0.13	)		(0.11	)		—
Net asset value at end of period	$	18.21		$	18.68		$	17.01		$	13.79
TOTAL RETURN***		(2.11	)%		10.64	%		24.20	%		(8.46	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	114,699		$	117,680		$	66,339		$	9,651
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.66	%		0.63	%†
Expenses, prior to waivers and reimbursements		0.67	%†(b)		0.80	%		1.06	%		2.36	%†
Net investment income, net of waivers and reimbursements		5.35	%†		0.73	%		0.73	%		0.45	%†
Portfolio turnover rate ††		44	%		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.

(a)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of less than 0.01% and for the six months ended October 31, 2007.

See Notes to Financial Statements.

77

Financial Highlights (Continued)

PowerShares Dynamic Large Cap Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	27.00		$	25.18
Net investment income**		0.13			0.12
Net realized and unrealized gain on investments		1.53			1.79
Total from operations		1.66			1.91
Undistributed net investment loss included in price of units issued and redeemed**		0.01			(0.01	)
Distributions to shareholders from:
Net investment income		(0.15	)		(0.08	)
Net asset value at end of period	$	28.52		$	27.00
TOTAL RETURN***		6.22	%		7.55	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	14,259		$	10,798
Ratio to average net assets of:
Expenses, net of waivers		0.84	%†		0.74	%†
Expenses, prior to waivers		0.95	%†		1.45	%†
Net investment income, net of waivers		1.92	%†		1.05	%†
Portfolio turnover rate ††		9	%		3	%

PowerShares Dynamic Mid Cap Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	27.98		$	25.26
Net investment income**		0.03			0.10
Net realized and unrealized gain on investments		0.49			2.68
Total from operations		0.52			2.78
Undistributed net investment loss included in price of units issued and redeemed**		—	(a)		—	(a)
Distributions to shareholders from:
Net investment income		(0.08	)		(0.06	)
Net asset value at end of period	$	28.42		$	27.98
TOTAL RETURN***		1.86	%		11.04	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	17,052		$	11,190
Ratio to average net assets of:
Expenses, net of waivers		0.82	%†		0.74	%†
Expenses, prior to waivers		1.68	%†		1.55	%†
Net investment income, net of waivers		0.20	%†		0.91	%†
Portfolio turnover rate ††		42	%		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.

78

Financial Highlights (Continued)

PowerShares Dynamic Small Cap Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	26.68		$	25.17
Net investment income**		0.33			—	(a)
Net realized and unrealized gain (loss) on investments		(0.74	)		1.51
Total from operations		(0.41	)		1.51
Undistributed net investment loss included in price of units issued and redeemed**		—			—	(a)
Distributions to shareholders from:
Net investment income		(0.14	)		—	(a)
Net asset value at end of period	$	26.13		$	26.68
TOTAL RETURN***		(1.55	)%		6.01	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	7,838		$	8,005
Ratio to average net assets of:
Expenses, net of waivers		0.94	%†		0.74	%†
Expenses, prior to waivers		2.61	%†		1.55	%†
Net investment income, net of waivers		2.45	%†		0.04	%†
Portfolio turnover rate ††		53	%		52	%

PowerShares Dynamic Aggressive Growth Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	26.38		$	24.86
Net investment loss**		(0.09	)		(0.05	)
Net realized and unrealized gain on investments		3.84			1.56
Total from operations		3.75			1.51
Undistributed net investment income included in price of units issued and redeemed**		(0.09	)		0.01
Net asset value at end of period	$	30.04		$	26.38
TOTAL RETURN***		13.88	%		6.11	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	15,022		$	10,552
Ratio to average net assets of:
Expenses, net of waivers		1.03	%†		0.75	%†
Expenses, prior to waivers		2.66	%†		1.76	%†
Net investment loss, net of waivers		(0.72	)%†		(0.50	)%†
Portfolio turnover rate ††		27	%		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.

79

Financial Highlights (Continued)

PowerShares Dynamic Deep Value Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	26.31		$	24.99
Net investment income**		0.15			0.22
Net realized and unrealized gain (loss) on investments		(0.37	)		1.17
Total from operations		(0.22	)		1.39
Undistributed net investment income included in price of units issued and redeemed**		—			—	(a)
Distributions to shareholders from:
Net investment income		(0.29	)		(0.07	)
Net asset value at end of period	$	25.80		$	26.31
TOTAL RETURN***		(0.85	)%		5.59	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	15,482		$	15,786
Ratio to average net assets of:
Expenses, net of waivers		0.86	%†		0.74	%†
Expenses, prior to waivers		1.67	%†		1.55	%†
Net investment income, net of waivers		1.19	%†		2.40	%†
Portfolio turnover rate ††		50	%		7	%

PowerShares Zacks Micro Cap Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	18.32		$	17.47		$	14.79
Net investment income**		0.09			0.06			—	(a)
Net realized and unrealized gain (loss) on investments		(1.10	)		0.80			2.69
Total from operations		(1.01	)		0.86			2.69
Undistributed net investment income included in price of units issued and redeemed**		(0.01	)		0.01			—
Distributions to shareholders from:
Net investment income		(0.05	)		(0.02	)		(0.01	)
Tax return of capital		—			—			—	(a)
Total distributions		(0.05	)		(0.02	)		(0.01	)
Net asset value at end of period	$	17.25		$	18.32		$	17.47
TOTAL RETURN***		(5.57	)%		4.99	%		18.20	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	155,226		$	192,310		$	158,976
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.70	%†		0.71	%		0.72	%†
Expenses, prior to waivers and reimbursements		0.71	%†(b)		0.78	%		0.82	%†
Net investment income, net of waivers and reimbursements		1.01	%†		0.36	%		0.01	%†
Portfolio turnover rate ††		30	%		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.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of less than 0.01% and for the six months ended October 31, 2007.

See Notes to Financial Statements.

80

Financial Highlights (Continued)

PowerShares Zacks Small Cap Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	27.51		$	26.76		$	25.41
Net investment income**		0.15			0.05			0.02
Net realized and unrealized gain on investments		1.03			0.76			1.33
Total from operations		1.18			0.81			1.35
Undistributed net investment income included in price of units issued and redeemed**		(0.01	)		—	(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	$	28.68		$	27.51		$	26.76
TOTAL RETURN***		4.25	%		3.03	%		5.31	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	65,968		$	71,530		$	58,866
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.70	%†		0.71	%		0.75	%†
Expenses, prior to waivers and reimbursements		0.84	%†(b)		0.89	%(b)		1.17	%†
Net investment income, net of waivers and reimbursements		1.04	%†		0.19	%		0.30	%†
Portfolio turnover rate ††		33	%		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.

(a)  Amount represents less than $0.005.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Advisor under the Expense Agreement of less than 0.01% and for the six months ended October 31, 2007 and for the year end April 30, 2007.

See Notes to Financial Statements.

81

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of 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"

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 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

82

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

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

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

83

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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, 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, sub-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 Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the six months ended October 31, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dynamic Mid Cap Value Portfolio	$	28,357	$	—
Dynamic Small Cap Growth Portfolio		46,432		—
Dynamic Small Cap Value Portfolio		26,962		—
Dynamic Large Cap Portfolio		29,662		34,419
Dynamic Mid Cap Portfolio		36,301		26,562
Dynamic Small Cap Portfolio		19,981		46,709
Dynamic Aggressive Growth Portfolio		20,158		45,669
Dynamic Deep Value Portfolio		38,841		23,941
Zacks Micro Cap Portfolio		13,418		—
Zacks Small Cap Portfolio		48,209		—

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.

84

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

During the six months ended October 31, 2007, the Fund that reimbursed expenses to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbusements		Net (Waivers)/ Reimbursements
Dynamic Large Cap Growth Portfolio	$	(70	)	$	66,880	$	66,810
Dynamic Large Cap Value Portfolio		(1,614	)		21,875		20,261
Dynamic Mid Cap Growth Portfolio		(13,593	)		36,737		23,144
Dynamic Mid Cap Value Portfolio		(29,828	)		1,471		(28,357	)
Dynamic Small Cap Growth Portfolio		(47,888	)		1,456		(46,432	)
Dynamic Small Cap Value Portfolio		(28,440	)		1,478		(26,962	)
Zacks Micro Cap Portfolio		(20,972	)		7,554		(13,418	)
Zacks Small Cap Portfolio		(49,614	)		1,405		(48,209	)

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

The amounts subject to reimbursement to the Adviser at October 31, 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	$	(156,975	)	$	(156,975	)	$	(94,033	)
Dynamic Large Cap Value Portfolio		(218,738	)		(218,738	)		(152,195	)
Dynamic Mid Cap Growth Portfolio		(231,591	)		(231,591	)		(133,322	)
Dynamic Mid Cap Value Portfolio		(308,297	)		(284,446	)		(162,364	)
Dynamic Small Cap Growth Portfolio		(329,489	)		(305,402	)		(190,293	)
Dynamic Small Cap Value Portfolio		(311,703	)		(287,630	)		(162,695	)
Dynamic Large Cap Portfolio		(108,187	)		(108,187	)		(108,187	)
Dynamic Mid Cap Portfolio		(107,453	)		(107,453	)		(107,453	)
Dynamic Small Cap Portfolio		(113,246	)		(113,246	)		(113,246	)
Dynamic Aggressive Growth Portfolio		(110,998	)		(110,998	)		(110,998	)
Dynamic Deep Value Portfolio		(107,255	)		(107,255	)		(107,255	)
Dynamic Zacks Micro Cap Portfolio		(212,225	)		(212,225	)		(141,747	)
Dynamic Zacks Small Cap Portfolio		(196,500	)		(196,500	)		(164,348	)

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.

85

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 sub-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. Effective July 2, 2007, The Bank of New York became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

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 may invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by AIM Advisors, Inc., an affiliate of the Adviser.

86

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 5. Federal Income Tax

At October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation
Dynamic Large Cap Growth Portfolio	$	577,121,420	$	50,985,685		$	59,761,303	$	(8,775,618	)
Dynamic Large Cap Value Portfolio		248,326,618		18,877,393			25,272,758		(6,395,365	)
Dynamic Mid Cap Growth Portfolio		321,594,812		32,954,239			41,828,603		(8,874,364	)
Dynamic Mid Cap Value Portfolio		104,376,666		2,444,465			6,045,477		(3,601,012	)
Dynamic Small Cap Growth Portfolio		64,147,578		3,831,307			6,541,964		(2,710,657	)
Dynamic Small Cap Value Portfolio		118,480,420		(3,595,610	)		6,308,978		(9,904,588	)
Dynamic Large Cap Portfolio		13,047,643		1,200,160			1,392,054		(191,894	)
Dynamic Mid Cap Portfolio		16,120,408		940,850			1,358,534		(417,684	)
Dynamic Small Cap Portfolio		7,856,043		(23,266	)		526,616		(549,882	)
Dynamic Aggressive Growth Portfolio		13,414,343		1,622,981			2,053,135		(430,154	)
Dynamic Deep Value Portfolio		14,974,920		495,606			985,845		(490,239	)
Zacks Micro Cap Portfolio		155,964,809		(1,286,340	)		13,030,353		(14,316,693	)
Zacks Small Cap Value Portfolio		62,581,401		3,468,966			8,358,223		(4,889,257	)

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	)

87

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

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

88

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

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.

89

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

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

90

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 6. Investment Transactions

For the six months ended October 31, 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	$	88,826,763	$	87,880,020
Dynamic Large Cap Value Portfolio		34,624,224		35,052,191
Dynamic Mid Cap Growth Portfolio		73,526,505		75,802,237
Dynamic Mid Cap Value Portfolio		27,589,075		27,265,932
Dynamic Small Cap Growth Portfolio		26,564,215		28,840,746
Dynamic Small Cap Value Portfolio		56,694,629		52,373,172
Dynamic Large Cap Portfolio		1,093,854		1,170,002
Dynamic Mid Cap Portfolio		6,129,689		6,224,435
Dynamic Small Cap Portfolio		4,628,665		4,217,315
Dynamic Aggressive Growth Portfolio		2,438,500		2,583,355
Dynamic Deep Value Portfolio		7,674,391		7,873,850
Zacks Micro Cap Portfolio		52,742,910		55,440,679
Zacks Small Cap Value Portfolio		21,865,960		22,139,131

For the six months ended October 31, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Large Cap Growth Portfolio	$	516,078,882	$	202,884,171
Dynamic Large Cap Value Portfolio		80,387,078		111,269,771
Dynamic Mid Cap Growth Portfolio		321,160,162		196,458,501
Dynamic Mid Cap Value Portfolio		83,958,684		82,461,527
Dynamic Small Cap Growth Portfolio		65,684,940		57,984,638
Dynamic Small Cap Value Portfolio		79,850,449		80,450,311
Dynamic Large Cap Portfolio		8,645,108		6,007,183
Dynamic Mid Cap Portfolio		12,877,293		7,386,090
Dynamic Small Cap Portfolio		4,441,293		4,878,010
Dynamic Aggressive Growth Portfolio		11,901,186		8,930,481
Dynamic Deep Value Portfolio		7,668,047		7,689,628
Zacks Micro Cap Portfolio		77,673,100		100,457,833
Zacks Small Cap Value Portfolio		46,153,988		53,569,852

There were no purchases or sales of U.S. government or government agency obligations for the six months ended October 31, 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.

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Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferred Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Only authorized participants are permitted to create or redeem from the Funds. 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 Pronouncement

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.

92

Supplemental Information (Unaudited)

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)		89	None
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006- February 2007); 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) Assistant Vice President and Controller, Priority Health (September 2005-present)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

93

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
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)		89	None
Philip M. Nussbaum (46) 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

94

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent 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
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007- Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006- August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995- February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 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)		89	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 19 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 (53) 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 (42) 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 (45) 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

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 Semi-Annual Report.
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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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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

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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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

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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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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the fund's independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-5

2007 Semi-Annual Report to Shareholders

31 October 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
Supplemental Information (Unaudited)	53

To My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management – Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500^® Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potential recession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25 to 4.75%, the first cut in four years, and the discount rate moved from 5.75 to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

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 which 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"), NASDAQ or AMEX, and must have raised its annual regular cash dividend payments for at least each of the last ten consecutive fiscal years.

For the six months ended October 31, 2007, the Fund increased in value by 1.43%. For the same period, the S&P 500 Index increased by 5.49%.

For the six months ended October 31, 2007, three of the seven industry sectors represented in the Fund generated positive returns. Overexposure in the manufacturing sector made the largest positive contribution to the performance of the Fund relative to the broader US equity market. This positive performance was partially offset by overexposure to the financial services sector, which made the largest negative contribution to the performance of the Fund relative to the broader US equity market.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	27.6
Consumer Staples	19.5
Industrials	12.8
Health Care	11.8
Energy	8.8
Consumer Discretionary	6.5
Telecommunication Services	4.6
Information Technology	3.8
Materials	2.5
Utilities	1.9
Money Market Fund	0.2
Other	0.0

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	71.9
Large-Cap Growth	12.3
Mid-Cap Value	10.2
Mid-Cap Growth	2.8
Small-Cap Value	2.6
Small-Cap Growth	0.2

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
General Electric Co.	5.1
Exxon Mobil Corp.	4.9
AT&T, Inc.	4.5
Procter & Gamble (The) Co.	3.9
Bank of America Corp.	3.8
Citigroup, Inc.	3.7
Chevron Corp.	3.5
Johnson & Johnson	3.4
Wal-Mart Stores, Inc.	3.3
Pfizer, Inc.	3.0
Total	39.1

4

Manager's Analysis (Continued)

PowerShares Dividend Achievers^TM Portfolio (ticker: PFM)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Broad Dividend AchieversTM Index		1.56		7.96		10.90		24.66
S&P 500® Index		5.49		14.56		13.61		31.24
Dow Jones Industrial Average Index		7.79		17.94		16.46		38.35

Fund

NAV Return	1.43	7.58	10.38	23.36
Share Price Return	1.11	7.37	10.28	23.11

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 0.89%. In the Financial Highlights section of this Semi-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 0.72%. 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, 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 Dow Jones Industrial Average Index are unmanaged indices used as a measurement of change in stock market conditions 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 Dividend Achievers^TM 50 Index. The Dividend Achievers^TM 50 Index seeks to deliver high current income and capital appreciation. It is comprised of the fifty highest yielding companies with at least ten years of consecutive dividend increases. The 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.

For the six months ended October 31, 2007, the Fund decreased in value by 6.49%. For the same period, the Russell 3000 Value Index increased by 0.53% and the Dow Jones Select Dividend Index declined by 4.06%.

For the six months ended October 31, 2007, all four industry sectors represented in the Fund generated negative returns. Overexposure in the financial services sector made the largest negative contribution to the performance of the Fund relative to the broader US equity market as well as other comparable indices.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	65.2
Utilities	21.2
Consumer Discretionary	4.6
Consumer Staples	3.4
Health Care	2.1
Telecommunication Services	1.4
Materials	1.3
Industrials	0.9
Money Market Fund	0.5
Other	(0.6	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Value	53.0
Mid-Cap Value	27.9
Large-Cap Value	17.5
Large-Cap Growth	1.1
Mid-Cap Growth	0.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Corus Bankshares, Inc.	3.3
La-Z-Boy, Inc.	3.3
National City Corp.	2.9
Washington Mutual, Inc.	2.8
First Commonwealth Financial Corp.	2.7
FirstMerit Corp.	2.6
F.N.B. Corp.	2.5
Sterling Bancorp	2.4
Old National Bancorp	2.3
Integrys Energy Group, Inc.	2.3
Total	27.1

6

Manager's Analysis (Continued)

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

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dividend AchieversTM 50 Index		-6.95		-5.61		2.34		6.94
S&P 500® Index		5.49		14.56		11.57		37.37
S&P Citigroup Large Cap Value Index		3.15		13.54		13.08		42.84

Fund

NAV Return	-6.49	-5.03	2.92	8.68
Share Price Return	-6.44	-5.43	2.77	8.24

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 0.59%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.60% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) was 0.58%. 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, 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 S&P Citigroup Large Cap Value Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 346 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 which 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.

For the six months ended October 31, 2007, the Fund decreased in value by 1.76%. For the same period, the S&P 500 Index increased by 5.49%.

For the six months ended October 31, 2007, four of the six industry sectors represented in the Fund generated positive returns. Underexposure in the Manufacturing sector made the largest positive contribution to the performance of the Fund relative to the broader US equity market. Overexposure in the Financial Services sector made the largest negative contribution to the performance of the Fund relative to the broader US equity market.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	41.5
Health Care	16.8
Consumer Discretionary	13.7
Industrials	9.6
Information Technology	7.9
Consumer Staples	5.4
Materials	3.8
Energy	1.1
Money Market Fund	0.2
Other	0.0

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	64.4
Large-Cap Growth	19.3
Mid-Cap Value	8.9
Mid-Cap Growth	5.1
Small-Cap Value	1.9
Small-Cap Growth	0.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
International Business Machines Corp.	4.4
United Technologies Corp.	4.0
Wal-Mart Stores, Inc.	4.0
Bank of America Corp.	4.0
American International Group, Inc.	4.0
Pfizer, Inc.	4.0
Wells Fargo & Co.	3.9
Johnson & Johnson	3.9
Citigroup, Inc.	3.9
McDonald's Corp.	3.9
Total	40.0

8

Manager's Analysis (Continued)

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

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
High Growth Rate Dividend AchieversTM Index		-1.42		1.38		7.64		16.99
Dow Jones Industrial Average Index		7.79		17.94		16.46		38.35
S&P 500® Index		5.49		14.56		13.61		31.24

Fund

NAV Return	-1.76	0.70	6.84	15.11
Share Price Return	-1.82	0.70	6.84	15.11

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 0.99%. In the Financial Highlights section of this Semi-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 0.86%. 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, 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 Dow Jones Industrials Average Index and S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions 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 which 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.

For the six months ended October 31, 2007, the Fund increased in value by 12.69%. For the same period, the MSCI EAFE Index increased by 8.19%.

Canada, China, and the United Kingdom contributed the most the Fund's performance over this reporting period. Ireland, Japan, and Hong Kong all were negative contributors to the Fund's performance. Energy was the largest contributing sector with about 25% of the return. Financials which make up 26% of the fund also contributed positively to the Fund's performance.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	38.9
Consumer Staples	11.6
Consumer Discretionary	10.3
Energy	9.4
Industrials	7.5
Information Technology	7.5
Telecommunication Services	4.5
Utilities	4.4
Materials	3.9
Health Care	2.1
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	47.7
Mid-Cap Value	19.1
Large-Cap Growth	19.0
Mid-Cap Growth	8.6
Small-Cap Value	5.0
Small-Cap Growth	0.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Nam Tai Electronics, Inc.	4.5
Tomkins PLC ADR	3.9
Barclays PLC ADR	3.5
HSBC Holdings PLC ADR	3.0
Allied Irish Banks PLC ADR	2.8
Volvo AB ADR	2.7
Bank of Montreal	2.6
Pearson PLC ADR	2.5
Westpac Banking Corp. ADR	2.5
TransCanada Corp.	2.4
Total	30.4

10

Manager's Analysis (Continued)

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

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
International Dividend AchieversTM Index		12.93		29.15		23.85		57.73
MSCI EAFE Index		8.19		24.91		23.61		57.09
S&P 500® Index		5.49		14.56		13.61		31.24

Fund

NAV Return	12.69	29.14	24.06	58.15
Share Price Return	13.19	29.60	24.33	58.89

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 0.63%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.59% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) was 0.57%. 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, 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 MSCI EAFE Index and S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 1,137 and 500 common stocks, 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 which 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.

For the six months ended October 31, 2007, the Fund increased in value by 0.81%. For the same period, the S&P 500 Index increased by 5.49%.

For the six months ended October 31, 2007, four of the eight industry sectors represented in the Fund generated positive returns. Underexposure in the manufacturing sector made the largest positive contribution to the performance of the Fund relative to the broader US equity market. The sector in the Fund which made the largest negative contribution to performance relative to the broader US equity market was the construction sector.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Consumer Discretionary	25.4
Information Technology	22.9
Health Care	15.1
Financials	13.0
Energy	8.9
Industrials	6.5
Consumer Staples	2.9
Materials	2.6
Telecommunication Services	1.2
Utilities	1.2
Other	0.3

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	38.6
Mid-Cap Value	22.0
Large-Cap Growth	20.8
Mid-Cap Growth	12.2
Small-Cap Value	4.9
Small-Cap Growth	1.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Microsoft Corp.	5.3
Exxon Mobil Corp.	4.9
Goldman Sachs Group (The), Inc.	4.7
Time Warner, Inc.	4.6
Amgen, Inc.	4.3
EMC Corp.	3.6
Texas Instruments, Inc.	3.2
Prudential Financial, Inc.	3.0
DIRECTV Group (The), Inc.	2.1
Viacom, Inc., Class B	1.9
Total	37.6

12

Manager's Analysis (Continued)

PowerShares Buyback Achievers^TM Portfolio (ticker: PKW)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Share BuyBack AchieversTM Index		1.36		5.87
S&P 500® Index		5.49		10.53
Russell 1000® Index		5.44		10.87

Fund

NAV Return	0.81	4.98
Share Price Return	0.35	4.69

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 1.23%. In the Financial Highlights section of this Semi-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 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, 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 Russell 1000^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 1,000 common stocks, respectively.

13

Manager's Analysis

PowerShares Financial Preferred Portfolio (ticker: PGF)

The PowerShares Financial Preferred is based on the WHPS Financial 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 impact of the credit crunch has been particularly hard on preferred stock with financials bearing the brunt of the sell off. The Fund was down 6.04% over the reporting period. Many issuers were shut out of the bond markets during summer months and unable to raise capital in these markets. Due to this scenario many companies chose to source the funds they needed in the preferred market. Issuing new deals focused at retail investors contributed to the already weakening performance of financials. These issuers generally had to come 12.5 to 25bps wider than where their secondary preferred's were trading to get new issue deals done. But with the other markets closed and funding needs in place, issuers brought new deals up to 37.5bps wider than their outstanding deals to get the desired size of the transaction. This caused a re-pricing of all current securities in the market, and with each consecutive deal coming wider than its predecessor, the effect was exacerbated.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Insurance	42.7
Banks	40.5
Diversified Financial Services	16.9
Money Market Fund	0.2
Other	(0.3	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth 100.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Royal Bank of Scotland Group PLC, 6.35%, Series N (United Kingdom)	5.8
Aegon N.V., 6.38% (Netherlands)	5.8
Royal Bank of Scotland Group PLC, 6.40%, Series M (United Kingdom)	5.4
Royal Bank of Scotland Group PLC, 6.60%, Series S (United Kingdom)	5.2
Bank of America Corp., 6.20%, Series D	4.8
ING Groep N.V., 6.38% (Netherlands)	4.8
MetLife, Inc., 6.50%, Series B	4.7
HSBC Holdings PLC, 6.20%, Series A (United Kingdom)	4.7
Barclays Bank PLC, 6.63%, Series 2 (United Kingdom)	4.7
Goldman Sachs Group (The), Inc., 6.20 %, Series B	4.7
Total	50.6

14

Manager's Analysis (Continued)

PowerShares Financial Preferred Portfolio (ticker: PGF)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Wachovia Hybrid & Preferred Securities Financial Index		-4.45		-3.05
Lehman Aggregate U.S. Corporate Bond Index		1.17		3.15
S&P 500® Index		5.49		12.74

Fund

NAV Return	-6.04	-4.93
Share Price Return	-6.15	-5.81

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 1.00%. In the Financial Highlights section of this Semi-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 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, 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 Lehman Aggregate U.S. 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 1,500 bonds and 500 common stocks, respectively.

15

Funds' Distribution History

	Ex-Dividend	10/15/07		9/21/07		9/14/07		8/15/07		7/13/07		6/15/07		5/15/07
	Record	10/17/07		9/25/07		9/18/07		8/17/07		7/17/07		6/19/07		5/17/07
	Payable	10/31/07		9/28/07		9/28/07		8/31/07		7/31/07		6/29/07		5/31/07
Fund	Ticker
PowerShares Dividend AchieversTM Portfolio	PFM		—		0.08586		—		—		—		0.05524		—
PowerShares High Yield Equity Dividend AchieversTM Portfolio	PEY		0.05059		—		0.05180		0.05006		0.05003		0.05005		0.05007
PowerShares High Growth Rate Dividend AchieversTM Portfolio	PHJ		—		0.07169		—		—		—		0.04519		—
PowerShares International Dividend AchieversTM Portfolio	PID		—		0.10051		—		—		—		0.14313		—
PowerShares Buyback AchieversTM Portfolio	PKW		—		0.01037		—		—		—		0.01102		—
PowerShares Financial Preferred Portfolio	PGF		0.08669		—		0.11516		0.11319		0.11325		0.11307		0.11540
	Ex-Dividend	9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	Record	9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	Payable	9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund	Ticker
PowerShares Dividend AchieversTM Portfolio	PFM		0.05029		—		—		0.07671		—		—		0.07660
PowerShares High Yield Equity Dividend AchieversTM Portfolio	PEY		0.05518		0.05512		0.05523		—		0.04512		0.03950		0.12300
PowerShares High Growth Rate Dividend AchieversTM Portfolio	PHJ		0.03428		—		—		0.06068		—		—		0.05916
PowerShares International Dividend AchieversTM Portfolio	PID		0.12589		—		—		0.12567		—		—		0.11910
PowerShares Buyback AchieversTM Portfolio	PKW		—		—		—		—		—		—		—
PowerShares Financial Preferred Portfolio	PGF		—		—		—		—		—		—		—

16

	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06		10/13/06
	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06		10/17/06
	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06		10/31/06
Fund
PowerShares Dividend AchieversTM Portfolio		—		0.07520		—		—		—		0.11050		—		—
PowerShares High Yield Equity Dividend AchieversTM Portfolio		0.05003		—		0.05020		0.05006		0.05012		0.06648		0.05501		0.05529
PowerShares High Growth Rate Dividend AchieversTM Portfolio		—		0.07020		—		—		—		0.13210		—		—
PowerShares International Dividend AchieversTM Portfolio		—		0.11020		—		—		—		0.16748		—		—
PowerShares Buyback AchieversTM Portfolio		—		0.02102		—		—		—		—		—		—
PowerShares Financial Preferred Portfolio		0.11205		—		0.11020		0.11250		0.11260		0.18568		—		—
	12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05		12/31/04		12/17/04
	1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05		1/4/05		12/21/04
	1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05		1/31/05		1/31/05
Fund
PowerShares Dividend AchieversTM Portfolio		—		0.08740		—		—		—		—		—		—
PowerShares High Yield Equity Dividend AchieversTM Portfolio		—		0.11320		0.11490		0.12828		0.03688		0.09700		0.00859		0.02742
PowerShares High Growth Rate Dividend AchieversTM Portfolio		—		0.08594		—		—		—		—		—		—
PowerShares International Dividend AchieversTM Portfolio		—		0.07747		—		—		—		—		—		—
PowerShares Buyback AchieversTM Portfolio		—		—		—		—		—		—		—		—
PowerShares Financial Preferred Portfolio		—		—		—		—		—		—		—		—

17

Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 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		536		328		44		1		—		—		—
PEY	PowerShares High Yield Equity Dividend AchieversTM Portfolio	12/9/04		729		306		21		—		—		—		—
PHJ	PowerShares High Growth Rate Dividend AchieversTM Portfolio	9/15/05		536		314		25		3		—		—		—
PID	PowerShares International Dividend AchieversTM Portfolio	9/15/05		536		359		26		7		—		—		1
PKW	PowerShares Buyback AchieversTM Portfolio	12/20/06		217		117		29		4		—		—		—
PGF	PowerShares Financial Preferred Portfolio	12/1/06		230		127		72		8		—		—		—

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		162		1		—		—		—		—
PEY		355		42		5		—		—		—
PHJ		186		8		—		—		—		—
PID		140		3		—		—		—		—
PKW		66		1		—		—		—		—
PGF		22		1		—		—		—		—

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 period ended October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	1,014.25		0.60	%	$	3.04
Hypothetical (5% return before expenses)	$	1,000.00	$	1,022.12		0.60	%	$	3.05
PowerShares High Yield Equity Dividend AcheiversTM Portfolio Actual	$	1,000.00	$	935.06		0.60	%	$	2.92
Hypothetical (5% return before expenses)	$	1,000.00	$	1,022.12		0.60	%	$	3.05
PowerShares High Growth Rate Dividend AchieversTM Portfolio Actual	$	1,000.00	$	982.42		0.60	%	$	2.99
Hypothetical (5% return before expenses)	$	1,000.00	$	1,022.12		0.60	%	$	3.05
PowerShares International Dividend AchieversTM Portfolio Actual	$	1,000.00	$	1,126.89		0.59	%	$	3.15
Hypothetical (5% return before expenses)	$	1,000.00	$	1,022.17		0.59	%	$	3.00

20

Fees and Expenses (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Buyback AchieversTM Portfolio
Actual	$	1,000.00	$	1,008.14		0.74	%	$	3.74
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.42		0.74	%	$	3.76
PowerShares Financial Preferred Portfolio
Actual	$	1,000.00	$	939.56		0.74	%	$	3.61
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.42		0.74	%	$	3.76

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended October 31, 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 184 and then dividing the result by 366.

21

Schedule of Investments

PowerShares Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—6.5%
	1,040	Applebee's International, Inc.	$	26,354
	751	Cedar Fair, L.P.		18,460
	174	Courier Corp.		6,575
	2,015	Family Dollar Stores, Inc.		51,080
	3,224	Gannett Co., Inc.		136,730
	2,352	Genuine Parts Co.		115,413
	3,343	Harley-Davidson, Inc.		172,165
	1,007	Harte-Hanks, Inc.		17,753
	314	Haverty Furniture Cos., Inc.		2,669
	23,375	Home Depot (The), Inc.		736,546
	803	John Wiley & Sons, Inc., Class A		35,316
	8,215	Johnson Controls, Inc.		359,160
	711	La-Z-Boy, Inc.		5,610
	2,355	Leggett & Platt, Inc.		45,758
	20,469	Lowe's Cos., Inc.		550,411
	433	Matthews International Corp., Class A		19,732
	16,498	McDonald's Corp.		984,930
	4,554	McGraw-Hill (The) Cos., Inc.		227,882
	313	Media General, Inc., Class A		8,758
	657	Meredith Corp.		40,898
	1,992	New York Times (The) Co., Class A		38,964
	3,381	Nordstrom, Inc.		133,347
	496	Polaris Industries, Inc.		24,393
	1,898	Ross Stores, Inc.		51,284
	1,739	Sherwin-Williams (The) Co.		111,157
	1,136	Stanley Works (The)		65,377
	368	Superior Industries International, Inc.		7,437
	757	Talbots (The), Inc.		11,135
	11,720	Target Corp.		719,139
	6,155	TJX (The) Cos., Inc.		178,064
	1,523	VF Corp.		132,699
	723	Wolverine World Wide, Inc.		18,538
				5,053,734
		Consumer Staples—19.5%
	29,143	Altria Group, Inc.		2,125,399
	10,159	Anheuser-Busch Cos., Inc.		520,954
	8,919	Archer-Daniels-Midland Co.		319,122
	5,989	Avon Products, Inc.		245,429
	1,710	Brown-Forman Corp., Class B		126,506
	912	Church & Dwight Co., Inc.		43,147
	1,916	Clorox (The) Co.		119,884
	31,992	Coca-Cola (The) Co.		1,975,826
	7,059	Colgate-Palmolive Co.		538,390
	3,157	Hershey (The) Co.		136,098
	1,890	Hormel Foods Corp.		68,947
	5,892	Kimberly-Clark Corp.		417,684
	418	Lancaster Colony Corp.		16,791
	1,768	McCormick & Co., Inc.		61,933
	22,284	PepsiCo, Inc.		1,642,776
	43,137	Procter & Gamble (The) Co.		2,998,884

Number of Shares			Value
		Common Stocks (Continued)
	2,927	SUPERVALU, Inc.	$	113,421
	8,444	Sysco Corp.		289,545
	762	Tootsie Roll Industries, Inc.		19,637
	379	Universal Corp.		18,472
	13,727	Walgreen Co.		544,276
	56,318	Wal-Mart Stores, Inc.		2,546,137
	3,797	Wm. Wrigley Jr. Co.		234,161
				15,123,419
		Energy—8.8%
	605	Buckeye Partners L.P.		33,571
	29,510	Chevron Corp.		2,700,460
	41,302	Exxon Mobil Corp.		3,799,371
	1,432	Helmerich & Payne, Inc.		45,280
	761	Holly Corp.		47,791
	3,133	Kinder Morgan Energy Partners, L.P.		164,483
	1,244	TEPPCO Partners, L.P.		50,083
				6,841,039
		Financials—27.6%
	335	1st Source Corp.		6,445
	6,764	AFLAC, Inc.		424,644
	282	Alabama National Bancorp		22,227
	1,117	Alfa Corp.		20,329
	8,098	Allstate (The) Corp.		424,335
	1,405	AMBAC Financial Group, Inc.		51,746
	35,500	American International Group, Inc.		2,240,760
	296	Anchor BanCorp Wisconsin, Inc.		7,282
	1,300	Arthur J. Gallagher & Co.		34,593
	1,757	Associated Banc-Corp		50,707
	1,339	Astoria Financial Corp.		34,801
	210	BancFirst Corp.		9,542
	1,137	BancorpSouth, Inc.		27,584
	61,421	Bank of America Corp.		2,965,405
	678	Bank of Hawaii Corp.		36,042
	776	BankAtlantic Bancorp, Inc., Class A		3,189
	218	Banner Corp.		7,120
	7,633	BB&T Corp.		282,192
	1,943	Brown & Brown, Inc.		48,944
	245	Capital City Bank Group, Inc.		6,907
	909	CBL & Associates Properties, Inc.		30,097
	336	Chemical Financial Corp.		8,400
	647	Chittenden Corp.		23,046
	5,445	Chubb (The) Corp.		290,491
	2,379	Cincinnati Financial Corp.		94,637
	68,864	Citigroup, Inc.		2,885,402
	665	City National Corp.		44,954
	2,123	Colonial BancGroup (The), Inc.		40,719
	650	Colonial Properties Trust		20,365
	2,091	Comerica, Inc.		97,608
	874	Commerce Group (The), Inc.		31,892
	2,670	Commerce Bancorp, Inc.		108,803
	950	Commerce Bancshares, Inc.		44,812

See Notes to Financial Statements.
22

Schedule of Investments (Continued)

PowerShares Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	413	Community Bank System, Inc.	$	8,636
	343	Community Banks, Inc.		10,413
	211	Community Trust Bancorp, Inc.		6,151
	781	Corus Bankshares, Inc.		8,607
	810	Cullen/Frost Bankers, Inc.		43,076
	1,154	CVB Financial Corp.		13,525
	1,993	Duke Realty Corp.		64,075
	329	EastGroup Properties, Inc.		15,687
	1,711	Eaton Vance Corp.		85,601
	788	Erie Indemnity Co., Class A		44,837
	348	Essex Property Trust, Inc.		42,954
	838	F.N.B. Corp.		13,928
	781	Federal Realty Investment Trust		68,900
	7,409	Fifth Third Bancorp		231,754
	199	First BanCorp		3,600
	506	First Busey Corp.		10,489
	480	First Charter Corp.		14,544
	1,018	First Commonwealth Financial Corp.		11,697
	155	First Community Bancshares, Inc.		5,323
	287	First Financial Bankshares, Inc.		11,202
	182	First Financial Corp.		5,582
	164	First Financial Holdings, Inc.		4,736
	229	First Indiana Corp.		7,282
	682	First Midwest Bancorp, Inc.		22,970
	280	First State Bancorp		4,752
	1,114	FirstMerit Corp.		23,617
	294	Flushing Financial Corp.		4,998
	1,422	Forest City Enterprises, Inc., Class A		80,940
	3,405	Franklin Resources, Inc.		441,560
	9,158	Freddie Mac		478,322
	2,400	Fulton Financial Corp.		31,464
	3,400	General Growth Properties, Inc.		184,824
	742	Glacier Bancorp, Inc.		15,092
	422	Harleysville Group, Inc.		13,154
	400	Harleysville National Corp.		6,028
	4,345	Hartford Financial Services Group (The), Inc.		421,595
	1,559	HCC Insurance Holdings, Inc.		46,599
	2,982	HCP, Inc.		101,507
	724	Healthcare Realty Trust, Inc.		19,143
	228	Heartland Financial USA, Inc.		4,546
	511	Hilb Rogal & Hobbs Co.		22,520
	465	Home Properties, Inc.		23,910
	168	Horizon Financial Corp.		2,913
	178	IBERIABANK Corp.		8,823
	313	Independent Bank Corp.		3,305
	406	Irwin Financial Corp.		3,914
	5,381	KeyCorp		153,089
	3,492	Kimco Realty Corp.		144,988
	1,866	Legg Mason, Inc.		154,766
	7,337	Lehman Brothers Holdings, Inc.		464,726
	886	Lexington Realty Trust		17,534
	1,263	Liberty Property Trust		47,514

Number of Shares			Value
		Common Stocks (Continued)
	3,755	Lincoln National Corp.	$	234,199
	1,479	M&T Bank Corp.		147,131
	995	Macerich (The) Co.		85,281
	258	Mainsource Financial Group, Inc.		4,337
	3,694	Marshall & Ilsley Corp.		157,734
	1,738	MBIA, Inc.		74,804
	757	Mercury General Corp.		38,842
	268	Midland (The) Co.		17,050
	8,771	National City Corp.		212,697
	680	National Penn Bancshares, Inc.		11,465
	984	National Retail Properties, Inc.		24,944
	3,045	Northern Trust Corp.		229,014
	1,112	Nuveen Investments, Inc., Class A		72,058
	916	Old National Bancorp		15,306
	3,206	Old Republic International Corp.		49,148
	168	Old Second Bancorp, Inc.		4,763
	175	Omega Financial Corp.		4,786
	651	Pacific Capital Bancorp		13,495
	195	Park National Corp.		15,456
	143	Peoples Bancorp, Inc.		3,571
	4,165	People's United Financial, Inc.		74,054
	10,024	Progressive (The) Corp.		185,444
	3,557	ProLogis		255,179
	971	Protective Life Corp.		41,627
	445	Provident Bankshares Corp.		10,978
	1,399	Realty Income Corp.		41,326
	962	Regency Centers Corp.		68,764
	293	Renasant Corp.		6,812
	330	RLI Corp.		19,196
	338	S&T Bancorp, Inc.		11,195
	194	S.Y. Bancorp, Inc.		4,900
	227	Sandy Spring Bancorp, Inc.		6,746
	265	Seacoast Banking Corp. of Florida		3,882
	2,711	SEI Investments Co.		85,722
	193	Simmons First National Corp., Class A		5,219
	5,706	SLM Corp.		269,095
	1,009	South Financial Group (The), Inc.		20,846
	198	Southwest Bancorp, Inc.		3,748
	299	Sovran Self Storage, Inc.		14,146
	570	State Auto Financial Corp.		15,686
	5,392	State Street Corp.		430,120
	249	Sterling Bancorp		3,658
	1,011	Sterling Bancshares, Inc.		12,334
	412	Sterling Financial Corp.		7,560
	252	Sun Communities, Inc.		7,686
	4,835	SunTrust Banks, Inc.		351,021
	723	Susquehanna Bancshares, Inc.		14,583
	4,616	Synovus Financial Corp.		121,678
	3,655	T. Rowe Price Group, Inc.		234,797
	433	Tanger Factory Outlet Centers, Inc.		18,238
	732	Taubman Centers, Inc.		43,093
	1,754	TCF Financial Corp.		39,939

See Notes to Financial Statements.
23

Schedule of Investments (Continued)

PowerShares Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	916	Transatlantic Holdings, Inc.	$	68,269
	793	Trustmark Corp.		21,403
	23,900	U.S. Bancorp		792,524
	1,865	UDR, Inc.		44,275
	583	UMB Financial Corp.		24,486
	597	United Bankshares, Inc.		18,089
	164	Universal Health Realty Income Trust		6,063
	1,661	Valley National Bancorp		34,017
	2,104	Vornado Realty Trust		235,059
	1,209	Washington Federal, Inc.		29,209
	12,052	Washington Mutual, Inc.		336,010
	646	Washington Real Estate Investment Trust		22,752
	184	Washington Trust Bancorp, Inc.		4,587
	754	Webster Financial Corp.		27,325
	1,197	Weingarten Realty Investors		45,797
	46,271	Wells Fargo & Co.		1,573,677
	286	WesBanco, Inc.		6,598
	99	Wesco Financial Corp.		39,402
	216	West Coast Bancorp		5,858
	410	Westamerica Bancorp		19,713
	937	Whitney Holding Corp.		24,043
	941	Wilmington Trust Corp.		34,224
				21,366,465
		Health Care—11.8%
	21,394	Abbott Laboratories		1,168,540
	867	Beckman Coulter, Inc.		61,401
	3,369	Becton, Dickinson & Co.		281,177
	1,431	C.R. Bard, Inc.		119,646
	5,046	Cardinal Health, Inc.		343,279
	2,105	DENTSPLY International, Inc.		87,315
	15,702	Eli Lilly & Co.		850,263
	857	Hillenbrand Industries, Inc.		47,324
	40,070	Johnson & Johnson		2,611,362
	15,700	Medtronic, Inc.		744,808
	551	Meridian Bioscience, Inc.		18,233
	95,894	Pfizer, Inc.		2,359,951
	5,675	Stryker Corp.		402,925
	459	West Pharmaceutical Services, Inc.		18,975
				9,115,199
		Industrials—12.8%
	9,909	3M Co.		855,741
	426	A.O. Smith Corp.		15,928
	691	ABM Industries, Inc.		16,252
	1,474	Avery Dennison Corp.		85,345
	200	Badger Meter, Inc.		7,690
	753	Brady Corp., Class A		27,786
	688	Briggs & Stratton Corp.		15,487
	863	Carlisle Cos., Inc.		34,045
	8,848	Caterpillar, Inc.		660,149
	2,199	Cintas Corp.		80,483
	691	Clarcor, Inc.		25,194

Number of Shares			Value
		Common Stocks (Continued)
	4,297	Danaher Corp.	$	368,124
	1,096	Donaldson Co., Inc.		46,975
	2,751	Dover Corp.		126,546
	10,964	Emerson Electric Co.		573,088
	2,950	Expeditors International of Washington, Inc.		149,418
	318	Franklin Electric Co., Inc.		13,855
	5,616	General Dynamics Corp.		510,831
	95,322	General Electric Co.		3,923,455
	185	Gorman-Rupp (The) Co.		7,163
	1,165	Harsco Corp.		70,622
	641	HNI Corp.		27,794
	7,530	Illinois Tool Works, Inc.		431,168
	298	LSI Industries, Inc.		5,632
	5,184	Masco Corp.		124,831
	351	McGrath Rentcorp		12,032
	495	Mine Safety Appliances Co.		22,666
	114	NACCO Industries, Inc., Class A		11,809
	467	Nordson Corp.		24,985
	2,328	Parker Hannifin Corp.		187,101
	1,377	Pentair, Inc.		48,732
	3,031	Pitney Bowes, Inc.		121,361
	250	Raven Industries, Inc.		10,803
	1,226	Roper Industries, Inc.		86,813
	545	Teleflex, Inc.		39,899
	259	Tennant Co.		12,214
	13,684	United Technologies Corp.		1,048,058
	263	Universal Forest Products, Inc.		9,418
	1,097	W.W. Grainger, Inc.		98,642
				9,938,135
		Information Technology—3.8%
	7,306	Automatic Data Processing, Inc.		362,085
	911	Diebold, Inc.		38,116
	18,832	International Business Machines Corp.		2,186,772
	1,237	Jack Henry & Associates, Inc.		36,145
	3,140	Linear Technology Corp.		103,683
	5,187	Paychex, Inc.		216,713
				2,943,514
		Materials—2.5%
	2,992	Air Products & Chemicals, Inc.		292,766
	1,322	Albemarle Corp.		63,139
	946	AptarGroup, Inc.		42,286
	1,391	Bemis Co., Inc.		39,171
	3,392	Ecolab, Inc.		160,001
	831	H.B. Fuller Co.		24,456
	579	Martin Marietta Materials, Inc.		74,894
	487	Myers Industries, Inc.		10,320
	4,146	Nucor Corp.		257,135
	2,267	PPG Industries, Inc.		169,436
	4,373	Praxair, Inc.		373,803
	2,711	Rohm & Haas Co.		140,647
	1,681	RPM International, Inc.		36,024

See Notes to Financial Statements.
24

Schedule of Investments (Continued)

PowerShares Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	1,808	Sigma-Aldrich Corp.	$	93,419
	1,397	Sonoco Products Co.		43,195
	1,392	Valspar (The) Corp.		34,842
	1,323	Vulcan Materials Co.		113,130
				1,968,664
		Telecommunication Services—4.6%
	84,430	AT&T, Inc.		3,528,330
	1,498	CenturyTel, Inc.		65,987
				3,594,317
		Utilities—1.9%
	237	American States Water Co.		10,772
	1,841	Aqua America, Inc.		42,822
	1,234	Atmos Energy Corp.		34,614
	523	Black Hills Corp.		23,232
	286	California Water Service Group		12,696
	3,751	Consolidated Edison, Inc.		176,635
	993	Energen Corp.		63,552
	5,632	FPL Group, Inc.		385,340
	1,052	Integrys Energy Group, Inc.		56,608
	2,521	MDU Resources Group, Inc.		70,991
	301	MGE Energy, Inc.		10,084
	1,157	National Fuel Gas Co.		56,103
	388	New Jersey Resources Corp.		19,109
	412	Otter Tail Corp.		14,272
	1,025	Piedmont Natural Gas Co., Inc.		26,168
	1,389	Pinnacle West Capital Corp.		56,116
	3,584	Progress Energy, Inc.		172,032
	2,390	Questar Corp.		136,421
	254	SJW Corp.		8,872
	335	Southwest Water Co.		4,328
	1,476	UGI Corp.		39,291
	1,059	Vectren Corp.		29,694
	683	WGL Holdings, Inc.		23,167
				1,472,919
		Total Common Stocks (Cost $72,505,626)		77,417,405
		Money Market Fund—0.2%
	166,505	Liquid Assets Portfolio Private Class* (Cost $166,505)		166,505
		Total Investments (Cost $72,672,131)—100.0%		77,583,910
		Liabilities in excess of other assets—(0.0%)		(14,231	)
		Net Assets—100.0%	$	77,569,679

*  Affiliated Investment.

See Notes to Financial Statements.
25

Schedule of Investments

PowerShares High Yield Equity Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Consumer Discretionary—4.6%
	1,197,332	La-Z-Boy, Inc.	$	9,446,949
	183,131	Superior Industries International, Inc.		3,701,078
				13,148,027
		Consumer Staples—3.4%
	74,055	Altria Group, Inc.		5,400,831
	93,558	Universal Corp.		4,560,017
				9,960,848
		Financials—65.2%
	204,778	Arthur J. Gallagher & Co.		5,449,143
	184,527	Associated Banc-Corp		5,325,449
	133,538	Bank of America Corp.		6,447,215
	154,986	BB&T Corp.		5,729,832
	136,883	Citigroup, Inc.		5,735,398
	134,452	Comerica, Inc.		6,276,219
	159,794	Commerce Group (The), Inc.		5,830,883
	257,723	Community Bank System, Inc.		5,388,988
	871,503	Corus Bankshares, Inc.		9,603,962
	437,847	F.N.B. Corp.		7,277,017
	212,018	Fifth Third Bancorp		6,631,923
	234,796	First BanCorp		4,247,460
	668,438	First Commonwealth Financial Corp.		7,680,353
	350,048	FirstMerit Corp.		7,421,018
	404,602	Fulton Financial Corp.		5,304,332
	395,564	Harleysville National Corp.		5,961,150
	201,212	KeyCorp		5,724,481
	95,362	Mercury General Corp.		4,893,024
	345,983	National City Corp.		8,390,088
	400,571	Old National Bancorp		6,693,541
	202,893	Omega Financial Corp.		5,549,124
	66,721	Park National Corp.		5,288,306
	203,245	Provident Bankshares Corp.		5,014,054
	140,432	S&T Bancorp, Inc.		4,651,108
	475,387	Sterling Bancorp		6,983,435
	305,198	Susquehanna Bancshares, Inc.		6,155,844
	203,706	TCF Financial Corp.		4,638,386
	189,064	U.S. Bancorp		6,269,362
	165,567	Washington Federal, Inc.		4,000,099
	288,667	Washington Mutual, Inc.		8,048,036
	217,469	Whitney Holding Corp.		5,580,255
				188,189,485
		Health Care—2.1%
	242,974	Pfizer, Inc.		5,979,590
		Industrials—0.9%
	47,504	Emerson Electric Co.		2,483,034
		Materials—1.3%
	176,814	RPM International, Inc.		3,789,124
		Telecommunication Services—1.4%
	100,430	AT&T, Inc.		4,196,970

Number of Shares			Value
		Common Stocks (Continued)
		Utilities—21.2%
	203,245	Atmos Energy Corp.	$	5,701,022
	93,534	Black Hills Corp.		4,154,780
	134,510	Consolidated Edison, Inc.		6,334,076
	123,378	Integrys Energy Group, Inc.		6,638,969
	158,039	MGE Energy, Inc.		5,294,307
	113,839	Otter Tail Corp.		3,943,383
	197,386	Piedmont Natural Gas Co., Inc.		5,039,265
	161,160	Pinnacle West Capital Corp.		6,510,864
	137,591	Progress Energy, Inc.		6,604,368
	208,269	Vectren Corp.		5,839,863
	150,316	WGL Holdings, Inc.		5,098,719
				61,159,616
		Total Common Stocks (Cost $327,191,246)		288,906,694
		Money Market Fund—0.5%
	1,369,339	Liquid Assets Portfolio Private Class* (Cost $1,369,339)		1,369,339
		Total Investments (Cost $328,560,585)—100.6%		290,276,033
		Liabilities in excess of other assets—(0.6%)		(1,670,896	)
		Net Assets—100.0%	$	288,605,137

*  Affiliated Investment.

See Notes to Financial Statements.
26

Schedule of Investments

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Consumer Discretionary—13.7%
	1,772	Applebee's International, Inc.	$	44,902
	297	Courier Corp.		11,224
	5,652	Harley-Davidson, Inc.		291,078
	1,714	Harte-Hanks, Inc.		30,218
	40,913	Home Depot (The), Inc.		1,289,169
	1,369	John Wiley & Sons, Inc., Class A		60,209
	34,783	Lowe's Cos., Inc.		935,315
	22,686	McDonald's Corp.		1,354,353
	6,248	Nordstrom, Inc.		246,421
	845	Polaris Industries, Inc.		41,557
	3,227	Ross Stores, Inc.		87,194
	10,453	TJX (The) Cos., Inc.		302,405
	1,229	Wolverine World Wide, Inc.		31,512
				4,725,557
		Consumer Staples—5.4%
	14,357	Sysco Corp.		492,302
	30,499	Wal-Mart Stores, Inc.		1,378,859
				1,871,161
		Energy—1.1%
	1,296	Holly Corp.		81,389
	5,335	Kinder Morgan Energy Partners, L.P.		280,087
				361,476
		Financials—41.5%
	11,514	AFLAC, Inc.		722,849
	480	Alabama National Bancorp		37,834
	21,747	American International Group, Inc.		1,372,671
	503	Anchor BanCorp Wisconsin, Inc.		12,374
	2,210	Arthur J. Gallagher & Co.		58,808
	2,280	Astoria Financial Corp.		59,257
	357	BancFirst Corp.		16,222
	28,525	Bank of America Corp.		1,377,188
	377	Banner Corp.		12,313
	3,307	Brown & Brown, Inc.		83,303
	32,371	Citigroup, Inc.		1,356,345
	1,132	City National Corp.		76,523
	4,547	Commerce Bancorp, Inc.		185,290
	1,329	Corus Bankshares, Inc.		14,646
	1,961	CVB Financial Corp.		22,983
	2,908	Eaton Vance Corp.		145,487
	1,341	Erie Indemnity Co., Class A		76,303
	12,614	Fifth Third Bancorp		394,566
	338	First Bancorp		6,114
	476	First State Bancorp		8,078
	501	Flushing Financial Corp.		8,517
	2,421	Forest City Enterprises, Inc., Class A		137,803
	15,592	Freddie Mac		814,370
	1,264	Glacier Bancorp, Inc.		25,710
	2,656	HCC Insurance Holdings, Inc.		79,388
	302	IBERIABANK Corp.		14,970
	533	Independent Bank Corp.		5,628
	691	Irwin Financial Corp.		6,661
	3,180	Legg Mason, Inc.		263,749

Number of Shares			Value
		Common Stocks (Continued)
	12,490	Lehman Brothers Holdings, Inc.	$	791,117
	2,515	M&T Bank Corp.		250,192
	1,289	Mercury General Corp.		66,139
	1,895	Nuveen Investments, Inc., Class A		122,796
	5,457	Old Republic International Corp.		83,656
	284	Old Second Bancorp, Inc.		8,051
	1,109	Pacific Capital Bancorp		22,990
	7,092	People's United Financial, Inc.		126,096
	757	Provident Bankshares Corp.		18,675
	330	S.Y. Bancorp, Inc.		8,336
	389	Sandy Spring Bancorp, Inc.		11,561
	4,610	SEI Investments Co.		145,768
	9,717	SLM Corp.		458,254
	339	Southwest Bancorp, Inc.		6,417
	971	State Auto Financial Corp.		26,722
	9,160	State Street Corp.		730,693
	423	Sterling Bancorp		6,214
	1,596	Sterling Bancshares, Inc.		19,471
	7,873	Synovus Financial Corp.		207,532
	6,220	T. Rowe Price Group, Inc.		399,573
	2,984	TCF Financial Corp.		67,946
	1,347	Trustmark Corp.		36,356
	40,684	U.S. Bancorp		1,349,081
	20,473	Washington Mutual, Inc.		570,787
	40,082	Wells Fargo & Co.		1,363,189
	368	West Coast Bancorp		9,980
	698	Westamerica Bancorp		33,560
				14,337,102
		Health Care—16.8%
	5,733	Becton, Dickinson & Co.		478,476
	8,543	Cardinal Health, Inc.		581,180
	20,913	Johnson & Johnson		1,362,900
	26,952	Medtronic, Inc.		1,278,603
	939	Meridian Bioscience, Inc.		31,072
	55,743	Pfizer, Inc.		1,371,835
	9,663	Stryker Corp.		686,073
				5,790,139
		Industrials—9.6%
	3,745	Cintas Corp.		137,067
	7,321	Danaher Corp.		627,190
	1,865	Donaldson Co., Inc.		79,934
	5,024	Expeditors International of Washington, Inc.		254,466
	541	Franklin Electric Co., Inc.		23,571
	12,788	Illinois Tool Works, Inc.		732,241
	508	LSI Industries, Inc.		9,601
	596	McGrath Rentcorp		20,431
	842	Mine Safety Appliances Co.		38,555
	427	Raven Industries, Inc.		18,451
	18,023	United Technologies Corp.		1,380,381
				3,321,888

See Notes to Financial Statements.
27

Schedule of Investments (Continued)

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Information Technology—7.9%
	12,375	Automatic Data Processing, Inc.	$	613,305
	13,023	International Business Machines Corp.		1,512,231
	2,106	Jack Henry & Associates, Inc.		61,537
	5,280	Linear Technology Corp.		174,346
	8,814	Paychex, Inc.		368,249
				2,729,668
		Materials—3.8%
	1,609	AptarGroup, Inc.		71,922
	7,053	Nucor Corp.		437,427
	7,437	Praxair, Inc.		635,715
	3,075	Sigma-Aldrich Corp.		158,885
				1,303,949
		Total Common Stocks (Cost $34,140,093)		34,440,940
		Money Market Fund—0.2%
	81,590	Liquid Assets Portfolio Private Class* (Cost $81,590)		81,590
		Total Investments (Cost $34,221,683)—100.0%		34,522,530
		Other assets less liabilities—0.0%		7,232
		Net Assets—100.0%	$	34,529,762

*  Affiliated investment.

See Notes to Financial Statements.
28

Schedule of Investments

PowerShares International Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Consumer Discretionary—10.3%
	208,461	Honda Motor Co. Ltd. ADR	$	7,802,695
	190,496	Luxottica Group SpA ADR		6,743,558
	1,267,149	Pearson PLC ADR		21,326,118
	358,120	Reed Elsevier N.V. ADR		13,945,193
	269,825	Reed Elsevier PLC ADR		14,211,683
	274,293	Thomson (The) Corp.		12,963,087
	131,283	WPP Group PLC ADR		9,032,270
				86,024,604
		Consumer Staples—11.6%
	230,179	British American Tobacco PLC ADR		17,650,126
	28,089	Bunge Ltd.		3,235,572
	264,251	Cadbury Schweppes PLC ADR		14,068,723
	175,878	Diageo PLC ADR		16,136,807
	146,728	Imperial Tobacco Group PLC ADR		14,913,434
	488,670	Unilever N.V.		15,862,228
	462,111	Unilever PLC ADR		15,647,078
				97,513,968
		Energy—9.4%
	245,622	BP PLC ADR		19,156,060
	27,488	Canadian Natural Resources Ltd.		2,287,002
	408,779	Enbridge, Inc.		17,499,829
	68,104	Imperial Oil Ltd.		3,686,470
	241,793	Sasol Ltd. ADR		12,297,592
	468,230	TransCanada Corp.		19,838,904
	36,042	Yanzhou Coal Mining Co. Ltd. ADR		3,924,253
				78,690,110
		Financials—38.9%
	150,231	ACE Ltd.		9,105,501
	428,143	Allianz SE ADR		9,676,032
	464,389	Allied Irish Banks PLC ADR		23,544,522
	764,475	Banco Bilbao Vizcaya Argentaria S.A. ADR		19,295,349
	781,545	Banco Santander Central Hispanic S.A. ADR		16,967,342
	324,750	Bank of Montreal		21,621,855
	313,829	Bank of Nova Scotia		17,643,466
	578,369	Barclays PLC ADR		29,410,063
	505,769	Brookfield Properties Corp.		12,629,052
	166,769	Canadian Imperial Bank of Commerce		17,997,710
	135,569	Credicorp Ltd.		10,076,844
	77,074	Everest Re Group Ltd.		8,211,464
	254,057	HSBC Holdings PLC ADR		25,283,752
	239,961	Manulife Financial Corp.		11,131,791
	204,840	Max Capital Group Ltd.		5,794,924
	25,302	ORIX Corp. ADR		2,612,432
	138,656	PartnerRe Ltd.		11,543,112
	115,923	RenaissanceRe Holdings Ltd.		6,762,948
	293,372	Royal Bank of Canada		17,355,888
	236,481	Sun Life Financial, Inc.		13,763,194
	190,906	Toronto-Dominion (The) Bank		14,394,312
	155,428	Westpac Banking Corp. ADR		21,068,265
				325,889,818

Number of Shares			Value
		Common Stocks (Continued)
		Health Care—2.1%
	92,583	Fresenius Medical Care AG ADR	$	4,893,012
	33,212	Novo Nordisk A/S ADR		4,141,204
	72,562	Smith & Nephew PLC ADR		4,917,527
	83,602	Teva Pharmaceutical Industries Ltd. ADR		3,679,324
				17,631,067
		Industrials—7.5%
	137,190	Canadian National Railway Co.		7,681,268
	1,713,644	Tomkins PLC ADR		32,250,780
	1,162,943	Volvo AB ADR		22,851,830
				62,783,878
		Information Technology—7.5%
	164,749	Canon, Inc. ADR		8,331,357
	72,413	Dassault Systemes S.A. ADR		4,483,089
	63,479	KYOCERA Corp. ADR		5,426,185
	3,113,203	Nam Tai Electronics, Inc.		37,514,096
	82,233	SAP AG ADR		4,463,607
	97,070	Satyam Computer Services Ltd. ADR		2,946,075
				63,164,409
		Materials—3.9%
	73,306	BHP Billiton Ltd. ADR		6,396,682
	251,236	CRH PLC ADR		9,951,458
	120,151	Compania de Minas Buenaventura S.A. ADR		6,897,869
	641,152	Norsk Hydro ASA ADR		9,424,934
				32,670,943
		Telecommunication Services—4.5%
	46,071	America Movil SAB de CV ADR		3,012,583
	849,359	NTT DoCoMo, Inc. ADR		12,400,641
	39,483	Rostelecom ADR		2,357,135
	503,483	Vodafone Group PLC ADR		19,771,778
				37,542,137
		Utilities—4.4%
	134,917	Consolidated Water Co., Inc.		4,472,499
	292,844	Huaneng Power International, Inc. ADR		14,071,154
	226,117	National Grid PLC ADR		18,541,594
				37,085,247
		Total Investments (Cost $760,263,597)—100.1%		838,996,181
		Liabilities in excess of other assets—(0.1%)		(711,237	)
		Net Assets—100.0%	$	838,284,944

ADR American Depositary Receipt.

See Notes to Financial Statements.
29

Schedule of Investments (Continued)

PowerShares International Dividend Achievers^TM Portfolio

October 31, 2007 (Unaudited)

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United Kingdom	$	272,317,793			32.5	%
Canada		190,493,828			22.7
Bermuda		45,624,864			5.4
British Virgin Islands		37,514,096			4.5
Japan		36,573,310			4.4
Spain		36,262,691			4.3
Ireland		33,495,980			4.0
Netherlands		29,807,421			3.6
Australia		27,464,947			3.3
Sweden		22,851,830			2.7
Germany		19,032,651			2.3
China		17,995,407			2.1
Caymen Islands		13,578,000			1.6
South Africa		12,297,592			1.5
Norway		9,424,934			1.1
Peru		6,897,869			0.8
Italy		6,743,558			0.8
France		4,483,089			0.5
Demark		4,141,204			0.5
Israel		3,679,324			0.4
Mexico		3,012,583			0.4
India		2,946,075			0.4
Russia		2,357,135			0.3
Total investments		838,996,181			100.1
Liabilities in excess of other assets		(711,237	)		(0.1	)
Net Assets	$	838,284,944			100.0	%

See Notes to Financial Statements.
30

Schedule of Investments

PowerShares Buyback Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.7%
		Consumer Discretionary—25.4%
	3,612	American Greetings Corp., Class A	$	95,140
	1,487	Audiovox Corp., Class A*		17,844
	4,929	Autoliv, Inc.		311,414
	12,018	AutoNation, Inc.*		212,598
	4,217	AutoZone, Inc.*		524,637
	17,353	Bed Bath & Beyond, Inc.*		588,961
	6,700	Belo Corp., Class A		123,950
	4,349	Black & Decker (The) Corp.		391,019
	1,034	Blue Nile, Inc.*		81,727
	3,828	Borders Group, Inc.		59,028
	1,733	Brookfield Homes Corp.		26,047
	1,543	CBRL Group, Inc.		61,566
	7,869	Centex Corp.		197,197
	32,741	Clear Channel Communications, Inc.		1,236,628
	2,348	Columbia Sportswear Co.		114,465
	5,498	Corinthian Colleges, Inc.*		90,112
	415	CPI Corp.		13,782
	2,810	Cumulus Media, Inc., Class A*		28,971
	78,049	DIRECTV Group (The), Inc.*		2,066,737
	2,133	Dover Downs Gaming & Entertainment, Inc.		23,314
	2,524	Entercom Communications Corp., Class A		46,820
	6,878	Entravision Communications Corp., Class A*		62,590
	3,518	Furniture Brands International, Inc.		42,392
	52,434	Gap (The), Inc.		991,003
	9,358	Gentex Corp.		194,459
	15,834	Harley-Davidson, Inc.		815,451
	4,735	Harte-Hanks, Inc.		83,478
	10,598	Hasbro, Inc.		316,350
	2,024	Hibbett Sports, Inc.*		47,746
	1,104	IHOP Corp.		69,916
	2,584	ITT Educational Services, Inc.*		328,659
	1,647	Jackson Hewitt Tax Service, Inc.		51,469
	7,089	Jones Apparel Group, Inc.		148,444
	5,828	KB Home		161,086
	1,685	Kellwood Co.		27,920
	20,885	Kohl's Corp.*		1,148,048
	24,122	Marriott International, Inc., Class A		991,655
	5,265	Marvel Entertainment, Inc.*		130,256
	24,043	Mattel, Inc.		502,258
	21,562	McGraw-Hill (The) Cos., Inc.		1,078,962
	7,135	Mediacom Communications Corp., Class A*		41,026
	953	Midas, Inc.*		15,219
	2,054	Nautilus, Inc.		13,207
	352	NVR, Inc.*		167,464
	17,927	Office Depot, Inc.*		336,311
	21,469	Omnicom Group, Inc.		1,094,490
	4,555	Pacific Sunwear of California, Inc.*		76,160
	2,334	Polaris Industries, Inc.		114,786
	838	Pre-Paid Legal Services, Inc.*		49,945
	2,272	Progressive Gaming International Corp.*		9,043
	6,432	Radio One, Inc., Class D*		22,448
	3,355	Ruby Tuesday, Inc.		53,579
	2,730	Ryland Group, Inc.		77,614

Number of Shares			Value
		Common Stocks (Continued)
	1,553	Salem Communications Corp., Class A	$	12,424
	3,943	Sonic Corp.*		97,708
	1,235	Standard Motor Products, Inc.		10,325
	4,757	Standard-Pacific Corp.		22,834
	672	Stanley Furniture Co., Inc.		9,180
	3,726	Station Casinos, Inc.		334,595
	6,373	Stewart Enterprises, Inc., Class A		57,803
	1,485	Sturm, Ruger & Co., Inc.*		13,885
	5,223	Sun-Times Media Group, Inc., Class A*		11,543
	434	Superior Uniform Group, Inc.		5,768
	5,146	Tempur-Pedic International, Inc.		185,256
	4,035	Timberland (The) Co., Class A*		78,723
	246,343	Time Warner, Inc.		4,498,222
	7,706	Tribune Co.		233,184
	45,129	Viacom, Inc., Class B*		1,863,375
	2,739	WCI Communities, Inc.*		14,955
	5,151	Weight Watchers International, Inc.		263,937
	33,384	Yum! Brands, Inc.		1,344,374
				24,633,482
		Consumer Staples—2.9%
	25,235	Campbell Soup Co.		933,190
	1,236	Chattem, Inc.*		91,835
	3,706	Energizer Holdings, Inc.*		386,536
	12,558	Estee Lauder (The) Cos., Inc., Class A		551,296
	14,983	Hershey (The) Co.		645,917
	1,962	Lancaster Colony Corp.		78,814
	2,308	Performance Food Group Co.*		62,293
	1,684	Ralcorp Holdings, Inc.*		94,809
				2,844,690
		Energy—8.9%
	20,915	Baker Hughes, Inc.		1,813,749
	19,169	BJ Services Co.		482,867
	6,557	Exterran Holdings, Inc.*		552,099
	51,081	Exxon Mobil Corp.		4,698,942
	3,579	Holly Corp.		224,761
	10,337	Patterson-UTI Energy, Inc.		206,120
	970	Petroleum Development Corp.*		44,057
	7,829	Sunoco, Inc.		576,214
				8,598,809
		Financials—13.0%
	1,909	Affiliated Managers Group, Inc.*		251,129
	714	American Physicians Capital, Inc.		31,102
	7,439	AmeriCredit Corp.*		104,964
	1,975	Asset Acceptance Capital Corp.		21,251
	1,130	Associated Estates Realty Corp.		13,718
	7,746	Assurant, Inc.		452,676
	6,296	Astoria Financial Corp.		163,633
	1,222	Beverly Hills Bancorp, Inc.		7,662
	3,706	Erie Indemnity Co., Class A		210,871
	680	Federal Agricultural Mortgage Corp., Class C		19,958
	2,524	First Financial Bancorp		29,657
	1,830	GAMCO Investors, Inc., Class A		113,295
	28,831	Genworth Financial, Inc., Class A		787,086

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares Buyback Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	18,414	Goldman Sachs Group (The), Inc.	$	4,565,200
	3,379	Hanover Insurance Group (The), Inc.		155,671
	1,604	Housevalues, Inc.*		6,256
	34,694	Hudson City Bancorp, Inc.		543,308
	11,154	Janus Capital Group, Inc.		384,925
	1,703	KNBT Bancorp, Inc.		29,189
	5,320	MGIC Investment Corp.		102,995
	167	Monarch Community Bancorp, Inc.		1,979
	17,513	Moody's Corp.		765,668
	5,230	Nuveen Investments, Inc., Class A		338,904
	348	Oak Hill Financial, Inc.		10,228
	2,828	Partners Trust Financial Group, Inc.		35,124
	1,202	Piper Jaffray Cos.*		61,783
	4,016	Provident Financial Services, Inc.		63,613
	30,280	Prudential Financial, Inc.		2,928,682
	1,253	QC Holdings, Inc.		18,995
	6,026	Torchmark Corp.		392,654
				12,612,176
		Health Care—15.1%
	3,935	Advanced Medical Optics, Inc.*		108,016
	32,867	Aetna, Inc.		1,846,138
	599	America Service Group, Inc.*		6,661
	11,687	AmerisourceBergen Corp.		550,575
	71,224	Amgen, Inc.*		4,138,826
	2,913	AMICAS, Inc.*		7,749
	12,059	Applera Corp. - Applied Biosystems Group		447,871
	2,845	Apria Healthcare Group, Inc.*		68,764
	23,860	Cardinal Health, Inc.		1,623,195
	4,421	Charles River Laboratories International, Inc.*		256,418
	18,567	CIGNA Corp.		974,582
	1,861	CONMED Corp.*		52,927
	16,508	Express Scripts, Inc.*		1,041,655
	20,782	Forest Laboratories, Inc.*		811,953
	11,961	Hlth Corp.*		168,770
	12,814	IMS Health, Inc.		323,041
	3,012	Invitrogen Corp.*		273,700
	7,633	Laboratory Corp. of America Holdings*		524,769
	4,769	Manor Care, Inc.		317,520
	7,702	PerkinElmer, Inc.		211,959
	3,474	Savient Pharmaceuticals, Inc.*		48,914
	4,216	STERIS Corp.		122,433
	6,496	Waters Corp.*		500,062
	6,737	Watson Pharmaceuticals, Inc.*		205,883
				14,632,381
		Industrials—6.5%
	1,917	Albany International Corp., Class A		71,888
	2,188	Alliant Techsystems, Inc.*		241,533
	1,829	Bowne & Co., Inc.		31,788
	3,157	Brink's (The) Co.		197,786
	4,271	CBIZ, Inc.*		38,439
	2,935	Con-way, Inc.		125,060
	2,311	Diamond Management & Technology Consultants, Inc.		24,681

Number of Shares			Value
		Common Stocks (Continued)
	1,547	Dollar Thrifty Automotive Group*	$	53,372
	3,827	Dun & Bradstreet (The) Corp.		370,645
	947	Exponent, Inc.*		28,609
	1,099	GP Strategies Corp.*		12,078
	1,182	Heidrick & Struggles International, Inc.		51,086
	3,958	Herman Miller, Inc.		107,737
	3,010	HNI Corp.		130,514
	1,098	Innovative Solutions & Support, Inc.*		23,739
	8,209	J.B. Hunt Transport Services, Inc.		227,553
	7,030	Joy Global, Inc.		408,162
	5,004	Kansas City Southern*		193,605
	3,254	Knoll, Inc.		61,793
	555	Lawson Products, Inc.		19,641
	24,568	Masco Corp.		591,597
	1,307	NCI Building Systems, Inc.*		51,208
	2,197	Nordson Corp.		117,540
	180	Paragon Technologies, Inc.*		1,395
	12,406	Republic Services, Inc.		424,161
	9,927	Rockwell Automation, Inc.		683,772
	3,771	Ryder System, Inc.		180,442
	3,656	Spherion Corp.*		31,880
	3,535	SPX Corp.		358,096
	16,422	Textron, Inc.		1,136,568
	2,585	Toro (The) Co.		143,881
	1,785	United Stationers, Inc.*		103,369
				6,243,618
		Information Technology—22.9%
	5,251	Acxiom Corp.		68,998
	4,453	ADTRAN, Inc.		107,184
	1,669	Advent Software, Inc.*		92,346
	25,364	Agilent Technologies, Inc.*		934,663
	20,394	Analog Devices, Inc.		682,383
	90,543	Applied Materials, Inc.		1,758,345
	2,192	ATMI, Inc.*		70,451
	13,207	BMC Software, Inc.*		446,925
	33,864	CA, Inc.		895,703
	2,811	Cognex Corp.		50,542
	11,446	Computer Sciences Corp.*		668,332
	19,781	Compuware Corp.*		197,810
	579	Cyberoptics Corp.*		7,243
	4,280	Diebold, Inc.		179,075
	4,126	DST Systems, Inc.*		349,513
	8,049	EarthLink, Inc.*		63,668
	137,884	EMC Corp.*		3,500,875
	3,601	Fair Isaac Corp.		136,550
	10,834	Fiserv, Inc.*		600,204
	4,388	FLIR Systems, Inc.*		304,483
	1,516	Gevity HR, Inc.		15,130
	8,658	Intersil Corp., Class A		262,684
	6,162	Lexmark International, Inc., Class A*		258,742
	5,062	Micrel, Inc.		45,811
	138,230	Microsoft Corp.		5,088,245
	808	MicroStrategy, Inc., Class A*		79,451
	1,164	MTS Systems Corp.		51,786

See Notes to Financial Statements.
32

Schedule of Investments (Continued)

PowerShares Buyback Achievers^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	17,160	National Semiconductor Corp.	$	431,402
	2,968	NMS Communications Corp.*		4,749
	23,037	Novell, Inc.*		174,160
	8,049	Novellus Systems, Inc.*		228,672
	1,055	Numerex Corp., Class A*		8,925
	830	Overland Storage, Inc.*		1,685
	540	Perceptron, Inc.*		7,776
	5,974	Polycom, Inc.*		167,153
	1,888	Renaissance Learning, Inc.		26,470
	1,841	Selectica, Inc.*		3,572
	2,332	Sigmatel, Inc.*		7,136
	1,225	SM&A*		8,269
	57,895	Symantec Corp.*		1,087,268
	358	Tessco Technologies, Inc.*		5,452
	93,914	Texas Instruments, Inc.		3,061,596
	988	Travelzoo, Inc.*		17,784
	2,939	Websense, Inc.*		54,078
				22,213,289
		Materials—2.6%
	1,775	A. Schulman, Inc.		41,908
	443	AEP Industries, Inc.*		17,654
	4,089	Ashland, Inc.		240,106
	2,669	Cleveland-Cliffs, Inc.		255,290
	3,114	Eagle Materials, Inc.		123,034
	438	Friedman Industries, Inc.		3,548
	28,186	International Paper Co.		1,041,754
	8,508	Pactiv Corp.*		233,715
	6,218	Vulcan Materials Co.		531,701
				2,488,710
		Telecommunication Services—1.2%
	7,037	CenturyTel, Inc.		309,980
	18,720	Crown Castle International Corp.*		768,831
	5,343	IDT Corp., Class B		42,904
				1,121,715
		Utilities—1.2%
	664	Central Vermont Public Service Corp.		21,102
	23,239	PG&E Corp.		1,137,084
				1,158,186
		Total Investments (Cost $94,749,588)—99.7%		96,547,056
		Other assets less liabilities—0.3%		321,752
		Net Assets—100.0%	$	96,868,808

*  Non-income producing security.

See Notes to Financial Statements.
33

Schedule of Investments

PowerShares Financial Preferred Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Preferred Stocks—100.1%
		Banks—40.5%
	249,228	Bank of America Corp., 6.20%, Series D	$	6,131,009
	241,191	Barclays Bank PLC, 6.63%, Series 2 (United Kingdom)		5,923,651
	265,309	HSBC Holdings PLC, 6.20%, Series A (United Kingdom)		5,974,759
	120,192	HSBC USA, Inc., 6.50%, Series H		3,043,261
	176,873	Royal Bank of Scotland Group PLC, 6.25%, Series P (United Kingdom)		4,002,636
	321,584	Royal Bank of Scotland Group PLC, 6.35%, Series N (United Kingdom)		7,402,864
	297,465	Royal Bank of Scotland Group PLC, 6.40%, Series M (United Kingdom)		6,841,695
	281,053	Royal Bank of Scotland Group PLC, 6.60%, Series S (United Kingdom)		6,641,282
	217,070	Royal Bank of Scotland Group PLC, 6.75%, Series Q (United Kingdom)		5,346,434
				51,307,591
		Diversified Financial Services—16.9%
	130,898	CIT Group, Inc., 6.35%, Series A		2,919,025
	246,286	Goldman Sachs Group (The), Inc., 6.20%, Series B		5,920,716
	184,910	HSBC Finance Corp., 6.36%		4,546,937
	96,474	Lehman Brothers Holdings, 6.50%		2,388,696
	238,524	Merrill Lynch & Co., Inc., 6.38%, Series 3		5,724,576
				21,499,950
		Insurance—42.7%
	184,910	ACE Ltd., 7.80%, Series C (Cayman Islands)		4,715,205
	321,584	Aegon N.V., 6.38% (Netherlands)		7,390,000
	236,570	Aegon N.V., 6.50% (Netherlands)		5,462,401
	101,040	Aegon N.V., 6.88% (Netherlands)		2,477,501
	80,399	Axis Capital Holdings Ltd., 7.25%, Series A (Bermuda)		1,933,596
	225,110	ING Groep N.V., 6.13% (Netherlands)		4,941,165
	160,792	ING Groep N.V., 6.20% (Netherlands)		3,561,543
	262,651	ING Groep N.V., 6.38% (Netherlands)		6,033,093
	241,191	MetLife, Inc., 6.50%, Series B		5,996,008
	112,961	PartnerRe Ltd., 6.75%, Series C (Bermuda)		2,654,583
	96,474	Prudential PLC, 6.50% (United Kingdom)		2,267,139
	92,007	Prudential PLC, 6.75% (United Kingdom)		2,243,131
	80,399	RenaissanceRe Holdings Ltd., 6.08%, Series C (Bermuda)		1,591,900
	134,495	RenaissanceRe Holdings Ltd., 6.60%, Series D (Bermuda)		2,891,643
				54,158,908
		Total Preferred Stocks (Cost $134,390,912)		126,966,449

Number of Shares			Value
		Money Market Fund—0.2%
	200,470	Liquid Assets Portfolio Private Class* (Cost $200,470)	$	200,470
		Total Investments (Cost $134,591,382)—100.3%		127,166,919
		Liabilities in excess of other assets—(0.3%)		(379,014	)
		Net Assets—100.0%	$	126,787,905

*   Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United Kingdom	$	46,643,591			36.8	%
United States		36,870,698			29.1
Netherlands		29,865,703			23.5
Bermuda		9,071,722			7.2
Cayman Islands		4,715,205			3.7
Total investments		127,166,919			100.3
Liabilities in excess of other assets		(379,014	)		(0.3	)
Net Assets	$	126,787,905			100.0	%

See Notes to Financial Statements.
34

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Statements of Assets and Liabilities

October 31, 2007 (Unaudited)

	PowerShares Dividend AchieversTM Portfolio		PowerShares High Yield Equity Dividend AchieversTM Portfolio			PowerShares High Growth Rate Dividend AchieversTM Portfolio
ASSETS:
Unaffiliated investment at value	$	77,417,405	$	288,906,694		$	34,440,940
Affiliated investment at value		166,505		1,369,339			81,590
Cash		271,539		—			196,380
Receivables:
Capital stock sold		1,762,947		10,151,940			1,644,274
Investments sold		406,152		32,256,527			2,103,648
Dividends		97,846		804,190			33,132
Expense waivers due from Adviser		5,363		—			7,950
Other assets		851		5,181			505
Total Assets		80,128,608		333,493,871			38,508,419
LIABILITIES:
Due to custodian		—		1,220,156			—
Payables:
Capital stock repurchased		1,762,947		17,319,469			1,644,274
Investments purchased		718,487		26,058,196			2,282,592
Expense reimbursements due to Adviser		—		12,359			—
Accrued advisory fees		26,516		106,419			12,853
Accrued expenses		50,979		172,135			38,938
Total Liabilities		2,558,929		44,888,734			3,978,657
NET ASSETS	$	77,569,679	$	288,605,137		$	34,529,762
NET ASSETS CONSIST OF:
Paid-in capital	$	71,491,182	$	339,093,544		$	33,747,690
Undistributed net investment income/distribution in excess of net investment income		198,966		1,059,768			70,268
Accumulated net realized gain (loss) on investments		967,752		(13,263,623	)		410,957
Net unrealized appreciation (depreciation) of investments		4,911,779		(38,284,552	)		300,847
Net Assets	$	77,569,679	$	288,605,137		$	34,529,762
Shares outstanding (unlimited amount authorized, $0.01 par value)		4,400,000		19,900,000			2,100,000
Net asset value	$	17.63	$	14.50		$	16.44
Unaffiliated investments at cost	$	72,505,626	$	327,191,246		$	34,140,093
Affiliated investments at cost	$	166,505	$	1,369,339		$	81,590

See Notes to Financial Statements.
36

	PowerShares International Dividend AchieversTM Portfolio		PowerShares Buyback AchieversTM Portfolio			PowerShares Financial Preferred Portfolio
ASSETS:
Unaffiliated investment at value	$	838,996,181	$	96,547,056		$	126,966,449
Affiliated investment at value		—		—			200,470
Cash		364,747		224,148			—
Receivables:
Capital stock sold		56,035,090		2,618,076			2,264,070
Investments sold		74,807,130		1,737,593			—
Dividends		1,177,801		34,025			92,680
Expense waivers due from Adviser		—		3,001			1,200
Other assets		6,719		766			1,217
Total Assets		971,387,668		101,164,665			129,526,086
LIABILITIES:
Due to custodian		—		—			344,446
Payables:
Capital stock repurchased		64,940,107		2,618,076			—
Investments purchased		67,665,506		1,562,279			2,263,906
Expense reimbursements due to Adviser		15,359		—			—
Accrued advisory fees		277,511		42,373			50,600
Accrued expenses		204,241		73,129			79,229
Total Liabilities		133,102,724		4,295,857			2,738,181
NET ASSETS	$	838,284,944	$	96,868,808		$	126,787,905
NET ASSETS CONSIST OF:
Paid-in capital	$	718,591,889	$	94,492,757		$	137,370,835
Undistributed net investment income/distribution in excess of net investment income		2,569,205		(8,416	)		286,781
Accumulated net realized gain (loss) on investments		38,391,266		586,999			(3,445,248	)
Net unrealized appreciation (depreciation) of investments		78,732,584		1,797,468			(7,424,463	)
Net Assets	$	838,284,944	$	96,868,808		$	126,787,905
Shares outstanding (unlimited amount authorized, $0.01 par value)		37,400,000		3,700,000			5,600,000
Net asset value	$	22.41	$	26.18		$	22.64
Unaffiliated investments at cost	$	760,263,597	$	94,749,588		$	134,390,912
Affiliated investments at cost	$	—	$	—		$	200,470

37

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	PowerShares Dividend AchieversTM Portfolio			PowerShares High Yield Equity Dividend AchieversTM Portfolio			PowerShares High Growth Rate Dividend AchieversTM Portfolio
INVESTMENT INCOME:
Unaffiliated dividend income	$	941,983		$	9,208,004		$	466,432
Affiliated dividend income		5,008			12,798			2,124
Foreign withholding tax		—			—			—
Total Income		946,991			9,220,802			468,556
EXPENSES:
Advisory fees		144,440			762,055			81,561
Administration & Accounting fees		42,912			55,634			42,912
Sub-licensing		36,110			190,514			20,390
Printing		8,442			52,359			4,744
Audit		8,319			8,319			8,319
Listing fee and expenses		5,098			5,404			5,075
Trustees		3,994			10,292			3,405
Custodian & transfer agent fees		3,496			12,225			3,468
Legal		1,284			8,011			691
Registration & filings		—			—			—
Offering costs		—			—			—
Other expenses		7,208			7,243			5,009
Total Expenses		261,303			1,112,056			175,574
Net expenses reimbursed to the Adviser under the Expense Agreement		—			31,027			—
Less fees waived/reimbursed:
Advisory		(44,644	)		—			(53,232	)
Net Expenses		216,659			1,143,083			122,342
Net Investment Income		730,332			8,077,719			346,214
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(15,783	)		(5,110,754	)		(217,134	)
In-kind redemptions		1,114,939			2,506,804			887,406
Net realized gain (loss)		1,099,156			(2,603,950	)		670,272
Net change in unrealized appreciation/ depreciation on investments		(1,068,700	)		(31,495,368	)		(1,807,492	)
Net realized and unrealized gain (loss) on investments		30,456			(34,099,318	)		(1,137,220	)
Net increase (decrease) in net assets resulting from operations	$	760,788		$	(26,021,599	)	$	(791,006	)

See Notes to Financial Statements.
38

	PowerShares International Dividend AchieversTM Portfolio			PowerShares Buyback AchieversTM Portfolio			PowerShares Financial Preferred Portfolio
INVESTMENT INCOME:
Unaffiliated dividend income	$	11,456,771		$	370,654		$	3,823,515
Affiliated dividend income		1,188			—			5,232
Foreign withholding tax		(691,434	)		—			—
Total Income		10,766,525			370,654			3,828,747
EXPENSES:
Advisory fees		1,351,549			210,530			283,301
Administration & Accounting fees		95,450			42,727			41,994
Sub-licensing		337,887			42,106			56,660
Printing		62,868			7,459			11,523
Audit		8,319			8,319			8,319
Listing fee and expenses		5,464			5,088			5,117
Trustees		13,968			4,058			4,898
Custodian & transfer agent fees		18,703			4,685			4,504
Legal		9,137			967			1,609
Registration & filings		—			4,248			7,119
Offering costs		—			15,872			22,109
Other expenses		8,779			4,195			4,477
Total Expenses		1,912,124			350,254			451,630
Net expenses reimbursed to the Adviser under the Expense Agreement		91,555			—			—
Less fees waived/reimbursed:
Advisory		—			(39,640	)		(32,900	)
Net Expenses		2,003,679			310,614			418,730
Net Investment Income		8,762,846			60,040			3,410,017
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(1,619,178	)		(162,780	)		(3,433,928	)
In-kind redemptions		45,566,006			1,050,700			(11,320	)
Net realized gain (loss)		43,946,828			887,920			(3,445,248	)
Net change in unrealized appreciation/ depreciation on investments		35,878,690			408,919			(6,930,242	)
Net realized and unrealized gain (loss) on investments		79,825,518			1,296,839			(10,375,490	)
Net increase (decrease) in net assets resulting from operations	$	88,588,364		$	1,356,879		$	(6,965,473	)

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
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income	$	730,332		$	891,157		$	8,077,719		$	15,167,615		$	346,214		$	625,435
Net realized gain (loss) on investments		1,099,156			852,815			(2,603,950	)		21,966,940			670,272			1,149,160
Net change in unrealized appreciation/ depreciation of investments		(1,068,700	)		4,770,653			(31,495,368	)		594,916			(1,807,492	)		643,486
Net increase (decrease) in net assets resulting from operations		760,788			6,514,625			(26,021,599	)		37,729,471			(791,006	)		2,418,081
Undistributed net investment income/(loss) included in the price of units issued and redeemed		44,791			70,102			480,347			(112,827	)		(13,992	)		14,460
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(590,158	)		(892,954	)		(7,498,298	)		(16,754,893	)		(277,862	)		(627,388	)
Tax return of capital		—			—			—			(788,801	)		—			—
Total distributions to shareholders		(590,158	)		(892,954	)		(7,498,298	)		(17,543,694	)		(277,862	)		(627,388	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		15,943,055			49,447,993			18,625,419			191,978,674			3,248,817			26,475,751
Value of shares repurchased		(8,622,941	)		(8,439,931	)		(136,320,754	)		(232,033,594	)		(9,777,717	)		(13,366,288	)
Net income equalization		(44,791	)		(70,102	)		(480,347	)		112,827			13,992			(14,460	)
Net increase (decrease) in net assets resulting from shares transactions		7,275,323			40,937,960			(118,175,682	)		(39,942,093	)		(6,514,908	)		13,095,003
Increase (Decrease) in Net Assets		7,490,744			46,629,733			(151,215,232	)		(19,869,143	)		(7,597,768	)		14,900,156
NET ASSETS:
Beginning of period		70,078,935			23,449,202			439,820,369			459,689,512			42,127,530			27,227,374
End of period	$	77,569,679		$	70,078,935		$	288,605,137		$	439,820,369		$	34,529,762		$	42,127,530
Undistributed net investment income/distribution in excess of net investment income at end of period	$	198,966		$	14,002		$	1,059,768		$	—		$	70,268		$	15,907
CHANGES IN SHARES OUTSTANDING:
Shares sold		900,000			3,000,000			1,300,000			12,000,000			200,000			1,600,000
Shares repurchased		(500,000	)		(500,000	)		(9,200,000	)		(14,700,000	)		(600,000	)		(800,000	)
Shares outstanding, beginning of period		4,000,000			1,500,000			27,800,000			30,500,000			2,500,000			1,700,000
Shares outstanding, end of period		4,400,000			4,000,000			19,900,000			27,800,000			2,100,000			2,500,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
40

	PowerShares International Dividend AchieversTM Portfolio						PowerShares Buyback AchieversTM Portfolio						PowerShares Financial Preferred Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period December 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period December 01, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	8,762,846		$	9,691,791		$	60,040		$	20,428		$	3,410,017		$	1,065,631
Net realized gain (loss) on investments		43,946,828			30,945,521			887,920			403,046			(3,445,248	)		38,292
Net change in unrealized appreciation/ depreciation of investments		35,878,690			34,368,081			408,919			1,388,549			(6,930,242	)		(494,221	)
Net increase (decrease) in net assets resulting from operations		88,588,364			75,005,393			1,356,879			1,812,023			(6,965,473	)		609,702
Undistributed net investment income/(loss) included in the price of units issued and redeemed		1,103,406			2,016,764			2,843			19,385			6,403			193,038
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(7,975,620	)		(9,485,475	)		(71,299	)		(39,938	)		(3,129,639	)		(1,336,352	)
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(7,975,620	)		(9,485,475	)		(71,299	)		(39,938	)		(3,129,639	)		(1,336,352	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		385,992,371			518,438,866			43,552,651			78,476,709			42,680,357			104,833,729
Value of shares repurchased		(181,520,166	)		(201,601,419	)		(10,352,563	)		(17,865,654	)		(4,915,580	)		(4,988,839	)
Net income equalization		(1,103,406	)		(2,016,764	)		(2,843	)		(19,385	)		(6,403	)		(193,038	)
Net increase (decrease) in net assets resulting from shares transactions		203,368,799			314,820,683			33,197,245			60,591,670			37,758,374			99,651,852
Increase (Decrease) in Net Assets		285,084,949			382,357,365			34,485,668			62,383,140			27,669,665			99,118,240
NET ASSETS:
Beginning of period		553,199,995			170,842,630			62,383,140			—			99,118,240			—
End of period	$	838,284,944		$	553,199,995		$	96,868,808		$	62,383,140		$	126,787,905		$	99,118,240
Undistributed net investment income/distribution in excess of net investment income at end of period	$	2,569,205		$	678,573		$	(8,416	)	$	—		$	286,781		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		18,400,000			28,200,000			1,700,000			3,100,000			1,800,000			4,200,000
Shares repurchased		(8,500,000	)		(10,800,000	)		(400,000	)		(700,000	)		(200,000	)		(200,000	)
Shares outstanding, beginning of period		27,500,000			10,100,000			2,400,000			—			4,000,000			—
Shares outstanding, end of period		37,400,000			27,500,000			3,700,000			2,400,000			5,600,000			4,000,000

41

Financial Highlights

PowerShares Dividend Achievers^TM Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	17.52		$	15.63		$	14.84
Net investment income**		0.18			0.32			0.17
Net realized and unrealized gain on investments		0.06			1.85			0.78
Total from operations		0.24			2.17			0.95
Undistributed net investment income included in price of units issued and redeemed**		0.01			0.03			—	(a)
Distributions to shareholders from:
Net investment income		(0.14	)		(0.31	)		(0.16	)
Net asset value at end of period	$	17.63		$	17.52		$	15.63
TOTAL RETURN***		1.43	%		14.26	%		6.45	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	77,570		$	70,079		$	23,449
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.60	%†		0.60	%		0.67	%†
Expenses, prior to waivers and reimbursements		0.72	%†(b)		0.92	%		1.02	%†
Net investment income, net of waivers and reimbursements		2.02	%†		1.94	%		1.81	%†
Portfolio turnover rate ††		2	%		9	%		8	%

PowerShares High Yield Equity Dividend Achievers^TM Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period December 9, 2004* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	15.82		$	15.07		$	14.41		$	14.79
Net investment income**		0.33			0.54			0.53			0.18
Net realized and unrealized gain (loss) on investments		(1.37	)		0.84			0.59			(0.39	)
Total from operations		(1.04	)		1.38			1.12			(0.21	)
Undistributed net investment income included in price of units issued and redeemed**		0.02			—	(a)		0.02			—
Distributions to shareholders from:
Net investment income		(0.30	)		(0.60	)		(0.48	)		(0.17	)
Tax return of capital		—			(0.03	)		—			—
Total distributions		(0.30	)		(0.63	)		(0.48	)		(0.17	)
Net asset value at end of period	$	14.50		$	15.82		$	15.07		$	14.41
TOTAL RETURN***		(6.49	)%		9.28	%		7.92	%		(1.44	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	288,605		$	439,820		$	459,690		$	314,245
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.60	%†		0.60	%		0.61	%		0.60	%†
Expenses, prior to waivers and reimbursements		0.58	%†(c)		0.60	%(c)		0.65	%		0.66	%†
Net investment income, net of waivers and reimbursements		4.24	%†		3.47	%		3.49	%		3.57	%†
Portfolio turnover rate ††		11	%		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.

(a)  Amount represents less than $0.01.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% and 0.02% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

See Notes to Financial Statements.
42

Financial Highlights (Continued)

PowerShares High Growth Rate Dividend Achievers^TM Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	16.85		$	16.02		$	14.78
Net investment income**		0.15			0.30			0.15
Net realized and unrealized gain (loss) on investments		(0.43	)		0.82			1.24
Total from operations		(0.28	)		1.12			1.39
Undistributed net investment income (loss) included in price of units issued and redeemed**		(0.01	)		0.01			—	(a)
Distributions to shareholders from:
Net investment income		(0.12	)		(0.30	)		(0.15	)
Net asset value at end of period	$	16.44		$	16.85		$	16.02
TOTAL RETURN***		(1.76	)%		7.11	%		9.39	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	34,530		$	42,128		$	27,227
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.60	%†		0.61	%		0.66	%†
Expenses, prior to waivers and reimbursements		0.86	%†(b)		1.04	%		1.00	%†
Net investment income, net of waivers and reimbursements		1.70	%†		1.86	%		1.59	%†
Portfolio turnover rate ††		4	%		12	%		20	%

PowerShares International Dividend Achievers^TM Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	20.12		$	16.92		$	14.96
Net investment income**		0.27			0.53			0.28
Net realized and unrealized gain on investments		2.23			3.09			1.84
Total from operations		2.50			3.62			2.12
Undistributed net investment income included in price of units issued and redeemed**		0.03			0.11			0.04
Distributions to shareholders from:
Net investment income		(0.24	)		(0.53	)		(0.20	)
Net asset value at end of period	$	22.41		$	20.12		$	16.92
TOTAL RETURN***		12.69	%		22.56	%		14.50	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	838,285		$	553,200		$	170,843
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.59	%†		0.60	%		0.62	%†
Expenses, prior to waivers and reimbursements		0.57	%†(c)		0.62	%(c)		0.69	%†
Net investment income, net of waivers and reimbursements		2.59	%†		2.98	%		3.06	%†
Portfolio turnover rate ††		19	%		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.

(a)  Amount represents less than $0.01.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% and 0.02% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

See Notes to Financial Statements.
43

Financial Highlights (Continued)

PowerShares Buyback Achievers^TM Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.99		$	24.98
Net investment income**		0.02			0.01
Net realized and unrealized gain on investments		0.19			1.01
Total from operations		0.21			1.02
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.01
Distributions to shareholders from:
Net investment income		(0.02	)		(0.02	)
Net asset value at end of period	$	26.18		$	25.99
TOTAL RETURN***		0.81	%		4.13	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	96,869		$	62,383
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†		0.73	%†
Expenses, prior to waivers		0.83	%†		1.04	%†
Net investment income, net of waivers		0.14	%†		0.15	%†
Portfolio turnover rate ††		2	%		38	%

PowerShares Financial Preferred Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 1, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	24.78		$	25.12
Net investment income**		0.71			0.41
Net realized and unrealized loss on investments		(2.19	)		(0.19	)
Total from operations		(1.48	)		0.22
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.07
Distributions to shareholders from:
Net investment income		(0.66	)		(0.63	)
Net asset value at end of period	$	22.64		$	24.78
TOTAL RETURN***		(6.04	)%		1.18	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	126,788		$	99,118
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†		0.72	%†
Expenses, prior to waivers		0.80	%†		0.89	%†
Net investment income, net of waivers		6.02	%†		4.63	%†
Portfolio turnover rate ††		30	%		0	%

*  Commencement of Investment Operations.

**  Based on average shares outstanding.

***  Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized.

†  Annualized.

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

(a)  Amount represents less than $0.01.

See Notes to Financial Statements.
44

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of 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 price 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	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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

45

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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. 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

46

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 0.40% 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, sub-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 six months ended October 31, 2007, the Adviser waived the following fees:

	Fees Waived
Dividend AchieversTM Portfolio	$	44,644
High Growth Rate Dividend AchieversTM Portfolio		53,232
Buyback AchieversTM Portfolio		39,640
Financial Preferred Portfolio		32,900

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 six months ended October 31, 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
Dividend AchieversTM Portfolio	$	(46,059	)	$	1,415	$	(44,644	)
High Yield Equity Dividend AchieversTM Portfolio		(1,744	)		32,771		31,027
High Growth Rate Dividend AchieversTM Portfolio		(55,139	)		1,907		(53,232	)
International Dividend AchieversTM Portfolio		(2,710	)		94,265		91,555
Buyback AchieversTM Portfolio		(39,640	)		—		(39,640	)
Financial Preferred Portfolio		(32,900	)		—		(32,900	)

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

October 31, 2007 (Unaudited)

The amounts subject to reimbursement to the Adviser at October 31, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dividend AchieversTM Portfolio	$	252,581	$	252,581	$	196,792
High Yield Equity Dividend AchieversTM Portfolio		146,824		146,824		69,312
High Growth Rate Dividend AchieversTM Portfolio		256,470		256,470		199,402
Buyback AchieversTM Portfolio		82,122		82,122		82,122
Financial Preferred Portfolio		71,909		71,909		71,909

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 sub-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. Effective July 2, 2007, The Bank of New York became a wholly-owned subsidiary of The Bank of New YorkMellon Corporation.

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

48

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 may 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 October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation
Dividend AchieversTM Portfolio	$	72,672,131	$	4,911,779		$	7,534,710	$	(2,622,931	)
High Yield Equity Dividend AchieversTM Portfolio		328,560,585		(38,284,552	)		6,860,161		(45,144,713	)
High Growth Rate Dividend AchieversTM Portfolio		34,221,683		300,847			2,533,796		(2,232,949	)
International Dividend AchieversTM Portfolio		760,263,597		78,732,584			90,972,377		(12,239,793	)
Buyback AchieversTM Portfolio(1)		94,749,588		1,797,468			7,831,419		(6,033,951	)
Financial Preferred Portfolio(1)		134,591,382		(7,424,463	)		25,289		(7,449,752	)

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

49

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

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.

50

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 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 six months ended October 31, 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	$	1,352,219	$	1,749,213
High Yield Equity Dividend AchieversTM Portfolio		41,705,185		41,285,181
High Growth Rate Dividend AchieversTM Portfolio		1,827,655		1,760,519
International Dividend AchieversTM Portfolio		148,289,173		126,681,307
Buyback AchieversTM Portfolio		1,375,447		2,383,172
Financial Preferred Portfolio		34,158,445		34,037,569

For the six months ended October 31, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dividend AchieversTM Portfolio	$	14,200,539	$	6,460,473
High Yield Equity Dividend AchieversTM Portfolio		18,334,313		135,654,913
High Growth Rate Dividend AchieversTM Portfolio		1,288,873		7,800,015
International Dividend AchieversTM Portfolio		357,858,324		174,498,063
Buyback AchieversTM Portfolio		40,765,400		6,905,153
Financial Preferred Portfolio		42,754,721		4,901,748

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

51

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

There were no purchases or sales of U.S. government or government agency obligations for the six months ended October 31, 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.

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferral Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Only authorized participants are permitted to create or redeem from the Funds. 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 Pronouncement

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

Supplemental Information (Unaudited)

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 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
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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

53

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
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006-February 2007); 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)		89	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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

54

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent 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
Philip M. Nussbaum (46) 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

55

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent 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
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007- Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006- August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995- February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 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 Officer (April 1998- August 2002)		89	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 19 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 (53) 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 (42) 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 (45) 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

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 Semi-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.

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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 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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61

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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62

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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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.

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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 are not closed-end funds and trade at or near net asset values.

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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the fund's independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-1

2007 Semi-Annual Report to Shareholders

31 October 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	32
Frequency Distribution of Discounts & Premiums	34
Fees and Expenses	36
Specialty Portfolios
Schedules of Investments
PowerShares Aerospace & Defense Portfolio	38
PowerShares CleantechTM Portfolio	39
PowerShares Golden Dragon Halter USX China Portfolio	41
PowerShares Listed Private Equity Portfolio	43
PowerShares Lux Nanotech Portfolio	44
PowerShares Value Line TimelinessTM Select Portfolio	45
PowerShares Value Line Industry Rotation Portfolio	46
PowerShares Water Resources Portfolio	48
PowerShares WilderHill Clean Energy Portfolio	49
PowerShares WilderHill Progressive Energy Portfolio	50
PowerShares DWA Technical LeadersTM Portfolio	52
Statements of Assets and Liabilities	54
Statements of Operations	56
Statements of Changes in Net Assets	58
Financial Highlights	62
Notes to Financial Statements	68
Supplemental Information (Unaudited)	78

To My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management – Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500^® Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potential recession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25 to 4.75%, the first cut in four years, and the discount rate moved from 5.75 to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

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 is on pace to outperform the S&P 500 Index for eight consecutive years, six by double digits. During the period of this report, the fund has outperformed the broader market by double digits, gaining 18.58%.

The period began with the Fund experiencing a steady climb from May to mid-July gaining approximately 12% before giving back approximately 8% from mid-July to mid-August as issues with the market for sub-prime loans affected the banking sector and the broader market. From these lows the fund began a steady climb toward its historical highs in mid-October.

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^TM Defense Index (AMEX: DXS), constituents represent a diversified offering of large-cap, mid- and small-cap companies 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 for funding activities 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 near-term risk to the sector remains politics.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Aerospace/Defense	50.5
Electronics	11.4
Miscellaneous Manufacturing	10.5
Computers	5.9
Telecommunications	4.8
Metal Fabricate/Hardware	4.8
Commercial Services	4.6
Auto Manufacturers	2.5
Packaging & Containers	2.4
Engineering & Construction	1.8
Software	0.7
Other	0.1

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	26.0
Mid-Cap Value	20.5
Mid-Cap Growth	20.1
Large-Cap Growth	18.0
Small-Cap Growth	9.6
Small-Cap Value	5.8

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Lockheed Martin Corp.	5.7
Honeywell International, Inc.	5.6
United Technologies Corp.	5.3
Boeing Co.	5.2
General Dynamics Corp.	4.7
Northrop Grumman Corp.	4.6
Precision Castparts Corp.	4.4
Raytheon Co.	4.4
L-3 Communications Holdings, Inc.	4.3
Computer Sciences Corp.	4.1
Total	48.3

4

Manager's Analysis (Continued)

PowerShares Aerospace & Defense Portfolio (ticker: PPA)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inceptions
	6 Month		1 Year		Avg Ann†		Cumulative
SPADETM Defense Index		18.45		36.10		26.36		60.40
S&P 500® Index		5.49		14.56		16.05		35.06
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	18.58	36.42	26.83	61.39
Share Price Return	18.56	36.41	26.83	61.40

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 Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.66% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) was 0.64%. 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, 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 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 2,918 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 (prior to Fund fees and expenses) of the Index.

The Cleantech^TM Index enables investors to profit from the surging global demand for clean technology products & services as reflected by the investment returns of the leading US-traded, cleantech companies. Cleantech businesses are found across a broad range of industry sectors - from energy, water, and new materials to agriculture and transportation. As a result, the Index is far more diversified than more narrowly focused sector indices.

The Index focuses on the leading companies most representative of the growth of cleantech. Index companies must meet 18 stringent criteria for inclusion including quality, profitability, growth, strategy, sector leadership, and have strong technology/knowledge-based businesses. As such, producers of commodity products, regulated utilities, and dubious products such as grain-based fuels are excluded.

In the 6 months ending October 31, 2007, the Fund dramatically outperformed nearly all major market indices and even many "renewable energy" indices. The Fund rose 27.07% for the 6 months compared to 5.49% for S&P 500, 13.69% for the NASDAQ Composite, and 5.17% for the Russell 3000.

There were several dominant sector trends for the period. One such trend, rising energy costs and environmental concerns combined with strong earnings, fueled the torrid performance of stocks related to wind, geothermal, and above all, solar power with some stocks increasing over 100%. Stocks in the emerging "smart" power grid and electricity demand-response technology also posted gains of 20-75%. Another trend which aided Fund performance was a huge surge in venture capital investment into cleantech companies worldwide which promises a pipeline of exciting new cleantech stocks for years to come.

On the flip side, the Fund had minimal exposure to grain-based fuel and clean coal stocks which plunged 30% to 50% during the period. Increasing investor demands for near-term profitability and earnings growth will continue to be hard on fuel cell and cellulosic ethanol companies.

6

Manager's Analysis (Continued)

PowerShares Cleantech^TM Portfolio (ticker: PZD)

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Miscellaneous Manufacturing	23.6
Energy-Alternate Sources	16.6
Electronics	13.5
Environmental Control	8.8
Semiconductors	8.4
Electrical Components & Equipment	5.0
Chemicals	3.7
Machinery-Diversified	3.2
Water	2.9
Telecommunications	2.8
Electric	2.6
Hand/Machine Tools	2.6
Biotechnology	1.9
Office Funishings	1.8
Engineering & Construction	1.3
Computers	1.0
Building Materials	0.4
Other	(0.1	)

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
SunPower Corp., Class A	4.3
Suntech Power Holdings Co. Ltd. ADR (Cayman Islands)	3.9
First Solar, Inc.	3.8
SPX Corp.	3.3
MEMC Electronic Materials, Inc.	3.2
Itron, Inc.	3.2
Roper Industries, Inc.	3.0
Hexcel Corp.	3.0
Woodward Govemor Co.	3.0
Trimble Navigation Ltd.	2.9
Total	33.6

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	36.4
Small-Cap Growth	35.6
Small-Cap Value	13.3
Mid-Cap Value	6.2
Large-Cap Growth	5.7
Large-Cap Value	2.8

7

Manager's Analysis (Continued)

PowerShares Cleantech^TM Portfolio (ticker: PZD)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
CleantechTM Index		27.26		37.99		39.72		39.72
NASDAQ Composite Index		13.23		20.81		21.39		21.93
S&P 500® Index		5.49		14.56		14.63		14.63

Fund

NAV Return	27.07	37.58	38.45	39.31
Share Price Return	26.92	37.14	38.33	39.20

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 1.32%. In the Financial Highlights section of this Semi-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 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, 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 S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 3,087 and 500 common stocks, respectively.

^† Average annualized.

8

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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 It 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 six months the portfolio has had phenomenal performance returning 82.17%. China's economy has experienced rapid growth this year resulting in soaring stock prices for Chinese companies. The energy sector has driven performance contributing over 25% of the Fund's return. In particular some of the Fund's top holdings, PetroChina, Yanzhou Coal Mining, and China Petroleum are all up triple digits. Several other top contributors that returned triple digits over the reporting period include Aluminum Corp, Baidu.com, China Life and China Southern Airlines.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Energy	21.5
Telecommunication Services	21.0
Information Technology	14.9
Industrials	14.6
Consumer Discretionary	8.5
Materials	7.1
Financials	4.9
Utilities	3.7
Health Care	3.5
Consumer Staples	0.4
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Large-Cap Growth	37.9
Mid-Cap Growth	34.3
Large-Cap Value	13.3
Small-Cap Growth	11.0
Small-Cap Value	3.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
PetroChina Co. Ltd. ADR	7.3
China Mobile Ltd. ADR	6.5
China Petroleum and Chemical Corp. ADR	5.2
CNOOC Ltd. ADR	5.1
China Telecom Corp. Ltd. ADR	5.0
China Life Insurance Co. Ltd. ADR	4.9
China Unicom Ltd. ADR	4.9
Baidu.com ADR	4.8
China Netcom Group Corp. Ltd. ADR	4.6
Suntech Power Holdings Co. Ltd. ADR	4.1
Total	52.4

10

Manager's Analysis (Continued)

PowerShares Golden Dragon Halter USX China Portfolio (ticker: PGJ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
Halter USX China IndexSM		83.12		135.12		42.87		181.43
MSCI EAFE Index		8.19		24.91		21.91		77.61
S&P 500® Index		5.49		14.56		11.57		37.37

Fund

NAV Return	82.17	132.85	41.88	175.13
Share Price Return	82.47	133.23	41.84	174.91

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 0.73%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.70% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) 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, 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 MSCI EAFE Index and S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 1,137 and 500 common stocks, respectively.

^† Average annualized.

11

Manager's Analysis

PowerShares Listed Private Equity Portfolio (ticker: PSP)

The PowerShares Listed Private Equity Portfolio seeks investment results that generally correspond to the Red Rocks Listed Private Equity Index. The Index provides investors with a means of diversified exposure to private equity firms and their underlying portfolio investments. The private equity asset class has historically provided strong, non-correlated performance to other traditional asset classes.

Since its October 24, 2006 inception, the Fund has generated a 5.5% return versus the S&P 500 with 14.6%. True to the non-correlated nature of private equity, much of the disparity in performance occurred during a short period over the summer. As of October 31, 2007 the three month return of the Fund was positive 6.8% versus the S&P 500 up 2%, the Russell 2000 increasing 7%, and the S&P Financial Sector (XLF) up 3.3%.

The weakness over the summer does not exhibit the strong characteristics of the underlying portfolio of private equity investments. Nor does it represent the record year in private equity transactions and capital raised along with steadily increasing private equity allocations by endowments, foundations, and pension plans. Over extended time periods, the performance of the Fund is expected to more closely mirror the performance of the private equity sector. This is illustrated by the three-year correlation coefficient of 0.8 between the Red Rocks Listed Private Equity Index and the Cambridge Private Equity Index.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Investment Companies	46.9
Diversified Financial Services	22.0
Holding Companies-Diversified	11.7
REITS	5.5
Internet	4.9
Commercial Services	4.5
Banks	4.3
Money Market Fund	0.3
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	43.5
Mid-Cap Value	29.3
Small-Cap Growth	13.8
Small-Cap Value	13.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Leucadia National Corp.	10.2
Fortress Investment Group LLC, Class A	9.5
American Capital Strategies Ltd.	8.9
Blackstone Group (The) LP	8.2
Allied Capital Corp.	6.8
CapitalSource, Inc.	5.5
Apollo Investment Corp.	4.5
Macquarie Infrastructure Co. LLC	4.5
SVB Financial Group	4.4
KKR Financial Holdings LLC	3.8
Total	66.3

12

Manager's Analysis (Continued)

PowerShares Listed Private Equity Portfolio (ticker: PSP)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
Red Rocks Listed Private Equity Index		-5.92		3.19		5.43		5.43
S&P 500 Pure Growth Index		4.39		13.22		13.40		13.40
Russell 2000® Index		2.25		9.27		9.93		9.93

Fund

NAV Return	-5.99	3.20	5.36	5.46
Share Price Return	-6.15	3.18	5.16	5.26

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 0.91%. In the Financial Highlights section of this Semi-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 0.75%. 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, 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 S&P 500 Pure Growth 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 154 and 2,000 common stocks, respectively.

^† Average annualized.

13

Manager's Analysis

PowerShares Lux Nanotech Portfolio (ticker: PXN)

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

For the last six months ended October 31, 2007 the Fund returned 0.34% relative to the broader market's return of 5.49%. Since the Fund is very specialized and focused on nanotechnology, much of this underperformance was due to single stock selection. Two medical related companies, Flamel Technologies and Immunicon Corp., were both down over 60% during this period. Two of the Fund's larger holdings, Arrowhead and Nanophase, were also down big over the reporting period. However, the Fund also picked several winners, including Cambridge Display, Elan Corp., and Altair Nanotechnologies. Cambridge Display, which is one of the Fund's top holdings, was up 137% over the past six months.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Pharmaceuticals	17.9
Commercial Services	12.6
Electronics	11.3
Chemicals	11.1
Miscellaneous Manufacturing	10.8
Semiconductors	9.3
Computers	6.7
Software	6.4
Energy-Alternate Sources	4.6
Investment Companies	4.6
Auto Manufacturers	3.3
Healthcare-Products	1.4
Other	0.0

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	43.8
Large-Cap Value	21.0
Mid-Cap Growth	13.6
Large-Cap Growth	11.7
Small-Cap Value	9.9

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Altair Nanotechnologies, Inc. (Canada)	7.4
Elan Corp. PLC ADR (Ireland)	7.1
Abraxis BioScience, Inc.	6.6
Accelrys, Inc.	6.4
Veeco Instruments, Inc.	5.8
FEI Co.	5.7
NVE Corp.	5.6
Arrowhead Research Corp.	5.2
Headwaters, Inc.	4.6
Harris & Harris Group, Inc.	4.6
Total	59.0

14

Manager's Analysis (Continued)

PowerShares Lux Nanotech Portfolio (ticker: PXN)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
Lux Nanotech IndexTM		0.99		-5.67		6.19		12.90
Merrill Lynch Nanotech Index		-11.03		-15.54		-4.23		-8.35
S&P 500® Index		5.49		14.56		16.05		35.06

Fund

NAV Return	0.34	-5.14	7.20	15.03
Share Price Return	-0.14	-5.37	7.17	14.96

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 0.77%. In the Financial Highlights section of this Semi-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 0.73%. 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, 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 Merrill Lynch Nanotech Index and S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 21 and 500 common stocks, respectively.

^† Average annualized.

15

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.

For the past six months as of 10/31/2007, the Fund is up 9.66% relative to the S&P 500 at 5.49%. Much of the outperformance came from an over allocation to consumer discretionary along with superior stock selection within that sector. The Fund also benefited from holding one-fourth the weight in financials relative to the market. Superior stock selection within the health care sector also added to the Fund's relative performance.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Industrials	26.2
Consumer Discretionary	16.2
Energy	13.9
Information Technology	12.8
Health Care	12.3
Materials	10.9
Consumer Staples	5.9
Financials	1.8
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	32.8
Large-Cap Growth	26.4
Small-Cap Growth	14.3
Small-Cap Value	10.8
Mid-Cap Value	9.4
Large-Cap Value	6.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Intuitive Surgical, Inc.	2.7
Deckers Outdoor Corp.	2.6
Monsanto Co.	2.5
Apple, Inc.	2.5
BHP Billiton Ltd. ADR	2.4
McDermott International, Inc. (Panama)	2.4
Fresh Del Monte Produce, Inc. (Cayman Islands)	2.4
Jacobs Engineering Group, Inc.	2.4
Southern Copper Corp.	2.3
Core Laboratories N.V. (Netherlands)	2.3
Total	24.5

16

Manager's Analysis (Continued)

PowerShares Value Line Timeliness^TM Select Portfolio (ticker: PIV)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
Value Line TimelinessTM Select Index		9.65		23.42		11.86		23.83
S&P 500® Index		5.49		14.56		13.33		26.97
Russell 2000® Index		2.25		9.27		11.53		23.15

Fund

NAV Return	9.66	23.65	12.12	24.29
Share Price Return	9.61	23.80	11.81	23.64

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 0.73%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.70% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) was substantially the same at 0.70%. 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, 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 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.

^† Average annualized.

17

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. The Index is designed to first rank all industries represented in the Value Line universe by their industry Timeliness^TM. The Index then selects the highest ranked stock for Timeliness^TM from each of the 50 highest Timeliness(TM)-rated industries, as well as the second highest Timeliness^TM-ranked stock from each of the 25 highest rated industries. The Index is reconstituted and rebalanced quarterly using the same methodology as described above.

For the past six months as of 10/31/2007, the Fund is up 10.40% relative to the S&P 500 at 5.49%. Much of the outperformance came from an over allocation to consumer discretionary along with superior stock selection within that sector. The Fund also benefited from holding one-fourth the weight in financials relative to the market. Overweighting in materials and industrials also increased the Fund's relative performance.

18

Manager's Analysis (Continued)

PowerShares Value Line Industry Rotation Portfolio (ticker: PYH)

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Commercial Services	6.2
Chemicals	6.1
Electronics	4.7
Engineering & Construction	4.7
Media	4.7
Machinery-Diversified	4.2
Telecommunications	4.2
Metal Fabricate/Hardware	4.1
Transportation	4.1
Oil & Gas	4.0
Internet	3.9
Software	3.9
Insurance	3.8
Pharmaceuticals	3.8
Mining	3.3
Healthcare-Products	3.1
Machinery-Construction & Mining	3.0
Beverages	2.7
Computers	2.7
Oil & Gas Services	2.7
Financial	2.6
Environmental Control	2.5
Semiconductors	2.3
Food	1.6
Aerospace/Defense	1.5
Packaging & Containers	1.4
Healthcare-Services	1.3
Iron/Steel	1.3
Entertainment	1.2
Home Furnishings	1.2
Real Estate	1.1
Auto Parts & Equipment	1.0
Retail	1.0
Money Market Fund	0.1
Other	0.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Intuitive Surgical, Inc.	1.8
Monsanto Co.	1.7
Potash Corp. of Saskatchewan, Inc. (Canada)	1.7
BHP Billiton Ltd. ADR	1.6
Southern Copper Corp.	1.6
Jacobs Engineering Group, Inc.	1.6
McDermott International, Inc. (Panama)	1.6
CNH Global N.V. (Netherlands)	1.6
Fresh Del Monte Produce, Inc. (Cayman Islands)	1.6
BE Aerospace, Inc.	1.5
Total	16.3

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	34.8
Large-Cap Growth	24.2
Small-Cap Growth	13.6
Mid-Cap Value	13.4
Large-Cap Value	9.0
Small-Cap Value	5.0

19

Manager's Analysis (Continued)

PowerShares Value Line Industry Rotation Portfolio (ticker: PYH)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Value Line Industry Rotation Index		10.33		22.83
S&P 500® Index		5.49		12.74
Russell 2000® Index		2.25		7.14

Fund

NAV Return	10.40	22.93
Share Price Return	10.27	22.80

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 1.58%. In the Financial Highlights section of this Semi-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 1.04%. 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, 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 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.

20

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Manager's Analysis

PowerShares Water Resources Portfolio (ticker: PHO)

The Powershares Water Resources Portfolio continued its strong relative performance over the 6-month period May 1 to October 31, 2007 with an increase of 16.34%. The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of the Palisades Water Index. The Palisades Water Index is a proxy for the water industry and includes U.S. exchange-listed water companies that participate in the broad spectrum of industry sectors including water utilities, water and wastewater treatment, water infrastructure, analytics and water resource management.

Comparisons to the broader averages (the Dow Jones Industrial Average at 7.79% and the S&P 500 at 5.49%, for example) the Fund's performance figures are extremely favorable. Of greater significance, however, is the industry's relatively lower volatility and its continuing divergence in correlation from other equity asset classes. As a result, based on long-term water industry fundamentals, PHO continues the secular trend higher, without the range-bound characteristics associated with the Dow Jones Industrial Average and the S&P 500 Index. Further, the Palisades index design, in particular the quarterly rebalancing and reconstitution, has played a major role in not only outperforming the broader market indexes but also outpacing competitive products within the water industry.

The increasing recognition of the sector's attractiveness based on the basic supply and demand fundamentals of the global water industry are reinforced by the earnings momentum, and a large number of individual index components. Water industry growth is expected to remain robust with particular strength in global water infrastructure, treatment and services.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Miscellaneous Manufacturing	26.0
Water	16.5
Engineering & Construction	13.3
Electronics	12.1
Environmental Control	9.5
Machinery-Diversified	6.6
Metal Fabricate/Hardware	6.2
Biotechnology	3.5
Electrical Components & Equipment	3.1
Hand/Machine Tools	3.0
Other	0.2

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	32.0
Small-Cap Growth	21.4
Small-Cap Value	18.7
Mid-Cap Value	11.7
Large-Cap Growth	10.1
Large-Cap Value	6.1

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Itron, Inc.	4.2
Aecom Technology Corp.	3.9
Tetra Tech, Inc.	3.9
URS Corp.	3.9
Veolia Environnement ADR (France)	3.8
Valmont Industries, Inc.	3.8
Pentair, Inc.	3.8
Layne Christensen Co.	3.8
Pall Corp.	3.6
Millipore Corp.	3.5
Total	38.2

22

Manager's Analysis (Continued)

PowerShares Water Resources Portfolio (ticker: PHO)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
Palisades Water Index		18.10		28.68		24.06		50.87
S&P 500® Index		5.49		14.56		13.33		26.97
Dow Jones Utility Index		3.02		19.33		15.85		32.39

Fund

NAV Return	16.34	25.96	22.71	47.58
Share Price Return	16.34	25.96	22.02	46.00

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 0.68%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.66% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) was 0.64%. 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, 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 Dow Jones Utility Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 15 common stocks, respectively.

^† Average annualized.

23

Manager's Analysis

PowerShares WilderHill Clean Energy Portfolio (ticker: PBW)

The PowerShares WilderHill Clean Energy Portfolio is based on the WilderHill Clean Energy Index which 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 six months, the portfolio has returned 31.31%. The start of this 6 month period came at a time when clean energy valuations already were broadly gaining. Those gains continued then at a moderate pace for roughly three months over the summer, and were distributed across diverse aspects of the sector as defined by the WilderHill Clean Energy Index.

Following a brief correction in August, the Fund saw even sharper increases through October. To a significant degree that was due to non-negligible prospects for growth in solar globally due to sharply rising demand in countries such as Germany, Japan, China, and Spain. It was also fueled by increasing anticipation that America, too, could add to that mix with new federal legislation, thus creating more demand and helping to increase solar stock volatility to the upside. Several of the Fund's China-based companies in particular saw greater demand.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Energy-Alternate Sources	39.9
Semiconductors	14.6
Electrical Components & Equipment	14.1
Electric	9.3
Chemicals	9.2
Auto Parts & Equipment	3.8
Electronics	3.5
Computers	3.3
Food	2.1
Other	0.2

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	53.7
Mid-Cap Growth	26.7
Small-Cap Value	7.9
Large-Cap Growth	6.7
Mid-Cap Value	5.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
SunPower Corp., Class A	4.3
American Superconductor Corp.	4.1
Suntech Power Holdings Co. Ltd. ADR (Cayman Islands)	3.9
First Solar, Inc.	3.9
Yingli Green Energy Holding Co., Ltd. ADR (Cayman Islands)	3.9
Emcore Corp.	3.6
Evergreen Solar, Inc.	3.5
JA Solar Holdings Co. Ltd. ADR (Cayman Islands)	3.4
Ormat Technologies, Inc.	3.3
MEMC Electronic Materials, Inc.	3.2
Total	37.1

24

Manager's Analysis (Continued)

PowerShares WilderHill Clean Energy Portfolio (ticker: PBW)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
WilderHill Clean Energy Index		31.27		41.69		19.12		59.54
NASDAQ Composite Index		13.23		20.81		13.10		38.90
S&P 500® Index		5.49		14.56		11.71		34.39

Fund

NAV Return	31.31	42.04	20.05	62.69
Share Price Return	31.18	42.12	20.10	62.85

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 0.70%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.68% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) 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, 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 S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 3,087 and 500 common stocks, respectively.

^† Average annualized.

25

Manager's Analysis

PowerShares WilderHill Progressive Energy Portfolio (ticker: PUW)

The PowerShares WilderHill Progressive Energy Portfolio is based on the WilderHill Progressive Energy Index which 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 six months, the portfolio has returned 10.05%. A run-up in valuations that began in March ended rather abruptly in mid-July following a nearly unbroken rise over four months. A sharp decline that was next seen was typical in its severity compared to the past corrections for this Fund, however, the sideways movement that followed continued for a slightly longer period than usual. The Fund then rose and ended October at a level just below a previously reached all-time mid-July high.

Reasons for that decline included a general credit crunch in broader markets in July. But it was also due to specifics in the alternative energy sector, such as lower values in nuclear fuel stocks, decreases in the lower CO2 natural gas providers, biofuel makers, cleaner-coal applications, emission control manufacturers, and those in smarter grids and energy efficiency technology. Attention in the political arena to climate change solutions and improving use of fossil fuels also drew some fresh attention to the progressive technologies represented in this Fund.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Electric	11.3
Energy-Alternate Sources	10.8
Mining	8.2
Auto Parts & Equipment	7.9
Electrical Components & Equipment	6.8
Semiconductors	6.8
Miscellaneous Manufacturing	6.7
Chemicals	5.8
Oil & Gas	5.6
Auto Manufacturers	4.7
Electronics	4.1
Environmental Control	3.9
Gas	3.5
Pipelines	2.8
Food	2.7
Agriculture	2.6
Telecommunications	2.2
Hand/Machine Tools	1.7
Aerospace/Defense	1.6
Investment Companies	0.5
Money Market Fund	0.1
Other	(0.3	)

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Fuel Tech, Inc.	3.5
Uranium Resources, Inc.	3.4
Merthanex Corp. (Canada)	3.3
Clean Energy Fuels Corp.	3.0
Sasol Ltd. ADR (South Africa)	2.8
Questar Corp.	2.8
Chesapeake Energy Corp.	2.8
Headwaters, Inc.	2.7
Tenneco, Inc.	2.7
SunOpta, Inc. (Canada)	2.7
Total	29.7

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	23.9
Small-Cap Value	23.4
Mid-Cap Value	22.1
Large-Cap Value	13.2
Mid-Cap Growth	9.9
Large-Cap Growth	7.5

26

Manager's Analysis (Continued)

PowerShares WilderHill Progressive Energy Portfolio (ticker: PUW)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg Ann†		Fund Inception
	6 Month		1 Year		Avg Ann†		Cumulative
WilderHill Progressive Energy Index		9.85		24.79		26.00		26.00
NASDAQ Composite Index		13.23		20.81		21.39		21.93
S&P 500® Index		5.49		14.56		14.63		14.63

Fund

NAV Return	10.05	25.31	26.01	26.57
Share Price Return	9.92	25.31	25.98	26.54

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 1.35%. In the Financial Highlights section of this Semi-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 1.00%. 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, 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 S&P 500^® Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 3,087 and 500 common stocks, respectively.

27

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. PDP outperformed the general market over the reporting period posting a solid 8.66% return.

One of the major themes in the portfolio continues to be the underweight of financials. This macro sector has been underperforming for quite some time, and the allocation in the portfolio continues to shrink. During the third quarter, financials were especially hard hit due to the concerns over sub-prime mortgage exposure. This underperformance caused the allocation to fall even farther. The allocation the Fund has in financials is also much more capital-markets focused rather than banking focused. The Fund doesn't have any banks or S&L stocks in the portfolio, but much of the financials exposure is in asset managers and insurance stocks. The Fund holds one REIT in the portfolio, but it is a company that focuses on health care properties so it subject to a slightly different cycle than most other REITs.

Industrials continue to be a large overweight and increased quite a bit more heading into the last quarter of the year. While only price performance is analyzed when the index is constructed, it is clear that the falling dollar has helped firms in this area. A falling dollar makes U.S. goods much cheaper overseas (and foreign goods much more expensive domestically), which has helped U.S. firms increase their sales relative to their foreign competitors. We may also be seeing signs of a shift from a consumer spending to a capital spending economy. The U.S. consumer spent heavily during the first part of the decade, but the slowing real estate market and overall economy might put a crimp in their spending. Businesses, however, seem to be continuing to spend.

The factor with the largest effect on the overall portfolio changes has to be the leadership switch from value to growth. The outperformance of value, which began in early 2000, finally seems to be coming to an end. We saw some signs of a growth resurgence back in 2003, but it quickly reverted back to a more value-driven market. This time, we are seeing growth continuing to outperform. We don't specifically allocate the portfolio based on growth versus value, but the bottom-up allocation process picks the changes up very quickly. The portfolio has been shedding weight in value areas and increasing exposure to areas that benefit from a growth environment. As these trends continue, the portfolio will adapt and exploit them.

28

Manager's Analysis (Continued)

PowerShares DWA Technical Leaders^TM Portfolio (ticker: PDP)

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Industrials	30.8
Health Care	15.2
Energy	10.4
Consumer Discretionary	8.1
Information Technology	6.7
Materials	6.6
Financials	6.5
Utilities	6.4
Telecommunication Services	5.0
Consumer Staples	4.3
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	52.4
Large-Cap Growth	23.5
Mid-Cap Value	15.4
Large-Cap Value	8.7

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
American Tower Corp., Class A	4.5
McDermott International, Inc. (Panama)	3.4
Apple, Inc.	2.8
Williams (The) Cos., Inc.	2.6
Energizer Holdings, Inc.	2.6
Covanta Holding Corp.	2.5
Stericycle, Inc.	2.3
Pediatrix Medical Group, Inc.	2.2
General Cable Corp.	2.1
Ventas, Inc.	1.7
Total	26.7

29

Manager's Analysis (Continued)

PowerShares DWA Technical Leaders^TM Portfolio (ticker: PDP)

  Fund Performance History (%)  As of 31 October 2007

Index

	6 Month		Fund Inception Cumulative
Dorsey Wright Technical LeadersTM Index		8.74		16.17
S&P 500® Index		5.49		11.68

Fund

NAV	8.66	16.06
Share Price Return	8.17	15.58

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 1.96%. In the Financial Highlights section of this Semi-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 0.73%. 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, 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 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 is an unmanaged index used as a measurement of change in stock market conditions based on the average performance of approximately 500 common stocks.

30

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Funds' Distribution History

	Ex-Dividend	10/15/07		9/21/07		9/14/07		8/15/07		7/13/07		6/15/07		5/15/07
	Record	10/17/07		9/25/07		9/18/07		8/17/07		7/17/07		6/19/07		5/17/07
	Payable	10/31/07		9/28/07		9/28/07		8/31/07		7/31/07		6/29/07		5/31/07
Fund	Ticker
PowerShares Aerospace & Defense Portfolio	PPA		—		0.01038		—		—		—		0.01862		—
PowerShares CleantechTM Portfolio	PZD		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio	PGJ		—		0.04904		—		—		—		0.16303		—
PowerShares Listed Private Equity Portfolio	PSP		—		0.11266		—		—		—		0.21792		—
PowerShares Lux Nanotech Portfolio	PXN		—		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio	PIV		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio	PYH		—		0.01475		—		—		—		—		—
PowerShares Water Resources Portfolio	PHO		—		0.01328		—		—		—		0.03052		—
PowerShares WilderHill Clean Energy Portfolio	PBW		—		—		—		—		—		—		—
PowerShares WilderHill Progressive Energy Portfolio	PUW		—		0.02001		—		—		—		0.06309		—
PowerShares DWA Technical LeadersTM Portfolio	PDP		—		0.02466		—		—		—		—		—
	Ex-Dividend	9/15/06		8/15/06		7/14/06		6/16/06		6/15/06		5/15/06		3/17/06
	Record	9/16/06		8/17/06		7/18/06		6/20/06		6/19/06		5/17/06		3/21/06
	Payable	9/29/06		8/31/06		7/31/06		6/30/06		6/30/06		5/31/06		3/30/06
Fund	Ticker
PowerShares Aerospace & Defense Portfolio	PPA		0.02002		—		—		0.02120		—		—		—
PowerShares CleantechTM Portfolio	PZD		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio	PGJ		0.08011		—		—		0.12430		—		—		—
PowerShares Listed Private Equity Portfolio	PSP		—		—		—		—		—		—		—
PowerShares Lux Nanotech Portfolio	PXN		—		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio	PIV		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio	PYH		—		—		—		—		—		—		—
PowerShares Water Resources Portfolio	PHO		0.03621		—		—		0.03737		—		—		—
PowerShares WilderHill Clean Energy Portfolio	PBW		—		—		—		0.01037		—		—		—
PowerShares WilderHill Progressive Energy Portfolio	PUW		—		—		—		—		—		—		—
PowerShares DWA Technical LeadersTM Portfolio	PDP		—		—		—		—		—		—		—

32

	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06		10/13/06
	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06		10/17/06
	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06		10/31/06
Fund
PowerShares Aerospace & Defense Portfolio		—		0.01223		—		—		—		0.00968		—		—
PowerShares CleantechTM Portfolio		—		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio		—		—		—		—		—		0.00598		—		—
PowerShares Listed Private Equity Portfolio		—		0.07235		—		—		—		0.26528		—		—
PowerShares Lux Nanotech Portfolio		—		—		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio		—		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio		—		—		—		—		—		0.01016		—		—
PowerShares Water Resources Portfolio		—		0.02358		—		—		—		0.07779		—		—
PowerShares WilderHill Clean Energy Portfolio		—		—		—		—		—		0.03675		—		—
PowerShares WilderHill Progressive Energy Portfolio		—		0.01250		—		—		—		0.00451		—		—
PowerShares DWA Technical LeadersTM Portfolio		—		—		—		—		—		—		—		—
	12/30/05		12/16/05		9/16/05		6/17/05		4/1/05		3/18/05		12/31/04		12/17/04
	1/4/06		12/20/05		9/20/05		6/21/05		4/5/05		3/22/05		1/4/05		12/21/04
	1/31/06		12/30/05		9/30/05		6/30/05		4/29/05		4/29/05		1/31/05		1/31/05
Fund
PowerShares Aerospace & Defense Portfolio		—		0.02191		—		—		—		—		—		—
PowerShares CleantechTM Portfolio		—		—		—		—		—		—		—		—
PowerShares Golden Dragon Halter USX China Portfolio		—		0.00132		0.11161		0.04962		—		—		—		—
PowerShares Listed Private Equity Portfolio		—		—		—		—		—		—		—		—
PowerShares Lux Nanotech Portfolio		0.06725		0.01063		—		—		—		—		—		—
PowerShares Value Line TimelinessTM Select Portfolio		—		—		—		—		—		—		—		—
PowerShares Value Line Industry Rotation Portfolio		—		—		—		—		—		—		—		—
PowerShares Water Resources Portfolio		0.02682		0.00627		—		—		—		—		—		—
PowerShares WilderHill Clean Energy Portfolio		—		—		—		—		—		—		—		—
PowerShares WilderHill Progressive Energy Portfolio		—		—		—		—		—		—		—		—
PowerShares DWA Technical LeadersTM Portfolio		—		—		—		—		—		—		—		—

33

Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 2007

					Closing Price Above NAV (bps)
Ticker	Fund Name	Inception	Days		0-24		25-49		50-99		100-149		150-199		200+
PPA	PowerShares Aerospace & Defense Portfolio	10/26/05		507		260		9		2		—		—		—
PZD	PowerShares CleantechTM Portfolio	10/24/06		257		69		9		8		—		—		—
PGJ	PowerShares Golden Dragon Halter USX China Portfolio	12/9/04		729		373		95		19		—		—		—
PSP	PowerShares Listed Private Equity Portfolio	10/24/06		257		141		4		—		—		—		—
PXN	PowerShares Lux Nanotech Portfolio	10/26/05		507		224		39		13		5		1		—
PIV	PowerShares Value Line TimelinessTM Select Portfolio	12/6/05		479		233		19		2		—		—		—
PYH	PowerShares Value Line Industry Rotation Portfolio	12/1/06		230		103		3		1		—		—		—
PHO	PowerShares Water Resources Portfolio	12/6/05		479		226		82		14		1		—		—
PBW	PowerShares WilderHill Clean Energy Portfolio	3/3/05		672		304		83		11		2		—		—
PUW	PowerShares WilderHill Progressive Energy Portfolio	10/24/06		257		91		10		3		—		—		—
PDP	PowerShares DWA Technical LeadersTM Portfolio	3/1/07		171		85		3		3		—		—		—

34

	Closing Below Above NAV (bps)
Ticker	-0-24		-25-49		-50-99		-100-149		-150-199		-200+
PPA		234		2		—		—		—		—
PZD		166		5		—		—		—		—
PGJ		221		16		5		—		—		—
PSP		109		3		—		—		—		—
PXN		200		20		3		—		1		1
PIV		222		3		—		—		—		—
PYH		121		2		—		—		—		—
PHO		148		6		1		1		—		—
PBW		245		26		1		—		—		—
PUW		151		2		—		—		—		—
PDP		79		—		1		—		—		—

35

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 October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	1,185.79		0.66	%	$	3.63
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.66	%	$	3.35
PowerShares CleantechTM Portfolio Actual	$	1,000.00	$	1,270.69		0.74	%	$	4.22
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.42		0.74	%	$	3.76
PowerShares Golden Dragon Halter USX China Portfolio Actual	$	1,000.00	$	1,821.66		0.70	%	$	4.96
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56

36

Fees and Expenses (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 2007		Annualized Expense Ratio Based on the Six-Month Period			Expenses Paid During the Six-Month Period (1)
PowerShares Listed Private Equity Portfolio Actual	$	1,000.00	$	940.08		0.72	%	$	3.51
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.52		0.72	%	$	3.66
PowerShares Lux Nanotech Portfolio Actual	$	1,000.00	$	1,003.43		0.70	%	$	3.53
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56
PowerShares Value Line TimelinessTM Select Portfolio
Actual	$	1,000.00	$	1,096.64		0.70	%	$	3.69
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56
PowerShares Value Line Industry Rotation Portfolio
Actual	$	1,000.00	$	1,103.97		0.75	%	$	3.97
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.37		0.75	%	$	3.81
PowerShares Water Resource Portfolio Actual	$	1,000.00	$	1,163.36		0.66	%	$	3.59
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.82		0.66	%	$	3.35
PowerShares WilderHill Clean Energy Portfolio Actual	$	1,000.00	$	1,313.11		0.68	%	$	3.95
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.72		0.68	%	$	3.46
PowerShares WilderHill Progressive Energy Portfolio Actual	$	1,000.00	$	1,100.49		0.77	%	$	4.07
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.27		0.77	%	$	3.91
PowerShares DWA Technical LeadersTM Portfolio Actual	$	1,000.00	$	1,086.64		0.71	%	$	3.72
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.57		0.71	%	$	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 October 31, 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 184 and then dividing the result by 366.

37

Schedule of Investments

PowerShares Aerospace and Defense Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Aerospace/Defense—50.5%
	38,284	Aerovironment, Inc.*	$	985,047
	66,318	Alliant Techsystems, Inc.*		7,320,844
	44,232	Argon ST, Inc.*		893,929
	218,654	Boeing Co.		21,557,098
	81,010	DRS Technologies, Inc.		4,653,214
	20,485	Ducommun, Inc.*		813,869
	41,966	EDO Corp.		2,434,028
	50,885	Esterline Technologies Corp.*		2,787,480
	111,111	GenCorp, Inc.*		1,308,888
	217,210	General Dynamics Corp.		19,757,422
	240,844	Goodrich Corp.		16,777,193
	27,585	Herley Industries, Inc.*		421,775
	161,211	L-3 Communications Holdings, Inc.		17,675,174
	216,483	Lockheed Martin Corp.		23,821,790
	83,860	Moog, Inc., Class A*		3,870,139
	29,888	MTC Technologies, Inc.*		546,652
	229,973	Northrop Grumman Corp.		19,230,342
	117,045	Orbital Sciences Corp.*		2,988,159
	287,354	Raytheon Co.		18,278,588
	224,804	Rockwell Collins, Inc.		16,817,587
	69,140	Teledyne Technologies, Inc.*		3,616,713
	19,647	United Industrial Corp.		1,587,871
	287,046	United Technologies Corp.		21,984,853
				210,128,655
		Auto Manufacturers—2.5%
	134,609	Force Protection, Inc.*		2,409,501
	146,407	Oshkosh Truck Corp.		7,935,260
				10,344,761
		Commercial Services—4.6%
	112,492	DynCorp International, Inc., Class A*		2,546,819
	850,675	SAIC, Inc.*		16,766,804
				19,313,623
		Computers—5.9%
	59,193	CACI International, Inc., Class A*		3,187,543
	289,760	Computer Sciences Corp.*		16,919,086
	44,714	Mercury Computer Systems, Inc.*		699,327
	25,931	SI International, Inc.*		731,514
	112,929	SRA International, Inc., Class A*		3,101,030
				24,638,500
		Electronics—11.4%
	18,173	American Science & Engineering, Inc.		1,098,376
	186,970	Cogent, Inc.*		2,761,547
	52,736	Cubic Corp.		2,373,120
	132,912	FLIR Systems, Inc.*		9,222,764
	153,653	Garmin Ltd. (Cayman Islands)		16,502,332
	147,878	L-1 Identity Solutions, Inc.*		2,746,094
	33,820	OSI Systems, Inc.*		846,515

Number of Shares			Value
		Common Stocks (Continued)
	124,202	Taser International, Inc.*	$	2,067,963
	237,140	Trimble Navigation Ltd.*		9,888,738
				47,507,449
		Engineering & Construction—1.8%
	43,800	Stanley, Inc.*		1,159,824
	105,293	URS Corp.*		6,508,160
				7,667,984
		Metal Fabricate/Hardware—4.8%
	28,634	Ladish Co., Inc.*		1,314,014
	122,815	Precision Castparts Corp.		18,398,915
				19,712,929
		Miscellaneous Manufacturing—10.5%
	53,518	Ceradyne, Inc.*		3,661,166
	388,274	Honeywell International, Inc.		23,455,633
	243,802	ITT Corp.		16,315,230
				43,432,029
		Packaging & Containers—2.4%
	202,114	Ball Corp.		10,020,812
		Software—0.7%
	67,266	ManTech International Corp., Class A*		2,674,496
		Telecommunications—4.8%
	24,394	Applied Signal Technology, Inc.		350,542
	34,703	GeoEye, Inc.*		1,086,551
	271,175	Harris Corp.		16,422,357
	29,705	KVH Industries, Inc.*		280,415
	59,587	Viasat, Inc.*		1,817,404
				19,957,269
		Total Investments (Cost $370,339,705)—99.9%		415,398,507
		Other assets less liabilities—0.1%		614,436
		Net Assets—100.0%	$	416,012,943

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	398,896,175		95.9	%
Cayman Islands		16,502,332		4.0
Total investments		415,398,507		99.9
Other assets less liabilities		614,436		0.1
Net Assets	$	416,012,943		100.0	%

See Notes to Financial Statements.
38

Schedule of Investments

PowerShares Cleantech^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Biotechnology—1.9%
	52,933	Martek Biosciences Corp.*	$	1,617,103
		Building Materials—0.4%
	28,962	Trex Co., Inc.*		313,948
		Chemicals—3.7%
	57,862	Landec Corp.*		859,829
	52,040	Zoltek Cos., Inc.*		2,302,770
				3,162,599
		Computers—1.0%
	25,941	Echelon Corp.*		571,999
	26,699	Maxwell Technologies, Inc.*		267,524
				839,523
		Electric—2.6%
	9,929	EnerNOC, Inc.*		462,691
	33,253	Ormat Technologies, Inc.		1,793,335
				2,256,026
		Electrical Components & Equipment—5.0%
	31,000	American Superconductor Corp.*		841,650
	41,479	Energy Conversion Devices, Inc.*		1,131,962
	66,493	EnerSys*		1,204,852
	95,962	Power-One, Inc.*		544,105
	44,602	PowerSecure International, Inc.*		570,014
				4,292,583
		Electronics—13.5%
	36,278	Badger Meter, Inc.		1,394,889
	27,366	Dionex Corp.*		2,408,208
	25,207	Itron, Inc.*		2,709,500
	60,731	Trimble Navigation Ltd.*		2,532,483
	37,876	Woodward Governor Co.		2,537,692
				11,582,772
		Energy-Alternate Sources—16.6%
	30,139	Comverge, Inc.*		1,060,893
	20,818	First Solar, Inc.*		3,306,107
	83,254	Headwaters, Inc.*		1,194,695
	33,759	LDK Solar Co., Ltd. ADR (Cayman Islands)*		1,337,194
	29,044	SunPower Corp., Class A*		3,672,904
	57,391	Suntech Power Holdings Co. Ltd. ADR (Cayman Islands)*		3,379,756
	68,229	Verenium Corp.*		362,978
				14,314,527
		Engineering & Construction—1.3%
	77,889	Insituform Technologies, Inc., Class A*		1,095,119
		Environmental Control—8.8%
	32,798	Clean Harbors, Inc.*		1,614,646
	51,180	Fuel Tech, Inc.*		1,513,393

Number of Shares			Value
		Common Stocks (Continued)
	84,141	Nalco Holding Co.	$	2,091,745
	100,543	Tetra Tech, Inc.*		2,347,678
				7,567,462
		Hand/Machine Tools—2.6%
	55,711	Baldor Electric Co.		2,246,268
		Machinery-Diversified—3.2%
	43,021	Kadant, Inc.*		1,396,892
	27,724	Lindsay Corp.		1,364,021
				2,760,913
		Miscellaneous Manufacturing—23.6%
	63,418	Clarcor, Inc.		2,312,220
	57,087	Donaldson Co., Inc.		2,446,749
	47,133	ESCO Technologies, Inc.*		1,950,835
	103,462	Hexcel Corp.*		2,589,654
	62,425	Pall Corp.		2,501,370
	38,622	Polypore International, Inc.*		662,754
	36,772	Roper Industries, Inc.		2,603,825
	17,541	Siemens AG ADR (Germany)		2,392,066
	27,947	SPX Corp.		2,831,030
				20,290,503
		Office Furnishings—1.8%
	82,848	Interface, Inc., Class A		1,584,882
		Semiconductors—8.4%
	72,819	Cree, Inc.*		2,038,932
	73,954	International Rectifier Corp.*		2,468,585
	37,691	MEMC Electronic Materials, Inc.*		2,759,735
				7,267,252
		Telecommunications—2.8%
	98,391	Corning, Inc.		2,387,950
		Water—2.9%
	28,035	Veolia Environnement ADR (France)		2,515,581
		Total Investments (Cost $77,355,302)—100.1%		86,095,011
		Liabilities in excess of other assets—(0.1%)		(78,363	)
		Net Assets—100.0%	$	86,016,648

ADR American Depositary Receipt.

*  Non-income producing security.

See Notes to Financial Statements.
39

Schedule of Investments (Continued)

PowerShares Cleantech^TM Portfolio

October 31, 2007 (Unaudited)

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	76,470,414			88.9	%
Cayman Islands		4,716,950			5.5
France		2,515,581			2.9
Germany		2,392,066			2.8
Total investments		86,095,011			100.1
Liabilities in excess of other assets		(78,363	)		(0.1	)
Net Assets	$	86,016,648			100.0	%

See Notes to Financial Statements.
40

Schedule of Investments

PowerShares Golden Dragon Halter USX China Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Consumer Discretionary—8.5%
	143,074	Acorn International, Inc. ADR*	$	2,430,827
	114,681	China Automotive Systems, Inc.*		959,880
	311,758	Ctrip.com International Ltd. ADR		17,570,681
	120,245	eLong, Inc. ADR*		1,299,848
	533,796	Focus Media Holding Ltd. ADR*		33,095,353
	202,645	Global Sources Ltd.*		6,567,724
	166,097	Home Inns & Hotels Management, Inc. ADR*		7,313,251
	30,561	Man Sang Holdings, Inc.		299,803
	168,859	New Oriental Education & Technology Group, Inc. ADR*		15,116,258
	87,482	SORL Auto Parts, Inc.*		786,463
	119,363	Wonder Auto Technology, Inc.*		1,098,140
	325,207	Xinhua Finance Media Ltd. ADR*		2,520,354
				89,058,582
		Consumer Staples—0.4%
	78,877	American Dairy, Inc.*		1,732,927
	257,601	New Dragon Asia Corp.*		319,425
	118,221	Origin Agritech Ltd.*		1,067,536
	341,414	Tiens Biotech Group USA, Inc.*		1,283,717
				4,403,605
		Energy—21.5%
	329,509	China Petroleum and Chemical Corp. ADR		54,668,838
	246,873	CNOOC Ltd. ADR		53,445,536
	292,698	PetroChina Co. Ltd. ADR		76,862,495
	367,969	Yanzhou Coal Mining Co. Ltd. ADR		40,064,465
				225,041,334
		Financials—4.9%
	507,315	China Life Insurance Co. Ltd. ADR		51,599,009
		Health Care—3.5%
	103,989	3SBio, Inc. ADR*		2,135,934
	130,954	China Medical Technologies, Inc. ADR		6,109,004
	31,903	Chindex International, Inc.*		1,086,616
	496,467	Mindray Medical International Ltd. ADR		19,739,528
	299,147	Simcere Pharmaceutical Group ADR*		4,995,755
	192,024	Sinovac Biotech Ltd.*		1,184,788
	159,973	Tongjitang Chinese Medicines Co. ADR*		1,839,690
				37,091,315
		Industrials—14.6%
	131,311	51job, Inc. ADR*		2,926,922
	130,506	Canadian Solar, Inc.*		1,444,701
	235,713	China Bak Battery, Inc.*		1,414,278
	232,943	China Eastern Airlines Corp. Ltd. ADR*		25,483,964
	418,727	China Southern Airlines Co. Ltd. ADR*		29,478,382

Number of Shares			Value
		Common Stocks (Continued)
	178,380	China Yuchai International Ltd.	$	2,461,644
	72,474	Deswell Industries, Inc.		731,987
	106,157	Fushi International, Inc.*		1,794,053
	678,070	Guangshen Railway Co. Ltd. ADR		29,373,992
	220,603	JA Solar Holdings Co. Ltd. ADR*		12,706,733
	229,723	Solarfun Power Holdings Co. Ltd. ADR*		3,220,716
	720,161	Suntech Power Holdings Co. Ltd. ADR*		42,410,282
				153,447,654
		Information Technology—14.9%
	411,613	Actions Semiconductor Co. Ltd. ADR*		2,058,065
	208,687	AsiaInfo Holdings, Inc.*		2,552,242
	131,447	Baidu.com ADR*		50,277,164
	550,151	CDC Corp., Class A*		4,060,114
	99,929	China Finance Online Co. Ltd. ADR*		3,477,529
	207,353	China Techfaith Wireless Communication Technology Ltd. ADR*		1,482,574
	183,543	Comtech Group, Inc.*		3,948,010
	108,994	HSW International, Inc.*		755,328
	106,737	Hurray! Holding Co. Ltd. ADR*		442,959
	170,294	KongZhong Corp. ADR*		1,028,576
	214,448	Nam Tai Electronics, Inc.		2,584,098
	605,019	Netease.com, Inc. ADR*		12,590,445
	167,492	Ninetowns Internet Technology Group Co. Ltd. ADR*		877,658
	251,289	Qiao Xing Mobile Communication Co. Ltd.*		2,867,207
	141,709	Qiao Xing Universal Telephone, Inc.*		1,533,291
	1,772,423	Semiconductor Manufacturing International Corp. ADR*		10,315,502
	342,719	Shanda Interactive Entertainment Ltd. ADR*		13,492,847
	261,657	SINA Corp.*		15,000,797
	177,387	Sohu.com, Inc.*		10,627,255
	140,517	The9 Ltd. ADR*		4,461,415
	127,423	Trina Solar Ltd. ADR*		7,514,134
	578,387	UTStarcom, Inc.*		1,850,838
	206,946	Webzen, Inc. ADR		792,603
	78,454	Yucheng Technologies Ltd.*		1,138,368
				155,729,019
		Materials—7.1%
	577,662	Aluminum Corp. of China Ltd. ADR		42,307,964
	62,536	Fuwei Films Holdings Co. Ltd.*		440,879
	258,918	ShengdaTech, Inc.*		2,094,647
	344,614	Sinopec Shanghai Petrochemical Co. Ltd. ADR		29,478,282
				74,321,772
		Telecommunication Services—21.0%
	659,262	China Mobile Ltd. ADR		68,352,285
	778,243	China Netcom Group Corp. Ltd. ADR		48,554,581
	590,280	China Telecom Corp. Ltd. ADR		51,873,806

See Notes to Financial Statements.
41

Schedule of Investments (Continued)

PowerShares Golden Dragon Halter USX China Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	2,091,524	China Unicom Ltd. ADR	$	51,284,168
	114,489	Linktone Ltd. ADR*		391,552
				220,456,392
		Utilities—3.7%
	811,208	Huaneng Power International, Inc. ADR		38,978,544
		Total Investments (Cost $756,699,698)—100.1%		1,050,127,226
		Liabilities in excess of other assets—(0.1%)		(844,462	)
		Net Assets—100.0%	$	1,049,282,764

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
China	$	473,647,270			45.1	%
Cayman Islands		299,865,814			28.6
Hong Kong		221,636,569			21.1
United States		32,603,624			3.1
Bermuda		9,029,368			0.9
British Virgin Islands		7,055,280			0.7
US Virgin Islands		2,867,209			0.3
Canada		1,444,701			0.1
Antigua		1,184,788			0.1
South Korea		792,603			0.1
Total investments		1,050,127,226			100.1
Liabilities in excess of other assets		(844,462	)		(0.1	)
Net Assets	$	1,049,282,764			100.0	%

See Notes to Financial Statements.
42

Schedule of Investments

PowerShares Listed Private Equity Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Banks—4.3%
	123,641	SVB Financial Group*	$	6,403,367
		Commercial Services—4.5%
	157,950	Macquarie Infrastructure Co. LLC		6,595,992
		Diversified Financial Services—22.0%
	36,232	Affiliated Managers Group, Inc.*		4,766,320
	474,691	Blackstone Group (The) LP*		12,071,392
	59,483	Evercore Partners, Inc., Class A		1,542,394
	634,442	Fortress Investment Group LLC, Class A		13,989,446
				32,369,552
		Holding Companies-Diversified—11.7%
	139,155	Compass Diversified Trust		2,241,787
	296,748	Leucadia National Corp.		15,033,254
				17,275,041
		Internet—4.9%
	2,261,274	CMGI, Inc.*		3,188,396
	194,867	Internet Capital Group, Inc.*		2,502,092
	618,468	Safeguard Scientifics, Inc.*		1,453,400
				7,143,888
		Investment Companies—46.9%
	341,209	Allied Capital Corp.		10,058,842
	300,253	American Capital Strategies Ltd.		13,033,984
	318,956	Apollo Investment Corp.		6,634,285
	313,444	Ares Capital Corp.		5,215,708
	250,557	BlackRock Kelso Capital Corp.		3,582,965
	21,772	Capital Southwest Corp.		2,659,668
	74,292	Gladstone Capital Corp.		1,398,918
	115,777	Gladstone Investment Corp.		1,417,110
	136,144	Harris & Harris Group, Inc.*		1,444,488
	163,343	Hercules Technology Growth Capital, Inc.		2,095,691
	358,888	KKR Financial Holdings LLC		5,602,242
	96,610	Kohlberg Capital Corp.		1,244,337
	310,340	MCG Capital Corp.		4,347,863
	119,342	MVC Capital, Inc.		2,035,975
	86,247	NGP Capital Resources Co.		1,380,814
	105,022	Patriot Capital Funding, Inc.		1,314,875
	111,582	PennantPark Investment Corp.		1,457,261
	108,911	Prospect Energy Corp.		1,594,457
	112,887	Technology Investment Capital Corp.		1,473,175
	70,941	UTEK Corp.		998,849
				68,991,507
		REIT—5.5%
	443,252	CapitalSource, Inc.		8,076,051
		Total Common Stocks (Cost $158,317,189)		146,855,398

Number of Shares			Value
		Money Market Fund—0.3%
	468,638	Liquid Assets Portfolio Private Class ** (Cost $468,638)	$	468,638
		Total Investments (Cost $158,785,827)—100.1%		147,324,036
		Liabilities in excess of other assets—(0.1%)		(185,514	)
		Net Assets—100.0%	$	147,138,522

REIT Real Estate Investment Trust.

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
43

Schedule of Investments

PowerShares Lux Nanotech Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Auto Manufacturers—3.3%
	39,050	Toyota Motor Corp. ADR (Japan)	$	4,468,882
		Chemicals—11.1%
	47,200	Air Products & Chemicals, Inc.		4,618,520
	91,123	E.I. du Pont de Nemours & Co.		4,511,500
	629,254	Symyx Technologies, Inc.*		5,795,429
				14,925,449
		Commercial Services—12.6%
	2,032,974	Altair Nanotechnologies, Inc. (Canada)*		10,002,231
	1,710,304	Arrowhead Research Corp.*		7,063,556
				17,065,787
		Computers—6.7%
	88,316	Hewlett-Packard Co.		4,564,171
	38,644	International Business Machines Corp.		4,487,341
				9,051,512
		Electronics—11.3%
	267,613	FEI Co.*		7,763,453
	259,996	NVE Corp.*		7,506,085
				15,269,538
		Energy-Alternate Sources—4.6%
	435,637	Headwaters, Inc.*		6,251,391
		Healthcare-Products—1.4%
	1,839,358	Immunicon Corp.*		1,931,326
		Investment Companies—4.6%
	580,850	Harris & Harris Group, Inc.*		6,162,819
		Miscellaneous Manufacturing—10.8%
	48,987	3M Co.		4,230,517
	109,546	General Electric Co.		4,508,913
	1,190,842	Nanophase Technologies Corp.*		5,763,676
				14,503,106
		Pharmaceuticals—17.9%
	355,978	Abraxis BioScience, Inc.*		8,842,493
	402,522	Elan Corp. PLC ADR (Ireland)*		9,580,023
	435,637	Flamel Technologies ADR (France)*		4,121,126
	663,137	NUCRYST Pharmaceuticals Corp. (Canada)*		1,644,580
				24,188,222
		Semiconductors—9.3%
	173,904	Intel Corp.		4,678,018
	436,787	Veeco Instruments, Inc.*		7,892,741
				12,570,759

Number of Shares			Value
		Common Stocks (Continued)
		Software—6.4%
	1,113,296	Accelrys, Inc.*	$	8,650,310
		Total Investments (Cost $145,251,593)—100.0%		135,039,101
		Liabilities in excess of other assets—(0.0%)		(17,391	)
		Net Assets—100.0%	$	135,021,710

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	105,222,259			77.9	%
Canada		11,646,811			8.6
Ireland		9,580,023			7.1
Japan		4,468,882			3.3
France		4,121,126			3.1
Total investments		135,039,101			100.0
Liabilities in excess of other assets		(17,391	)		(0.0	)
Net Assets	$	135,021,710			100.0	%

See Notes to Financial Statements.
44

Schedule of Investments

PowerShares Value Line Timeliness Select^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—16.2%
	46,747	Amazon.com, Inc.*	$	4,167,495
	147,420	Cooper Tire & Rubber Co.		3,284,518
	39,020	Deckers Outdoor Corp.*		5,454,605
	75,481	GameStop Corp., Class A*		4,469,985
	36,069	Garmin Ltd. (Cayman Islands)		3,873,811
	33,854	ITT Educational Services, Inc.*		4,305,890
	23,253	Strayer Education, Inc.		4,335,754
	108,104	Warnaco Group (The), Inc.*		4,398,752
				34,290,810
		Consumer Staples—5.9%
	68,072	Coca-Cola (The) Co.		4,204,127
	140,440	Fresh Del Monte Produce, Inc. (Cayman Islands)		5,095,163
	82,825	Walgreen Co.		3,284,011
				12,583,301
		Energy—13.9%
	47,362	Cameron International Corp.*		4,611,164
	33,831	Core Laboratories N.V. (Netherlands)*		4,937,297
	36,693	Diamond Offshore Drilling, Inc.		4,154,748
	73,598	Noble Corp. (Cayman Islands)		3,897,014
	39,474	Schlumberger Ltd. (Netherlands)		3,812,004
	58,600	Smith International, Inc.		3,870,530
	65,561	Weatherford International Ltd. (Bermuda)*		4,255,565
				29,538,322
		Financials—1.8%
	84,638	AON Corp.		3,835,794
		Health Care—12.3%
	27,566	Alcon, Inc. (Switzerland)		4,195,821
	66,691	ArthroCare Corp.*		4,324,244
	59,356	Chemed Corp.		3,402,286
	67,169	Express Scripts, Inc.*		4,238,364
	17,557	Intuitive Surgical, Inc.*		5,738,856
	46,942	Invitrogen Corp.*		4,265,620
				26,165,191
		Industrials—26.2%
	62,115	Actuant Corp., Class A		4,284,693
	57,664	Bucyrus International, Inc., Class A		4,757,280
	52,091	Cascade Corp.		3,280,691
	128,373	CDI Corp.		3,537,960
	75,173	CNH Global N.V. (Netherlands)		4,929,845
	98,281	Cubic Corp.		4,422,645
	29,407	Fluor Corp.		4,646,306
	71,323	FTI Consulting, Inc.*		3,872,839
	56,957	Jacobs Engineering Group, Inc.*		4,963,803
	83,846	McDermott International, Inc. (Panama)*		5,119,637
	26,646	Precision Castparts Corp.		3,991,837

Number of Shares			Value
		Common Stocks (Continued)
	47,338	Terex Corp.*	$	3,513,426
	44,022	Valmont Industries, Inc.		4,213,786
				55,534,748
		Information Technology—12.8%
	48,375	Anixter International, Inc.*		3,475,744
	27,800	Apple, Inc.*		5,280,610
	68,788	CommScope, Inc.*		3,244,730
	62,913	KLA-Tencor Corp.		3,312,369
	119,417	Nokia Oyj ADR (Finland)		4,743,243
	185,128	Oracle Corp.*		4,104,288
	66,328	Varian Semiconductor Equipment Associates, Inc.*		3,052,415
				27,213,399
		Materials—10.9%
	59,291	BHP Billiton Ltd. ADR (Australia)		5,173,733
	107,034	International Paper Co.		3,955,977
	54,253	Monsanto Co.		5,296,719
	105,780	Penford Corp.		3,730,861
	35,484	Southern Copper Corp.		4,957,115
				23,114,405
		Total Investments (Cost $184,615,264)—100.0%		212,275,970
		Liabilities in excess of other assets—(0.0%)		(51,658	)
		Net Assets—100.0%	$	212,224,312

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	162,242,837			76.5	%
Netherlands		13,679,146			6.4
Cayman Islands		12,865,988			6.1
Australia		5,173,733			2.4
Panama		5,119,637			2.4
Finland		4,743,243			2.2
Bermuda		4,255,565			2.0
Switzerland		4,195,821			2.0
Total investments		212,275,970			100.0
Liabilities in excess of other assets		(51,658	)		(0.0	)
Net Assets	$	212,224,312			100.0	%

See Notes to Financial Statements.
45

Schedule of Investments

PowerShares Value Line Industry Rotation Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Aerospace/Defense—1.5%
	13,304	BE Aerospace, Inc.*	$	661,342
		Auto Parts & Equipment—1.0%
	20,359	Cooper Tire & Rubber Co.		453,599
		Beverages—2.7%
	9,205	Coca-Cola (The) Co.		568,501
	16,887	PepsiAmericas, Inc.		603,203
				1,171,704
		Chemicals—6.1%
	11,332	FMC Corp.		651,590
	7,489	Monsanto Co.		731,150
	14,543	Penford Corp.		512,932
	5,908	Potash Corp. of Saskatchewan, Inc. (Canada)		725,621
				2,621,293
		Commercial Services—6.2%
	20,010	Corrections Corp. of America*		566,083
	9,840	FTI Consulting, Inc.*		534,312
	4,595	ITT Educational Services, Inc.*		584,438
	3,165	Strayer Education, Inc.		590,146
	16,233	TeleTech Holdings, Inc.*		404,689
				2,679,668
		Computers—2.7%
	8,896	Computer Sciences Corp.*		519,437
	25,680	EMC Corp.*		652,016
				1,171,453
		Electronics—4.7%
	13,656	Cubic Corp.		614,520
	12,945	FARO Technologies, Inc.*		372,298
	5,087	Garmin Ltd. (Cayman Islands)		546,344
	15,693	National Instruments Corp.		509,081
				2,042,243
		Engineering & Construction—4.7%
	4,114	Fluor Corp.		650,012
	7,868	Jacobs Engineering Group, Inc.*		685,696
	11,216	McDermott International, Inc. (Panama)*		684,849
				2,020,557
		Entertainment—1.2%
	8,762	Vail Resorts, Inc.*		531,766
		Environmental Control—2.5%
	39,282	Allied Waste Industries, Inc.*		496,524
	39,032	Calgon Carbon Corp.*		581,577
				1,078,101
		Financial—2.6%
	34,646	Adams Express Co.**		520,383
	41,794	Thai Fund, Inc.**		595,146
				1,115,529

Number of Shares			Value
		Common Stocks (Continued)
		Food—1.6%
	18,819	Fresh Del Monte Produce, Inc. (Cayman Islands)	$	682,753
		Healthcare - Products—3.1%
	7,906	Gen-Probe, Inc.*		553,578
	2,380	Intuitive Surgical, Inc.*		777,951
				1,331,529
		Healthcare - Services—1.3%
	9,890	Aetna, Inc.		555,521
		Home Furnishings—1.2%
	10,793	Sony Corp. ADR (Japan)		533,822
		Insurance—3.8%
	9,410	AFLAC, Inc.		590,759
	18,265	Max Capital Group Ltd. (Bermuda)		516,717
	7,084	Transatlantic Holdings, Inc.		527,971
				1,635,447
		Internet—3.9%
	6,432	Amazon.com, Inc.*		573,413
	47,596	eResearch Technology, Inc.*		528,316
	6,398	Priceline.com, Inc.*		595,653
				1,697,382
		Iron/Steel—1.3%
	9,700	Reliance Steel & Aluminum Co.		565,995
		Machinery - Construction & Mining—3.0%
	7,975	Bucyrus International, Inc., Class A		657,938
	10,938	Joy Global, Inc.		635,060
				1,292,998
		Machinery - Diversified—4.2%
	10,424	CNH Global N.V. (Netherlands)		683,605
	13,206	Manitowoc (The) Co., Inc.		650,528
	7,278	Rockwell Automation, Inc.		501,309
				1,835,442
		Media—4.7%
	19,768	Comcast Corp., Special Class A*		412,558
	12,019	EchoStar Communications Corp., Class A*		588,450
	45,183	Playboy Enterprises, Inc., Class B*		506,050
	14,766	Walt Disney (The) Co.		511,347
				2,018,405
		Metal Fabricate/Hardware—4.1%
	11,739	Dynamic Materials Corp.		645,880
	3,724	Precision Castparts Corp.		557,892
	6,155	Valmont Industries, Inc.		589,157
				1,792,929
		Mining—3.3%
	8,210	BHP Billiton Ltd. ADR		716,404
	4,958	Southern Copper Corp.		692,633
				1,409,037

See Notes to Financial Statements.
46

Schedule of Investments (Continued)

PowerShares Value Line Industry Rotation Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Oil & Gas—4.0%
	13,038	Frontier Oil Corp.	$	597,010
	9,958	Petro-Canada (Canada)		573,880
	6,661	Royal Dutch Shell PLC ADR (United Kingdom)		582,904
				1,753,794
		Oil & Gas Services—2.7%
	4,520	Core Laboratories N.V. (Netherlands)*		659,648
	7,970	Smith International, Inc.		526,419
				1,186,067
		Packaging & Containers—1.4%
	13,225	Owens-Illinois, Inc.*		587,455
		Pharmaceuticals—3.8%
	9,187	Express Scripts, Inc.*		579,700
	4,491	Novo Nordisk A/S ADR		559,983
	16,545	Schering-Plough Corp.		504,953
				1,644,636
		Real Estate—1.1%
	4,815	Jones Lang LaSalle, Inc.		459,014
		Retail—1.0%
	11,244	Walgreen Co.		445,825
		Semiconductors—2.3%
	15,873	NVIDIA Corp.*		561,586
	9,331	Varian Semiconductor Equipment Associates, Inc.*		429,413
				990,999
		Software—3.9%
	22,033	Eclipsys Corp.*		497,064
	8,425	NAVTEQ*		650,410
	25,322	Oracle Corp.*		561,389
				1,708,863
		Telecommunications—4.2%
	12,638	AT&T, Inc.		528,142
	13,398	Ciena Corp.*		641,228
	16,336	Nokia Oyj ADR (Finland)		648,866
				1,818,236
		Transportation—4.1%
	11,972	CSX Corp.		535,986
	16,309	Kansas City Southern*		630,995
	13,101	Kirby Corp.*		598,454
				1,765,435
		Total Common Stocks (Cost $37,378,318)		43,258,839

Number of Shares			Value
		Money Market Fund—0.1%
	56,616	Liquid Assets Portfolio Private Class*** (Cost $56,616)	$	56,616
		Total Investments (Cost $37,434,934)—100.0%		43,315,455
		Other assets less liabilities—0.0%		3,333
		Net Assets—100.0%	$	43,318,788

ADR American Depositary Receipt.

*  Non-income producing security.

**  Closed-end management investment company.

***  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	35,200,059		81.3	%
Netherlands		1,343,253		3.1
Canada		1,299,501		3.0
Cayman Islands		1,229,097		2.8
Australia		716,404		1.7
Panama		684,849		1.6
Finland		648,866		1.5
United Kingdom		582,904		1.3
Denmark		559,983		1.3
Japan		533,822		1.2
Bermuda		516,717		1.2
Total investments		43,315,455		100.0
Other assets less liabilities		3,333		0.0
Net Assets	$	43,318,788		100.0	%

See Notes to Financial Statements.
47

Schedule of Investments

PowerShares Water Resources Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Biotechnology—3.5%
	965,697	Millipore Corp.*	$	74,986,372
		Electrical Components & Equipment—3.1%
	1,279,897	Emerson Electric Co.		66,900,216
		Electronics—12.1%
	1,775,915	Agilent Technologies, Inc.*		65,442,468
	1,296,360	Badger Meter, Inc.		49,845,042
	826,656	Itron, Inc.*		88,857,253
	1,928,782	Watts Water Technologies, Inc., Class A		54,835,272
				258,980,035
		Engineering & Construction—13.3%
	2,507,695	Aecom Technology Corp.*		84,684,860
	2,555,763	Insituform Technologies, Inc., Class A*		35,934,028
	1,416,420	Layne Christensen Co.*		80,650,955
	1,339,389	URS Corp.*		82,787,634
				284,057,477
		Environmental Control—9.5%
	3,584,430	Calgon Carbon Corp.*		53,408,007
	2,627,162	Nalco Holding Co.		65,311,247
	3,563,213	Tetra Tech, Inc.*		83,201,024
				201,920,278
		Hand/Machine Tools—3.0%
	1,474,349	Franklin Electric Co., Inc.		64,237,386
		Machinery - Diversified—6.6%
	856,086	Gorman-Rupp (The) Co.		33,147,650
	1,558,817	IDEX Corp.		55,213,298
	1,048,500	Lindsay Corp.		51,586,200
				139,947,148
		Metal Fabricate/Hardware—6.2%
	4,816,853	Mueller Water Products, Inc., Class B		50,962,305
	844,960	Valmont Industries, Inc.		80,879,571
				131,841,876
		Miscellaneous Manufacturing—26.0%
	647,305	Ameron International Corp.		69,824,790
	779,056	Danaher Corp.		66,741,728
	1,588,812	General Electric Co.		65,395,502
	978,140	ITT Corp.		65,457,129
	1,936,093	Pall Corp.		77,579,247
	2,279,235	Pentair, Inc.		80,662,127
	922,114	Roper Industries, Inc.		65,294,892
	478,728	Siemens AG ADR (Germany)		65,284,137
				556,239,552
		Water—16.5%
	896,718	American States Water Co.		40,755,833
	1,560,833	Aqua America, Inc.		36,304,976
	889,140	California Water Service Group		39,468,925

Number of Shares			Value
		Common Stocks (Continued)
	706,979	Companhia de Saneamento Basico do Estado de Sao Paulo ADR (Brazil)	$	36,777,048
	1,303,380	Consolidated Water Co., Inc. (Cayman Islands)		43,207,047
	1,348,294	SJW Corp.		47,095,909
	2,172,510	Southwest Water Co.		28,068,829
	910,715	Veolia Environnement ADR (France)		81,718,456
				353,397,023
		Total Investments (Cost $1,856,681,462)—99.8%		2,132,507,363
		Other assets less liabilities—0.2%		5,001,445
		Net Assets—100.0%	$	2,137,508,808

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	1,905,520,675		89.2	%
France		81,718,456		3.8
Germany		65,284,137		3.1
Cayman Islands		43,207,047		2.0
Brazil		36,777,048		1.7
Total investments		2,132,507,363		99.8
Other assets less liabilities		5,001,445		0.2
Net Assets	$	2,137,508,808		100.0	%

See Notes to Financial Statements.
48

Schedule of Investments

PowerShares WilderHill Clean Energy Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Auto Parts & Equipment—3.8%
	1,332,923	Amerigon, Inc.*	$	26,178,608
	1,351,089	Fuel Systems Solutions, Inc.*		25,413,984
				51,592,592
		Chemicals—9.2%
	284,333	Air Products & Chemicals, Inc.		27,821,984
	561,710	OM Group, Inc.*		29,759,396
	335,826	Praxair, Inc.		28,706,406
	903,142	Zoltek Cos., Inc.*		39,964,034
				126,251,820
		Computers—3.3%
	1,263,201	Echelon Corp.*		27,853,582
	1,703,102	Maxwell Technologies, Inc.*		17,065,082
				44,918,664
		Electric—9.3%
	769,904	IDACORP, Inc.		26,861,951
	841,199	Ormat Technologies, Inc.		45,365,861
	904,890	Portland General Electric Co.		25,472,654
	1,036,177	Puget Energy, Inc.		29,272,000
				126,972,466
		Electrical Components & Equipment—14.1%
	3,744,742	Active Power, Inc.*		7,040,115
	2,061,781	American Superconductor Corp.*		55,977,354
	2,636,439	China Bak Battery, Inc.*		15,818,634
	1,266,725	Energy Conversion Devices, Inc.*		34,568,925
	2,059,917	Medis Technologies Ltd.*		28,797,640
	561,108	Ultralife Batteries, Inc.*		7,530,069
	2,321,862	Universal Display Corp.*		43,534,912
				193,267,649
		Electronics—3.5%
	394,167	Itron, Inc.*		42,369,011
	1,425,541	UQM Technologies, Inc.*		5,545,354
				47,914,365
		Energy - Alternate Sources—39.9%
	4,996,274	Ballard Power Systems, Inc. (Canada)*		25,480,997
	784,696	Comverge, Inc.*		27,621,299
	4,145,380	Evergreen Solar, Inc.*		47,920,593
	333,523	First Solar, Inc.*		52,966,788
	2,190,676	FuelCell Energy, Inc.*		22,038,201
	803,631	JA Solar Holdings Co. Ltd. ADR (Cayman Islands)*		46,289,146
	2,671,490	Nova Biosource Fuels, Inc.*		7,319,883
	3,161,147	Pacific Ethanol, Inc.*		25,384,010
	7,749,325	Plug Power, Inc.*		27,045,144
	462,037	SunPower Corp., Class A*		58,429,199
	912,994	Suntech Power Holdings Co. Ltd. ADR (Cayman Islands)*		53,766,217
	659,671	Trina Solar Ltd. ADR (Cayman Islands)*		38,900,799

Number of Shares			Value
		Common Stocks (Continued)
	2,531,320	VeraSun Energy Corp.*	$	34,324,699
	4,651,688	Verenium Corp.*		24,746,980
	1,411,173	Yingli Green Energy Holding Co., Ltd. ADR (Cayman Islands)*		52,679,088
				544,913,043
		Food—2.1%
	2,226,818	Cosan Ltd., Class A (Bermuda)*		28,280,589
		Semiconductors—14.6%
	1,806,456	Applied Materials, Inc.		35,081,376
	1,138,790	Cree, Inc.*		31,886,120
	4,589,814	Emcore Corp.*		49,524,093
	1,156,555	International Rectifier Corp.*		38,605,806
	599,564	MEMC Electronic Materials, Inc.*		43,900,076
				198,997,471
		Total Investments (Cost $1,115,586,148)—99.8%		1,363,108,659
		Other assets less liabilities—0.2%		2,172,595
		Net Assets—100.0%	$	1,365,281,254

ADR American Depositary Receipt.

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	1,117,711,823		81.9	%
Cayman Islands		191,635,250		14.0
Bermuda		28,280,589		2.0
Canada		25,480,997		1.9
Total investments		1,363,108,659		99.8
Other assets less liabilities		2,172,595		0.2
Net Assets	$	1,365,281,254		100.0	%

See Notes to Financial Statements.
49

Schedule of Investments

PowerShares WilderHill Progressive Energy Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.2%
		Aerospace/Defense—1.6%
	10,953	United Technologies Corp.	$	838,890
		Agriculture—2.6%
	28,058	Andersons (The), Inc.		1,393,080
		Auto Manufacturers—4.7%
	35,704	Honda Motor Co. Ltd. ADR		1,336,401
	10,203	Toyota Motor Corp. ADR (Japan)		1,167,631
				2,504,032
		Auto Parts & Equipment—7.9%
	167,825	Exide Technologies*		1,401,339
	30,992	Johnson Controls, Inc.		1,354,970
	47,689	Tenneco, Inc.*		1,459,760
				4,216,069
		Chemicals—5.8%
	58,104	Methanex Corp. (Canada)		1,767,524
	6,848	Sociedad Quimica y Minera de Chile S.A. ADR (Chile)		1,314,816
				3,082,340
		Electric—11.3%
	23,942	Alliant Energy Corp.		957,680
	15,763	CPFL Energia S.A. ADR (Brazil)		1,048,555
	22,003	EnerNOC, Inc.*		1,025,340
	53,081	Enersis S.A. ADR (Chile)		1,052,066
	14,773	FPL Group, Inc.		1,010,769
	20,265	Wisconsin Energy Corp.		970,288
				6,064,698
		Electrical Components & Equipment—6.8%
	10,034	Energizer Holdings, Inc.*		1,046,546
	60,949	EnerSys*		1,104,396
	66,167	GrafTech International Ltd.*		1,250,557
	19,857	PowerSecure International, Inc.*		253,772
				3,655,271
		Electronics—4.1%
	54,311	AU Optronics Corp. ADR (Taiwan)		1,180,178
	26,275	Badger Meter, Inc.		1,010,274
				2,190,452
		Energy - Alternate Sources—10.8%
	130,247	Aventine Renewable Energy Holdings, Inc.*		1,366,291
	88,697	Clean Energy Fuels Corp.*		1,585,903
	49,100	Covanta Holding Corp.*		1,331,101
	101,749	Headwaters, Inc.*		1,460,098
				5,743,393
		Environmental Control—3.9%
	62,549	Fuel Tech, Inc.*		1,849,574
	110,418	Rentech, Inc.*		235,190
				2,084,764

Number of Shares			Value
		Common Stocks (Continued)
		Food—2.7%
	95,014	SunOpta, Inc. (Canada)*	$	1,423,310
		Gas—3.5%
	19,689	Northwest Natural Gas Co.		948,419
	36,164	Piedmont Natural Gas Co., Inc.		923,267
				1,871,686
		Hand/Machine Tools—1.7%
	22,448	Baldor Electric Co.		905,103
		Investment Companies—0.5%
	23,163	Harris & Harris Group, Inc.*		245,759
		Mining—8.2%
	28,969	Cameco Corp. (Canada)		1,420,929
	148,061	Uranium Resources, Inc.*		1,843,360
	127,728	USEC, Inc.*		1,124,006
				4,388,295
		Miscellaneous Manufacturing—6.7%
	12,219	Eaton Corp.		1,131,235
	51,351	Hexcel Corp.*		1,285,315
	8,707	Siemens AG ADR (Germany)		1,187,374
				3,603,924
		Oil & Gas—5.6%
	37,498	Chesapeake Energy Corp.		1,480,421
	29,866	Sasol Ltd. ADR (South Africa)		1,518,985
				2,999,406
		Pipelines—2.8%
	26,014	Questar Corp.		1,484,879
		Semiconductors—6.8%
	47,323	Fairchild Semiconductor International, Inc., Class A*		863,645
	23,473	IXYS Corp.*		247,640
	25,180	Linear Technology Corp.		831,444
	56,702	O2Micro International Ltd. ADR (Cayman Islands)*		984,346
	68,131	ON Semiconductor Corp.*		694,936
				3,622,011
		Telecommunications—2.2%
	48,835	Corning, Inc.		1,185,225
		Total Common Stocks (Cost $49,661,537)		53,502,587

See Notes to Financial Statements.
50

Schedule of Investments (Continued)

PowerShares WilderHill Progressive Energy Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Money Market Fund—0.1%
	50,788	Liquid Assets Portfolio Private Class** (Cost $50,788)	$	50,788
		Total Investments (Cost $49,712,325)—100.3%		53,553,375
		Liabilities in excess of other assets—(0.3%)		(140,460	)
		Net Assets—100.0%	$	53,412,915

ADR American Depositary Receipt.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	38,151,260			71.4	%
Canada		4,611,763			8.6
Japan		2,504,032			4.7
Chile		2,366,882			4.4
South Africa		1,518,985			2.9
Germany		1,187,374			2.2
Taiwan		1,180,178			2.2
Brazil		1,048,555			2.0
Cayman Islands		984,346			1.9
Total investments		53,553,375			100.3
Liabilities in excess of other assets		(140,460	)		(0.3	)
Net Assets	$	53,412,915			100.0	%

See Notes to Financial Statements.
51

Schedule of Investments

PowerShares DWA Technical Leaders^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Consumer Discretionary—8.1%
	13,474	BorgWarner, Inc.	$	1,424,337
	17,634	CROCS, Inc.*		1,318,142
	42,732	Dick's Sporting Goods, Inc.*		1,425,967
	34,971	GameStop Corp., Class A*		2,070,982
	11,820	Garmin Ltd. (Cayman Islands)		1,269,468
	31,317	Guess ?, Inc.		1,609,381
	28,341	Johnson Controls, Inc.		1,239,069
	16,759	MGM MIRAGE*		1,535,292
	19,925	Phillips-Van Heusen Corp.		952,415
	12,403	Wynn Resorts Ltd.*		2,002,215
	38,607	Yum! Brands, Inc.		1,554,704
				16,401,972
		Consumer Staples—4.3%
	11,373	Bunge Ltd. (Bermuda)		1,310,056
	22,764	Church & Dwight Co., Inc.		1,076,965
	24,145	Corn Products International, Inc.		1,027,128
	50,230	Energizer Holdings, Inc.*		5,238,989
				8,653,138
		Energy—10.4%
	12,540	Baker Hughes, Inc.		1,087,469
	11,082	Cameron International Corp.*		1,078,944
	34,524	Chesapeake Energy Corp.		1,363,008
	9,683	Diamond Offshore Drilling, Inc.		1,096,406
	27,644	FMC Technologies, Inc.*		1,676,056
	36,411	Halliburton Co.		1,435,322
	23,038	Noble Energy, Inc.		1,763,329
	26,383	Occidental Petroleum Corp.		1,821,746
	14,563	Oceaneering International, Inc.*		1,125,283
	18,449	Smith International, Inc.		1,218,556
	144,323	Williams (The) Cos., Inc.		5,266,345
	32,543	XTO Energy, Inc.		2,160,204
				21,092,668
		Financials—6.5%
	12,635	Affiliated Managers Group, Inc.*		1,662,134
	18,586	Arch Capital Group Ltd. (Bermuda)*		1,389,675
	59,991	Eaton Vance Corp.		3,001,350
	8,594	Franklin Resources, Inc.		1,114,470
	32,000	Leucadia National Corp.		1,621,120
	14,986	MetLife, Inc.		1,031,786
	80,095	Ventas, Inc.		3,435,275
				13,255,810
		Health Care—15.2%
	33,941	Aetna, Inc.		1,906,466
	12,498	C.R. Bard, Inc.		1,044,958
	49,320	Celgene Corp.*		3,255,119
	32,156	Covance, Inc.*		2,652,870
	28,210	DENTSPLY International, Inc.		1,170,151
	19,479	Gen-Probe, Inc.*		1,363,920
	60,693	Gilead Sciences, Inc.*		2,803,410

Number of Shares			Value
		Common Stocks (Continued)
	32,757	Health Net, Inc.*	$	1,756,103
	34,274	Henry Schein, Inc.*		2,053,013
	21,598	Humana, Inc.*		1,618,770
	15,938	IDEXX Laboratories, Inc.*		1,940,930
	68,781	Pediatrix Medical Group, Inc.*		4,505,155
	58,027	Respironics, Inc.*		2,904,831
	38,684	VCA Antech, Inc.*		1,781,398
				30,757,094
		Industrials—30.8%
	14,272	Alliant Techsystems, Inc.*		1,575,486
	29,918	American Standard Cos., Inc.		1,115,044
	40,785	AMETEK, Inc.		1,916,895
	42,517	C.H. Robinson Worldwide, Inc.		2,122,449
	13,938	Caterpillar, Inc.		1,039,914
	184,971	Covanta Holding Corp.*		5,014,564
	13,200	Cummins, Inc.		1,583,472
	6,862	Deere & Co.		1,062,924
	12,599	Dun & Bradstreet (The) Corp.		1,220,213
	16,039	Flowserve Corp.		1,266,439
	20,705	Foster Wheeler Ltd. (Bermuda)*		3,069,516
	58,009	General Cable Corp.*		4,176,068
	24,472	Harsco Corp.		1,483,493
	18,098	ITT Corp.		1,211,118
	78,029	J.B. Hunt Transport Services, Inc.		2,162,964
	32,191	Jacobs Engineering Group, Inc.*		2,805,446
	26,478	Kirby Corp.*		1,209,515
	16,718	Lincoln Electric Holdings, Inc.		1,207,876
	13,843	Lockheed Martin Corp.		1,523,284
	45,957	Manitowoc (The) Co., Inc.		2,263,842
	113,298	McDermott International, Inc. (Panama)*		6,917,975
	36,042	Oshkosh Truck Corp.		1,953,476
	31,433	PACCAR, Inc.		1,746,417
	16,349	Precision Castparts Corp.		2,449,244
	21,889	Roper Industries, Inc.		1,549,960
	79,821	Stericycle, Inc.*		4,655,959
	27,799	Terex Corp.*		2,063,242
	37,851	Toro (The) Co.		2,106,787
				62,473,582
		Information Technology—6.7%
	30,406	Apple, Inc.*		5,775,619
	22,199	Harris Corp.		1,344,371
	25,312	MEMC Electronic Materials, Inc.*		1,853,345
	53,069	NVIDIA Corp.*		1,877,581
	47,124	Trimble Navigation Ltd.*		1,965,071
	19,830	Varian Semiconductor Equipment Associates, Inc.*		912,577
				13,728,564
		Materials—6.6%
	49,278	Airgas, Inc.		2,487,060
	43,154	AK Steel Holding Corp.*		2,163,310

See Notes to Financial Statements.
52

Schedule of Investments (Continued)

PowerShares DWA Technical Leaders^TM Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	28,769	Albemarle Corp.	$	1,374,007
	32,852	Ball Corp.		1,628,802
	16,658	Cleveland-Cliffs, Inc.		1,593,338
	18,485	Monsanto Co.		1,804,691
	12,867	Praxair, Inc.		1,099,871
	9,118	Southern Copper Corp.		1,273,785
				13,424,864
		Telecommunication Services—5.0%
	183,513	American Tower Corp., Class A*		8,107,605
	54,587	SBA Communications Corp., Class A*		1,943,297
				10,050,902
		Utilities—6.4%
	27,293	Allegheny Energy, Inc.*		1,655,593
	25,913	Edison International		1,506,841
	29,823	Energen Corp.		1,908,672
	13,629	Entergy Corp.		1,633,708
	36,530	Equitable Resources, Inc.		2,057,370
	25,371	PG&E Corp.		1,241,403
	24,687	PPL Corp.		1,276,318
	29,454	Questar Corp.		1,681,234
				12,961,139
		Total Investments (Cost $183,661,393)—100.0%		202,799,733
		Liabilities in excess of other assets—(0.0%)		(80,814	)
		Net Assets—100.0%	$	202,718,919

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	188,843,043			93.2	%
Panama		6,917,975			3.4
Bermuda		5,769,247			2.8
Cayman Islands		1,269,468			0.6
Total investments		202,799,733			100.0
Liabilities in excess of other assets		(80,814	)		(0.0	)
Net Assets	$	202,718,919			100.0	%

See Notes to Financial Statements.
53

Statements of Assets and Liabilities

October 31, 2007 (Unaudited)

	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	$	415,398,507		$	86,095,011		$	1,050,127,226		$	146,855,398		$	135,039,101		$	212,275,970
Affiliated investments at value		—			—			—			468,638			—			—
Cash		746,999			4,188			—			—			—			70,989
Receivables:
Dividends		135,778			7,192			279,112			1,445			20,957			63,148
Capital stock sold		—			3,440,666			3,838,638			—			—			—
Expense waivers due from Adviser		—			4,184			—			—			33			—
Investments sold		—			—			3,872,051			—			1,506,119			—
Other assets		2,442			266			4,744			1,842			1,902			3,271
Total Assets		416,283,726			89,551,507			1,058,121,771			147,327,323			136,568,112			212,413,378
LIABILITIES:
Due to custodian		—			—			494,317			21,595			88,612			—
Payables:
Expense reimbursements due to Adviser		15,545			—			49,391			1,153			—			4,873
Investments purchased		—			3,440,745			3,838,678			10,297			1,336,231			—
Capital stock repurchased		—			—			3,871,892			—			—			—
Accrued advisory fees		175,091			30,494			395,748			63,016			59,757			89,366
Accrued expenses		80,147			63,620			188,981			92,740			61,802			94,827
Total Liabilities		270,783			3,534,859			8,839,007			188,801			1,546,402			189,066
NET ASSETS	$	416,012,943		$	86,016,648		$	1,049,282,764		$	147,138,522		$	135,021,710		$	212,224,312
NET ASSETS CONSIST OF:
Paid-in capital	$	350,588,097		$	75,435,236		$	651,813,145		$	157,646,451		$	147,458,261		$	204,144,806
Undistributed net investment income(loss)/distribution in excess of net investment income		(40,400	)		(181,712	)		(799,067	)		2,221,422			(133,252	)		(55,987	)
Accumulated net realized gain (loss) on investments		20,406,444			2,023,415			104,841,158			(1,267,560	)		(2,090,807	)		(19,525,213	)
Net unrealized appreciation/depreciation of investments		45,058,802			8,739,709			293,427,528			(11,461,791	)		(10,212,492	)		27,660,706
Net Assets	$	416,012,943		$	86,016,648		$	1,049,282,764		$	147,138,522		$	135,021,710		$	212,224,312
Shares outstanding (unlimited amount authorized, $001 par value)		17,400,000			2,500,000			27,100,000			5,700,000			7,700,000			11,000,000
Net asset value	$	23.91		$	34.41		$	38.72		$	25.81		$	17.54		$	19.29
Unaffiliated investments at cost	$	370,339,705		$	77,355,302		$	756,699,698		$	158,317,189		$	145,251,593		$	184,615,264
Affiliated investments at cost	$	—		$	—		$	—		$	468,638		$	—		$	—

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
ASSETS:
Unaffiliated investments at value	$	43,258,839		$	2,132,507,363	$	1,363,108,659		$	53,502,587	$	202,799,733
Affiliated investments at value		56,616			—		—			50,788		—
Cash		62,074			10,272,030		5,904,243			—		38,976
Receivables:
Dividends		12,297			1,765,357		345,908			20,309		57,236
Capital stock sold		—			15,559,668		25,196,483			—		—
Expense waivers due from Adviser		6,980			5,107		3,134			6,030		4,259
Investments sold		—			—		—			—		—
Other assets		413			19,336		10,951			282		1,130
Total Assets		43,397,219			2,160,128,861		1,394,569,378			53,579,996		202,901,334
LIABILITIES:
Due to custodian		—			—		—			81,257		—
Payables:
Expense reimbursements due to Adviser		—			—		—			—		—
Investments purchased		—			21,227,202		28,509,189			—		—
Capital stock repurchased		—			—		—			—		—
Accrued advisory fees		17,867			871,158		514,562			21,345		82,585
Accrued expenses		60,564			521,693		264,373			64,479		99,830
Total Liabilities		78,431			22,620,053		29,288,124			167,081		182,415
NET ASSETS	$	43,318,788		$	2,137,508,808	$	1,365,281,254		$	53,412,915	$	202,718,919
NET ASSETS CONSIST OF:
Paid-in capital	$	37,751,654		$	1,776,525,782	$	1,173,864,464		$	47,921,515	$	187,770,270
Undistributed net investment income(loss)/distribution in excess of net investment income		(6,240	)		1,206,631		(1,833,879	)		15,843		116,426
Accumulated net realized gain (loss) on investments		(307,147	)		83,950,494		(54,271,842	)		1,634,507		(4,306,117	)
Net unrealized appreciation/depreciation of investments		5,880,521			275,825,901		247,522,511			3,841,050		19,138,340
Net Assets	$	43,318,788		$	2,137,508,808	$	1,365,281,254		$	53,412,915	$	202,718,919
Shares outstanding (unlimited amount authorized, $001 par value)		1,400,000			95,900,000		53,900,000			1,700,000		7,300,000
Net asset value	$	30.94		$	22.29	$	25.33		$	31.42	$	27.77
Unaffiliated investments at cost	$	37,378,318		$	1,856,681,462	$	1,115,586,148		$	49,661,537	$	183,661,393
Affiliated investments at cost	$	56,616		$	—	$	—		$	50,788	$	—

55

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	PowerShares Aerospace & Defense Portfolio		PowerShares CleantechTM Portfolio			PowerShares Golden Dragon Halter USX China Portfolio			PowerShares Listed Private Equity Portfolio			PowerShares Lux Nanotech Portfolio			Value Line TimelinessTM Select Portfolio
INVESTMENT INCOME:
Unaffiliated dividend income	$	1,244,180	$	86,232		$	4,683,100		$	4,088,862		$	358,367		$	684,760
Affiliated dividend income		1,810		21			3,216			13,481			—			—
Foreign withholding taxes		—		(3,057	)		(2,631	)		—			(473	)		(14,380	)
Total Income		1,245,990		83,196			4,683,685			4,102,343			357,894			670,380
EXPENSES:
Advisory fees		738,132		108,166			1,478,871			393,606			375,414			553,833
Sub-licensing		88,576		16,225			295,773			78,721			75,083			110,767
Administration & Accounting fees		44,626		41,408			76,570			39,419			42,912			42,912
Printing		25,592		2,243			47,932			17,035			18,785			28,609
Custodian & transfer agent fees		9,566		3,583			15,829			5,621			5,628			7,939
Audit		8,319		8,319			8,319			8,319			8,319			8,319
Trustees		7,244		3,290			12,583			5,688			5,257			7,181
Listing fee and expenses		5,193		5,057			5,356			5,158			5,171			5,239
Legal		3,513		327			7,092			2,443			2,729			4,334
Registration & filings		—		1,799			—			10,579			—			—
Offering costs		—		13,432			—			18,127			—			—
Other expenses		6,892		3,994			8,214			4,959			5,126			7,246
Total Expenses		937,653		207,843			1,956,539			589,675			544,424			776,379
Net expenses reimbursed to the Adviser under the Expense Agreement		36,681		—			113,882			—			—			—
Less fees waived/reimbursed:
Advisory		—		(48,387	)		—			(20,499	)		(18,844	)		(1,012	)
Net Expenses		974,334		159,456			2,070,421			569,176			525,580			775,367
Net Investment Income (Loss)		271,656		(76,260	)		2,613,264			3,533,167			(167,686	)		(104,987	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		44,967		(403,252	)		(1,079,066	)		(5,122,363	)		935,814			(14,621,667	)
In-kind redemptions		23,797,973		3,579,260			116,548,772			4,835,541			4,864,793			30,296,186
Net realized gain (loss)		23,842,940		3,176,008			115,469,706			(286,822	)		5,800,607			15,674,519
Net change in unrealized appreciation/depreciation on investments		24,379,296		7,734,046			260,359,581			(16,215,501	)		(5,628,481	)		3,776,059
Net realized and unrealized gain (loss) on investments		48,222,236		10,910,054			375,829,287			(16,502,323	)		172,126			19,450,578
Net increase (decrease) in net assets resulting from operations	$	48,493,892	$	10,833,794		$	378,442,551		$	(12,969,156	)	$	4,440		$	19,345,591

See Notes to Financial Statements.
56

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	153,588		$	11,658,536		$	1,938,513		$	214,320		$	414,475
Affiliated dividend income		1,349			10,444			—			1,130			975
Foreign withholding taxes		(97	)		(664,452	)		(8,456	)		(3,081	)		—
Total Income		154,840			11,004,528			1,930,057			212,369			415,450
EXPENSES:
Advisory fees		94,472			4,755,456			2,655,873			105,139			362,298
Sub-licensing		18,894			713,320			531,174			21,028			72,460
Administration & Accounting fees		43,268			274,023			150,678			41,498			42,545
Printing		3,864			186,419			116,441			2,675			8,132
Custodian & transfer agent fees		3,595			50,519			28,960			3,578			4,835
Audit		8,319			8,319			8,319			8,319			8,319
Trustees		3,278			34,666			19,904			3,342			4,727
Listing fee and expenses		5,068			6,328			5,793			5,060			2,506
Legal		557			28,694			17,233			390			10,328
Registration & filings		1,627			—			—			1,667			4,773
Offering costs		9,455			—			—			14,563			5,042
Other expenses		4,089			15,579			10,218			4,048			4,451
Total Expenses		196,486			6,073,323			3,544,593			211,307			530,416
Net expenses reimbursed to the Adviser under the Expense Agreement		—			214,854			83,654			—			—
Less fees waived/reimbursed:
Advisory		(54,771	)		—			—			(49,545	)		(18,157	)
Net Expenses		141,715			6,288,177			3,628,247			161,762			512,259
Net Investment Income (Loss)		13,125			4,716,351			(1,698,190	)		50,607			(96,809	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(3,418,911	)		(5,832,558	)		(22,621,988	)		(29,927	)		(5,040,508	)
In-kind redemptions		3,494,993			123,080,916			102,272,712			1,944,322			853,634
Net realized gain (loss)		76,082			117,248,358			79,650,724			1,914,395			(4,186,874	)
Net change in unrealized appreciation/depreciation on investments		4,141,585			152,072,495			219,051,994			2,003,787			17,149,155
Net realized and unrealized gain (loss) on investments		4,217,667			269,320,853			298,702,718			3,918,182			12,962,281
Net increase (decrease) in net assets resulting from operations	$	4,230,792		$	274,037,204		$	297,004,528		$	3,968,789		$	12,865,472

57

Statements of Changes in Net Assets

	PowerShares Aerospace & Defense Portfolio						PowerShares CleantechTM Portfolio						PowerShares Golden Dragon Halter USX China Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For The Period October 24, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	271,656		$	329,993		$	(76,260	)	$	(39,832	)	$	2,613,264		$	3,172,560
Net realized gain (loss) on investments		23,842,940			8,592,051			3,176,008			1,087,661			115,469,706			48,676,384
Net change in unrealized appreciation/depreciation of investments		24,379,296			12,375,809			7,734,046			1,005,663			260,359,581			13,246,066
Net increase (decrease) in net assets resulting from operations		48,493,892			21,297,853			10,833,794			2,053,492			378,442,551			65,095,010
Undistributed net investment income (loss) included in the price of units issued and redeemed		53,654			13,857			(105,452	)		6,280			79,914			111,037
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(365,710	)		(362,663	)		—			—			(4,080,354	)		(3,191,113	)
Tax return of capital		—			(25,620	)		—			—			—			—
Total distributions to shareholders		(365,710	)		(388,283	)		—			—			(4,080,354	)		(3,191,113	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		266,124,506			149,636,041			66,237,027			48,140,438			603,400,394			286,475,511
Value of shares repurchased		(100,125,866	)		(53,795,021	)		(12,716,993	)		(28,531,110	)		(322,800,198	)		(192,389,311	)
Net income equalization		(53,654	)		(13,857	)		105,452			(6,280	)		(79,914	)		(111,037	)
Net increase (decrease) in net assets resulting from shares transactions		165,944,986			95,827,163			53,625,486			19,603,048			280,520,282			93,975,163
Increase (Decrease) in Net Assets		214,126,822			116,750,590			64,353,828			21,662,820			654,962,393			155,990,097
NET ASSETS:
Beginning of period		201,886,121			85,135,531			21,662,820			—			394,320,371			238,330,274
End of period	$	416,012,943		$	201,886,121		$	86,016,648		$	21,662,820		$	1,049,282,764		$	394,320,371
Undistributed net investment income (loss)/distribution in excess of net investment income at end of period	$	(40,400	)	$	—		$	(181,712	)	$	—		$	(799,067	)	$	588,109
CHANGES IN SHARES OUTSTANDING:
Shares sold		11,800,000			8,100,000			2,100,000			1,900,000			20,100,000			14,400,000
Shares repurchased		(4,400,000	)		(3,000,000	)		(400,000	)		(1,100,000	)		(11,400,000	)		(10,100,000	)
Shares outstanding, beginning of period		10,000,000			4,900,000			800,000			—			18,400,000			14,100,000
Shares outstanding, end of period		17,400,000			10,000,000			2,500,000			800,000			27,100,000			18,400,000

*  Commencement of Investment Operations

See Notes to Financial Statements.
58

	PowerShares Listed Private Equity Portfolio						PowerShares Lux Nanotech Portfolio						PowerShares Value Line TimelinessTM Select Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For The Period October 24, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	3,533,167		$	1,314,594		$	(167,686	)	$	(119,784	)	$	(104,987	)	$	(115,400	)
Net realized gain (loss) on investments		(286,822	)		1,140,822			5,800,607			2,437,702			15,674,519			(6,066,601	)
Net change in unrealized appreciation/depreciation of investments		(16,215,501	)		4,753,710			(5,628,481	)		(12,992,856	)		3,776,059			13,228,112
Net increase (decrease) in net assets resulting from operations		(12,969,156	)		7,209,126			4,440			(10,674,938	)		19,345,591			7,046,111
Undistributed net investment income (loss) included in the price of units issued and redeemed		13,075			242,577			34,433			(40,198	)		49,000			(29,370	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(1,949,682	)		(689,732	)		—			—			—			—
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(1,949,682	)		(689,732	)		—			—			—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		70,897,079			162,455,219			17,872,338			91,815,890			223,559,111			461,154,401
Value of shares repurchased		(58,918,077	)		(18,896,255	)		(41,907,388	)		(34,505,044	)		(303,287,969	)		(378,402,470	)
Net income equalization		(13,075	)		(242,577	)		(34,433	)		40,198			(49,000	)		29,370
Net increase (decrease) in net assets resulting from shares transactions		11,965,927			143,316,387			(24,069,483	)		57,351,044			(79,777,858	)		82,781,301
Increase (Decrease) in Net Assets		(2,939,836	)		150,078,358			(24,030,610	)		46,635,908			(60,383,267	)		89,798,042
NET ASSETS:
Beginning of period		150,078,358			—			159,052,320			112,416,412			272,607,579			182,809,537
End of period	$	147,138,522		$	150,078,358		$	135,021,710		$	159,052,320		$	212,224,312		$	272,607,579
Undistributed net investment income (loss)/distribution in excess of net investment income at end of period	$	2,221,422		$	624,862		$	(133,252	)	$	—		$	(55,987	)	$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		2,600,000			6,100,000			1,000,000			5,200,000			12,800,000			29,200,000
Shares repurchased		(2,300,000	)		(700,000	)		(2,400,000	)		(2,000,000	)		(17,300,000	)		(24,400,000	)
Shares outstanding, beginning of period		5,400,000			—			9,100,000			5,900,000			15,500,000			10,700,000
Shares outstanding, end of period		5,700,000			5,400,000			7,700,000			9,100,000			11,000,000			15,500,000

59

Statements of Changes in Net Assets (Continued)

	PowerShares Value Line Industry Rotation Portfolio						PowerShares Water Resources Portfolio						PowerShares WilderHill Clean Energy Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For The Period December 1, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	13,125		$	2,617		$	4,716,351		$	11,614,106		$	(1,698,190	)	$	1,691,001
Net realized gain (loss) on investments		76,082			337,461			117,248,358			17,395,002			79,650,724			(57,640,921	)
Net change in unrealized appreciation/ depreciation of investments		4,141,585			1,738,936			152,072,495			62,772,486			219,051,994			(51,974,247	)
Net increase (decrease) in net assets resulting from operations		4,230,792			2,079,014			274,037,204			91,781,594			297,004,528			(107,924,167	)
Undistributed net investment income (loss) included in the price of units issued and redeemed		1,285			2,011			200,195			1,052,528			(135,689	)		188,257
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(20,650	)		(2,669	)		(3,862,276	)		(11,901,149	)		—			(1,691,001	)
Tax return of capital		—			(4,445	)		—			—			—			(160,324	)
Total distributions to shareholders		(20,650	)		(7,114	)		(3,862,276	)		(11,901,149	)		—			(1,851,325	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		47,752,632			39,530,660			712,267,814			875,926,807			507,380,009			602,781,817
Value of shares repurchased		(42,293,805	)		(7,952,741	)		(451,715,617	)		(340,233,615	)		(353,448,076	)		(301,601,160	)
Net income equalization		(1,285	)		(2,011	)		(200,195	)		(1,052,528	)		135,689			(188,257	)
Net increase (decrease) in net assets resulting from shares transactions		5,457,542			31,575,908			260,352,002			534,640,664			154,067,622			300,992,400
Increase (Decrease) in Net Assets		9,668,969			33,649,819			530,727,125			615,573,637			450,936,461			191,405,165
NET ASSETS:
Beginning of period		33,649,819			—			1,606,781,683			991,208,046			914,344,793			722,939,628
End of period	$	43,318,788		$	33,649,819		$	2,137,508,808		$	1,606,781,683		$	1,365,281,254		$	914,344,793
Undistributed net investment income/distribution in excess of net investment income at end of period	$	(6,240	)	$	—		$	1,206,631		$	152,360		$	(1,833,879	)	$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,700,000			1,500,000			33,400,000			48,400,000			23,100,000			31,600,000
Shares repurchased		(1,500,000	)		(300,000	)		(21,200,000	)		(19,000,000	)		(16,600,000	)		(16,500,000	)
Shares outstanding, beginning of period		1,200,000			—			83,700,000			54,300,000			47,400,000			32,300,000
Shares outstanding, end of period		1,400,000			1,200,000			95,900,000			83,700,000			53,900,000			47,400,000

*  Commencement of Investment Operations

See Notes to Financial Statements.
60

	PowerShares WilderHill Progressive Energy Portfolio						PowerShares DWA Technical LeadersTM Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For The Period October 24, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For The Period March 1, 2007* Through April 30, 2007
OPERATIONS:
Net investment income (loss)	$	50,607		$	60,408		$	(96,809	)	$	105,514
Net realized gain (loss) on investments		1,914,395			1,647,951			(4,186,874	)		66,278
Net change in unrealized appreciation/ depreciation of investments		2,003,787			1,837,263			17,149,155			1,989,185
Net increase (decrease) in net assets resulting from operations		3,968,789			3,545,622			12,865,472			2,160,977
Undistributed net investment income (loss) included in the price of units issued and redeemed		26,550			(2,980	)		270,477			177,364
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(107,724	)		(14,162	)		(162,756	)		—
Tax return of capital		—			—			—			—
Total distributions to shareholders		(107,724	)		(14,162	)		(162,756	)		—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		38,580,370			40,867,799			154,840,612			92,402,327
Value of shares repurchased		(11,933,177	)		(21,494,602	)		(56,914,705	)		(2,473,008	)
Net income equalization		(26,550	)		2,980			(270,477	)		(177,364	)
Net increase (decrease) in net assets resulting from shares transactions		26,620,643			19,376,177			97,655,430			89,751,955
Increase (Decrease) in Net Assets		30,508,258			22,904,657			110,628,623			92,090,296
NET ASSETS:
Beginning of period		22,904,657			—			92,090,296			—
End of period	$	53,412,915		$	22,904,657		$	202,718,919		$	92,090,296
Undistributed net investment income/distribution in excess of net investment income at end of period	$	15,843		$	46,410		$	116,426		$	105,514
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,300,000			1,600,000			5,900,000			3,700,000
Shares repurchased		(400,000	)		(800,000	)		(2,200,000	)		(100,000	)
Shares outstanding, beginning of period		800,000			—			3,600,000			—
Shares outstanding, end of period		1,700,000			800,000			7,300,000			3,600,000

61

Financial Highlights

PowerShares Aerospace & Defense Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	20.19		$	17.37		$	14.91
Net investment income**		0.02			0.05			0.03
Net realized and unrealized gain on investments		3.73			2.83			2.45
Total from operations		3.75			2.88			2.48
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—	(a)		—
Distributions to shareholders from:
Net investment income		(0.03	)		(0.06	)		(0.02	)
Tax return of capital		—			—	(a)		—
Total distributions		(0.03	)		(0.06	)		(0.02	)
Net asset value at end of period	$	23.91		$	20.19		$	17.37
TOTAL RETURN***		18.58	%		16.66	%		16.66	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	416,013		$	201,886		$	85,136
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.66	%†		0.66	%		0.68	%†
Expenses, prior to waivers and reimbursements		0.64	%†(b)		0.77	%		0.80	%†
Net investment income, net of waivers and reimbursements		0.18	%†		0.28	%		0.31	%†
Portfolio turnover rate ††		3	%		16	%		1	%

PowerShares Cleantech^TM Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 24, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	27.08		$	24.70
Net investment loss**		(0.05	)		(0.04	)
Net realized and unrealized gain on investments		7.45			2.41
Total from operations		7.40			2.37
Undistributed net investment income (loss) included in price of units issued and redeemed**		(0.07	)		0.01
Net asset value at end of period	$	34.41		$	27.08
TOTAL RETURN***		27.07	%		9.64	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	86,017		$	21,663
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†		0.71	%†
Expenses, prior to waivers		0.96	%†		1.06	%†
Net investment loss, net of waivers		(0.35	)%†		(0.29	)%†
Portfolio turnover rate ††		4	%		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.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
62

Financial Highlights (Continued)

PowerShares Golden Dragon Halter USX China Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period December 9, 2004* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	21.43		$	16.90		$	13.00		$	14.55
Net investment income**		0.12			0.20			0.17			0.06
Net realized and unrealized gain (loss) on investments		17.38			4.53			3.89			(1.61	)
Total from operations		17.50			4.73			4.06			(1.55	)
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.01			—			—
Distributions to shareholders from:
Net investment income		(0.21	)		(0.21	)		(0.16	)		—
Net asset value at end of period	$	38.72		$	21.43		$	16.90		$	13.00
TOTAL RETURN***		82.17	%		28.53	%		31.52	%		(10.68	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	1,049,283		$	394,320		$	238,330		$	49,384
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.70	%†		0.70	%		0.71	%		0.70	%†
Expenses, prior to waivers and reimbursements		0.66	%†(b)		0.72	%(b)		0.88	%		0.97	%†
Net investment income, net of waivers and reimbursements		0.88	%†		1.06	%		1.18	%		1.24	%†
Portfolio turnover rate ††		3	%		17	%		21	%		9	%

PowerShares Listed Private Equity Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 24, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	27.79		$	25.09
Net investment income**		0.60			0.44
Net realized and unrealized gain (loss) on investments		(2.25	)		2.52
Total from operations		(1.65	)		2.96
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.08
Distributions to shareholders from:
Net investment income		(0.33	)		(0.34	)
Net asset value at end of period	$	25.81		$	27.79
TOTAL RETURN***		(5.99	)%		12.18	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	147,139		$	150,078
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.72	%†		0.71	%†
Expenses, prior to waivers and reimbursements		0.75	%†(c)		0.82	%†
Net investment income, net of waivers and reimbursements		4.49	%†		3.38	%†
Portfolio turnover rate ††		13	%		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.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% and 0.01% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
63

Financial Highlights (Continued)

PowerShares Lux Nanotech Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	17.48		$	19.05		$	15.32
Net investment income (loss)**		(0.02	)		(0.02	)		0.02
Net realized and unrealized gain (loss) on investments		0.08			(1.54	)		3.79
Total from operations		0.06			(1.56	)		3.81
Undistributed net investment income (loss) included in price of units issued and redeemed**		—	(a)		(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	$	17.54		$	17.48		$	19.05
TOTAL RETURN***		0.34	%		(8.24	)%		24.94	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	135,022		$	159,052		$	112,416
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.70	%†		0.71	%		0.73	%†
Expenses, prior to waivers and reimbursements		0.73	%†(b)		0.79	%		0.83	%†
Net investment income (loss), net of waivers and reimbursements		(0.22	)%†		(0.09	)%		0.17	%†
Portfolio turnover rate ††		20	%		16	%		6	%

PowerShares Value Line Timeliness^TM Select Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	17.59		$	17.09		$	15.52
Net investment loss**		(0.01	)		(0.01	)		(0.02	)
Net realized and unrealized gain on investments		1.71			0.51			1.59
Total from operations		1.70			0.50			1.57
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—	(a)		—
Net asset value at end of period	$	19.29		$	17.59		$	17.09
TOTAL RETURN***		9.66	%		2.93	%		10.12	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	212,224		$	272,608		$	182,810
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.70	%†		0.70	%		0.71	%†
Expenses, prior to waivers and reimbursements		0.70	%†(c)		0.75	%(c)		0.78	%†
Net investment loss, net of waivers and reimbursements		(0.09	)%†		(0.06	)%		(0.30	)%†
Portfolio turnover rate ††		61	%		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.

(a)  Amount represents less than $0.005.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007, and for the year ended April 30, 2007.

See Notes to Financial Statements.
64

Financial Highlights (Continued)

PowerShares Value Line Industry Rotation Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period December 1, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.04		$	25.19
Net investment income**		0.01			—	(a)
Net realized and unrealized gain on investments		2.90			2.86
Total from operations		2.91			2.86
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—	(a)
Distributions to shareholders from:
Net investment income		(0.01	)		—	(a)
Tax return of capital		—			(0.01	)
Total distributions		(0.01	)		(0.01	)
Net asset value at end of period	$	30.94		$	28.04
TOTAL RETURN***		10.40	%		11.36	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	43,319		$	33,650
Ratio to average net assets of:
Expenses, net of waivers		0.75	%†		0.75	%†
Expenses, prior to waivers		1.04	%†		1.21	%†
Net investment income, net of waivers		0.07	%†		0.03	%†
Portfolio turnover rate ††		53	%		13	%

PowerShares Water Resources Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	19.20		$	18.25		$	15.32
Net investment income**		0.05			0.17			0.02
Net realized and unrealized gain on investments		3.08			0.93			2.94
Total from operations		3.13			1.10			2.96
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.02			—
Distributions to shareholders from:
Net investment income		(0.04	)		(0.17	)		(0.03	)
Net asset value at end of period	$	22.29		$	19.20		$	18.25
TOTAL RETURN***		16.34	%		6.26	%		19.38	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	2,137,509		$	1,606,782		$	991,208
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.66	%†		0.66	%		0.67	%†
Expenses, prior to waivers and reimbursements		0.64	%†(b)		0.67	%(b)		0.70	%†
Net investment income, net of waivers and reimbursements		0.50	%†		0.96	%		0.40	%†
Portfolio turnover rate ††		12	%		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.

(a)  Amount represents less than $0.005.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% and less than 0.01% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

See Notes to Financial Statements.
65

Financial Highlights (Continued)

PowerShares WilderHill Clean Energy Portfolio

	Six Months Ended October 31, 2007			Year Ended April 30,						For the Period March 3, 2005* Through
	(Unaudited)			2007			2006			April 30, 2005
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	19.29		$	22.38		$	12.86		$	15.61
Net investment income (loss)**		(0.03	)		0.04			(0.07	)		(0.01	)
Net realized and unrealized gain (loss) on investments		6.07			(3.09	)		9.59			(2.74	)
Total from operations		6.04			(3.05	)		9.52			(2.75	)
Undistributed net investment income (loss) included in price of units issued and redeemed**		—	(a)		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	$	25.33		$	19.29		$	22.38		$	12.86
TOTAL RETURN***		31.31	%		(13.58	)%		74.03	%		(17.59	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	1,365,281		$	914,345		$	722,940		$	27,012
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.68	%†		0.70	%		0.71	%		0.70	%†
Expenses, prior to waivers and reimbursements		0.67	%†(b)		0.69	%(b)		0.75	%		1.35	%†
Net investment income (loss), net of waivers and reimbursements		(0.32	)%†		0.24	%†††		(0.39	)%		(0.31	)%†
Portfolio turnover rate ††		10	%		41	%		6	%		9	%

PowerShares WilderHill Progressive Energy Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 24, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.63		$	24.91
Net investment income**		0.04			0.06
Net realized and unrealized gain on investments		2.81			3.68
Total from operations		2.85			3.74
Undistributed net investment income (loss) included in price of units issued and redeemed**		0.02			—	(a)
Distributions to shareholders from:
Net investment income		(0.08	)		(0.02	)
Net asset value at end of period	$	31.42		$	28.63
TOTAL RETURN***		10.05	%		15.01	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	53,413		$	22,905
Ratio to average net assets of:
Expenses, net of waivers		0.77	%†		0.74	%†
Expenses, prior to waivers		1.00	%†		1.09	%†
Net investment income, net of waivers		0.24	%†		0.45	%†
Portfolio turnover rate ††		12	%		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.

†††  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.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% and 0.02% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

See Notes to Financial Statements.
66

Financial Highlights (Continued)

PowerShares DWA Technical Leaders^TM Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period March 1, 2007* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	25.58		$	23.95
Net investment income (loss)**		(0.02	)		0.04
Net realized and unrealized gain on investments		2.19			1.52
Total from operations		2.17			1.56
Undistributed net investment income included in price of units issued and redeemed**		0.05			0.07
Distributions to shareholders from:
Net investment income		(0.03	)		—
Net asset value at end of period	$	27.77		$	25.58
TOTAL RETURN***		8.66	%		6.81	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	202,719		$	92,090
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.71	%†		0.72	%†
Expenses, prior to waivers and reimbursements		0.73	%†(a)		1.78	%†
Net investment income (loss), net of waivers and reimbursements†††		(0.13	)%†		1.50	%†
Portfolio turnover rate ††		37	%		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.

(a)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
67

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of seventy portfolios. This report includes the following portfolios:

PowerShares Aerospace & Defense Portfolio	"Aerospace & Defense Portfolio"
PowerShares CleantechTM Portfolio	"CleantechTM 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 TimelinessTM Select Portfolio	"Value Line TimelinessTM 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 LeadersTM Portfolio	"DWA Technical LeadersTM Portfolio"

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 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
Aerospace & Defense Portfolio	SPADETM Defense Index
CleantechTM Portfolio	CleantechTM Index
Golden Dragon Halter USX China Portfolio	Halter 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	WilderHill Progressive Energy Index
DWA Technical LeadersTM Portfolio	Dorsey Wright Technical LeadersTM Index

68

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

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

69

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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, 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, sub-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 Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the six months ended October 31, 2007, the Adviser waived the following fees:

	Fees Waived
CleantechTM Portfolio	$	48,387
Listed Private Equity Portfolio		20,499
Lux Nanotech Portfolio		18,844
Value Line TimelinessTM Select Portfolio		1,012
Value Line Industry Rotation Portfolio		54,771
WilderHill Progressive Energy Portfolio		49,545
DWA Technical LeadersTM Portfolio		18,157

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.

70

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

During the six months ended October 31, 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
Aerospace & Defense Portfolio	$	(1,987	)	$	38,668	$	36,681
CleantechTM Portfolio		(48,387	)		—		(48,387	)
Golden Dragon Halter USX China Portfolio		—			113,882		113,882
Listed Private Equity Portfolio		(21,885	)		1,386		(20,499	)
Lux Nanotech Portfolio		(20,531	)		1,687		(18,844	)
Value Line TimelinessTM Select Portfolio		(11,847	)		10,835		(1,012	)
Value Line Industry Rotation Portfolio		(54,771	)		—		(54,771	)
Water Resources Portfolio		(10,214	)		225,068		214,854
WilderHill Clean Energy Portfolio		(6,268	)		89,922		83,654
WilderHill Progressive Energy Portfolio		(49,545	)		—		(49,545	)
DWA Technical LeadersTM Portfolio		(21,266	)		3,109		(18,157	)

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

The amounts subject to reimbursement to the Adviser at October 31, 2007 are as follows:

	Reimbursements available during the fiscal years ended:
	04/30/08		04/30/09		04/30/10
Aerospace & Defense Portfolio	$	116,816	$	116,816	$	116,816
CleantechTM Portfolio		96,551		96,551		96,551
Golden Dragon Halter USX China Portfolio		131,817		131,817		85,395
Listed Private Equity Portfolio		63,121		63,121		63,121
Lux Nanotech Portfolio		157,962		157,962		126,569
Value Line TimelinessTM Select Portfolio		116,516		116,516		98,330
Value Line Industry Rotation Portfolio		94,872		94,872		94,872
WilderHill Progressive Energy Portfolio		96,913		96,913		96,913
DWA Technical LeadersTM Portfolio		92,636		92,636		92,636

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.

71

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.
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 sub-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. Effective July 2, 2007 The Bank of New York became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

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 may invest in the Liquid Assets Portfolio ("LAP") of the Short-Term Investments. LAP is advised by AIM Advisors, Inc., an affiliate of the Adviser.

72

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 5. Federal Income Tax

At October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation
Aerospace & Defense Portfolio	$	370,339,705	$	45,058,802		$	46,815,086	$	(1,756,284	)
CleantechTM Portfolio		77,355,302		8,739,709			10,501,943		(1,762,234	)
Golden Dragon Halter USX China Portfolio		756,699,698		293,427,528			306,515,072		(13,087,544	)
Listed Private Equity Portfolio(1)		158,785,827		(11,461,791	)		6,750,976		(18,212,767	)
Lux Nanotech Portfolio		145,251,593		(10,212,492	)		14,642,311		(24,854,803	)
Value Line TimelinessTM Select Portfolio		184,615,264		27,660,706			31,661,552		(4,000,846	)
Value Line Industry Rotation Portfolio		37,434,934		5,880,521			6,538,986		(658,465	)
Water Resources Portfolio		1,856,681,462		275,825,901			346,036,208		(70,210,307	)
WilderHill Clean Energy Portfolio		1,115,586,148		247,522,511			324,818,613		(77,296,102	)
WilderHill Progressive Energy Portfolio		49,712,325		3,841,050			6,196,762		(2,355,712	)
DWA Technical LeadersTM Portfolio		183,661,393		19,138,340			20,621,600		(1,483,260	)

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(1)		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

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(1)		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

73

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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(1)		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

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

74

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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(1)		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, 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(1)		(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

⁽¹⁾ First tax year-end was April 30, 2007. Tax year-end will be changed to February 29, 2008.

75

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 6. Investment Transactions

For the six months ended October 31, 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	$	8,914,197	$	7,681,511
CleantechTM Portfolio		1,796,810		2,126,528
Golden Dragon Halter USX China Portfolio		25,027,742		16,533,274
Listed Private Equity Portfolio		24,111,588		19,683,124
Lux Nanotech Portfolio		30,199,695		30,659,363
Value Line TimelinessTM Select Portfolio		135,515,813		138,775,826
Value Line Industry Rotation Portfolio		19,983,684		20,555,464
Water Resources Portfolio		296,009,893		232,706,839
WilderHill Clean Energy Portfolio		136,196,078		111,934,670
WilderHill Progressive Energy Portfolio		4,771,050		4,830,070
DWA Technical LeadersTM Portfolio		54,620,326		53,576,175

For the six months ended October 31, 2007, in-kind transactions were as follows:

	Purchases		Sales
Aerospace & Defense Portfolio	$	264,420,102	$	100,432,173
CleantechTM Portfolio		65,401,938		11,702,160
Golden Dragon Halter USX China Portfolio		589,549,187		316,925,448
Listed Private Equity Portfolio		68,173,304		58,979,590
Lux Nanotech Portfolio		18,086,368		41,746,730
Value Line TimelinessTM Select Portfolio		221,681,263		298,347,347
Value Line Industry Rotation Portfolio		49,263,803		43,259,251
Water Resources Portfolio		627,885,250		431,344,497
WilderHill Clean Energy Portfolio		461,378,971		334,633,865
WilderHill Progressive Energy Portfolio		37,131,562		10,444,896
DWA Technical LeadersTM Portfolio		153,890,477		56,979,570

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.

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferral Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the

76

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Only authorized participants are permitted to create or redeem from the Funds. 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 Pronouncement

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.

Note 12. Subsequent Event

Effective December 31, 2007, the DWA Technical Leaders^TM Portfolio will transfer its primary listing to the NYSE Arca, Inc. and will not be listed on the New York Stock Exchange.

77

Supplemental Information (Unaudited)

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)		89	None
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006- February 2007); 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)		89	None

  *  This is the date the Trustee began serving 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 19 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
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)		89	None
Philip M. Nussbaum (46) 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

79

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
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007- Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006- August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995- February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

80

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)		89	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 19 Portfolios advised by the Adviser.

81

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 (53) 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 (42) 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 (45) 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.

82

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 Semi-Annual Report.
83

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 Semi-Annual Report.
84

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 Semi-Annual Report.
85

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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86

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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87

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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88

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 Semi-Annual Report.
89

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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the fund's independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-4

2007 Semi-Annual Report to Shareholders

31 October 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	50
Notes to Financial Statements	55
Supplemental Information	64

To My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management – Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500^® Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potential recession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25 to 4.75%, the first cut in four years, and the discount rate moved from 5.75 to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

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

For the six months ending October 31, 2007, the Fund has shown strong performance returning 16.01%. The portfolio outperformed the overall S&P Materials Index which had a positive return of 14.70%. Chemicals along with metals & mining led the way with the largest percent of contribution to return for the Fund. Mosaic, Monsanto, CF Industries Holdings and Terra Industries within chemicals along with Freeport-McMoRan Copper & Gold and Southern Copper in metals & mining were the largest contributors to the Fund's performance. Headwaters Inc. within construction materials and Spartech and Cabot in chemicals were the laggards during the period.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Chemicals	56.4
Iron/Steel	14.8
Packaging & Containers	8.8
Mining	7.3
Forest Products & Paper	7.3
Micellaneous Manufacturing	1.5
Environmental Control	1.4
Metal Fabricate/Hardware	1.2
Energy-Alternate Sources	1.1
Money Market	0.1
Other	0.1

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	38.9
Small-Cap Value	21.1
Large-Cap Growth	17.8
Mid-Cap Growth	9.9
Large-Cap Value	9.6
Small-Cap Growth	2.7

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Mosaic (The Co.)	3.7
Monsanto Co.	3.1
Freeport-McMoRan Copper & Gold, Inc., Class B	3.0
Southern Copper Corp.	3.0
Nucor Corp.	2.6
United States Steel Corp.	2.6
Ecolab, Inc.	2.5
Praxair, Inc.	2.5
Owens-Illinois, Inc.	2.5
Air Products & Chemicals, Inc.	2.4
Total	27.9

4

Manager's Analysis (Continued)

PowerShares Dynamic Basic Materials Sector Portfolio (ticker: PYZ)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Basic Materials Sector IntellidexSM Index		16.48		41.16		43.22		46.02
S&P Materials Index		14.70		34.10		36.21		38.49
Dow Jones Basic Materials Index		18.53		37.99		39.92		42.48

Fund

NAV Return	16.01	40.22	42.03	44.65
Share Price Return	15.87	40.18	42.06	44.68

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 1.77%. In the Financial Highlights section of this Semi-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 1.09%. 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, 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 S&P Materials Index and the Dow Jones Basic Materials Index are unmanaged indices used as measurements of changes in stock market conditions based on the average performance of approximately 29 and 90 common stocks, respectively.

† Average annualized.

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

For the six months ended October 31, 2007 the Fund was down 4.81% relative to the S&P Consumer Discretionary Index which was down 5.19%. The Fund primarily benefited from superior stock selection. Avoiding Comcast and Home Depot and investing in DeVry, Gemstar, Blue Nile, and Tempur-Pedic boosted the Fund's relative performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Retail	22.8
Apparel	11.4
Auto Parts & Equipment	10.4
Commercial Services	9.4
Media	9.2
Entertainment	4.2
Household Products/Wares	4.1
Hand/Machine Tools	4.0
Advertising	3.6
Home Furnishings	3.6
Housewares	2.7
Distribution/Wholesale	2.4
Leisure Time	2.3
Chemicals	2.2
Airlines	1.4
Electronics	1.4
Building Materials	1.3
Lodging	1.3
Textiles	1.3
Internet	0.7
Money Market	0.5
Other	(0.2	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	38.1
Mid-Cap Growth	21.3
Small-Cap Value	18.7
Large-Cap Growth	12.8
Large-Cap Value	5.4
Small-Cap Growth	3.7

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Apollo Group, Inc., Class A	3.3
Yum! Brands, Inc.	3.0
NIKE, Inc., Class B	2.8
Johnson Controls, Inc.	2.8
International Game Technology	2.8
DIRECTV Group (The), Inc.	2.7
Newell Rubbermaid, Inc.	2.7
VF Corp.	2.6
Walt Disney (The) Co.	2.5
AutoZone, Inc.	2.5
Total	27.7

6

Manager's Analysis (Continued)

PowerShares Dynamic Consumer Discretionary Sector Portfolio (ticker: PEZ)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Consumer Discretionary Sector IntellidexSM Index		-4.47		6.23		8.02		8.47
S&P Consumer Discretionary Index		-5.19		-0.07		1.17		1.23
Dow Jones Consumer Services Index		-2.50		3.19		4.26		4.49

Fund

NAV Return	-4.81	5.51	7.27	7.67
Share Price Return	-4.92	5.51	7.24	7.63

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 1.92%. In the Financial Highlights section of this Semi-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 1.32%. 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, 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 S&P Consumer Discretionary Index and the Dow Jones Consumer Services Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 88 and 250 common stocks, respectively.

† Average annualized.

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

For the six months ending October 31, 2007, the Fund had a positive performance of 1.13% for the period. Since the Fund's inception in October 12, 2006, it has a cumulative return of 13.96%. The portfolio underperformed the S&P Consumer Staples Index which returned 6.03% for the period. Beverages and household products led the way with the largest percent of contribution to return. Hansen Natural, PepsiAmericas Inc. and Coca-Cola were the leaders in beverages while Fresh Del Monte Produce was the leader in food products. Seaboard, Dean Foods and Tyson Foods, all food product companies, were the laggards and contributed negatively to the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Food	36.4
Beverages	17.5
Retail	11.3
Cosmetics/Personal Care	11.0
Agriculture	10.7
Household Products/Wares	7.9
Phamaceuticals	2.7
Electrical Components & Equipment	1.3
Miscellaneous Manufacturing	1.3
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	29.7
Large-Cap Value	25.0
Small-Cap Value	21.4
Large-Cap Growth	15.0
Mid-Cap Growth	4.6
Small-Cap Growth	4.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Colgate-Palmolive Co.	2.7
Coca-Cola (The) Co.	2.7
Kroger (The) Co.	2.6
Costco Wholesale Corp.	2.6
PepsiCo, Inc.	2.6
Procter & Gamble (The) Co.	2.5
Wm. Wrigley Jr. Co.	2.5
Altria Group, Inc.	2.5
Anheuser-Busch Cos., Inc.	2.5
Wal-Mart Stores, Inc.	2.5
Total	25.7

8

Manager's Analysis (Continued)

PowerShares Dynamic Consumer Staples Sector Portfolio (ticker: PSL)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Consumer Staples Sector IntellidexSM Index		1.52		13.95		14.01		14.82
S&P Consumer Staples Index		6.03		13.65		15.15		16.03
Dow Jones Consumer Goods Index		4.01		12.18		13.49		14.26

Fund

NAV Return	1.13	13.11	13.23	13.96
Share Price Return	1.02	13.18	13.17	13.90

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 2.01%. In the Financial Highlights section of this Semi-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 1.27%. 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, 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 S&P Consumer Staples Index and the Dow Jones Consumer Goods Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 39 and 160 common stocks, respectively.

† Average annualized.

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

For the six months ended October 31, 2007 the Fund was up 13.04% relative to the S&P Energy Index which was up 21.06%. The Fund was hurt by overweighting mid and small cap which lagged the larger energy companies. The Fund allocated 20% between gas utilities and multi-utilities which have trailed other energy companies. Oil, gas and consumable fuels were the best performing companies for the period contributing over 9% to the Fund's return.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Oil & Gas	61.3
Oil & Gas Services	18.1
Gas	5.2
Coal	4.9
Transportation	3.6
Pipelines	2.5
Energy-Alternate Sources	1.5
Retail	1.4
Electric	1.3
Money Market	0.1
Other	0.1

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	27.5
Large-Cap Value	26.5
Mid-Cap Growth	19.8
Small-Cap Value	19.1
Small-Cap Growth	4.7
Large-Cap Growth	2.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Apache Corp.	3.0
EOG Resources, Inc.	3.0
Noble Energy, Inc.	2.9
Devon Energy Corp.	2.8
XTO Energy, Inc.	2.8
Occidental Petroleum Corp.	2.7
Murphy Oil Corp.	2.7
Cameron International Corp.	2.7
Hess Corp.	2.6
Marathon Oil Corp.	2.5
Total	27.7

10

Manager's Analysis (Continued)

PowerShares Dynamic Energy Sector Portfolio (ticker: PXI)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Energy Sector IntellidexSM Index		13.49		33.29		38.49		40.93
S&P Energy Index		21.06		38.36		42.77		45.53
Dow Jones Oil & Gas Index		19.85		37.28		41.89		44.58

Fund

NAV Return	13.04	32.38	37.62	39.92
Share Price Return	12.83	32.47	37.52	39.82

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 1.60%. In the Financial Highlights section of this Semi-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 1.06%. 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, 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 S&P Energy Index and the Dow Jones Oil & Gas Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 34 and 70 common stocks, respectively.

† Average annualized.

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

For the six months ended October 31, 2007 the Fund was down 1.17%. This compares very favorably with the S&P Financials Index which dropped 7.81% during this period. The Fund benefited by avoiding commercial banks, diversified financials, and thrifts which were hit hardest during the subprime meltdown. The Fund was overweight insurance which has held up better during this period. The Fund also benefited through superior stock selection by completely avoiding some of the worst affected companies such as Citigroup, Countrywide Financial and Washington Mutual.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Insurance	80.1
Diversified Financial Services	10.8
Banks	7.0
Software	1.6
Money Market	0.4
Other	0.1

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	38.4
Large-Cap Value	30.2
Small-Cap Value	21.4
Large-Cap Growth	5.4
Mid-Cap Growth	4.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
State Street Corp.	3.1
Principal Financial Group, Inc.	2.9
AFLAC, Inc.	2.8
Hartford Financial Services Group (The), Inc.	2.6
Prudential Financial, Inc.	2.5
MetLife, Inc.	2.5
ACE Ltd. (Cayman Islands)	2.5
AON Corp.	2.5
Loews Corp.	2.5
Chubb (The) Corp.	2.5
Total	26.4

12

Manager's Analysis (Continued)

PowerShares Dynamic Financial Sector Portfolio (ticker: PFI)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Financial Sector IntellidexSM Index		-0.71		5.96		5.03		5.31
S&P Financials Index		-7.81		-2.53		-2.11		-2.22
Dow Jones Financials Index		-8.78		-5.13		-4.61		-4.85

Fund

NAV Return	-1.17	5.15	4.26	4.49
Share Price Return	-1.30	5.24	4.26	4.49

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 1.85%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.85% while the Fund's gross annualized total operating expense ratio was 2.08%. 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, 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 S&P Financials Index and the Dow Jones Financials Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 93 and 300 common stocks, respectively.

† Average annualized.

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

For the six months ending October 31, 2007, the Fund returned 4.34% compared with the S&P Health Care Index which returned 0.91%. The two industries which led the way were health care equipment & supplies and life sciences tools & services. Dade Behring Holdings, Meridian Bioscience and Waters Corporation were the largest contributors to performance for the Fund. Pharmaceuticals were the lone industry with negative performance with King Pharmaceuticals, Mylan and Endo Pharmaceuticals Holdings being the laggards.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Healthcare-Products	28.7
Healthcare-Services	26.6
Pharmaceuticals	23.3
Electronics	6.1
Commercial Services	5.6
Biotechnology	4.5
Software	2.8
Insurance	2.4
Other	(0.0	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	32.5
Large-Cap Growth	19.9
Small-Cap Growth	16.0
Large-Cap Value	12.3
Mid-Cap Value	11.1
Small-Cap Value	8.2

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Merck & Co., Inc.	2.8
McKesson Corp.	2.8
Express Scripts, Inc.	2.8
Medco Health Solutions, Inc.	2.6
Aetna, Inc.	2.6
Baxter International, Inc.	2.6
Becton, Dickinson & Co.	2.6
Coventry Health Care, Inc.	2.5
Bristol-Myers Squibb Co.	2.5
CIGNA Corp.	2.4
Total	26.2

14

Manager's Analysis (Continued)

PowerShares Dynamic Healthcare Sector Portfolio (ticker: PTH)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Healthcare Sector IntellidexSM Index		4.71		19.99		19.07		20.19
S&P Health Care Index		0.91		10.27		10.01		10.58
Dow Jones Healthcare Index		1.29		9.37		9.08		9.59

Fund

NAV Return	4.34	19.13	18.24	19.27
Share Price Return	4.25	19.21	18.18	19.21

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 1.59%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.68% 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, 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 S&P Health Care Index and the Dow Jones Healthcare Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 51 and 180 common stocks, respectively.

† Average annualized.

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

For the six months ended October 31, 2007, the Fund was up 10.37% matching the S&P Industrials return of 10.32%. Machinery and aerospace & defense companies were the largest contributors to the Fund's performance. McDermott International was the largest single stock contributor returning 84.50% and contributing 1.28% to the Fund's overall performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Miscellaneous Manufacturing	19.0
Machinery-Diversified	16.0
Commercial Services	14.2
Aerospace/Defense	9.3
Electronical Components & Equipment	8.0
Environmental Control	7.7
Engineering & Construction	4.3
Transportation	3.8
Retail	2.9
Electronics	2.8
Hand/Machine Tools	2.8
Metal Fabricate/Hardware	2.7
Distribution/Wholesale	2.4
Computers	1.6
Building Materials	1.4
Housewares	1.2
Money Market	0.1
Other	(0.2	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	33.6
Mid-Cap Growth	25.3
Small-Cap Value	20.1
Large-Cap Value	10.0
Small-Cap Growth	8.5
Large-Cap Growth	2.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Fluor Corp.	3.1
Deere & Co.	2.9
Parker Hannifin Corp.	2.8
L-3 Communications Holdings, Inc.	2.8
Lockheed Martin Corp.	2.8
Republic Services, Inc.	2.8
Rockwell Collins, Inc.	2.7
Manpower, Inc.	2.7
Emerson Electric Co.	2.7
Cooper Industries Ltd.	2.6
Total	27.9

16

Manager's Analysis (Continued)

PowerShares Dynamic Industrials Sector Portfolio (ticker: PRN)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Industrials Sector IntellidexSM Index		10.75		27.53		25.48		27.02
S&P Industrials Index		10.32		20.91		18.31		19.38
Dow Jones Industrials Index		9.17		20.90		19.05		20.17

Fund

NAV Return	10.37	26.68	24.69	26.13
Share Price Return	10.21	26.74	24.61	26.05

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 1.55%. In the Financial Highlights section of this Semi-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 0.88%. 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, 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 S&P Industrials Index and the Dow Jones Industrials Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 56 and 270 common stocks, respectively.

† Average annualized.

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

For the six months ending October 31, 2007, the portfolio returned 4.39% relative to the S&P Information Technology Index which returned 19.24%. Software, computer & peripherals and communications equipment industries were the strongest industries. BEA Systems, within software, and Apple and NCR Corporate, within computers & peripherals along with Avaya in communications equipment were the largest contributors to performance for the period. Electronic Data Systems in IT services, InterDigital in communications equipment and Lexmark International in computers & peripherals industries contributed negatively to the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Software	21.9
Electronics	17.8
Computers	16.0
Telecommunications	12.4
Internet	11.9
Semiconductors	10.8
Commercial Services	6.5
Retail	1.5
Engineering & Construction	1.2
Other	(0.0	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	30.1
Small-Cap Value	19.6
Mid-Cap Value	16.9
Small-Cap Growth	16.6
Large-Cap Growth	14.5
Large-Cap Value	2.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Amphenol Corp., Class A	2.9
MEMC Electronic Materials, Inc.	2.8
NCR Corp.	2.7
McAfee, Inc.	2.7
BMC Software, Inc.	2.6
Oracle Corp.	2.6
eBay, Inc.	2.5
Autodesk, Inc.	2.5
CA, Inc.	2.5
Hewlett-Packard Co.	2.4
Total	26.2

18

Manager's Analysis (Continued)

PowerShares Dynamic Technology Sector Portfolio (ticker: PTF)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Technology Sector IntellidexSM Index		4.75		14.39		13.51		14.29
S&P Information Technology Index		19.24		26.90		26.22		27.81
Dow Jones Technology Index		18.67		26.38		25.20		26.72

Fund

NAV Return	4.39	13.60	12.76	13.47
Share Price Return	4.36	13.78	12.80	13.51

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 1.65%. In the Financial Highlights section of this Semi-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 1.02%. 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, 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 S&P Information Technology Index and the Dow Jones Technology Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of approximately 70 and 252common stocks, respectively.

† Average annualized.

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

For the six months ending October 31, 2007, the portfolio has returned 7.67% benefiting from strong returns in Cisco Systems, Comtech Telecommunications and Avaya in the communications equipment industry along with Syniverse holdings in wireless telecommunication services. Garmin Ltd. was the largest contributor to performance up 85.95% for the period. The stock which hurt the Fund's performance the greatest was Qwest Communication International with diversified telecommunications services. Convergys and CSG Systems International within IT services and Charter Communications and RCN Corporation within media were among the laggards contributing negatively to the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Telecommunications	70.1
Media	12.1
Electronics	8.3
Internet	3.2
Commercial Services	2.9
Software	2.4
Money Market	1.0
Other	(0.0	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Value	22.3
Large-Cap Growth	20.9
Large-Cap Value	18.8
Small-Cap Growth	14.1
Mid-Cap Value	12.6
Mid-Cap Growth	11.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
DIRECTV Group (The), Inc.	5.5
Verizon Communications, Inc.	5.4
Garmin Ltd. (Cayman Islands)	5.2
AT&T, Inc.	5.1
Cisco Systems, Inc.	5.1
Liberty Global, Inc., Series A	4.7
Sprint Nextel Corp.	4.4
Qwest Communications International, Inc.	3.9
Comtech Telecommunications Corp.	3.4
United Online, Inc.	3.3
Total	46.0

20

Manager's Analysis (Continued)

PowerShares Dynamic Telecommunications & Wireless Portfolio (ticker: PTE)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Telecommunications and Wireless IntellidexSM Index		8.02		17.50		22.30		46.82
S&P Information Technology Index		19.24		26.90		14.47		29.41
Russell 3000® Index		5.17		14.53		13.25		26.78

Fund

NAV Return	7.67	16.80	21.27	44.29
Share Price Return	7.38	16.11	21.14	43.99

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 1.06%. In the Financial Highlights section of this Semi-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 0.94%. 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, 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 S&P Information Technology Index and the Russell 3000^® Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of 70 and 2,918 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 which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

For the six months ending October 31, 2007, the portfolio has returned a -1.15% relative to the S&P Utilities Index which returned 3.97% for the period. Electric utilities and commercial services & supplies contributed the largest percent of the return. Gas utilities and independent power producers & energy traders were the laggards for the period.

PPL Corp. and Edison International were the top performing electric utilities within the portfolio while Public Service Enterprise Group and Energy East within multi-utilities added positively to the Fund's performance. Southeast Gas within gas utilities and AES Corporation within independent power producers & energy traders were companies causing a large drag on performance. Nisource and CenterPoint Energy within multi-utilities also contributed negatively during the period.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Electric	73.0
Gas	20.9
Energy-Alternate Sources	3.0
Pipelines	2.7
Other	0.4

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	30.4
Mid-Cap Value	29.2
Small-Cap Value	21.0
Large-Cap Growth	10.4
Mid-Cap Growth	9.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Entergy Corp.	5.4
Constellation Energy Group, Inc.	5.2
FirstEnergy Corp.	5.2
Public Service Enterprise Group, Inc.	5.2
Edison International	5.1
PG&E Corp.	5.0
PPL Corp.	4.9
Duke Energy Corp.	4.8
Covanta Holding Corp.	3.0
NRG Energy, Inc.	3.0
Total	46.8

22

Manager's Analysis (Continued)

PowerShares Dynamic Utilities Portfolio (ticker: PUI)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Utilities IntellidexSM Index		-0.84		10.65		17.62		38.79
S&P Utilities Index		3.97		22.61		21.34		47.78
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	-1.15	10.00	16.89	36.94
Share Price Return	-1.25	9.95	16.90	36.96

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 Semi-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 0.86%. 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, 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 S&P Utilities Index and the Russell 3000^® Index are unmanaged indices used as measurements of change in stock market conditions based on the average performance of 31 and 2,918 common stocks, respectively.

† Average annualized.

23

Funds' Distribution History (Unaudited)

	Ex-Dividend	10/15/07		09/21/07		09/14/07		08/15/07		07/13/07		06/15/07		05/15/07
	Record	10/17/07		09/25/07		09/18/07		08/17/07		07/17/07		06/19/07		05/17/07
	Payable	10/31/07		09/28/07		09/28/07		08/31/07		07/31/07		06/29/07		05/31/07
Fund	Ticker
PowerShares Dynamic Basic Materials Sector Portfolio	PYZ		—		0.07226		—		—		—		0.06573		—
PowerShares Dynamic Consumer Discretionary Sector Portfolio	PEZ		—		—		—		—		—		0.08893		—
PowerShares Dynamic Consumer Staples Sector Portfolio	PSL		—		0.07164		—		—		—		0.24346		—
PowerShares Dynamic Energy Sector Portfolio	PXI		—		0.04850		—		—		—		0.02896		—
PowerShares Dynamic Financial Sector Portfolio	PFI		—		0.09995		—		—		—		0.08027		—
PowerShares Dynamic Healthcare Sector Portfolio	PTH		—		—		—		—		—		—		—
PowerShares Dynamic Industrials Sector Portfolio	PRN		—		0.01726		—		—		—		0.02460		—
PowerShares Dynamic Technology Sector Portfolio	PTF		—		—		—		—		—		—		—
PowerShares Dynamic Telecommunications & Wireless Portfolio	PTE		—		0.03843		—		—		—		0.05650		—
PowerShares Dynamic Utilities Portfolio	PUI		—		0.09948		—		—		—		0.11750		—
	Ex-Dividend													09/15/06
	Record													09/16/06
	Payable													09/29/06
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													0.03081
PowerShares Dynamic Utilities Portfolio	PUI													0.06053

24

	04/13/07		03/16/07		03/15/07		02/15/07		01/12/07		12/15/06		11/15/06		10/13/06
	04/17/07		03/20/07		03/20/07		02/20/07		01/16/07		12/19/06		11/17/06		10/17/06
	04/30/07		03/30/07		03/30/07		02/28/07		01/31/07		12/29/06		11/30/06		10/31/06
Fund
PowerShares Dynamic Basic Materials Sector Portfolio		—		0.03850		—		—		—		0.15875		—		—
PowerShares Dynamic Consumer Discretionary Sector Portfolio		—		—		—		—		—		0.16398		—		—
PowerShares Dynamic Consumer Staples Sector Portfolio		—		0.03510		—		—		—		0.23925		—		—
PowerShares Dynamic Energy Sector Portfolio		—		0.00830		—		—		—		0.02386		—		—
PowerShares Dynamic Financial Sector Portfolio		—		0.01860		—		—		—		0.06758		—		—
PowerShares Dynamic Healthcare Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Industrials Sector Portfolio		—		0.03620		—		—		—		0.01397		—		—
PowerShares Dynamic Technology Sector Portfolio		—		—		—		—		—		—		—		—
PowerShares Dynamic Telecommunications & Wireless Portfolio		—		—		—		—		—		0.14163		—		—
PowerShares Dynamic Utilities Portfolio		—		0.08250		—		—		—		0.13668		—		—
	08/15/06		07/14/06		06/16/06		06/15/06		05/15/06		03/17/06		12/30/05		12/16/05
	08/17/06		07/18/06		06/20/06		06/19/06		05/17/06		03/21/06		01/04/06		12/20/05
	08/31/06		07/31/06		06/30/06		06/30/06		05/31/06		03/30/06		01/31/06		12/30/05
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	—		—		0.03188		—		—		0.03180		—		0.00158
PowerShares Dynamic Utilities Portfolio	—		—		0.10547		—		—		0.07089		—		0.11650

25

Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 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		265		111		4		—		—		—		—
PEZ	PowerShares Dynamic Consumer Discretionary Sector Portfolio	10/12/06		265		104		10		—		—		—		—
PSL	PowerShares Dynamic Consumer Staples Sector Portfolio	10/12/06		265		93		6		2		—		—		—
PXI	PowerShares Dynamic Energy Sector Portfolio	10/12/06		265		84		3		1		—		—		—
PFI	PowerShares Dynamic Financial Sector Portfolio	10/12/06		265		94		5		—		—		—		—
PTH	PowerShares Dynamic Healthcare Sector Portfolio	10/12/06		265		90		5		7		—		—		—
PRN	PowerShares Dynamic Industrials Sector Portfolio	10/12/06		265		127		3		2		—		—		—
PTF	PowerShares Dynamic Technology Sector Portfolio	10/12/06		265		91		43		8		—		—		—
PTE	PowerShares Dynamic Telecommunications & Wireless Portfolio	12/06/05		479		191		27		6		1		—		—
PUI	PowerShares Dynamic Utilities Portfolio	10/26/05		507		193		9		2		—		—		—

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		149		1		—		—		—		—
PEZ		148		3		—		—		—		—
PSL		162		2		—		—		—		—
PXI		177		—		—		—		—		—
PFI		164		2		—		—		—		—
PTH		161		2		—		—		—		—
PRN		131		2		—		—		—		—
PTF		120		3		—		—		—		—
PTE		242		10		2		—		—		—
PUI		297		6		—		—		—		—

27

Fees and Expenses (Unaudited)

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust, you incur advisory fees and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month period ended October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	1,160.15		0.71	%	$	3.86
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.57		0.71	%	$	3.61
PowerShares Dynamic Consumer Discretionary Sector Portfolio Actual	$	1,000.00	$	951.86		0.74	%	$	3.63
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.42		0.74	%	$	3.76
PowerShares Dynamic Consumer Staples Sector Portfolio Actual	$	1,000.00	$	1,011.25		0.73	%	$	3.69
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.47		0.73	%	$	3.71

28

Fees and Expenses (Unaudited) (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 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	$	1,130.42		0.72	%	$	3.86
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.52		0.72	%	$	3.66
PowerShares Dynamic Financial Sector Portfolio Actual	$	1,000.00	$	988.32		0.85	%	$	4.25
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.86		0.85	%	$	4.32
PowerShares Dynamic Healthcare Sector Portfolio Actual	$	1,000.00	$	1,043.36		0.68	%	$	3.49
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.72		0.68	%	$	3.46
PowerShares Dynamic Industrials Sector Portfolio Actual	$	1,000.00	$	1,103.70		0.70	%	$	3.70
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56
PowerShares Dynamic Technology Sector Portfolio Actual	$	1,000.00	$	1,043.95		0.71	%	$	3.65
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.57		0.71	%	$	3.61
PowerShares Dynamic Telecommunications & Wireless Portfolio Actual	$	1,000.00	$	1,076.69		0.63	%	$	3.29
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Utilities Portfolio Actual	$	1,000.00	$	988.46		0.63	%	$	3.15
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended October 31, 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 184 and then dividing the result by 366.

29

Schedule of Investments

PowerShares Dynamic Basic Materials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Chemicals—56.4%
	22,803	A. Schulman, Inc.	$	538,379
	10,004	Air Products & Chemicals, Inc.		978,891
	12,137	Albemarle Corp.		579,663
	11,339	Arch Chemicals, Inc.		517,285
	8,215	Ashland, Inc.		482,385
	12,176	Cabot Corp.		426,282
	13,674	Celanese Corp., Series A		573,761
	7,756	CF Industries Holdings, Inc.		681,752
	7,398	Cytec Industries, Inc.		493,521
	21,124	Dow Chemical (The) Co.		951,425
	18,472	E.I. du Pont de Nemours & Co.		914,549
	7,357	Eastman Chemical Co.		489,903
	21,616	Ecolab, Inc.		1,019,627
	10,914	FMC Corp.		627,555
	18,253	H.B. Fuller Co.		537,186
	23,592	Hercules, Inc.		443,766
	19,774	Innospec, Inc.		420,988
	7,726	Lubrizol Corp.		524,441
	19,424	Lyondell Chemical Co.		921,669
	7,453	Minerals Technologies, Inc.		523,350
	12,912	Monsanto Co.		1,260,599
	21,430	Mosaic (The) Co.*		1,495,814
	22,910	Olin Corp.		521,890
	9,944	OM Group, Inc.*		526,833
	12,276	PPG Industries, Inc.		917,508
	11,902	Praxair, Inc.		1,017,383
	15,326	Rockwood Holdings, Inc.*		599,093
	21,695	RPM International, Inc.		464,924
	18,131	Sensient Technologies Corp.		541,936
	10,965	Sigma-Aldrich Corp.		566,562
	22,677	Spartech Corp.		348,545
	18,914	Terra Industries, Inc.*		697,737
	18,213	Valspar (The) Corp.		455,871
	21,987	W.R. Grace & Co.*		650,815
				22,711,888
		Energy - Alternate Sources—1.1%
	29,732	Headwaters, Inc.*		426,654
		Environmental Control—1.4%
	10,471	Metal Management, Inc.		550,460
		Forest Products & Paper—7.3%
	31,547	Buckeye Technologies, Inc.*		565,322
	25,648	International Paper Co.		947,951
	16,943	Rock-Tenn Co., Class A		494,058
	8,917	Temple-Inland, Inc.		478,575
	43,739	Wausau Paper Corp.		437,827
				2,923,733
		Iron/Steel—14.8%
	12,280	AK Steel Holding Corp.*		615,596

Number of Shares			Value
		Common Stocks (Continued)
	9,060	Allegheny Technologies, Inc.	$	925,660
	6,441	Cleveland-Cliffs, Inc.		616,082
	17,023	Nucor Corp.		1,055,767
	9,274	Reliance Steel & Aluminum Co.		541,138
	8,407	Schnitzer Steel Industries, Inc., Class A		555,450
	11,322	Steel Dynamics, Inc.		602,557
	9,531	United States Steel Corp.		1,028,395
				5,940,645
		Metal Fabricate/Hardware—1.2%
	11,341	Quanex Corp.		467,136
		Mining—7.3%
	10,300	Freeport-McMoRan Copper & Gold, Inc., Class B		1,212,103
	8,555	Southern Copper Corp.		1,195,134
	15,668	Titanium Metals Corp.*		551,514
				2,958,751
		Miscellaneous Manufacturing—1.5%
	13,520	AptarGroup, Inc.		604,344
		Packaging & Containers—8.8%
	9,377	Ball Corp.		464,912
	20,450	Crown Holdings, Inc.*		507,160
	22,390	Owens-Illinois, Inc.*		994,563
	18,855	Packaging Corp. of America		600,343
	18,570	Sealed Air Corp.		462,950
	9,615	Silgan Holdings, Inc.		524,691
				3,554,619
		Total Common Stocks (Cost $35,363,666)		40,138,230
		Money Market Fund—0.1%
	44,890	Liquid Assets Portfolio Private Class** (Cost $44,890)		44,890
		Total Investments (Cost $35,408,556)—99.9%		40,183,120
		Other assets less liabilities—0.1%		42,642
		Net Assets—100.0%	$	40,225,762

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.

30

Schedule of Investments

PowerShares Dynamic Consumer Discretionary Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.7%
		Advertising—3.6%
	2,293	Getty Images, Inc.*	$	64,777
	2,574	Omnicom Group, Inc.		131,223
				196,000
		Airlines—1.4%
	2,148	Continental Airlines, Inc., Class B*		73,784
		Apparel—11.4%
	2,940	Coach, Inc.*		107,486
	2,383	Hanesbrands, Inc.*		73,968
	2,323	NIKE, Inc., Class B		153,921
	1,227	Phillips-Van Heusen Corp.		58,651
	1,643	VF Corp.		143,155
	2,049	Warnaco Group (The), Inc.*		83,374
				620,555
		Auto Parts & Equipment—10.4%
	2,387	Aftermarket Technology Corp.*		82,399
	3,063	American Axle & Manufacturing Holdings, Inc.		84,110
	845	BorgWarner, Inc.		89,325
	3,472	Johnson Controls, Inc.		151,796
	2,447	Lear Corp.*		86,942
	2,251	Tenneco, Inc.*		68,903
				563,475
		Building Materials—1.3%
	1,820	Drew Industries, Inc.*		72,036
		Chemicals—2.2%
	1,896	Sherwin-Williams (The) Co.		121,192
		Commercial Services—9.4%
	2,791	Aaron Rents, Inc.		59,113
	2,234	Apollo Group, Inc., Class A*		177,067
	2,071	DeVry, Inc.		113,263
	651	ITT Educational Services, Inc.*		82,801
	1,294	Pre-Paid Legal Services, Inc.		77,122
				509,366
		Distribution/Wholesale—2.4%
	2,636	Genuine Parts Co.		129,349
		Electronics—1.4%
	3,567	Gentex Corp.		74,122
		Entertainment—4.2%
	2,316	DreamWorks Animation SKG, Inc., Class A*		75,409
	3,434	International Game Technology		149,757
				225,166
		Hand/Machine Tools—4.0%
	823	Black & Decker (The) Corp.		73,996
	1,460	Snap-On, Inc.		72,869

Number of Shares			Value
		Common Stocks (Continued)
	1,260	Stanley Works (The)	$	72,513
				219,378
		Home Furnishings—3.6%
	2,475	Tempur-Pedic International, Inc.		89,100
	1,359	Whirlpool Corp.		107,606
				196,706
		Household Products/Wares—4.1%
	2,887	American Greetings Corp., Class A		76,044
	3,195	Blyth, Inc.		60,993
	2,322	Tupperware Brands Corp.		83,823
				220,860
		Housewares—2.7%
	5,080	Newell Rubbermaid, Inc.		148,133
		Internet—0.7%
	1,315	NutriSystem, Inc.*		39,582
		Leisure Time—2.3%
	2,434	Harley-Davidson, Inc.		125,351
		Lodging—1.3%
	1,748	Boyd Gaming Corp.		73,101
		Media—9.2%
	25,698	Charter Communications, Inc., Class A*		53,195
	5,613	DIRECTV Group (The), Inc.*		148,632
	11,712	Gemstar-TV Guide International, Inc.*		80,696
	1,277	Meredith Corp.		79,493
	3,901	Walt Disney (The) Co.		135,092
				497,108
		Retail—22.8%
	2,011	Advance Auto Parts, Inc.		68,615
	3,766	AutoNation, Inc.*		66,621
	1,082	AutoZone, Inc.*		134,611
	2,400	Big Lots, Inc.*		57,552
	2,143	Bob Evans Farms, Inc.		60,390
	2,477	Brinker International, Inc.		62,891
	3,012	Burger King Holdings, Inc.		79,637
	3,249	Conn's, Inc.*		83,077
	1,717	Darden Restaurants, Inc.		73,831
	1,647	Dollar Tree Stores, Inc.*		63,080
	2,442	Family Dollar Stores, Inc.		61,905
	1,135	IHOP Corp.		71,880
	2,369	Jos. A. Bank Clothiers, Inc.*		69,198
	1,409	Men's Wearhouse (The), Inc.		59,544
	2,060	PetSmart, Inc.		61,697
	4,003	Yum! Brands, Inc.		161,200
				1,235,729

See Notes to Financial Statements.

31

Schedule of Investments (Continued)

PowerShares Dynamic Consumer Discretionary Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
		Textiles—1.3%
	819	Mohawk Industries, Inc.*	$	69,894
		Total Common Stocks (Cost $5,725,712)		5,410,887
		Money Market Fund—0.5%
	25,118	Liquid Assets Portfolio Private Class** (Cost $25,118)		25,118
		Total Investments (Cost $5,750,830)—100.2%		5,436,005
		Liabilities in excess of other assets—(0.2%)		(10,936	)
		Net Assets—100.0%	$	5,425,069

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.

32

Schedule of Investments

PowerShares Dynamic Consumer Staples Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Agriculture—10.7%
	5,822	Altria Group, Inc.	$	424,599
	2,411	Bunge Ltd. (Bermuda)		277,723
	2,896	Carolina Group		248,419
	6,112	Reynolds American, Inc.		393,796
	4,473	UST, Inc.		238,500
	10,072	Vector Group Ltd.		220,375
				1,803,412
		Beverages—17.5%
	8,181	Anheuser-Busch Cos., Inc.		419,522
	4,521	Boston Beer (The) Co., Inc., Class A*		236,222
	7,515	Coca-Cola (The) Co.		464,126
	9,254	Coca-Cola Enterprises, Inc.		238,846
	4,908	Hansen Natural Corp.*		333,744
	4,928	Molson Coors Brewing Co., Class B		282,029
	6,373	Pepsi Bottling Group (The), Inc.		274,549
	7,447	PepsiAmericas, Inc.		266,007
	5,941	PepsiCo, Inc.		437,971
				2,953,016
		Cosmetics/Personal Care—11.0%
	9,514	Alberto-Culver Co.		247,269
	3,572	Chattem, Inc.*		265,400
	6,094	Colgate-Palmolive Co.		464,789
	8,961	Elizabeth Arden, Inc.*		223,129
	5,300	Estee Lauder (The) Cos., Inc., Class A		232,670
	6,188	Procter & Gamble (The) Co.		430,190
				1,863,447
		Electrical Components & Equipment—1.3%
	2,081	Energizer Holdings, Inc.*		217,048
		Food—36.4%
	5,839	Campbell Soup Co.		215,926
	8,574	ConAgra Foods, Inc.		203,461
	4,877	Corn Products International, Inc.		207,468
	20,914	Del Monte Foods Co.		216,251
	10,680	Flowers Foods, Inc.		234,319
	8,372	Fresh Del Monte Produce, Inc. (Cayman Islands)		303,736
	7,232	General Mills, Inc.		417,503
	7,029	Great Atlantic & Pacific Tea Co., Inc.*		227,529
	4,889	H.J. Heinz Co.		228,707
	4,741	Hershey (The) Co.		204,385
	6,187	Hormel Foods Corp.		225,702
	5,871	J & J Snack Foods Corp.		209,125
	4,007	J.M. Smucker (The) Co.		214,094
	7,357	Kellogg Co.		388,376
	15,204	Kroger (The) Co.		446,845
	7,751	Performance Food Group Co.*		209,199
	5,256	Sanderson Farms, Inc.		182,909
	13,263	Sara Lee Corp.		219,370

Number of Shares			Value
		Common Stocks (Continued)
	106	Seaboard Corp.	$	172,992
	5,230	SUPERVALU, Inc.		202,663
	12,107	Sysco Corp.		415,149
	10,229	Tyson Foods, Inc., Class A		161,618
	5,129	Weis Markets, Inc.		225,112
	6,938	Wm. Wrigley Jr. Co.		427,866
				6,160,305
		Household Products/Wares—7.9%
	4,906	Church & Dwight Co., Inc.		232,103
	3,686	Clorox (The) Co.		230,633
	5,883	Kimberly-Clark Corp.		417,046
	20,094	Prestige Brands Holdings, Inc.*		210,183
	6,340	WD-40 Co.		251,064
				1,341,029
		Miscellaneous Manufacturing—1.3%
	5,420	Lancaster Colony Corp.		217,721
		Pharmaceuticals—2.7%
	6,006	NBTY, Inc.*		213,814
	5,789	USANA Health Sciences, Inc.*		236,249
				450,063
		Retail—11.3%
	6,298	BJ's Wholesale Club, Inc.*		225,972
	6,545	Costco Wholesale Corp.		440,217
	4,180	Longs Drug Stores Corp.		219,492
	14,167	Nu Skin Enterprises, Inc., Class A		244,664
	8,967	Walgreen Co.		355,542
	9,263	Wal-Mart Stores, Inc.		418,780
				1,904,667
		Total Investments (Cost $16,684,391)—100.1%		16,910,708
		Liabilities in excess of other assets—(0.1%)		(14,913	)
		Net Assets—100.0%	$	16,895,795

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	16,329,249			96.6	%
Cayman Islands		303,736			1.8
Bermuda		277,723			1.7
Total investments		16,910,708			100.1
Liabilities in excess of other assets		(14,913	)		(0.1	)
Net Assets	$	16,895,795			100.0	%

See Notes to Financial Statements.

33

Schedule of Investments

PowerShares Dynamic Energy Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.8%
		Coal—4.9%
	17,552	Alliance Holdings GP LP	$	457,054
	11,091	CONSOL Energy, Inc.		626,642
	21,316	Massey Energy Co.		675,291
				1,758,987
		Electric—1.3%
	16,352	MDU Resources Group, Inc.		460,472
		Energy - Alternate Sources—1.5%
	19,580	Covanta Holding Corp.*		530,814
		Gas—5.2%
	11,138	AGL Resources, Inc.		440,285
	8,237	Energen Corp.		527,168
	9,030	New Jersey Resources Corp.		444,728
	9,520	Northwest Natural Gas Co.		458,578
				1,870,759
		Oil & Gas—61.3%
	10,479	Apache Corp.		1,087,826
	5,821	Atwood Oceanics, Inc.*		490,361
	24,627	Bois d'Arc Energy, Inc.*		540,316
	9,240	Chevron Corp.		845,552
	12,352	Cimarex Energy Co.		500,380
	16,131	Delek US Holdings, Inc.		386,983
	10,767	Devon Energy Corp.		1,005,638
	7,711	Diamond Offshore Drilling, Inc.		873,117
	12,038	EOG Resources, Inc.		1,066,567
	9,503	Exxon Mobil Corp.		874,181
	11,444	Forest Oil Corp.*		556,064
	10,780	Frontier Oil Corp.		493,616
	66,613	Grey Wolf, Inc.*		375,031
	14,046	Helmerich & Payne, Inc.		444,135
	13,213	Hess Corp.		946,183
	6,636	Holly Corp.		416,741
	15,047	Marathon Oil Corp.		889,729
	13,307	Murphy Oil Corp.		979,794
	16,529	Noble Corp. (Cayman Islands)		875,211
	13,499	Noble Energy, Inc.		1,033,213
	14,304	Occidental Petroleum Corp.		987,691
	56,779	Parker Drilling Co.*		479,215
	20,601	Patterson-UTI Energy, Inc.		410,784
	12,576	Pride International, Inc.*		464,054
	11,087	Sunoco, Inc.		816,003
	11,884	Swift Energy Co.*		563,658
	8,966	Tesoro Corp.		542,712
	9,016	Unit Corp.*		430,694
	11,836	Valero Energy Corp.		833,609
	19,843	W&T Offshore, Inc.		532,189
	8,532	Western Refining, Inc.		312,954
	14,987	XTO Energy, Inc.		994,837
				22,049,038

Number of Shares			Value
		Common Stocks (Continued)
		Oil & Gas Services—18.1%
	31,616	Cal Dive International, Inc.*	$	418,280
	9,917	Cameron International Corp.*		965,518
	11,997	Dresser-Rand Group, Inc.*		464,284
	5,707	Exterran Holdings, Inc.*		480,529
	9,341	FMC Technologies, Inc.*		566,345
	18,292	Global Industries Ltd.*		450,349
	7,998	Grant Prideco, Inc.*		393,182
	7,778	Lufkin Industries, Inc.		462,480
	8,857	NATCO Group, Inc., Class A*		472,167
	6,586	Oceaneering International, Inc.*		508,900
	10,481	Oil States International, Inc.		452,674
	5,038	SEACOR Holdings, Inc.*		461,733
	11,394	Superior Energy Services, Inc.*		422,490
				6,518,931
		Pipelines—2.5%
	11,344	Copano Energy LLC		439,126
	9,441	ONEOK, Inc.		471,484
				910,610
		Retail—1.4%
	11,474	World Fuel Services Corp.		508,183
		Transportation—3.6%
	9,647	GulfMark Offshore, Inc.*		449,357
	6,195	Overseas Shipholding Group, Inc.*		460,908
	6,758	Tidewater, Inc.		369,460
				1,279,725
		Total Common Stocks (Cost $31,933,915)		35,887,519
		MONEY MARKET FUND—0.1%
	46,950	Liquid Assets Portfolio Private Class** (Cost $46,950)		46,950
		Total Investments (Cost $31,980,865)—99.9%		35,934,469
		Other assets less liabilities—0.1%		49,112
		Net Assets—100.0%	$	35,983,581

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	35,059,258		97.5	%
Cayman Islands		875,211		2.4
Total investments		35,934,469		99.9
Other assets less liabilities		49,112		0.1
Net Assets	$	35,983,581		100.0	%

See Notes to Financial Statements.

34

Schedule of Investments

PowerShares Dynamic Financial Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.5%
		Banks—7.0%
	3,241	Bank of Hawaii Corp.	$	172,292
	4,506	City Holding Co.		170,372
	4,979	State Street Corp.		397,174
	3,349	SVB Financial Group*		173,445
				913,283
		Diversified Financial Services—10.8%
	5,008	Ameriprise Financial, Inc.		315,404
	4,341	Eaton Vance Corp.		217,180
	4,746	Federated Investors, Inc., Class B		204,078
	2,319	Franklin Resources, Inc.		300,728
	3,102	GAMCO Investors, Inc., Class A		192,045
	9,181	TD Ameritrade Holding Corp.*		175,724
				1,405,159
		Insurance—80.1%
	5,289	ACE Ltd. (Cayman Islands)		320,566
	5,731	AFLAC, Inc.		359,792
	5,580	Allstate (The) Corp.		292,392
	5,909	American Financial Group, Inc.		176,679
	1,322	American National Insurance		170,935
	7,052	AON Corp.		319,597
	2,320	Arch Capital Group Ltd. (Bermuda)*		173,466
	3,233	Assurant, Inc.		188,937
	5,975	Chubb (The) Corp.		318,766
	3,954	Cincinnati Financial Corp.		157,290
	9,278	CNA Surety Corp.*		183,612
	5,227	Commerce Group (The), Inc.		190,733
	4,135	Delphi Financial Group, Inc., Class A		160,231
	2,982	Erie Indemnity Co., Class A		169,676
	1,635	Everest Re Group Ltd. (Bermuda)		174,193
	4,258	FBL Financial Group, Inc., Class A		172,364
	3,895	Hanover Insurance Group (The), Inc.		179,443
	3,436	Hartford Financial Services Group (The), Inc.		333,395
	6,035	HCC Insurance Holdings, Inc.		180,386
	8,616	Horace Mann Educators Corp.		178,265
	5,018	Lincoln National Corp.		312,973
	6,499	Loews Corp.		319,036
	350	Markel Corp.*		190,127
	3,163	Mercury General Corp.		162,294
	4,770	MetLife, Inc.		328,415
	3,042	Midland (The) Co.		193,532
	3,113	Nationwide Financial Services, Inc., Class A		167,012
	3,074	Navigators Group (The), Inc.*		185,362
	4,601	Odyssey Re Holdings Corp.		171,065
	9,161	Old Republic International Corp.		140,438
	2,292	PartnerRe Ltd. (Bermuda)		190,809
	4,164	Philadelphia Consolidated Holding Co.*		169,891
	5,506	Principal Financial Group, Inc.		372,590
	3,169	ProAssurance Corp.*		174,739
	3,987	Protective Life Corp.		170,923
	3,402	Prudential Financial, Inc.		329,041

Number of Shares			Value
		Common Stocks (Continued)
	3,068	Reinsurance Group of America, Inc.	$	175,275
	2,770	RLI Corp.		161,131
	2,872	Safeco Corp.		166,289
	3,537	StanCorp Financial Group, Inc.		194,995
	2,707	Torchmark Corp.		176,388
	2,352	Transatlantic Holdings, Inc.		175,295
	6,045	Travelers Cos. (The), Inc.		315,609
	7,700	United America Indemnity Ltd., Class A (Cayman Islands)*		169,785
	4,386	United Fire & Casualty Co.		140,527
	6,810	Unum Group		158,945
	5,575	W.R. Berkley Corp.		167,752
	4,009	XL Capital Ltd., Class A (Cayman Islands)		288,448
	3,865	Zenith National Insurance Corp.		155,296
				10,424,700
		Software—1.6%
	6,568	SEI Investments Co.		207,680
		Total Common Stocks (Cost $12,333,099)		12,950,822
		Money Market Fund—0.4%
	43,452	Liquid Assets Portfolio Private Class** (Cost $43,452)		43,452
		Total Investments (Cost $12,376,551)—99.9%		12,994,274
		Other assets less liabilities—0.1%		16,880
		Net Assets—100.0%	$	13,011,154

*  Non-income producing security.

**  Afiliated Investment.

COUNTRY BREAKDOWN

October, 31 2007 (Unaudited)

	Value		Net Assets
United States	$	11,677,007		89.8	%
Cayman Islands		778,799		6.0
Bermuda		538,468		4.1
Total investments		12,994,274		99.9
Other assets less liabilities		16,880		0.1
Net Assets	$	13,011,154		100.0	%

See Notes to Financial Statements.

35

Schedule of Investments

PowerShares Dynamic Healthcare Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Biotechnology—4.5%
	15,237	Bio-Rad Laboratories, Inc., Class A*	$	1,471,589
	24,480	Charles River Laboratories International, Inc.*		1,419,840
	16,492	Invitrogen Corp.*		1,498,629
				4,390,058
		Commercial Services—5.6%
	45,781	Emergency Medical Services Corp., Class A*		1,390,369
	41,168	McKesson Corp.		2,721,205
	29,869	Parexel International Corp.*		1,373,974
				5,485,548
		Electronics—6.1%
	17,734	Dionex Corp.*		1,560,592
	46,867	PerkinElmer, Inc.		1,289,780
	21,405	Varian, Inc.*		1,581,615
	20,864	Waters Corp.*		1,606,111
				6,038,098
		Healthcare - Products—28.7%
	56,519	Align Technology, Inc.*		1,169,943
	22,933	ArthroCare Corp.*		1,486,976
	43,008	Baxter International, Inc.		2,580,910
	17,855	Beckman Coulter, Inc.		1,264,491
	30,612	Becton, Dickinson & Co.		2,554,878
	32,622	DENTSPLY International, Inc.		1,353,161
	26,598	Edwards Lifesciences Corp.*		1,335,752
	20,066	Gen-Probe, Inc.*		1,405,021
	25,879	Haemonetics Corp.*		1,329,922
	22,077	Henry Schein, Inc.*		1,322,412
	22,320	Hillenbrand Industries, Inc.		1,232,510
	11,494	IDEXX Laboratories, Inc.*		1,399,739
	21,373	Kinetic Concepts, Inc.*		1,284,517
	44,573	Medtronic, Inc.		2,114,543
	49,793	Meridian Bioscience, Inc.		1,647,650
	34,926	Patterson Cos., Inc.*		1,365,956
	20,389	Techne Corp.*		1,330,178
	30,067	Zimmer Holdings, Inc.*		2,089,356
				28,267,915
		Healthcare - Services—26.6%
	46,262	Aetna, Inc.		2,598,537
	34,002	Amedisys, Inc.*		1,443,385
	48,241	Apria Healthcare Group, Inc.*		1,165,985
	17,522	Covance, Inc.*		1,445,565
	41,053	Coventry Health Care, Inc.*		2,475,906
	22,335	DaVita, Inc.*		1,456,019
	23,447	Health Net, Inc.*		1,256,994
	45,716	LifePoint Hospitals, Inc.*		1,395,252
	35,696	Lincare Holdings, Inc.*		1,241,150
	31,643	Magellan Health Services, Inc.*		1,332,170
	20,106	Manor Care, Inc.		1,338,657
	43,769	MedCath Corp.*		1,213,714

Number of Shares			Value
		Common Stocks (Continued)
	37,727	Molina Healthcare, Inc.*	$	1,437,776
	60,256	Res-Care, Inc.*		1,479,887
	47,094	UnitedHealth Group, Inc.		2,314,670
	13,014	WellCare Health Plans, Inc.*		314,809
	29,226	WellPoint, Inc.*		2,315,576
				26,226,052
		Insurance—2.4%
	45,573	CIGNA Corp.		2,392,127
		Pharmaceuticals—23.3%
	49,221	AmerisourceBergen Corp.		2,318,801
	80,795	Bristol-Myers Squibb Co.		2,423,042
	41,067	Eli Lilly & Co.		2,223,778
	40,296	Endo Pharmaceuticals Holdings, Inc.*		1,180,673
	43,018	Express Scripts, Inc.*		2,714,436
	37,718	ImClone Systems, Inc.*		1,627,532
	85,472	King Pharmaceuticals, Inc.*		906,003
	47,004	KV Pharmaceutical Co., Class A*		1,473,105
	27,561	Medco Health Solutions, Inc.*		2,601,207
	46,945	Merck & Co., Inc.		2,735,016
	31,417	VCA Antech, Inc.*		1,446,753
	69,329	Warner Chilcott Ltd., Class A (Bermuda)*		1,284,666
				22,935,012
		Software—2.8%
	22,522	Cerner Corp.*		1,341,410
	53,218	Omnicell, Inc.*		1,404,956
				2,746,366
		Total Investments (Cost $94,092,680)—100.0%		98,481,176
		Liabilities in excess of other assets—(0.0%)		(48,997	)
		Net Assets—100.0%	$	98,432,179

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	97,196,510			98.7	%
Bermuda		1,284,666			1.3
Total investments		98,481,176			100.0
Liabilities in excess of other assets		(48,997	)		(0.0	)
Net Assets	$	98,432,179			100.0	%

See Notes to Financial Statements.

36

Schedule of Investments

PowerShares Dynamic Industrials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Aerospace/Defense—9.3%
	5,236	Alliant Techsystems, Inc.*	$	578,002
	10,251	L-3 Communications Holdings, Inc.		1,123,921
	10,184	Lockheed Martin Corp.		1,120,647
	14,666	Rockwell Collins, Inc.		1,097,163
				3,919,733
		Building Materials—1.4%
	23,548	Goodman Global, Inc.*		580,458
		Commercial Services—14.2%
	15,972	Administaff, Inc.		636,963
	9,572	Advisory Board (The) Co.*		614,618
	19,257	CDI Corp.		530,723
	14,495	Deluxe Corp.		584,728
	11,764	Heidrick & Struggles International, Inc.		508,440
	24,805	Korn/Ferry International*		475,264
	26,390	Labor Ready, Inc.*		463,936
	14,374	Manpower, Inc.		1,074,313
	17,245	Robert Half International, Inc.		518,902
	11,643	Watson Wyatt Worldwide, Inc., Class A		555,022
				5,962,909
		Computers—1.6%
	10,912	IHS, Inc., Class A*		688,002
		Distribution/Wholesale—2.4%
	11,025	W.W. Grainger, Inc.		991,368
		Electrical Components & Equipment—8.0%
	13,772	AMETEK, Inc.		647,284
	20,519	Emerson Electric Co.		1,072,528
	21,186	Encore Wire Corp.		444,906
	32,812	GrafTech International Ltd.*		620,147
	10,167	Hubbell, Inc., Class B		559,185
				3,344,050
		Electronics—2.8%
	13,937	Cubic Corp.		627,165
	9,945	Thomas & Betts Corp.*		557,019
				1,184,184
		Engineering & Construction—4.3%
	7,941	Fluor Corp.		1,254,678
	9,732	Perini Corp.*		558,130
				1,812,808
		Environmental Control—7.7%
	43,145	Allied Waste Industries, Inc.*		545,353
	32,486	Republic Services, Inc.		1,110,696
	18,111	Waste Connections, Inc.*		612,333
	26,816	Waste Management, Inc.		975,834
				3,244,216

Number of Shares			Value
		Common Stocks (Continued)
		Hand/Machine Tools—2.8%
	6,834	Kennametal, Inc.	$	623,329
	7,658	Lincoln Electric Holdings, Inc.		553,291
				1,176,620
		Housewares—1.2%
	9,318	Toro (The) Co.		518,640
		Machinery - Diversified—16.0%
	12,753	AGCO Corp.*		761,099
	17,230	Applied Industrial Technologies, Inc.		610,804
	7,483	Cascade Corp.		471,279
	8,527	Cummins, Inc.		1,022,899
	7,423	Deere & Co.		1,149,823
	13,803	Gardner Denver, Inc.*		498,702
	13,861	Manitowoc (The) Co., Inc.		682,793
	14,330	Rockwell Automation, Inc.		987,050
	14,703	Wabtec Corp.		551,804
				6,736,253
		Metal Fabricate/Hardware—2.7%
	19,068	Commercial Metals Co.		598,354
	15,489	Timken (The) Co.		515,164
				1,113,518
		Miscellaneous Manufacturing—19.0%
	11,099	3M Co.		958,510
	11,190	Carlisle Cos., Inc.		441,446
	7,623	Ceradyne, Inc.*		521,489
	19,742	Cooper Industries Ltd., Class A (Bermuda)		1,034,283
	12,300	Crane Co.		583,512
	9,904	Harsco Corp.		600,380
	14,851	ITT Corp.		993,829
	14,451	Pall Corp.		579,052
	14,096	Parker Hannifin Corp.		1,132,895
	6,114	SPX Corp.		619,348
	7,082	Teleflex, Inc.		518,473
				7,983,217
		Retail—2.9%
	18,780	Copart, Inc.*		720,777
	10,634	MSC Industrial Direct Co., Class A		517,982
				1,238,759
		Transportation—3.8%
	11,363	Con-way, Inc.		484,177
	12,811	Landstar System, Inc.		539,215
	29,604	Werner Enterprises, Inc.		563,069
				1,586,461
		Total Common Stocks (Cost $41,506,996)		42,081,196

See Notes to Financial Statements.

37

Schedule of Investments (Continued)

PowerShares Dynamic Industrials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Money Market Fund—0.1%
	29,563	Liquid Assets Portfolio Private Class** (Cost $29,563)	$	29,563
		Total Investments (Cost $41,536,559)—100.2%		42,110,759
		Liabilities in excess of other assets—(0.2%)		(63,811	)
		Net Assets—100.0%	$	42,046,948

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	41,076,476			97.7	%
Bermuda		1,034,283			2.5
Total investments		42,110,759			100.2
Liabilities in excess of other assets		(63,811	)		(0.2	)
Net Assets	$	42,046,948			100.0	%

See Notes to Financial Statements.

38

Schedule of Investments

PowerShares Dynamic Technology Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Commercial Services—6.5%
	30,784	Convergys Corp.*	$	564,271
	15,332	Hewitt Associates, Inc., Class A*		540,913
	37,473	MPS Group, Inc.*		457,545
	28,160	SAIC, Inc.*		555,034
	13,977	Wright Express Corp.*		540,910
				2,658,673
		Computers—16.0%
	16,896	Computer Sciences Corp.*		986,557
	6,744	DST Systems, Inc.*		571,284
	8,604	Factset Research Systems, Inc.		606,754
	19,155	Hewlett-Packard Co.		989,930
	19,651	Jack Henry & Associates, Inc.		574,202
	17,854	Manhattan Associates, Inc.*		538,477
	12,241	MTS Systems Corp.		544,602
	39,878	NCR Corp.*		1,100,235
	22,073	Western Digital Corp.*		572,132
				6,484,173
		Electronics—17.8%
	25,970	Agilent Technologies, Inc.*		956,995
	26,179	Amphenol Corp., Class A		1,158,943
	12,289	Arrow Electronics, Inc.*		491,314
	18,514	Checkpoint Systems, Inc.*		560,049
	14,154	Dolby Laboratories, Inc., Class A*		586,825
	10,472	FLIR Systems, Inc.*		726,652
	35,708	Methode Electronics, Inc.		447,778
	5,468	Mettler-Toledo International, Inc.*		581,522
	16,333	National Instruments Corp.		529,843
	7,401	Rofin-Sinar Technologies, Inc.*		581,867
	16,039	Tektronix, Inc.		607,076
				7,228,864
		Engineering & Construction—1.2%
	17,461	Dycom Industries, Inc.*		493,273
		Internet—11.9%
	13,498	DealerTrack Holdings, Inc.*		662,617
	27,722	eBay, Inc.*		1,000,764
	15,165	j2 Global Communications, Inc.*		510,909
	26,443	McAfee, Inc.*		1,093,418
	50,256	Symantec Corp.*		943,808
	35,882	United Online, Inc.		631,523
				4,843,039
		Retail—1.5%
	21,738	Insight Enterprises, Inc.*		600,838
		Semiconductors—10.8%
	44,759	Amkor Technology, Inc.*		507,119
	15,475	Intersil Corp., Class A		469,512
	15,391	MEMC Electronic Materials, Inc.*		1,126,929
	47,089	Micrel, Inc.		426,155

Number of Shares			Value
		Common Stocks (Continued)
	44,527	Photronics, Inc.*	$	487,125
	27,608	Texas Instruments, Inc.		900,021
	19,516	Verigy Ltd. (Singapore)*		448,673
				4,365,534
		Software—21.9%
	15,564	Ansys, Inc.*		604,039
	39,301	Aspen Technology, Inc.*		685,409
	20,409	Autodesk, Inc.*		998,000
	42,265	BEA Systems, Inc.*		714,279
	30,872	BMC Software, Inc.*		1,044,709
	37,527	CA, Inc.		992,589
	22,302	CSG Systems International, Inc.*		457,860
	13,940	Fair Isaac Corp.		528,605
	36,936	Informatica Corp.*		630,867
	46,613	Oracle Corp.*		1,033,411
	22,370	Sybase, Inc.*		639,782
	18,588	Total System Services, Inc.		556,896
				8,886,446
		Telecommunications—12.4%
	28,177	ADC Telecommunications, Inc.*		526,910
	19,290	ADTRAN, Inc.		464,310
	6,717	Anixter International, Inc.*		482,616
	29,615	Cisco Systems, Inc.*		979,072
	9,110	CommScope, Inc.*		429,719
	12,115	Comtech Telecommunications Corp.*		657,239
	40,450	Corning, Inc.		981,721
	18,156	Plantronics, Inc.		496,567
				5,018,154
		Total Investments (Cost $37,661,007)—100.0%		40,578,994
		Liabilities in excess of other assets—(0.0%)		(466	)
		Net Assets—100.0%	$	40,578,528

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	40,130,321			98.9	%
Singapore		448,673			1.1
Total investments		40,578,994			100.0
Liabilities in excess of other assets		(466	)		(0.0	)
Net Assets	$	40,578,528			100.0	%

See Notes to Financial Statements.

39

Schedule of Investments

PowerShares Dynamic Telecommunications & Wireless Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.0%
		Commercial Services—2.9%
	57,290	Convergys Corp.*	$	1,050,126
		Electronics—8.3%
	17,277	Garmin Ltd. (Cayman Islands)		1,855,550
	27,177	Trimble Navigation Ltd.*		1,133,281
				2,988,831
		Internet—3.2%
	66,779	United Online, Inc.		1,175,310
		Media—12.1%
	345,185	Charter Communications, Inc., Class A*		714,533
	75,409	DIRECTV Group (The), Inc.*		1,996,830
	42,931	Liberty Global, Inc., Series A*		1,685,042
				4,396,405
		Software—2.4%
	41,506	CSG Systems International, Inc.*		852,118
		Telecommunications—70.1%
	52,438	ADC Telecommunications, Inc.*		980,591
	70,250	Alaska Communications Systems Group, Inc.		1,142,968
	44,126	AT&T, Inc.		1,844,025
	20,000	CenturyTel, Inc.		881,000
	55,116	Cisco Systems, Inc.*		1,822,135
	66,135	Citizens Communications Co.		870,337
	22,547	Comtech Telecommunications Corp.*		1,223,175
	75,979	Dobson Communications Corp., Class A*		983,168
	15,374	Embarq Corp.		813,592
	15,775	Harris Corp.		955,334
	51,843	Iowa Telecommunications Services, Inc.		1,022,344
	42,014	Novatel Wireless, Inc.*		1,092,364
	35,833	NTELOS Holdings Corp.		1,081,798
	33,789	Plantronics, Inc.		924,129
	196,569	Qwest Communications International, Inc.*		1,411,365
	92,986	Sprint Nextel Corp.		1,590,061
	67,913	Syniverse Holdings, Inc.*		1,133,468
	14,820	Telephone & Data Systems, Inc.		1,034,436
	9,867	U.S. Cellular Corp.*		928,978
	52,012	USA Mobility, Inc.*		813,468
	42,008	Verizon Communications, Inc.		1,935,308
	67,200	Windstream Corp.		903,840
				25,387,884
		Total Common Stocks (Cost $31,195,260)		35,850,674

Number of Shares			Value
		Money Market Fund—1.0%
	188,915	Liquid Assets Portfolio Private Class** (Cost $188,915)	$	188,915
		Total Investments (Cost $31,384,175)—100.0%		36,039,589
		Liabilities in excess of other assets—(0.0%)		(11,331	)
		Net Assets—100.0%	$	36,028,258

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	34,184,039			94.9	%
Cayman Islands		1,855,550			5.1
Total investments		36,039,589			100.0
Liabilities in excess of other assets		(11,331	)		(0.0	)
Net Assets	$	36,028,258			100.0	%

See Notes to Financial Statements.

40

Schedule of Investments

PowerShares Dynamic Utilities Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.6%
		Electric—73.0%
	18,479	Allegheny Energy, Inc.*	$	1,120,936
	22,648	ALLETE, Inc.		989,491
	25,177	Alliant Energy Corp.		1,007,080
	20,760	Consolidated Edison, Inc.		977,588
	21,081	Constellation Energy Group, Inc.		1,996,372
	19,948	DTE Energy Co.		989,421
	95,336	Duke Energy Corp.		1,827,591
	33,172	Edison International		1,926,961
	16,874	Entergy Corp.		2,022,687
	28,459	FirstEnergy Corp.		1,983,592
	24,472	Mirant Corp.*		1,036,634
	34,492	Northeast Utilities		1,063,388
	25,039	NRG Energy, Inc.*		1,143,281
	29,103	NSTAR		1,023,261
	34,208	Pepco Holdings, Inc.		974,586
	39,292	PG&E Corp.		1,922,558
	35,868	Portland General Electric Co.		1,009,684
	36,230	PPL Corp.		1,873,091
	20,573	Public Service Enterprise Group, Inc.		1,966,779
	60,209	TECO Energy, Inc.		1,013,317
				27,868,298
		Energy - Alternate Sources—3.0%
	42,219	Covanta Holding Corp.*		1,144,557
		Gas—20.9%
	24,017	AGL Resources, Inc.		949,392
	29,219	Laclede Group (The), Inc.		1,016,529
	19,472	New Jersey Resources Corp.		958,996
	22,948	Nicor, Inc.		992,960
	20,528	Northwest Natural Gas Co.		988,834
	28,125	South Jersey Industries, Inc.		1,056,375
	31,950	Southern Union Co.		1,006,425
	28,997	WGL Holdings, Inc.		983,578
				7,953,089
		Pipelines—2.7%
	21,509	National Fuel Gas Co.		1,042,971
		Total Investments (Cost $35,474,447)—99.6%		38,008,915
		Other assets in excess of liabilities—0.4%		149,710
		Net Assets—100.0%	$	38,158,625

*  Non-income producing security.

See Notes to Financial Statements.

41

Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

October 31, 2007 (Unaudited)

	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	$	40,138,230	$	5,410,887		$	16,910,708	$	35,887,519	$	12,950,822
Affiliated investments at value		44,890		25,118			—		46,950		43,452
Cash		73,586		36,260			18,298		84,892		59,299
Receivables:
Dividends		29,809		13,593			15,548		25,269		6,634
Capital stock sold		—		—			—		—		—
Expense waivers due from Adviser		7,279		7,694			8,842		7,517		9,062
Investments sold		—		13,401,053			—		—		—
Other assets		233		211			138		235		97
Total Assets		40,294,027		18,894,816			16,953,534		36,052,382		13,069,366
LIABILITIES:
Due to custodian		—		—			—		—		—
Payables:
Investments purchased		—		13,404,579			—		—		—
Accrued advisory fees		16,523		12,463			7,092		14,911		5,480
Accrued expenses		51,742		52,705			50,647		53,890		52,732
Total Liabilities		68,265		13,469,747			57,739		68,801		58,212
NET ASSETS	$	40,225,762	$	5,425,069		$	16,895,795	$	35,983,581	$	13,011,154
NET ASSETS CONSIST OF:
Paid-in capital	$	34,191,049	$	7,372,553		$	16,514,798	$	29,947,416	$	12,646,510
Undistributed net investment income gain (loss)/distributions in excess of net investment income		33,045		29,984			22,752		15,755		7,313
Accumulated net realized gain (loss) on investments		1,227,104		(1,662,643	)		131,928		2,066,806		(260,392	)
Net unrealized appreciation (depreciation) of investments		4,774,564		(314,825	)		226,317		3,953,604		617,723
Net Assets	$	40,225,762	$	5,425,069		$	16,895,795	$	35,983,581	$	13,011,154
Shares outstanding (unlimited amount authorized, $0.01 par value)		1,100,000		200,000			600,000		1,000,000		500,000
Net asset value	$	36.57	$	27.13		$	28.16	$	35.98	$	26.02
Unaffiliated investments at cost	$	35,363,666	$	5,725,712		$	16,684,391	$	31,933,915	$	12,333,099
Affiliated investments at cost	$	44,890	$	25,118			—	$	46,950	$	43,452

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	$	98,481,176		$	42,081,196		$	40,578,994		$	35,850,674		$	38,008,915
Affiliated investments at value		—			29,563			—			188,915			—
Cash		17,546			—			58,460			—			152,590
Receivables:
Dividends		25,127			10,510			4,497			33,950			45,752
Capital stock sold		—			6,368,409			—			—			—
Expense waivers due from Adviser		3,634			7,757			7,121			8,443			8,007
Investments sold		—			—			—			—			—
Other assets		702			324			273			400			719
Total Assets		98,528,185			48,497,759			40,649,345			36,082,382			38,215,983
LIABILITIES:
Due to custodian		—			11,735			—			4,034			—
Payables:
Investments purchased		—			6,368,072			—			—			—
Accrued advisory fees		40,507			16,830			16,925			15,514			15,669
Accrued expenses		55,499			54,174			53,892			34,576			41,689
Total Liabilities		96,006			6,450,811			70,817			54,124			57,358
NET ASSETS	$	98,432,179		$	42,046,948		$	40,578,528		$	36,028,258		$	38,158,625
NET ASSETS CONSIST OF:
Paid-in capital	$	93,785,650		$	38,084,715		$	37,927,443		$	30,909,368		$	34,721,192
Undistributed net investment income gain (loss)/distributions in excess of net investment income		(127,044	)		(7,439	)		(122,797	)		474,465			68,127
Accumulated net realized gain (loss) on investments		385,077			3,395,472			(144,105	)		(10,989	)		834,838
Net unrealized appreciation (depreciation) of investments		4,388,496			574,200			2,917,987			4,655,414			2,534,468
Net Assets	$	98,432,179		$	42,046,948		$	40,578,528		$	36,028,258		$	38,158,625
Shares outstanding (unlimited amount authorized, $0.01 par value)		3,300,000			1,300,000			1,400,000			1,700,000			1,900,000
Net asset value	$	29.83		$	32.34		$	28.98		$	21.19		$	20.08
Unaffiliated investments at cost	$	94,092,680		$	41,506,996		$	37,661,007		$	31,195,260		$	35,474,447
Affiliated investments at cost		—		$	29,563			—		$	188,915			—

43

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	201,167		$	89,763		$	186,708		$	173,683		$	94,300
Affiliated dividend income		1,325			701			889			1,502			1,176
Foreign withholding taxes		—			—			—			—			—
Total Income		202,492			90,464			187,597			175,185			95,476
EXPENSES:
Advisory fees		67,068			47,626			49,559			74,266			23,823
Administration & accounting fees		37,829			37,817			37,860			37,785			37,865
Offering costs		8,495			8,626			8,409			10,785			9,563
Audit		8,319			8,319			8,319			8,319			8,319
Sub-licensing		6,707			4,763			4,956			7,427			2,382
Listing fee and expenses		5,053			5,056			5,049			5,056			5,047
Custodian & transfer agent fees		3,485			3,483			3,491			3,476			3,492
Trustees		2,958			3,058			2,972			3,103			2,789
Printing		1,866			2,032			1,051			2,488			931
Registration & filings		529			697			543			848			830
Legal		220			297			144			324			136
Other expenses		4,034			3,978			4,005			4,036			3,994
Total Expenses		146,563			125,752			126,358			157,913			99,171
Less fees waived:
Advisory		(50,880	)		(47,626	)		(49,559	)		(50,582	)		(23,823	)
Other fees assumed by the Adviser		—			(7,585	)		(3,964	)		—			(34,816	)
Net Expenses		95,683			70,541			72,835			107,331			40,532
Net Investment Income (Loss)		106,809			19,923			114,762			67,854			54,944
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(205,078	)		(953,025	)		(520,936	)		(661,466	)		(349,617	)
In-kind redemptions		1,448,089			(412,362	)		857,182			2,953,577			362,500
Net realized gain (loss)		1,243,011			(1,365,387	)		336,246			2,292,111			12,883
Net change in unrealized appreciation/depreciation on investments		2,820,117			(1,124,998	)		(538,547	)		630,129			177,613
Net realized and unrealized gain (loss) on investments		4,063,128			(2,490,385	)		(202,301	)		2,922,240			190,496
Net increase (decrease) in net assets resulting from operations	$	4,169,937		$	(2,470,462	)	$	(87,539	)	$	2,990,094		$	245,440

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
INVESTMENT INCOME:
Unaffiliated dividend income	$	178,452		$	215,768		$	45,733		$	669,336		$	664,231
Affiliated dividend income		143			740			—			3,296			359
Foreign withholding taxes		—			—			—			—			—
Total Income		178,595			216,508			45,733			672,632			664,590
EXPENSES:
Advisory fees		184,983			120,519			79,317			89,024			114,857
Administration & accounting fees		37,838			37,753			37,801			42,912			42,912
Offering costs		11,224			11,951			9,866			—			—
Audit		8,319			8,319			8,319			8,319			8,319
Sub-licensing		18,498			12,052			7,932			5,341			6,891
Listing fee and expenses		5,082			5,060			5,060			5,069			5,089
Custodian & transfer agent fees		3,601			3,470			3,480			3,644			3,565
Trustees		3,608			3,390			3,120			3,354			3,629
Printing		6,979			3,543			2,848			4,304			6,997
Registration & filings		679			1,508			835			—			—
Legal		846			396			378			593			1,019
Other expenses		4,177			4,061			4,046			5,614			4,684
Total Expenses		285,834			212,022			163,002			168,174			197,962
Less fees waived:
Advisory		(34,132	)		(43,397	)		(50,024	)		(56,004	)		(53,242	)
Other fees assumed by the Adviser		—			—			—			—			—
Net Expenses		251,702			168,625			112,978			112,170			144,720
Net Investment Income (Loss)		(73,107	)		47,883			(67,245	)		560,462			519,870
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(2,041,811	)		(1,289,548	)		(1,944,284	)		(1,570,207	)		(1,662,209	)
In-kind redemptions		2,687,508			4,889,450			2,343,060			3,366,721			3,404,214
Net realized gain (loss)		645,697			3,599,902			398,776			1,796,514			1,742,005
Net change in unrealized appreciation/depreciation on investments		3,247,249			(1,399,955	)		1,275,723			226,701			(3,773,902	)
Net realized and unrealized gain (loss) on investments		3,892,946			2,199,947			1,674,499			2,023,215			(2,031,897	)
Net increase (decrease) in net assets resulting from operations	$	3,819,839		$	2,247,830		$	1,607,254		$	2,583,677		$	(1,512,027	)

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
	Six Months Ended October 31,2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31,2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31,2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	106,809		$	120,727		$	19,923		$	46,399		$	114,762		$	228,759
Net realized gain (loss) on investments		1,243,011			1,065,296			(1,365,387	)		866,240			336,246			401,327
Net change in unrealized appreciation/depreciation of investments		2,820,117			1,954,447			(1,124,998	)		810,173			(538,547	)		764,864
Net increase (decrease) in net assets resulting from operations		4,169,937			3,140,470			(2,470,462	)		1,722,812			(87,539	)		1,394,950
Undistributed net investment income included in the price of units issued and redeemed		20,631			9,184			49,802			(54,343	)		119,755			18,869
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(104,472	)		(110,650	)		(53,358	)		(32,796	)		(286,444	)		(154,080	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		27,067,987			27,194,924			79,840,551			39,571,339			25,449,539			23,102,425
Value of shares repurchased		(9,895,548	)		(11,236,886	)		(89,048,060	)		(24,104,957	)		(19,444,092	)		(13,078,964	)
Net income equalization		(20,631	)		(9,184	)		(49,802	)		54,343			(119,755	)		(18,869	)
Net increase (decrease) in net assets resulting from shares transactions		17,151,808			15,948,854			(9,257,311	)		15,520,725			5,885,692			10,004,592
Increase (Decrease) in Net Assets		21,237,904			18,987,858			(11,731,329	)		17,156,398			5,631,464			11,264,331
NET ASSETS:
Beginning of period		18,987,858			—			17,156,398			—			11,264,331			—
End of period	$	40,225,762		$	18,987,858		$	5,425,069		$	17,156,398		$	16,895,795		$	11,264,331
Undistributed net investment income at end of period	$	33,045		$	10,077		$	29,984		$	13,617		$	22,752		$	74,679
CHANGES IN SHARES OUTSTANDING:
Shares sold		800,000			1,000,000			2,900,000			1,500,000			900,000			900,000
Shares repurchased		(300,000	)		(400,000	)		(3,300,000	)		(900,000	)		(700,000	)		(500,000	)
Shares outstanding, beginning of period		600,000			—			600,000			—			400,000			—
Shares outstanding, end of period		1,100,000			600,000			200,000			600,000			600,000			400,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

46

	PowerShares Dynamic Energy Sector Portfolio						PowerShares Dynamic Financial Sector Portfolio
	Six Months Ended October 31,2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31,2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	67,854		$	26,672		$	54,944		$	65,061
Net realized gain (loss) on investments		2,292,111			473,132			12,883			(78,445	)
Net change in unrealized appreciation/depreciation of investments		630,129			3,323,475			177,613			440,110
Net increase (decrease) in net assets resulting from operations		2,990,094			3,823,279			245,440			426,726
Undistributed net investment income included in the price of units issued and redeemed		12,220			—			7,492			(10,327	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(68,772	)		(19,296	)		(74,056	)		(46,128	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		34,086,039			23,757,197			10,095,849			22,623,052
Value of shares repurchased		(20,161,061	)		(8,423,899	)		(5,210,457	)		(15,049,272	)
Net income equalization		(12,220	)		—			(7,492	)		10,327
Net increase (decrease) in net assets resulting from shares transactions		13,912,758			15,333,298			4,877,900			7,584,107
Increase (Decrease) in Net Assets		16,846,300			19,137,281			5,056,776			7,954,378
NET ASSETS:
Beginning of period		19,137,281			—			7,954,378			—
End of period	$	35,983,581		$	19,137,281		$	13,011,154		$	7,954,378
Undistributed net investment income at end of period	$	15,755		$	4,453		$	7,313		$	18,933
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,000,000			900,000			400,000			900,000
Shares repurchased		(600,000	)		(300,000	)		(200,000	)		(600,000	)
Shares outstanding, beginning of period		600,000			—			300,000			—
Shares outstanding, end of period		1,000,000			600,000			500,000			300,000

47

Statements of Changes in Net Assets (Continued)

	PowerShares Dynamic Healthcare Sector Portfolio						PowerShares Dynamic Industrials Sector Portfolio						PowerShares Dynamic Technology Sector Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For The Period October 12, 2006* Through April 30, 2007
OPERATIONS:
Net investment income (loss)	$	(73,107	)	$	(29,255	)	$	47,883		$	29,984		$	(67,245	)	$	(43,528	)
Net realized gain on investments		645,697			884,944			3,599,902			711,614			398,776			67,100
Net change in unrealized appreciation/depreciation of investments		3,247,249			1,141,247			(1,399,955	)		1,974,155			1,275,723			1,642,264
Net increase in net assets resulting from operations		3,819,839			1,996,936			2,247,830			2,715,753			1,607,254			1,665,836
Undistributed net investment income included in the price of units issued and redeemed		(53,937	)		(34,205	)		10,662			6,933			(55,552	)		(11,761	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			—			(65,984	)		(30,567	)		—			—
Tax return of capital		—			—			—			(6,775	)		—			—
Total distributions to shareholders		—			—			(65,984	)		(37,342	)		—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		63,476,385			68,579,509			96,798,840			34,518,651			39,012,248			30,855,070
Value of shares repurchased		(26,047,080	)		(13,393,410	)		(83,343,071	)		(10,787,729	)		(22,251,259	)		(10,310,621	)
Net income equalization		53,937			34,205			(10,662	)		(6,933	)		55,552			11,761
Net increase (decrease) in net assets resulting from shares transactions		37,483,242			55,220,304			13,445,107			23,723,989			16,816,541			20,556,210
Increase (Decrease) in Net Assets		41,249,144			57,183,035			15,637,615			26,409,333			18,368,243			22,210,285
NET ASSETS:
Beginning of period		57,183,035			—			26,409,333			—			22,210,285			—
End of period	$	98,432,179		$	57,183,035		$	42,046,948		$	26,409,333		$	40,578,528		$	22,210,285
Undistributed net investment income (loss)/distributions in excess of net investment income at end of period	$	(127,044	)	$	—		$	(7,439	)	$	—		$	(122,797	)	$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		2,200,000			2,500,000			3,100,000			1,300,000			1,400,000			1,200,000
Shares repurchased		(900,000	)		(500,000	)		(2,700,000	)		(400,000	)		(800,000	)		(400,000	)
Shares outstanding, beginning of period		2,000,000			—			900,000			—			800,000			—
Shares outstanding, end of period		3,300,000			2,000,000			1,300,000			900,000			1,400,000			800,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

48

	PowerShares Dynamic Telecommunications & Wireless Portfolio						PowerShares Dynamic Utilities Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	560,462		$	375,426		$	519,870		$	1,124,826
Net realized gain on investments		1,796,514			2,858,070			1,742,005			4,467,863
Net change in unrealized appreciation/depreciation of investments		226,701			2,042,772			(3,773,902	)		5,735,162
Net increase in net assets resulting from operations		2,583,677			5,276,268			(1,512,027	)		11,327,851
Undistributed net investment income included in the price of units issued and redeemed		—			(39,739	)		(109,914	)		119,398
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(161,381	)		(325,394	)		(494,512	)		(1,025,489	)
Tax return of capital		—			—			—			—
Total distributions to shareholders		(161,381	)		(325,394	)		(494,512	)		(1,025,489	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		16,633,613			30,113,496			24,004,400			90,348,494
Value of shares repurchased		(16,633,613	)		(33,127,001	)		(43,418,717	)		(63,932,035	)
Net income equalization		—			39,739			109,914			(119,398	)
Net increase (decrease) in net assets resulting from shares transactions		—			(2,973,766	)		(19,304,403	)		26,297,061
Increase (Decrease) in Net Assets		2,422,296			1,937,369			(21,420,856	)		36,718,821
NET ASSETS:
Beginning of period		33,605,962			31,668,593			59,579,481			22,860,660
End of period	$	36,028,258		$	33,605,962		$	38,158,625		$	59,579,481
Undistributed net investment income (loss)/distributions in excess of net investment income at end of period	$	474,465		$	75,384		$	68,127		$	152,683
CHANGES IN SHARES OUTSTANDING:
Shares sold		800,000			1,700,000			1,200,000			5,000,000
Shares repurchased		(800,000	)		(1,900,000	)		(2,200,000	)		(3,500,000	)
Shares outstanding, beginning of period		1,700,000			1,900,000			2,900,000			1,400,000
Shares outstanding, end of period		1,700,000			1,700,000			1,900,000			2,900,000

49

Financial Highlights

PowerShares Dynamic Basic Materials Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	31.65		$	25.56
Net investment income**		0.13			0.24
Net realized and unrealized gain on investments		4.90			6.03
Total from operations		5.03			6.27
Undistributed net investment income included in price of units issued and redeemed**		0.03			0.02
Distributions to shareholders from:
Net investment income		(0.14	)		(0.20	)
Net asset value at end of period	$	36.57		$	31.65
TOTAL RETURN***		16.01	%		24.69	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	40,226		$	18,988
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†		0.71	%†
Expenses, prior to waivers		1.09	%†		1.32	%†
Net investment income, net of waivers		0.80	%†		1.52	%†
Portfolio turnover rate ††		9	%		9	%

PowerShares Dynamic Consumer Discretionary Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.59		$	25.43
Net investment income**		0.04			0.09
Net realized and unrealized gain (loss) on investments		(1.50	)		3.34
Total from operations		(1.46	)		3.43
Undistributed net investment income included in price of units issued and redeemed**		0.09			(0.11	)
Distributions to shareholders from:
Net investment income		(0.09	)		(0.16	)
Net asset value at end of period	$	27.13		$	28.59
TOTAL RETURN***		(4.81	)%		13.11	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	5,425		$	17,156
Ratio to average net assets of:
Expenses, net of waivers		0.74	%†		0.72	%†
Expenses, prior to waivers		1.32	%†		1.41	%†
Net investment income, net of waivers		0.21	%†		0.65	%†
Portfolio turnover rate ††		41	%		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.

50

Financial Highlights (Continued)

PowerShares Dynamic Consumer Staples Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.16		$	25.25
Net investment income**		0.17			0.49
Net realized and unrealized gain (loss) on investments		(0.03	)		2.65
Total from operations		0.14			3.14
Undistributed net investment income included in price of units issued and redeemed**		0.18			0.04
Distributions to shareholders from:
Net investment income		(0.32	)		(0.27	)
Net asset value at end of period	$	28.16		$	28.16
TOTAL RETURN***		1.13	%		12.69	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	16,896		$	11,264
Ratio to average net assets of:
Expenses, net of waivers		0.73	%†		0.73	%†
Expenses, prior to waivers		1.27	%†		1.46	%†
Net investment income, net of waivers		1.15	%†		3.42	%†
Portfolio turnover rate ††		20	%		18	%

PowerShares Dynamic Energy Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	31.90		$	25.80
Net investment income**		0.08			0.05
Net realized and unrealized gain on investments		3.91			6.08
Total from operations		3.99			6.13
Undistributed net investment income included in price of units issued and redeemed**		0.01			—
Distributions to shareholders from:
Net investment income		0.08			(0.03	)
Net asset value at end of period	$	35.98		$	31.90
TOTAL RETURN***		13.04	%		23.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	35,984		$	19,137
Ratio to average net assets of:
Expenses, net of waivers		0.72	%†		0.71	%†
Expenses, prior to waivers		1.06	%†		1.22	%†
Net investment income, net of waivers		0.46	%†		0.28	%†
Portfolio turnover rate ††		28	%		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.

51

Financial Highlights (Continued)

PowerShares Dynamic Financial Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	26.51		$	25.16
Net investment income**		0.15			0.13
Net realized and unrealized gain (loss) on investments		(0.48	)		1.33
Total from operations		(0.33	)		1.46
Undistributed net investment income included in price of units issued and redeemed**		0.02			(0.02	)
Distributions to shareholders from:
Net investment income		(0.18	)		(0.09	)
Net asset value at end of period	$	26.02		$	26.51
TOTAL RETURN***		(1.17	)%		5.72	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	13,011		$	7,954
Ratio to average net assets of:
Expenses, net of waivers		0.85	%†		0.72	%†
Expenses, prior to waivers		2.08	%†		1.38	%†
Net investment income, net of waivers		1.15	%†		0.87	%†
Portfolio turnover rate ††		28	%		33	%

PowerShares Dynamic Healthcare Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.59		$	25.01
Net investment loss**		(0.03	)		(0.04	)
Net realized and unrealized gain on investments		1.29			3.67
Total from operations		1.26			3.63
Undistributed net investment income included in price of units issued and redeemed**		(0.02	)		(0.05	)
Net asset value at end of period	$	29.83		$	28.59
TOTAL RETURN***		4.34	%		14.31	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	98,432		$	57,183
Ratio to average net assets of:
Expenses, net of waivers		0.68	%†		0.71	%†
Expenses, prior to waivers		0.77	%†		1.20	%†
Net investment loss, net of waivers		(0.20	)%†		(0.31	)%†
Portfolio turnover rate ††		41	%		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.

52

Financial Highlights (Continued)

PowerShares Dynamic Industrials Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	29.34		$	25.72
Net investment income**		0.03			0.04
Net realized and unrealized gain on investments		2.92			3.62
Total from operations		2.95			3.66
Undistributed net investment income included in price of units issued and redeemed**		0.01			0.01
Distributions to shareholders from:
Net investment income		0.04			(0.04	)
Tax return of capital		—			(0.01	)
Total distributions		0.04			(0.05	)
Net asset value at end of period	$	32.34		$	29.34
TOTAL RETURN***		10.37	%		14.28	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	42,047		$	26,409
Ratio to average net assets of:
Expenses, net of waivers		0.70	%†		0.71	%†
Expenses, prior to waivers		0.88	%†		1.19	%†
Net investment income, net of waivers		0.20	%†		0.30	%†
Portfolio turnover rate ††		32	%		14	%

PowerShares Dynamic Technology Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	27.76		$	25.54
Net investment loss**		(0.06	)		(0.07	)
Net realized and unrealized gain on investments		1.33			2.31
Total from operations		1.27			2.24
Undistributed net investment income included in price of units issued and redeemed**		(0.05	)		(0.02	)
Net asset value at end of period	$	28.98		$	27.76
TOTAL RETURN***		4.39	%		8.69	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	40,579		$	22,210
Ratio to average net assets of:
Expenses, net of waivers		0.71	%†		0.71	%†
Expenses, prior to waivers		1.02	%†		1.25	%†
Net investment loss, net of waivers		(0.42	)%†		(0.49	)%†
Portfolio turnover rate ††		33	%		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.

53

Financial Highlights (Continued)

PowerShares Dynamic Telecommunications & Wireless Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	19.77		$	16.67		$	14.95
Net investment income**		0.33			0.22			0.05
Net realized and unrealized gain on investments		1.18			3.10			1.70
Total from operations		1.51			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		(0.09	)		(0.20	)		(0.03	)
Net asset value at end of period	$	21.19		$	19.77		$	16.67
TOTAL RETURN***		7.67	%		19.93	%		11.74	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	36,028		$	33,606		$	31,669
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.66	%		0.67	%†
Expenses, prior to waivers and reimbursements		0.94	%†(a)		1.12	%		0.97	%†
Net investment income, net of waivers and reimbursements		3.15	%†		1.24	%		0.79	%†
Portfolio turnover rate ††		23	%		43	%		3	%

PowerShares Dynamic Utilities Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	20.54		$	16.33		$	15.32
Net investment income**		0.23			0.44			0.24
Net realized and unrealized gain (loss) on investments		(0.42	)		4.11			0.97
Total from operations		(0.19	)		4.55			1.21
Undistributed net investment income included in price of units issued and redeemed**		(0.05	)		0.05			(0.01	)
Distributions to shareholders from:
Net investment income		(0.22	)		(0.39	)		(0.19	)
Net asset value at end of period	$	20.08		$	20.54		$	16.33
TOTAL RETURN***		(1.15	)%		28.48	%		7.82	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	38,159		$	59,579		$	22,861
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.69	%†
Expenses, prior to waivers and reimbursements		0.86	%†(b)		0.92	%		0.89	%†
Net investment income, net of waivers and reimbursements		2.26	%†		2.34	%		2.62	%†
Portfolio turnover rate ††		51	%		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.

(a)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.

54

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of 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"

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

55

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

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

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

56

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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, 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, sub-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 Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the six months ended October 31, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived			Expenses Assumed
Dynamic Basic Materials Sector Portfolio	$	(50,880	)	$	—
Dynamic Consumer Discretionary Sector Portfolio		(47,626	)		(7,585	)
Dynamic Consumer Staples Sector Portfolio		(49,559	)		(3,964	)
Dynamic Energy Sector Portfolio		(50,582	)		—
Dynamic Financial Sector Portfolio		(23,823	)		(34,816	)
Dynamic Healthcare Sector Portfolio		(34,132	)		—
Dynamic Industrials Sector Portfolio		(43,397	)		—
Dynamic Technology Sector Portfolio		(50,024	)		—
Dynamic Telecommunications & Wireless Portfolio		(56,004	)		—
Dynamic Utilities Portfolio		(53,242	)		—

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.

57

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

During the six months ended October 31, 2007, the Fund that reimbursed expenses to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbusements		Net Waivers
Dynamic Telecommunications & Wireless Portfolio	$	(57,364	)	$	1,360	$	(56,004	)
Dynamic Utilities Portfolio		(54,655	)		1,413		(53,242	)

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

The amounts subject to reimbursement to the Adviser at October 31, 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	$	99,164	$	99,164	$	99,164
Dynamic Consumer Discretionary Sector Portfolio		10,427		10,427		10,427
Dynamic Consumer Staples Sector Portfolio		102,377		102,377		102,377
Dynamic Energy Sector Portfolio		99,101		99,101		99,101
Dynamic Financial Sector Portfolio		108,186		108,186		108,186
Dynamic Healthcare Sector Portfolio		81,059		81,059		81,059
Dynamic Industrials Sector Portfolio		91,454		91,454		91,454
Dynamic Technology Sector Portfolio		98,385		98,385		98,385
Dynamic Telecommunications & Wireless Portfolio		226,083		226,083		226,083
Dynamic Utilities Portfolio		223,997		223,997		223,997

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 Agreement

The Adviser has entered into a licensing agreement 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 sub-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. Effective July 2, 2007, The Bank of New York became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

58

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

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 may 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 October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation
Dynamic Basic Materials Sector Portfolio	$	35,408,556	$	4,774,564		$	5,634,183	$	(859,619	)
Dynamic Consumer Discretionary Sector Portfolio		5,750,830		(314,825	)		126,827		(441,652	)
Dynamic Consumer Staples Sector Portfolio		16,684,391		226,317			986,738		(760,421	)
Dynamic Energy Sector Portfolio		31,980,865		3,953,604			4,533,447		(579,843	)
Dynamic Financial Sector Portfolio		12,376,551		617,723			875,984		(258,261	)
Dynamic Healthcare Sector Portfolio		94,092,680		4,388,496			7,814,127		(3,425,631	)
Dynamic Industrials Sector Portfolio		41,536,559		574,200			2,020,588		(1,446,388	)
Dynamic Technology Sector Portfolio		37,661,007		2,917,987			3,878,383		(960,396	)
Dynamic Telecommunications & Wireless Portfolio		31,384,175		4,655,414			6,145,880		(1,490,466	)
Dynamic Utilities Portfolio		35,474,447		2,534,468			3,127,260		(592,792	)

59

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

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

60

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

	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
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

61

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 six months ended October 31, 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	$	2,645,779	$	2,560,315
Dynamic Consumer Discretionary Sector Portfolio		6,416,396		6,758,600
Dynamic Consumer Staples Sector Portfolio		3,725,370		3,773,887
Dynamic Energy Sector Portfolio		8,394,845		8,826,062
Dynamic Financial Sector Portfolio		2,644,755		2,850,586
Dynamic Healthcare Sector Portfolio		30,351,631		30,579,838
Dynamic Industrials Sector Portfolio		14,385,077		14,698,236
Dynamic Technology Sector Portfolio		10,337,066		10,560,181
Dynamic Telecommunications & Wireless Portfolio		8,397,952		8,026,647
Dynamic Utilities Portfolio		22,777,699		24,837,280

For the six months ended October 31, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Basic Materials Sector Portfolio	$	25,173,348	$	8,201,509
Dynamic Consumer Discretionary Sector Portfolio		80,913,331		89,855,603
Dynamic Consumer Staples Sector Portfolio		22,086,431		16,154,546
Dynamic Energy Sector Portfolio		30,728,484		16,515,511
Dynamic Financial Sector Portfolio		7,563,077		2,580,463
Dynamic Healthcare Sector Portfolio		64,619,473		27,083,670
Dynamic Industrials Sector Portfolio		95,988,073		82,239,640
Dynamic Technology Sector Portfolio		37,943,408		21,068,531
Dynamic Telecommunications & Wireless Portfolio		15,212,435		15,386,056
Dynamic Utilities Portfolio		22,659,639		39,993,865

62

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

There were no purchases or sales of U.S. government or government agency obligations for the six months ended October 31, 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.

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferral Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Only authorized participants are permitted to create or redeem from the Funds. 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 Pronouncement

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.

63

Supplemental Information (Unaudited)

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)		89	None
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006- February 2007); 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)		89	None

  *  This is the date the Trustee began serving 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 19 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
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)		89	None
Philip M. Nussbaum (46) 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

65

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustee	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
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007-Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006- August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995-February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

66

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)		89	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 19 Portfolios advised by the Adviser.

67

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 (53) 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 (42) 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 (45) 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.

68

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 Semi-Annual Report.
69

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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70

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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71

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

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72

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

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73

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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74

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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75

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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the Funds independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-3

2007 Semi-Annual Report to Shareholders

31 October 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	40
Fees and Expenses	42
Industry Portfolios
Schedules of Investments
PowerShares Dynamic Banking Portfolio	45
PowerShares Dynamic Biotechnology & Genome Portfolio	46
PowerShares Dynamic Building & Construction Portfolio	47
PowerShares Dynamic Energy Exploration & Production Portfolio	48
PowerShares Dynamic Food & Beverage Portfolio	49
PowerShares Dynamic Hardware & Consumer Electronics Portfolio	50
PowerShares Dynamic Healthcare Services Portfolio	51
PowerShares Dynamic Insurance Portfolio	52
PowerShares Dynamic Leisure and Entertainment Portfolio	53
PowerShares Dynamic Media Portfolio	54
PowerShares Dynamic Networking Portfolio	55
PowerShares Dynamic Oil & Gas Services Portfolio	56
PowerShares Dynamic Pharmaceuticals Portfolio	57
PowerShares Dynamic Retail Portfolio	58
PowerShares Dynamic Semiconductors Portfolio	59
PowerShares Dynamic Software Portfolio	60
Statements of Assets and Liabilities	62
Statements of Operations	64
Statements of Changes in Net Assets	66
Financial Highlights	72
Notes to Financial Statements	80
Supplemental Information	91

To My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management — Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500^® Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potential recession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25% to 4.75%, the first cut in four years, and the discount rate moved from 5.75% to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

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.

The portfolio returned -9.20% compared to the Dow Jones Regional Banks Index which returned-11.72%. 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 biggest laggards were Comercia, KeyCorp, Sterling Financial, Fifth Third Bancorp and JPMorgan Chase &Co. Northern Trust and Chittenden added positively to performance for the period.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Commercial Banks-Central US	18.6
Commercial Banks-Eastern US	16.0
Super-Regional Banks-US	13.7
Commercial Banks-Southern US	13.3
Commercial Banks-Western US	13.3
Fiduciary Banks	8.9
Finance-Investment Banker/Broker	5.5
S&L/Thrifts-Western US	4.4
S&L/Thrifts-Central US	3.1
S&L/Thrifts-Eastern US	2.8
Money Market Fund	0.3
Other	0.1

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	46.4
Small-Cap Value	39.8
Large-Cap Value	10.4
Mid-Cap Growth	3.1
Small-Cap Growth	0.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Northern Trust Corp.	6.3
JPMorgan Chase & Co.	5.5
Marshall & Illsley Corp.	5.0
Bank of America Corp.	4.9
M&T Bank Corp.	4.9
UnionBanCal Corp.	4.7
KeyCorp.	4.4
Comerica, Inc.	4.3
Commerce Bancorp, Inc.	3.1
TFS Financial Corp.	3.1
Total	46.2

4

Manager's Analysis (Continued)

PowerShares Dynamic Banking Portfolio (ticker: PJB)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Banking IntellidexSM Index		-8.71		-10.96		-12.24		-12.85
Dow Jones Regional Banks Index		-11.72		-9.68		-9.93		-10.43
KBW Banking Index		-9.48		-12.80		-13.83		-14.52

Fund

NAV Return	-9.20	-11.89	-13.18	-13.82
Share Price Return	-9.07	-11.62	-13.04	-13.67

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 2.73%. In the Financial Highlights section of this Semi-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 1.02%. 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, 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 Dow Jones Regional Banks Index and the KBW Banking Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 50 and 24 common stocks, respectively.

^† Average annualized.

5

Manager's Analysis

PowerShares Dynamic Biotechnology & Genome Portfolio (ticker: PBE)

The PowerShares Dynamic Biotechnology & Genome Portfolio (Fund) 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.

The Fund returned 1.92% underperforming the S&P SuperComposite Biotechnology Index which returned 6.49% during the same period. Biotechnology, which has the most weight in the Fund, contributed the most to performance for the portfolio. Isis Pharmaceuticals, Myriad Genetics and Biogen led the way in the biotechnology industry. There were several stocks which impacted the portfolio negatively including ViroPharama in the pharmaceuticals industry, Bruker BioSciences in the life sciences tools & services industry along with Vertex Pharmaceuticals and Portalix BioTherapeutics in biotechnology.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Biotechnology	54.5
Pharmaceuticals	45.7
Other	(0.2	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	48.9
Mid-Cap Growth	24.4
Large-Cap Growth	21.4
Large-Cap Value	5.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Gilead Sciences, Inc.	5.9
ImClone Systems, Inc.	5.8
Genzyme Corp.	5.6
Biogen Idec, Inc.	5.4
Millennium Pharmaceuticals, Inc.	5.4
Amgen, Inc.	5.3
Genentech, Inc.	4.6
Vertex Pharmaceuticals, Inc.	3.8
Isis Pharmaceuticals, Inc.	3.6
Alnylam Pharmaceuticals, Inc.	3.4
Total	48.8

6

Manager's Analysis (Continued)

PowerShares Dynamic Biotechnology & Genome Portfolio (ticker: PBE)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Biotechnology & Genome IntellidexSM Index		1.93		6.66		12.96		33.34
S&P SuperComposite Biotechnology Index		6.49		6.90		15.17		39.58
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	1.92	6.21	13.12	33.72
Share Price Return	1.74	5.99	13.01	33.40

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 0.65%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio (before expense reimbursements to the Adviser) 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, 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 S&P SuperComposite Biotechnology Index and the Russell 3000^® Index are an unmanaged indices used as a measurement of change in stock market conditions based on the average performance of 14 and 2,918 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.

During the reporting period, the Fund has returned 7.70%, underperforming the S&P SuperComposite Construction & Engineering Index which returned 58.57% during the same period. The Fund had poor allocation across the industries relative to the S&P index. The Fund was underweight the construction & engineering industry, 23% vs. 100%, which had a positive return of 48.10%.

The construction materials and specialty retail were the two industries which hurt the Fund's performance. Within construction materials, Vulcan Materials and Martin Marietta Materials, each down 30.23% and 10.91% respectively, were the laggards. Within specialty retail, Home Depot, Lowe's and Tractor Supply each had negative returns for the period. Jacobs Engineering Group, Fluor Corporation were the leading contributors to performance within the construction & engineering industry along with Valmont Industries and Manitowac within machinery.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Engineering & Construction	30.0
Building Materials	15.2
Machinery-Construction & Mining	11.7
Retail	10.5
Machinery-Diversified	5.6
Electric	5.5
Textiles	4.8
Environmental Control	3.2
Metal Fabricate/Hardware	2.8
Commercial Services	2.8
Telecommunications	2.8
Office Furnishings	2.8
Home Builders	2.3
Other	0.0

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	24.9
Mid-Cap Growth	22.1
Small-Cap Value	20.8
Mid-Cap Value	19.2
Large-Cap Value	13.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Jacobs Engineering Group, Inc.	6.4
Fluor Corp.	6.0
American Standard Cos., Inc.	4.9
Caterpillar, Inc.	4.8
Mohawk Industries, Inc.	4.8
Terex Corp.	4.5
Lowe's Cos., Inc.	4.2
Home Depot (The), Inc.	4.0
Aecom Technology Corp.	3.3
Manitowoc (The) Co., Inc.	3.3
Total	46.2

8

Manager's Analysis (Continued)

PowerShares Dynamic Building & Construction Portfolio (ticker: PKB)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Building and Construction IntellidexSM Index		8.15		29.57		16.33		35.72
S&P SuperComposite Construction & Engineering Index		58.57		93.94		57.68		150.80
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	7.70	28.69	14.81	32.07
Share Price Return	7.46	28.53	14.67	31.73

\  

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 1.54%. In the Financial Highlights section of this Semi-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 1.12%. 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, 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 S&P SuperComposite Construction & Engineering 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 9 and 2,918 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 solid 17.42% relative to the S&P SuperComposite Oil & Gas Exploration & Production Index which returned 26.47%. During the time period, the price of oil rose dramatically nearing the $100 per barrel range causing the energy industry to outperform. The top contributors to the portfolio's performance were Occidental Petroleum, Apache, Devon Engery, Whiting Petroleum and Chevron Petroleum Development. Mariner Energy and BreitBrun Energy Partners were two of the largest laggards.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Oil Companies-Exploration & Production	54.7
Oil Companies-Integrated	18.8
Oil Refining & Marketing	18.4
Gas-Distribution	2.8
Pipelines	2.7
Oil & Gas Drilling	2.6
Other	0.0

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	39.5
Mid-Cap Value	28.6
Small-Cap Value	14.4
Mid-Cap Growth	9.3
Small-Cap Growth	8.2

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Apache Corp.	5.8
Devon Energy Corp.	5.3
Occidental Petroleum Corp.	5.2
Hess Corp.	5.0
Marathon Oil Corp.	4.7
Exxon Mobil Corp.	4.6
Chevron Corp.	4.5
Valero Energy Corp.	4.4
Whiting Petroleum Corp.	3.4
Denbury Resources, Inc.	3.3
Total	46.2

10

Manager's Analysis (Continued)

PowerShares Dynamic Energy Exploration & Production Portfolio (ticker: PXE)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Energy Exploration & Production IntellidexSM Index		17.86		36.87		25.49		58.17
S&P SuperComposite Oil & Gas Exploration & Production Index		26.47		39.95		24.95		56.81
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	17.42	35.77	24.96	56.63
Share Price Return	17.37	35.63	24.80	56.24

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 0.72%. In the Financial Highlights section of this Semi-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, 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 S&P SuperComposite Oil & Gas Exploration & Production 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 24 and 2,918 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 which seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of that equity index.

The Fund returned 3.36% but underperformed the S&P SuperComposite Food & Tobacco Products Index which returned 7.42% during the same period. Beverage and chemical stocks performed the best during the period. An overweight in food products, which underperformed, contributed negatively to the Fund's performance. Hanson Natural Corporation, Monsanto Co. and Yum! Brands were the leaders and contributed the most to the Fund's overall performance. Seaboard Corporation a food products company and Winn-Dixie Stores were the biggest laggards to the Fund.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Food	58.0
Beverages	16.0
Retail	13.8
Chemicals	6.5
Agriculture	3.2
Miscellaneous Manufacturing	2.5
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	38.9
Large-Cap Value	20.1
Large-Cap Growth	16.2
Small-Cap Value	15.8
Mid-Cap Growth	9.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Monsanto Co.	6.5
Yum! Brands, Inc.	5.7
Kroger (The) Co.	5.1
Wm. Wrigley Jr. Co.	4.9
General Mills, Inc.	4.8
Sysco Corp.	4.8
Campbell Soup Co.	4.6
Kellogg Co.	4.5
Hansen Natural Corp.	3.8
Fresh Del Monte Produce, Inc. (Cayman Islands)	3.5
Total	48.2

12

Manager's Analysis (Continued)

PowerShares Dynamic Food & Beverage Portfolio (ticker: PBJ)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Food & Beverage IntellidexSM Index		3.76		14.44		10.26		25.94
S&P SuperComposite Food & Tobacco Products Index		7.42		18.08		53.77		176.27
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	3.36	13.73	9.59	24.07
Share Price Return	3.25	13.46	9.56	24.00

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 1.10%. In the Financial Highlights section of this Semi-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, 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 S&P SuperComposite Food & Tobacco Products 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 42 and 2,918 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.

The Fund returned a strong 18.11% while the comparable the S&P SuperComposite Technology Hardware & Equipment Index returned 21.82%. Stocks which contributed the most to the solid performance of the fund included Apple, EMC Corp., Synaptics, Western Digital and Garmin Ltd. Stock selection in the computers & peripherals contributed to underperformance of the portfolio, specifically overweight positions in Network Appliance, Lexmark International and Gateway.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Computers	47.3
Elecronics	25.0
Telecommunications	7.5
Office/Business Equipment	6.9
Semiconductors	5.7
Micellaneous Manufacturing	2.7
Machinery-Diversified	2.7
Internet	2.1
Other	0.1

Style Allocation (%)

as of 31 October 2007

Large-Cap Growth	26.8
Small-Cap Value	26.3
Mid-Cap Growth	19.1
Mid-Cap Value	15.1
Small-Cap Growth	8.1
Large-Cap Value	4.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Apple, Inc.	6.3
EMC Corp.	5.9
Network Appliance, Inc.	5.2
Dell, Inc.	5.0
Garmin Ltd. (Cayman Islands)	4.8
Hewlett-Packard Co.	4.8
Xerox Corp.	4.7
Agilent Technologies, Inc.	4.6
Brocade Communications Systems, Inc.	3.4
Synaptics, Inc.	3.1
Total	47.8

14

Manager's Analysis (Continued)

PowerShares Dynamic Hardware & Consumer Electronics Portfolio (ticker: PHW)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Hardware & Consumer Electronics IntellidexSM Index		18.25		25.79		19.04		39.44
S&P SuperComposite Technology Hardware & Equipment Index		21.82		32.22		19.40		40.24
Russell 3000® Index		5.17		14.53		13.25		26.78

Fund

NAV Return	18.11	25.25	18.51	38.10
Share Price Return	17.97	25.10	18.41	37.90

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 1.83%. In the Financial Highlights section of this Semi-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 1.50%. 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, 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 S&P SuperComposite Technology Hardware & 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 107 and 2,918 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

Over the past six months the Fund has returned 3.53% and is up 15.79% since its launch. During the reporting period, the Fund outperformed the Dow Jones US Healthcare Index which was up 1.29% as well as the narrower Dow Jones Healthcare Providers Index up 2.45%. Those stocks which contributed the most to the portfolio's performance were Waters Corporation and Baxter International. WellCare Group, Apria Healthcare Group, Emergency Medical Services, HealthSpring all within health care providers & services contributed positively to the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Medical-HMO	13.4
Pharmacy Services	10.7
Medical Instruments	8.4
Medical-Outpatient/Home Medical Care	7.7
Medical-Biomedical/Gene	5.9
Health Care Cost Containment	5.5
Medical Products	5.2
Life/Health Insurance	4.8
Medical-Wholesale Drug Distribution	4.7
Instruments-Scientific	3.2
Chemicals-Specialty	3.0
Dialysis Centers	2.9
Instruments-Controls	2.9
Medical Labs & Testing Services	2.9
Consulting Services	2.9
Medical-Hospitals	2.8
Dental Supplies & Equipment	2.7
Medical-Nursing Homes	2.7
Hospital Beds/Equipment	2.6
Therapeutics	2.6
Vitamins & Nutrition Products	2.5
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	36.9
Mid-Cap Value	23.2
Large-Cap Growth	21.1
Small-Cap Growth	8.8
Small-Cap Value	5.2
Large-Cap Value	4.8

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
McKesson Corp.	5.5
Express Scripts, Inc.	5.5
Medco Health Solutions, Inc.	5.2
Aetna, Inc.	5.2
Baxter International, Inc.	5.2
Coventry Health Care, Inc.	5.0
CIGNA Corp.	4.8
AmerisourceBergen Corp.	4.7
Waters Corp.	3.2
Invitrogen Corp.	3.0
Total	47.3

16

Manager's Analysis (Continued)

PowerShares Dynamic Healthcare Services Portfolio (ticker: PTJ)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Healthcare Services IntellidexSM Index		3.89		19.73		16.68		17.66
Dow Jones US Healthcare Index		1.29		9.37		9.08		9.59
Dow Jones Healthcare Providers Index		2.45		18.36		14.28		15.11

Fund

NAV Return	3.53	18.78	15.79	16.68
Share Price Return	3.42	18.89	15.76	16.64

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 1.57%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.69% while the Fund's gross annualized total operating expense ratio was 0.97%. 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, 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 Dow Jones US Healthcare Index and the Dow Jones Healthcare Providers Index are unmanaged indices used as a measurement of change in stock market conditions based on the average performance of approximately 50 and 180 common stocks, respectively.

^† Average annualized.

17

Manager's Analysis

PowerShares Dynamic Insurance Portfolio (ticker: PIC)

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

The Fund returned -3.87% during the reporting period, outperforming the S&P SuperComposite Insurance Index which returned -5.76% during the same period. Stock selection in mid cap value stocks contributed positively to performance while stock selection within large cap value stocks contributed negative to the Fund's performance. Those stocks which contributed positively to the portfolio's performance were Commerce Group, Markel Corp., Loews, Navigators Group and Willis Group Holdings Ltd. CAN Financial, Allstate, Selective Insurance Group, American Financial Group and Lincoln National were among the Fund's laggards.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Property/Casualty Insurance	32.1
Life/Health Insurance	26.5
Multi-Line Insurance	25.5
Reinsurance	8.2
Insurance Brokers	7.7
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	56.0
Large-Cap Value	29.9
Small-Cap Value	14.1

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Hartford Financial Services Group (The), Inc.	5.2
Prudential Financial, Inc.	5.2
AON Corp.	5.0
Chubb (The) Corp.	5.0
Travelers (The) Cos., Inc.	5.0
Lincoln National Corp.	4.9
Allstate (The) Corp.	4.6
XL Capital Ltd., Class A (Cayman Islands)	4.5
StanCorp Financial Group (The), Inc.	3.1
Commerce Group, Inc.	3.0
Total	45.5

18

Manager's Analysis (Continued)

PowerShares Dynamic Insurance Portfolio (ticker: PIC)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Insurance IntellidexSM Index		-3.62		4.00		9.39		19.87
S&P SuperComposite Insurance Index		-5.76		2.67		6.90		14.43
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	-3.87	3.42	8.84	18.59
Share Price Return	-3.77	3.62	8.90	18.73

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 0.91%. In the Financial Highlights section of this Semi-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, 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 S&P SuperComposite Insurance 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 55 and 2,918 common stocks, respectively.

^† Average annualized.

19

Manager's Analysis

PowerShares Dynamic Leisure and Entertainment Portfolio (ticker: PEJ)

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

The PowerShares Dynamic Leisureand Entertainment Portfolio returned -1.48% during the reporting period. The Fund underperformed the S&P SuperComposite Hotels, Restaurants & Leisure Index which returned 6.61%. The Fund was lead by Yum! Brands, McDonald's, Chipotle Mexican Grill and WMS Industries in the hotels restaurants & leisure industry along with Expedia and Priceline.com in the internet & catalog retail industry. Ambassadors Group, Ruby Tuesday, Starwood Hotels & Resorts Worldwide and IAC/InterActiveCorp were the laggards for the period.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Retail	41.3
Lodging	19.8
Media	15.1
Entertainment	13.9
Leisure Time	4.4
Internet	3.0
Commercial Services	2.4
Money Market Fund	0.1
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	20.7
Large-Cap Growth	20.5
Mid-Cap Growth	18.1
Small-Cap Value	17.5
Large-Cap Value	16.4
Small-Cap Growth	6.8

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Yum! Brands, Inc.	6.0
McDonald's Corp.	5.9
Liberty Media Corp. Capital Series A	5.6
MGM MIRAGE	5.3
Walt Disney (The) Co.	5.0
Starwood Hotels & Resorts Worldwide, Inc.	4.5
Marriott Intenational, Inc., Class A	4.5
CBS Corp., Class B	4.4
Chipotle Mexican Grill, Inc., Class A	3.6
WMS Industries, Inc.	3.1
Total	47.9

20

Manager's Analysis (Continued)

PowerShares Dynamic Leisure and Entertainment Portfolio (ticker: PEJ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Leisure and Entertainment IntellidexSM Index		-1.22		4.16		9.82		24.77
S&P SuperComposite Hotels, Restaurants & Leisure Index		6.61		12.33		14.08		36.50
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	-1.48	3.58	9.16	22.93
Share Price Return	-1.70	3.49	9.07	22.70

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 Semi-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, 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 S&P SuperComposite Hotels, Restaurants & Leisure 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 46 and 2,918 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 which 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 Media Portfolio returned 0.21% during the reporting period outperforming the S&P SuperComposite Media Index which dropped 7.72%. During the reporting period, media stocks underperformed as a group. Positive stock selection in the Fund helped to contribute to the funds performance. Internet software & services companies Google and Sohu.com along with media companies Dow Jones & Co. and Gemstar-TV Guide International contributed the most to the Fund's performance. Getty Images, McGraw-Hill Cos. and Gannett Co. were the laggards in the Fund.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Media	60.3
Internet	15.9
Advertising	9.3
Commercial Services	8.2
Computers	3.2
Entertainment	2.7
Money Market Fund	0.4
Other	0.0

Style Allocation (%)

as of 31 October 2007

Large-Cap Growth	27.2
Small-Cap Growth	25.4
Large-Cap Value	14.0
Small-Cap Value	11.5
Mid-Cap Growth	11.3
Mid-Cap Value	10.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Google, Inc., Class A	6.4
EchoStar Communications Corp., Class A	5.4
Liberty Media Corp. - Capital, Series A	5.4
DIRECTV Group (The), Inc.	5.3
Walt Disney (The) Co.	4.8
Omnicom Group, Inc.	4.7
Sohu.com, Inc.	4.7
McGraw-Hill (The) Cos., Inc.	4.6
CBS Corp., Class B	4.3
IHS, Inc., Class A	3.2
Total	48.8

22

Manager's Analysis (Continued)

PowerShares Dynamic Media Portfolio (ticker: PBS)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Media IntellidexSM Index		0.50		9.48		5.24		12.82
S&P SuperComposite Media Index		-7.72		-3.44		4.76		11.60
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	0.21	8.86	4.55	11.04
Share Price Return	0.27	8.65	4.55	11.04

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 1.17%. In the Financial Highlights section of this Semi-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 0.81%. 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, 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 S&P SuperComposite Media 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 32 and 2,918 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 which 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 Networking Portfolio posted a solid 11.56% return during the reporting period relative to the S&P SuperComposite Communications Equipment Index which returned 14.32%. Communications equipment companies led the Fund with Juniper, Avaya, Comtech Telecommunications and Cisco along with Citrix Systems and McAfee in the Software industry. Nextwave Wireless, Tellabs and Arris Group in communications equipment industry and Echelon Corporation an electronic equipment & instruments company were a drag on the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Telecommunications	52.4
Semiconductors	18.9
Internet	17.9
Software	5.5
Computers	5.4
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	37.1
Mid-Cap Growth	25.1
Large-Cap Growth	19.2
Small-Cap Value	14.7
Mid-Cap Value	3.9

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Citrix Systems, Inc.	5.5
McAfee, Inc.	5.4
Juniper Networks, Inc.	5.1
QUALCOMM, Inc.	5.0
Cisco Systems, Inc.	4.8
F5 Networks, Inc.	4.8
Broadcom Corp., Class A	4.4
Tellabs, Inc.	3.9
Brocade Communications Systems, Inc.	3.4
Comtech Telecommunications Corp.	3.2
Total	45.5

24

Manager's Analysis (Continued)

PowerShares Dynamic Networking Portfolio (ticker: PXQ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Networking IntellidexSM Index		11.94		25.62		15.58		40.78
S&P SuperComposite Communications Equipment Index		14.32		23.14		16.57		43.62
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	11.56	24.86	15.11	39.31
Share Price Return	11.54	24.69	15.10	39.27

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 1.15%. In the Financial Highlights section of this Semi-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 1.19%. 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, 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 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 35 and 2,918 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 which 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 a solid 20.71% during the reporting period. The Fund benefited most from the strong demand for energy and rising price of crude oil. McDermott International and Foster Wheeler Ltd. were the largest contributors to the Fund's strong performance. There were very few companies which were laggards during the period due to the strong demand for energy. Those that lagged were Pioneer Drilling, Grew Wolf and Parker Drilling.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Oil & Gas Services	55.5
Oil & Gas	36.4
Transportation	4.9
Engineering & Construction	3.3
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	46.2
Large-Cap Growth	31.0
Small-Cap Value	12.9
Mid-Cap Value	9.9

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
National Oilwell Varco, Inc.	5.4
Halliburton Co.	5.4
Transocean, Inc. (Cayman Islands)	5.4
Noble Corp. (Cayman Islands)	5.1
Diamond Offshore Drilling, Inc.	5.1
Baker Hughes, Inc.	4.9
Schlumberger Ltd. (Netherlands)	4.8
Smith International, Inc.	4.7
FMC Technologies, Inc.	3.3
McDermott International, Inc. (Panama)	3.3
Total	47.4

26

Manager's Analysis (Continued)

PowerShares Dynamic Oil & Gas Services Portfolio (ticker: PXJ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Oil Services IntellidexSM Index		21.05		42.40		29.26		67.91
S&P SuperComposite Oil & Gas Equipment & Services Index		26.20		48.21		36.80		88.26
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	20.71	41.67	28.91	66.77
Share Price Return	20.42	41.50	28.77	66.39

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 0.65%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net annualized total operating expense ratio was determined to be 0.63% while the Fund's gross annualized total operating expense ratio (before expense 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 actually 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 S&P SuperComposite Oil & Gas Equipment & Services 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 28 and 2,918 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 which 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 Pharmaceuticals Portfolio dropped 2.49% as pharmaceutical stocks lagged during the period. The S&P SuperComposite Pharmaceutical Index posted a negative 1.03% return during the same period. For the year, the Fund remains inline with the index returning 6.88% vs. 6.59% for the index. Biogen and Genzyme, both biotechnology stocks, contributed strongly to the Fund's performance along with MGI Pharma, Merck & Co. and K-V Pharmaceutical. The laggards which hurt the Fund's performance the greatest were Sepracor, King Pharmaceuticals, Mylan, Forest Laboratories and Medicines Co.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Pharmaceuticals	73.1
Biotechnology	16.3
Healthcare-Products	5.0
Cosmetics & Personal Care	3.1
Household Products/Wares	2.5
Other	0.0

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	37.8
Large-Cap Growth	19.7
Small-Cap Growth	17.4
Mid-Cap Growth	12.6
Mid-Cap Value	7.1
Small-Cap Value	5.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Merck & Co., Inc.	5.5
Amgen, Inc.	5.5
Johnson & Johnson	5.0
Wyeth	5.0
Abbott Laboratories	5.0
Genentech, Inc.	4.7
Pfizer, Inc.	4.7
Eli Lily & Co.	4.5
MGI Pharma, Inc.	3.6
Gilead Sciences, Inc.	3.3
Total	46.8

28

Manager's Analysis (Continued)

PowerShares Dynamic Pharmaceuticals Portfolio (ticker: PJP)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Pharmaceuticals IntellidexSM Index		-2.15		7.54		12.20		31.24
S&P SuperComposite Pharmaceutical Index		-1.03		6.59		6.37		15.70
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	-2.49	6.88	11.74	29.88
Share Price Return	-2.49	7.01	11.74	29.90

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 0.78%. In the Financial Highlights section of this Semi-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, 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 S&P SuperComposite Pharmaceutical 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 26 and 2,918 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 which 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 dropped 12.08% during the reporting period relative to the S&P SuperComposite Retailing Index which was down 10.83%. Since the Fund's inception in October 2005 the Fund has delivered a 16.70% cumulative return. The retail industry has been rocky during the reporting period underperforming most industries. GameStop which is a specialty retailer and Blue Nile, an internet & catalog retail company, were two of the few winners in the retail space. Sears Holding, Kohl's Corp. and Dillards, multiline retail industry companies, along with New York Life & Co. and Collective Brands in the specialty retail industry contributed the most negatively to the Fund's overall performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Retail	71.6
Internet	8.1
Commercial Services	5.8
Food	5.7
Distribution/Wholesale	5.5
Transportation	2.5
Money Market Fund	0.8
Other	0.0

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	26.3
Large-Cap Value	24.4
Small-Cap Value	24.1
Mid-Cap Growth	17.1
Large-Cap Growth	5.5
Small-Cap Growth	2.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Kroger (The) Co.	5.7
eBay, Inc.	5.4
AutoZone, Inc.	5.3
Gap (The), Inc.	5.2
TJX (The) Cos., Inc.	4.9
Sears Holdings Corp.	4.8
Lowe's Cos., Inc.	4.5
Home Depot (The), Inc.	4.2
Copart, Inc.	3.7
Sotheby's	3.5
Total	47.2

30

Manager's Analysis (Continued)

PowerShares Dynamic Retail Portfolio (ticker: PMR)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Retail IntellidexSM Index		-11.98		-7.03		8.42		17.74
S&P SuperComposite Retailing Index		-10.83		-6.98		4.42		9.13
Russell 3000® Index		5.17		14.53		16.05		35.06

Fund

NAV Return	-12.08	-7.44	7.97	16.70
Share Price Return	-12.18	-7.50	7.92	16.59

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 1.29%. In the Financial Highlights section of this Semi-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 1.42%. 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, 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 S&P SuperComposite Retailing 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 94 and 2,918 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 which 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 dropped 3.89% during the reporting period relative to the S&P SuperComposite Semiconductor Index which was up 7.68%. Poor stock selection led to the underperformance of the Fund verses the index. Advanced Energy Industries, AMIS Holdings, Photronics, InterDigital and Vishay Intertechnology were the laggards in the Fund while strong returns for NVIDIA, MEMC Electronics Materials, Zoran and Cypress Semiconductor all contributed positively to the Fund's performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Semiconductors	88.6
Electronics	5.6
Telecommunications	3.2
Electronic Components & Equipment	2.7
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Mid-Cap Growth	29.1
Large-Cap Growth	19.9
Small-Cap Growth	19.2
Small-Cap Value	17.0
Mid-Cap Value	14.8

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
MEMC Electronic Materials, Inc.	6.0
Intel Corp.	5.3
NVIDIA Corp.	5.2
National Semiconductor Corp.	4.8
Texas Instruments, Inc.	4.8
Applied Materials, Inc.	4.6
Analog Devices, Inc.	4.6
Altera Corp.	4.2
Zoran Corp.	4.1
Cypress Semiconductor Corp.	4.0
Total	47.6

32

Manager's Analysis (Continued)

PowerShares Dynamic Semiconductors Portfolio (ticker: PSI)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Semiconductors IntellidexSM Index		-3.44		8.20		9.73		24.51
S&P SuperComposite Semiconductor Index		7.68		14.75		5.57		13.65
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	-3.89	7.39	9.05	22.64
Share Price Return	-4.20	7.00	8.88	22.19

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 0.76%. In the Financial Highlights section of this Semi-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 0.63%. 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, 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 S&P SuperComposite Semiconductor 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 37 and 2,918 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 which 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 returned 5.69% during the reporting period relative to the S&P SuperComposite Software & Services Index which returned 18.76. Since inception in June 2005 the Fund's cumulative return has been 43.86%. Software companies during the period fared well, but overall stock selection within the software industry and internet software & services industry hurt the Fund's performance. BEA Systems, McAfee and Oracle were the leading contributors for the period. IT service companies such as CSG Systems International and Convergys Corp. along with software companies Intuit and TIBCO Software contributed negatively to the Fund's overall performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Software	58.8
Internet	17.4
Computers	15.9
Electronics	5.3
Commercial Services	2.7
Other	(0.1	)

Style Allocation (%)

as of 31 October 2007

Small-Cap Growth	29.7
Mid-Cap Growth	26.2
Mid-Cap Value	20.9
Small-Cap Value	13.8
Large-Cap Growth	4.9
Large-Cap Value	4.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Fiserv, Inc.	5.3
NCR Corp.	5.2
McAfee, Inc.	5.2
BMC Software, Inc.	5.0
Oracle Corp.	4.9
Autodesk, Inc.	4.7
CA, Inc.	4.7
Symantec Corp.	4.5
MicroStrategy, Inc., Class A	3.5
BEA Systems, Inc.	3.4
Total	46.4

34

Manager's Analysis (Continued)

PowerShares Dynamic Software Portfolio (ticker: PSJ)

  Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
Dynamic Software IntellidexSM Index		5.87		12.78		17.16		45.35
S&P SuperComposite Software & Services Index		18.76		24.12		17.45		46.20
Russell 3000® Index		5.17		14.53		13.68		35.37

Fund

NAV Return	5.69	12.30	16.69	43.86
Share Price Return	5.54	12.22	16.61	43.63

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 0.80%. In the Financial Highlights section of this Semi-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 0.76%. 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, 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 S&P SuperComposite Software & Services 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 99 and 2,918 common stocks, respectively.

^† Average annualized.

35

Funds' Distribution History (Unaudited)

	Ex-Dividend	10/15/07		9/21/07		9/14/07		8/15/07		7/13/07		6/15/07		5/15/07		4/13/07		3/16/07
	Record	10/17/07		9/25/07		9/18/07		8/17/07		7/17/07		6/19/07		5/17/07		4/17/07		3/20/07
	Payable	10/31/07		9/28/07		9/28/07		8/31/07		7/31/07		6/29/07		5/31/07		4/30/07		3/30/07
Fund	Ticker
PowerShares Dynamic Banking Portfolio	PJB		—		0.02889		—		—		—		0.21285		—		—		—
PowerShares Dynamic Biotechnology & Genome Portfolio	PBE		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Building & Construction Portfolio	PKB		—		—		—		—		—		0.02063		—		—		—
PowerShares Dynamic Energy Exploration & Production Portfolio	PXE		—		0.01314		—		—		—		0.03364		—		—		—
PowerShares Dynamic Food & Beverage Portfolio	PBJ		—		0.23155		—		—		—		0.23482		—		—		0.03265
PowerShares Dynamic Hardware & Consumer Electronics Portfolio	PHW		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Services Portfolio	PTJ		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Insurance Portfolio	PIC		—		0.02802		—		—		—		0.03413		—		—		0.01758
PowerShares Dynamic Leisure and Entertainment Portfolio	PEJ		—		—		—		—		—		0.01937		—		—		0.02530
PowerShares Dynamic Media Portfolio	PBS		—		0.02062		—		—		—		0.01298		—		—		—
PowerShares Dynamic Networking Portfolio	PXQ		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Oil & Gas Services Portfolio	PXJ		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Pharmaceuticals Portfolio	PJP		—		0.02089		—		—		—		0.02110		—		—		0.01580
PowerShares Dynamic Retail Portfolio	PMR		—		—		—		—		—		0.02352		—		—		0.02680
PowerShares Dynamic Semiconductors Portfolio	PSI		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Software Portfolio	PSJ		—		—		—		—		—		—		—		—		—

36

	3/15/07		2/15/07		1/12/07		12/15/06		11/15/06		10/13/06		9/15/06		8/15/06		7/14/06
	3/20/07		2/20/07		1/16/07		12/19/06		11/17/06		10/17/06		9/16/06		8/17/06		7/18/06
	3/30/07		2/28/07		1/31/07		12/29/06		11/30/06		10/31/06		9/29/06		8/31/06		7/31/06
Fund
PowerShares Dynamic Banking Portfolio		—		—		—		0.22276		—		—		—		—		—
PowerShares Dynamic Biotechnology & Genome Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Building & Construction Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Energy Exploration & Production Portfolio		—		—		—		0.05076		—		—		0.01201		—		—
PowerShares Dynamic Food & Beverage Portfolio		—		—		—		0.07933		—		—		0.01726		—		—
PowerShares Dynamic Hardware & Consumer Electronics Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Services Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Insurance Portfolio		—		—		—		0.07314		—		—		0.01536		—		—
PowerShares Dynamic Leisure and Entertainment Portfolio		—		—		—		0.05101		—		—		—		—		—
PowerShares Dynamic Media Portfolio		—		—		—		0.03264		—		—		—		—		—
PowerShares Dynamic Networking Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Oil & Gas Services Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Pharmaceuticals Portfolio		—		—		—		0.05529		—		—		—		—		—
PowerShares Dynamic Retail Portfolio		—		—		—		0.00881		—		—		—		—		—
PowerShares Dynamic Semiconductors Portfolio		—		—		—		—		—		—		—		—		—
PowerShares Dynamic Software Portfolio		—		—		—		—		—		—		—		—		—

37

Funds' Distribution History (Unaudited) (Continued)

Ex-Dividend	6/16/06		6/15/06		5/15/06		3/17/06		12/30/05		12/16/05		9/16/05
Record	6/20/06		6/19/06		5/17/06		3/21/06		1/4/06		12/20/05		9/20/05
Payable	6/30/06		6/30/06		5/31/06		3/30/06		1/31/06		12/30/05		9/30/05
Fund	Ticker
PowerShares Dynamic Banking Portfolio PJB		—		—		—		—		—		—		—
PowerShares Dynamic Biotechnology & Genome Portfolio PBE		—		—		—		—		—		—		—
PowerShares Dynamic Building & Construction Portfolio PKB		0.00381		—		—		—		—		0.00730		—
PowerShares Dynamic Energy Exploration & Production Portfolio PXE		0.00182		—		—		—		—		0.01681		—
PowerShares Dynamic Food & Beverage Portfolio PBJ		0.03994		—		—		0.01605		—		0.02825		0.04552
PowerShares Dynamic Hardware & Consumer Electronics Portfolio PHW		—		—		—		—		—		—		—
PowerShares Dynamic Healthcare Services Portfolio PTJ		—		—		—		—		—		—		—
PowerShares Dynamic Insurance Portfolio PIC		0.02181		—		—		0.01798		—		0.04533		—
PowerShares Dynamic Leisure and Entertainment Portfolio PEJ		0.01010		—		—		—		—		0.01677		—
PowerShares Dynamic Media Portfolio PBS		0.00739		—		—		—		—		0.00257		0.01746
PowerShares Dynamic Networking Portfolio PXQ		—		—		—		—		—		—		—
PowerShares Dynamic Oil & Gas Services Portfolio PXJ		—		—		—		—		—		—		—
PowerShares Dynamic Pharmaceuticals Portfolio PJP		0.02365		—		—		0.01237		—		0.01581		0.01493
PowerShares Dynamic Retail Portfolio PMR		0.01022		—		—		—		—		0.01269		—
PowerShares Dynamic Semiconductors Portfolio PSI		—		—		—		—		—		—		—
PowerShares Dynamic Software Portfolio PSJ		—		—		—		—		—		—		—

38

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Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 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		265		89		12		—		1		—		—
PBE	PowerShares Dynamic Biotechnology & Genome Portfolio	06/23/05		594		261		27		3		1		—		—
PKB	PowerShares Dynamic Building & Construction Portfolio	10/26/05		507		152		22		4		—		—		—
PXE	PowerShares Dynamic Energy Exploration & Production Portfolio	10/26/05		507		266		17		5		—		—		—
PBJ	PowerShares Dynamic Food & Beverage Portfolio	06/23/05		594		280		21		5		—		—		—
PHW	PowerShares Dynamic Hardware & Consumer Electronics Portfolio	12/06/05		479		184		11		2		—		—		—
PTJ	PowerShares Dynamic Healthcare Services Portfolio	10/12/06		265		78		4		—		1		—		—
PIC	PowerShares Dynamic Insurance Portfolio	10/26/05		507		216		9		4		—		—		—
PEJ	PowerShares Dynamic Leisure and Entertainment Portfolio	06/23/05		594		238		20		6		—		—		—
PBS	PowerShares Dynamic Media Portfolio	06/23/05		594		215		17		2		—		—		—
PXQ	PowerShares Dynamic Networking Portfolio	06/23/05		594		225		17		8		—		—		—
PXJ	PowerShares Dynamic Oil & Gas Services Portfolio	10/26/05		507		221		38		10		—		—		—
PJP	PowerShares Dynamic Pharmaceuticals Portfolio	06/23/05		594		311		9		5		—		—		—
PMR	PowerShares Dynamic Retail Portfolio	10/26/05		507		195		17		2		—		—		—
PSI	PowerShares Dynamic Semiconductors Portfolio	06/23/05		594		303		19		2		—		—		—
PSJ	PowerShares Dynamic Software Portfolio	06/23/05		594		307		10		7		—		—		—

40

	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		151		11		1		—		—		—
PBE		273		27		2		—		—		—
PKB		322		7		—		—		—		—
PXE		208		8		3		—		—		—
PBJ		277		11		—		—		—		—
PHW		276		5		1		—		—		—
PTJ		181		1		—		—		—		—
PIC		274		4		—		—		—		—
PEJ		325		5		—		—		—		—
PBS		352		8		—		—		—		—
PXQ		334		9		1		—		—		—
PXJ		230		7		1		—		—		—
PJP		266		3		—		—		—		—
PMR		276		16		1		—		—		—
PSI		267		3		—		—		—		—
PSJ		266		3		1		—		—		—

41

Fees and Expenses (Unaudited)

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust, you incur advisory fees and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month period ended October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	907.98		0.70	%	$	3.36
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.62		0.70	%	$	3.56
PowerShares Dynamic Biotechnology & Genome Portfolio Actual	$	1,000.00	$	1,019.16		0.63	%		$3.20
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Building & Construction Portfolio Actual	$	1,000.00	$	1,077.00		0.63	%	$	3.29
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20

42

Fees and Expenses (Unaudited) (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 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	$	1,174.20		0.63	%	$	3.44
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Food & Beverage Portfolio Actual		$1,000.00	$	1,033.60		0.63%		$	3.22
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Hardware & Consumer Electronics Portfolio Actual	$	1,000.00		$1,181.10		0.63	%	$	3.45
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Healthcare Services Portfolio Actual	$	1,000.00	$	1,035.30		0.69	%	$	3.53
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.67		0.69	%	$	3.51
PowerShares Dynamic Insurance Portfolio Actual	$	1,000.00	$	961.31		0.63	%	$	3.11
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Leisure and Entertainment Portfolio Actual		$1,000.00	$	985.16		0.63	%	$	3.14
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Media Portfolio Actual	$	1,000.00	$	1,002.05		0.63	%	$	3.17
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Networking Portfolio Actual	$	1,000.00	$	1,115.63		0.63	%	$	3.35
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Oil & Gas Services Portfolio Actual		$1,000.00	$	1,207.05		0.63	%	$	3.50
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Pharmaceuticals Portfolio Actual	$	1,000.00	$	975.12		0.63	%	$	3.13
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Retail Portfolio Actual	$	1,000.00	$	879.16		0.63	%	$	2.98
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20

43

Fees and Expenses (Unaudited) (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 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	$	961.15		0.63	%	$	3.11
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20
PowerShares Dynamic Software Portfolio Actual	$	1,000.00	$	1,056.90		0.63	%	$	3.26
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.97		0.63	%	$	3.20

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended October 31, 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 184 and then dividing the result by 366.

44

Schedule of Investments

PowerShares Dynamic Banking Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.6%
		Commercial Banks - Central US—18.6%
	39,879	BancFirst Corp.	$	1,812,102
	38,504	Commerce Bancshares, Inc.		1,816,234
	78,113	International Bancshares Corp.		1,707,550
	75,419	Marshall & Ilsley Corp.		3,220,392
	71,155	TCF Financial Corp.		1,620,199
	40,591	UMB Financial Corp.		1,704,822
				11,881,299
		Commercial Banks - Eastern US—16.0%
	48,959	Commerce Bancorp, Inc.		1,995,079
	105,895	F.N.B. Corp.		1,759,975
	31,133	M&T Bank Corp.		3,097,112
	51,062	S&T Bancorp, Inc.		1,691,173
	160,827	TrustCo Bank Corp. NY		1,695,117
				10,238,456
		Commercial Banks - Southern US—13.3%
	48,628	City Holding Co.		1,838,624
	178,916	First BanCorp		1,572,672
	10,148	First Citizens BancShares, Inc., Class A		1,652,399
	63,670	Trustmark Corp.		1,718,453
	57,443	United Bankshares, Inc.		1,740,523
				8,522,671
		Commercial Banks - Western US—13.3%
	34,975	Bank of Hawaii Corp.		1,859,271
	25,195	City National Corp.		1,703,182
	36,136	SVB Financial Group*		1,871,483
	56,089	UnionBanCal Corp.		3,029,367
				8,463,303
		Fiduciary Banks—8.9%
	53,639	Northern Trust Corp.		4,034,189
	44,833	Wilmington Trust Corp.		1,630,576
				5,664,765
		Finance - Investment Banker/Broker—5.5%
	74,047	JPMorgan Chase & Co.		3,480,209
		S&L/Thrifts - Central US—3.1%
	155,012	TFS Financial Corp.*		1,976,403
		S&L/Thrifts - Eastern US—2.8%
	61,669	Northwest Bancorp, Inc.		1,816,152
		S&L/Thrifts - Western US—4.4%
	31,773	Downey Financial Corp.		1,294,114
	35,783	FirstFed Financial Corp.*		1,530,797
				2,824,911

Number of Shares			Value
		Common Stocks (Continued)
		Super-Regional Banks - US—13.7%
	65,052	Bank of America Corp.	$	3,140,710
	59,095	Comerica, Inc.		2,758,555
	99,000	KeyCorp		2,816,550
				8,715,815
		Total Common Stocks (Cost $67,148,000)		63,583,984
		Money Market Fund—0.3%
	186,425	Liquid Assets Portfolio Private Class** (Cost $186,425)		186,425
		Total Investments (Cost $67,334,425)—99.9%		63,770,409
		Other assets less liabilities—0.1%		79,018
		Net Assets—100.0%	$	63,849,427

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.

45

Schedule of Investments

PowerShares Dynamic Biotechnology & Genome Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.2%
		Biotechnology—54.5%
	106,389	Alexion Pharmaceuticals, Inc.*	$	8,138,759
	235,377	Amgen, Inc.*		13,677,757
	480,113	Arena Pharmaceuticals, Inc.*		4,613,886
	184,814	Biogen Idec, Inc.*		13,757,554
	571,867	Exelixis, Inc.*		6,290,537
	157,664	Genentech, Inc.*		11,687,632
	188,989	Genzyme Corp.*		14,357,495
	730,251	Halozyme Therapeutics, Inc.*		6,703,704
	698,536	Human Genome Sciences, Inc.*		6,608,151
	325,417	InterMune, Inc.*		6,482,307
	1,162,047	Millennium Pharmaceuticals, Inc.*		13,735,396
	146,348	Myriad Genetics, Inc.*		8,101,825
	247,443	Protalix BioTherapeutics, Inc.*		1,261,959
	330,602	Regeneron Pharmaceuticals, Inc.*		7,273,244
	488,128	Savient Pharmaceuticals, Inc.*		6,872,842
	302,741	Vertex Pharmaceuticals, Inc.*		9,790,644
				139,353,692
		Pharmaceuticals—45.7%
	275,290	Alnylam Pharmaceuticals, Inc.*		8,693,658
	299,511	BioMarin Pharmaceuticals, Inc.*		8,305,440
	281,185	Cubist Pharmaceuticals, Inc.*		6,579,729
	809,247	Dendreon Corp.*		6,045,075
	324,300	Gilead Sciences, Inc.*		14,979,418
	346,295	ImClone Systems, Inc.*		14,942,629
	521,353	Isis Pharmaceuticals, Inc.*		9,186,240
	162,379	Onyx Pharmaceuticals, Inc.*		7,584,723
	188,611	OSI Pharmaceuticals, Inc.*		7,840,559
	278,868	Progenics Pharmaceuticals, Inc.*		6,458,583
	204,823	Theravance, Inc.*		5,124,671
	93,932	United Therapeutics Corp.*		6,428,706
	154,912	XenoPort, Inc.*		7,603,081
	532,576	ZymoGenetics, Inc.*		7,163,147
				116,935,659
		Total Investments (Cost $245,161,632)—100.2%		256,289,351
		Liabilities in excess of other assets—(0.2%)		(563,243	)
		Net Assets—100.0%	$	255,726,108

*  Non-income producing security.

See Notes to Financial Statements.

46

Schedule of Investments

PowerShares Dynamic Building & Construction Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Building Materials—15.2%
	39,824	American Standard Cos., Inc.	$	1,484,240
	31,788	Apogee Enterprises, Inc.		747,972
	19,049	Armstrong World Industries, Inc.*		781,199
	34,205	Goodman Global, Inc.*		843,153
	24,243	Simpson Manufacturing Co., Inc.		727,048
				4,583,612
		Commercial Services—2.8%
	24,977	McGrath RentCorp		856,212
		Electric—5.5%
	29,580	MDU Resources Group, Inc.		832,973
	42,330	Pike Electric Corp.*		833,901
				1,666,874
		Engineering & Construction—30.0%
	29,777	Aecom Technology Corp.*		1,005,569
	27,091	Dycom Industries, Inc.*		765,321
	25,518	EMCOR Group, Inc.*		878,585
	11,537	Fluor Corp.		1,822,846
	22,193	Jacobs Engineering Group, Inc.*		1,934,119
	16,206	Layne Christensen Co.*		922,770
	14,135	Perini Corp.*		810,642
	14,969	URS Corp.*		925,234
				9,065,086
		Environmental Control—3.2%
	40,821	Tetra Tech, Inc.*		953,170
		Home Builders—2.3%
	1,428	NVR, Inc.*		679,371
		Machinery - Construction & Mining—11.7%
	15,816	Astec Industries, Inc.*		716,781
	19,358	Caterpillar, Inc.		1,444,301
	18,360	Terex Corp.*		1,362,679
				3,523,761
		Machinery - Diversified—5.6%
	10,864	Cascade Corp.		684,215
	20,127	Manitowoc (The) Co., Inc.		991,456
				1,675,671
		Metal Fabricate/Hardware—2.8%
	8,972	Valmont Industries, Inc.		858,800
		Office Furnishings—2.8%
	44,349	Interface, Inc., Class A		848,396
		Retail—10.5%
	38,287	Home Depot (The), Inc.		1,206,423
	47,223	Lowe's Cos., Inc.		1,269,827
	16,612	Tractor Supply Co.*		688,401
				3,164,651

Number of Shares			Value
		Common Stocks (Continued)
		Telecommunications—2.8%
	54,125	MasTec, Inc.*	$	854,634
		Textiles—4.8%
	16,799	Mohawk Industries, Inc.*		1,433,627
		Total Investments (Cost $29,594,361)—100.0%		30,163,865
		Other assets less liabilities—0.0%		12,598
		Net Assets—100.0%	$	30,176,463

*  Non-income producing security.

See Notes to Financial Statements.

47

Schedule of Investments

PowerShares Dynamic Energy Exploration & Production Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Gas - Distribution—2.8%
	72,916	Energen Corp.	$	4,666,624
		Oil Companies - Exploration & Production—54.7%
	92,772	Apache Corp.		9,630,662
	218,018	Bois d'Arc Energy, Inc.*		4,783,315
	117,445	Cabot Oil & Gas Corp.		4,661,392
	109,344	Cimarex Energy Co.		4,429,525
	98,431	Denbury Resources, Inc.*		5,571,195
	95,321	Devon Energy Corp.		8,902,982
	101,309	Forest Oil Corp.*		4,922,604
	64,254	Murphy Oil Corp.		4,731,022
	65,184	Noble Energy, Inc.		4,989,183
	126,629	Occidental Petroleum Corp.		8,743,733
	104,332	Plains Exploration & Production Co.*		5,315,715
	233,350	Rosetta Resources, Inc.*		4,433,650
	117,408	St. Mary Land & Exploration Co.		4,973,403
	105,201	Swift Energy Co.*		4,989,683
	175,666	W&T Offshore, Inc.		4,711,362
	105,372	Whiting Petroleum Corp.*		5,696,410
				91,485,836
		Oil Companies - Integrated—18.8%
	81,798	Chevron Corp.		7,485,335
	83,736	Exxon Mobil Corp.		7,702,875
	116,973	Hess Corp.		8,376,436
	133,208	Marathon Oil Corp.		7,876,589
				31,441,235
		Oil Refining & Marketing—18.4%
	102,235	Alon USA Energy, Inc.		3,759,181
	95,432	Frontier Oil Corp.		4,369,831
	58,749	Holly Corp.		3,689,437
	53,536	Sunoco, Inc.		3,940,250
	79,376	Tesoro Corp.		4,804,629
	104,782	Valero Energy Corp.		7,379,796
	75,532	Western Refining, Inc.		2,770,514
				30,713,638
		Oil & Gas Drilling—2.6%
	76,973	Atlas America, Inc.		4,441,342
		Pipelines—2.7%
	78,360	Questar Corp.		4,472,789
		Total Investments (Cost $138,061,884)—100.0%		167,221,464
		Liabilities in excess of other assets—(0.0%)		(39,058	)
		Net Assets—100.0%	$	167,182,406

*  Non-income producing security.

See Notes to Financial Statements.

48

Schedule of Investments

PowerShares Dynamic Food & Beverage Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Agriculture—3.2%
	8,799	Bunge Ltd. (Bermuda)	$	1,013,557
		Beverages—16.0%
	33,777	Coca-Cola Enterprises, Inc.		871,784
	17,915	Hansen Natural Corp.*		1,218,221
	17,987	Molson Coors Brewing Co., Class B		1,029,396
	23,260	Pepsi Bottling Group (The), Inc.		1,002,041
	27,181	PepsiAmericas, Inc.		970,905
				5,092,347
		Chemicals—6.5%
	21,151	Monsanto Co.		2,064,972
		Food—58.0%
	39,074	Campbell Soup Co.		1,444,957
	31,294	ConAgra Foods, Inc.		742,607
	17,800	Corn Products International, Inc.		757,212
	38,981	Flowers Foods, Inc.		855,243
	30,557	Fresh Del Monte Produce, Inc. (Cayman Islands)		1,108,608
	26,396	General Mills, Inc.		1,523,841
	17,844	H.J. Heinz Co.		834,742
	22,581	Hormel Foods Corp.		823,755
	26,853	Kellogg Co.		1,417,570
	55,494	Kroger (The) Co.		1,630,968
	28,290	Performance Food Group Co.*		763,547
	19,184	Sanderson Farms, Inc.		667,603
	48,409	Sara Lee Corp.		800,685
	387	Seaboard Corp.		631,584
	19,088	SUPERVALU, Inc.		739,660
	44,189	Sysco Corp.		1,515,241
	37,335	Tyson Foods, Inc., Class A		589,893
	25,323	Wm. Wrigley Jr. Co.		1,561,669
				18,409,385
		Miscellaneous Manufacturing—2.5%
	19,783	Lancaster Colony Corp.		794,683
		Retail—13.8%
	33,934	Burger King Holdings, Inc.		897,215
	25,862	Jack in the Box, Inc.*		811,291
	24,462	Wendy's International, Inc.		850,299
	45,081	Yum! Brands, Inc.		1,815,412
				4,374,217
		Total Investments (Cost $30,445,714)—100.0%		31,749,161
		Other assets less liabilities—0.0%		1,694
		Net Assets—100.0%	$	31,750,855

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	29,626,996		93.3	%
Cayman Islands		1,108,608		3.5
Bermuda		1,013,557		3.2
Total investments		31,749,161		100.0
Other assets less liabilities		1,694		0.0
Net Assets	$	31,750,855		100.0	%

See Notes to Financial Statements.

49

Schedule of Investments

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Computers—47.3%
	7,674	Apple, Inc.*	$	1,457,677
	82,809	Brocade Communications Systems, Inc.*		787,514
	37,619	Dell, Inc.*		1,151,141
	22,226	Electronics for Imaging, Inc.*		506,753
	54,055	EMC Corp.*		1,372,457
	21,534	Hewlett-Packard Co.		1,112,877
	15,557	Lexmark International, Inc., Class A*		653,238
	38,144	Network Appliance, Inc.*		1,201,155
	72,872	Palm, Inc.		657,305
	180,581	Quantum Corp.*		722,324
	13,387	Synaptics, Inc.*		727,583
	24,814	Western Digital Corp.*		643,179
				10,993,203
		Electronics—25.0%
	29,195	Agilent Technologies, Inc.*		1,075,836
	23,113	Benchmark Electronics, Inc.*		474,048
	20,814	Checkpoint Systems, Inc.*		629,624
	10,436	Garmin Ltd. (Cayman Islands)		1,120,825
	18,362	National Instruments Corp.		595,663
	253,129	Sanmina-SCI Corp.*		559,415
	18,030	Tektronix, Inc.		682,436
	16,416	Trimble Navigation Ltd.*		684,547
				5,822,394
		Internet—2.1%
	18,507	VASCO Data Security International, Inc.*		489,325
		Machinery - Diversified—2.7%
	15,969	Zebra Technologies Corp., Class A*		624,228
		Miscellaneous Manufacturing—2.7%
	21,735	Eastman Kodak Co.		622,925
		Office/Business Equipment—6.9%
	12,977	Pitney Bowes, Inc.		519,599
	62,039	Xerox Corp.*		1,081,960
				1,601,559
		Semiconductors—5.7%
	29,666	Emulex Corp.*		642,566
	43,585	QLogic Corp.*		676,875
				1,319,441
		Telecommunications—7.5%
	25,379	Novatel Wireless, Inc.*		659,853
	20,411	Plantronics, Inc.		558,241
	19,124	Polycom, Inc.*		535,090
				1,753,184
		Total Investments (Cost $20,405,186)—99.9%		23,226,259
		Other assets less liabilities—0.1%		14,853
		Net Assets—100.0%	$	23,241,112

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	22,105,433		95.1	%
Cayman Islands		1,120,826		4.8
Total investments		23,226,259		99.9
Other assets less liabilities		14,853		0.1
Net Assets	$	23,241,112		100.0	%

See Notes to Financial Statements.

50

Schedule of Investments

PowerShares Dynamic Healthcare Services Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Chemicals - Specialty—3.0%
	26,812	Sigma-Aldrich Corp.	$	1,385,376
		Consulting Services—2.9%
	20,879	Advisory Board (The) Co.*		1,340,641
		Dental Supplies & Equipment—2.7%
	30,502	DENTSPLY International, Inc.		1,265,223
		Dialysis Centers—2.9%
	20,882	DaVita, Inc.*		1,361,298
		Health Care Cost Containment—5.5%
	38,493	McKesson Corp.		2,544,387
		Hospital Beds/Equipment—2.6%
	19,983	Kinetic Concepts, Inc.*		1,200,978
		Instruments - Controls—2.9%
	12,737	Mettler Toledo International, Inc.*		1,354,580
		Instruments - Scientific—3.2%
	19,510	Waters Corp.*		1,501,880
		Life/Health Insurance—4.8%
	42,611	CIGNA Corp.		2,236,651
		Medical Instruments—8.4%
	21,440	ArthroCare Corp.*		1,390,170
	24,869	Edwards Lifesciences Corp.*		1,248,921
	19,064	Techne Corp.*		1,243,735
				3,882,826
		Medical Labs & Testing Services—2.9%
	16,383	Covance, Inc.*		1,351,598
		Medical Products—5.2%
	40,215	Baxter International, Inc.		2,413,302
		Medical - Biomedical/Gene—5.9%
	22,888	Charles River Laboratories International, Inc.*		1,327,504
	15,420	Invitrogen Corp.*		1,401,215
				2,728,719
		Medical - HMO—13.4%
	43,256	Aetna, Inc.		2,429,690
	38,386	Coventry Health Care, Inc.*		2,315,060
	21,924	Health Net, Inc.*		1,175,346
	12,169	WellCare Health Plans, Inc.*		294,368
				6,214,464
		Medical - Hospitals—2.8%
	42,747	LifePoint Hospitals, Inc.*		1,304,638
		Medical - Nursing Homes—2.7%
	18,800	Manor Care, Inc.		1,251,704

Number of Shares			Value
		Common Stocks (Continued)
		Medical - Outpatient/Home Medical Care—7.7%
	31,794	Amedisys, Inc.*	$	1,349,655
	45,106	Apria Healthcare Group, Inc.*		1,090,212
	33,374	Lincare Holdings, Inc.*		1,160,414
				3,600,281
		Medical - Wholesale Drug Distribution—4.7%
	46,022	AmerisourceBergen Corp.		2,168,096
		Pharmacy Services—10.7%
	40,220	Express Scripts, Inc.*		2,537,882
	25,771	Medco Health Solutions, Inc.*		2,432,267
				4,970,149
		Therapeutics—2.6%
	64,822	Warner Chilcott Ltd., Class A (Bermuda)*		1,201,152
		Vitamins & Nutrition Products—2.5%
	32,730	NBTY, Inc.*		1,165,188
		Total Investments (Cost $44,626,233)—100.0%		46,443,131
		Other assets less liabilities—0.0%		8,863
		Net Assets—100.0%	$	46,451,994

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	45,241,979		97.4	%
Bermuda		1,201,152		2.6
Total investments		46,443,131		100.0
Other assets less liabilities		8,863		0.0
Net Assets	$	46,451,994		100.0	%

See Notes to Financial Statements.

51

Schedule of Investments

PowerShares Dynamic Insurance Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Insurance Brokers—7.7%
	66,097	AON Corp.	$	2,995,516
	27,944	Erie Indemnity Co., Class A		1,590,014
				4,585,530
		Life/Health Insurance—26.5%
	39,913	FBL Financial Group, Inc., Class A		1,615,678
	47,032	Lincoln National Corp.		2,933,386
	29,181	Nationwide Financial Services, Inc., Class A		1,565,561
	31,892	Prudential Financial, Inc.		3,084,594
	28,757	Reinsurance Group of America, Inc.		1,642,887
	33,159	StanCorp Financial Group, Inc.		1,828,056
	25,370	Torchmark Corp.		1,653,109
	63,825	Unum Group		1,489,676
				15,812,947
		Multi-line Insurance—25.5%
	52,298	Allstate (The) Corp.		2,740,415
	30,303	Assurant, Inc.		1,770,907
	37,062	Cincinnati Financial Corp.		1,474,326
	32,204	Hartford Financial Services Group (The), Inc.		3,124,755
	56,567	HCC Insurance Holdings, Inc.		1,690,788
	80,755	Horace Mann Educators Corp.		1,670,821
	37,576	XL Capital Ltd., Class A (Cayman Islands)		2,703,593
				15,175,605
		Property/Casualty Insurance—32.1%
	21,743	Arch Capital Group Ltd. (Bermuda)*		1,625,724
	56,000	Chubb (The) Corp.		2,987,599
	48,990	Commerce Group (The), Inc.		1,787,645
	3,283	Markel Corp.*		1,783,391
	29,647	Mercury General Corp.		1,521,188
	28,816	Navigators Group (The), Inc.*		1,737,605
	26,918	Safeco Corp.		1,558,552
	56,654	Travelers (The) Cos., Inc.		2,957,905
	72,172	United America Indemnity Ltd., Class A (Cayman Islands)*		1,591,393
	52,251	W.R. Berkley Corp.		1,572,233
				19,123,235
		Reinsurance—8.2%
	15,330	Everest Re Group Ltd. (Bermuda)		1,633,258
	43,120	Odyssey Re Holdings Corp.		1,603,202
	22,050	Transatlantic Holdings, Inc.		1,643,386
				4,879,846
		Total Investments (Cost $59,110,580)—100.0%		59,577,163
		Other assets less liabilities—0.0%		2,435
		Net Assets—100.0%	$	59,579,598

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	52,023,195		87.3	%
Cayman Islands		4,294,986		7.2
Bermuda		3,258,982		5.5
Total investments		59,577,163		100.0
Other assets less liabilities		2,435		0.0
Net Assets	$	59,579,598		100.0%

See Notes to Financial Statements.

52

Schedule of Investments

PowerShares Dynamic Leisure and Entertainment Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Commercial Services—2.4%
	73,573	Global Cash Access Holdings, Inc.*	$	734,994
		Entertainment—13.9%
	26,472	DreamWorks Animation SKG, Inc., Class A*		861,928
	21,395	International Game Technology		933,036
	36,232	Regal Entertainment Group, Class A		817,756
	21,218	Speedway Motorsports, Inc.		770,213
	14,282	Vail Resorts, Inc.*		866,775
				4,249,708
		Internet—3.0%
	9,842	Priceline.com, Inc.*		916,290
		Leisure Time—4.4%
	21,064	Ambassadors Group, Inc.		382,733
	27,740	WMS Industries, Inc.*		961,746
				1,344,479
		Lodging—19.8%
	19,992	Boyd Gaming Corp.		836,065
	33,706	Marriott International, Inc., Class A		1,385,654
	17,830	MGM MIRAGE*		1,633,406
	24,496	Starwood Hotels & Resorts Worldwide, Inc.		1,392,843
	25,601	Wyndham Worldwide Corp.		840,481
				6,088,449
		Media—15.1%
	47,515	CBS Corp., Class B		1,363,681
	13,737	Liberty Media Corp. Capital, Series A*		1,716,850
	44,560	Walt Disney (The) Co.		1,543,113
				4,623,644
		Retail—41.3%
	24,473	Bob Evans Farms, Inc.		689,649
	28,317	Brinker International, Inc.		718,969
	34,444	Burger King Holdings, Inc.		910,699
	21,824	CBRL Group, Inc.		870,778
	26,601	CEC Entertainment, Inc.*		792,710
	7,853	Chipotle Mexican Grill, Inc., Class A*		1,091,567
	19,631	Darden Restaurants, Inc.		844,133
	12,990	IHOP Corp.		822,657
	26,251	Jack in the Box, Inc.*		823,494
	30,400	McDonald's Corp.		1,814,879
	36,869	Ruby Tuesday, Inc.		588,798
	24,830	Wendy's International, Inc.		863,091
	45,758	Yum! Brands, Inc.		1,842,674
				12,674,098
		Total Common Stocks (Cost $31,520,349)		30,631,662

Number of Shares			Value
		Money Market Fund—0.1%
	24,828	Liquid Assets Portfolio Private Class** (Cost $24,828)	$	24,828
		Total Investments (Cost $31,545,177)—100.0%		30,656,490
		Liabilities in excess of other assets—(0.0%)		(7,473	)
		Net Assets—100.0%	$	30,649,017

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.

53

Schedule of Investments

PowerShares Dynamic Media Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.6%
		Advertising—9.3%
	34,974	Getty Images, Inc.*	$	988,015
	39,267	Omnicom Group, Inc.		2,001,832
	18,542	R.H. Donnelley Corp.*		1,017,029
				4,006,876
		Commercial Services—8.2%
	27,877	Bankrate, Inc.*		1,280,948
	19,823	CoStar Group, Inc.*		1,139,822
	30,513	Viad Corp.		1,081,381
				3,502,151
		Computers—3.2%
	21,613	IHS, Inc., Class A*		1,362,700
		Entertainment—2.7%
	35,359	DreamWorks Animation SKG, Inc., Class A*		1,151,289
		Internet—15.9%
	3,881	Google, Inc., Class A*		2,743,867
	52,068	Knot (The), Inc.*		1,009,599
	57,232	LoopNet, Inc.*		1,078,823
	33,287	Sohu.com, Inc.*		1,994,224
				6,826,513
		Media—60.3%
	63,273	Belo Corp., Class A		1,170,550
	63,467	CBS Corp., Class B		1,821,503
	392,385	Charter Communications, Inc., Class A*		812,237
	162,085	Crown Media Holdings, Inc., Class A*		1,277,230
	85,720	DIRECTV Group (The), Inc.*		2,269,866
	43,425	Discovery Holding Co., Class A*		1,238,047
	47,256	EchoStar Communications Corp., Class A*		2,313,654
	121,069	Entravision Communications Corp., Class A*		1,101,728
	26,541	E.W. Scripps Co., Class A		1,194,610
	23,209	Gannett Co., Inc.		984,294
	178,825	Gemstar-TV Guide International, Inc.*		1,232,104
	105,191	Journal Communications, Inc., Class A		937,252
	18,349	Liberty Media Corp. Capital, Series A*		2,293,258
	81,833	Lin TV Corp., Class A*		1,192,307
	39,633	McGraw-Hill (The) Cos., Inc.		1,983,235
	127,583	Mediacom Communications Corp., Class A*		733,602
	19,514	Meredith Corp.		1,214,746
	59,520	Walt Disney (The) Co.		2,061,178
				25,831,401
		Total Common Stocks (Cost $43,989,684)		42,680,930

Number of Shares			Value
		Money Market Fund—0.4%
	181,378	Liquid Assets Portfolio Private Class** (Cost $181,378)	$	181,378
		Total Investments (Cost $44,171,062)—100.0%		42,862,308
		Liabilities in excess of other assets—(0.0%)		(6,615	)
		Net Assets—100.0%	$	42,855,693

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.

54

Schedule of Investments

PowerShares Dynamic Networking Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Computers—5.4%
	90,183	Brocade Communications Systems, Inc.*	$	857,640
	22,554	Echelon Corp.*		497,316
				1,354,956
		Internet—17.9%
	15,136	Blue Coat Systems, Inc.*		614,370
	33,095	F5 Networks, Inc.*		1,192,413
	32,373	McAfee, Inc.*		1,338,623
	73,576	SonicWALL, Inc.*		760,776
	30,689	Websense, Inc.*		564,678
				4,470,860
		Semiconductors—18.9%
	33,546	Broadcom Corp., Class A*		1,091,922
	32,307	Emulex Corp.*		699,770
	21,523	Netlogic Microsystems, Inc.*		714,564
	82,198	PMC - Sierra, Inc.*		740,604
	47,465	QLogic Corp.*		737,131
	17,099	Silicon Laboratories, Inc.*		747,226
				4,731,217
		Software—5.5%
	31,839	Citrix Systems, Inc.*		1,368,759
		Telecommunications—52.4%
	34,496	ADC Telecommunications, Inc.*		645,075
	23,617	ADTRAN, Inc.		568,461
	41,586	Arris Group, Inc.*		478,239
	21,106	Atheros Communications*		740,821
	54,846	C-COR, Inc.*		672,412
	16,665	Ciena Corp.*		797,587
	36,258	Cisco Systems, Inc.*		1,198,689
	14,833	Comtech Telecommunications Corp.*		804,690
	34,142	Foundry Networks, Inc.*		721,762
	63,318	Harmonic, Inc.*		780,078
	35,156	Juniper Networks, Inc.*		1,265,616
	22,497	NETGEAR, Inc.*		795,044
	29,013	QUALCOMM, Inc.		1,239,725
	109,218	Sonus Networks, Inc.*		753,604
	51,323	Tekelec*		677,464
	109,701	Tellabs, Inc.*		966,466
				13,105,733
		Total Investments (Cost $22,436,935)—100.1%		25,031,525
		Liabilities in excess of other assets—(0.1%)		(21,103	)
		Net Assets—100.0%	$	25,010,422

*  Non-income producing security.

See Notes to Financial Statements.

55

Schedule of Investments

PowerShares Dynamic Oil & Gas Services Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Engineering & Construction—3.3%
	236,373	McDermott International, Inc. (Panama)*	$	14,432,935
		Oil & Gas—36.4%
	149,293	Atwood Oceanics, Inc.*		12,576,442
	197,781	Diamond Offshore Drilling, Inc.		22,394,743
	209,235	ENSCO International, Inc.		11,610,450
	1,708,535	Grey Wolf, Inc.*		9,619,052
	360,265	Helmerich & Payne, Inc.		11,391,579
	423,941	Noble Corp. (Cayman Islands)		22,447,676
	1,456,313	Parker Drilling Co.*		12,291,282
	528,396	Patterson-UTI Energy, Inc.		10,536,216
	322,565	Pride International, Inc.*		11,902,649
	197,910	Transocean, Inc. (Cayman Islands)*		23,624,517
	231,242	Unit Corp.*		11,046,430
				159,441,036
		Oil & Gas Services—55.5%
	248,014	Baker Hughes, Inc.		21,507,774
	138,740	Cameron International Corp.*		13,507,726
	307,694	Dresser-Rand Group, Inc.*		11,907,758
	146,382	Exterran Holdings, Inc.*		12,325,364
	239,592	FMC Technologies, Inc.*		14,526,463
	469,173	Global Industries Ltd.*		11,551,039
	205,149	Grant Prideco, Inc.*		10,085,125
	601,289	Halliburton Co.		23,702,812
	199,482	Lufkin Industries, Inc.		11,861,200
	324,977	National Oilwell Varco, Inc.*		23,801,315
	168,918	Oceaneering International, Inc.*		13,052,294
	268,830	Oil States International, Inc.*		11,610,768
	215,529	Schlumberger Ltd. (Netherlands)		20,813,636
	129,209	SEACOR Holdings, Inc.*		11,842,005
	310,379	Smith International, Inc.		20,500,533
	292,237	Superior Energy Services, Inc.*		10,836,148
				243,431,960
		Transportation—4.9%
	158,890	Overseas Shipholding Group, Inc.		11,821,416
	173,334	Tidewater, Inc.		9,476,170
				21,297,586
		Total Investments (Cost $384,355,637)—100.1%		438,603,517
		Liabilities in excess of other assets—(0.1%)		(201,826	)
		Net Assets—100.0%	$	438,401,691

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	357,284,753			81.5	%
Cayman Islands		46,072,193			10.5
Netherlands		20,813,636			4.8
Panama		14,432,935			3.3
Total investments		438,603,517			100.1
Liabilities in excess of other assets		(201,826	)		(0.1	)
Net Assets	$	438,401,691			100.0	%

See Notes to Financial Statements.

56

Schedule of Investments

PowerShares Dynamic Pharmaceuticals Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Biotechnology—16.3%
	88,439	Amgen, Inc.*	$	5,139,191
	37,876	Biogen Idec, Inc.*		2,819,489
	59,239	Genentech, Inc.*		4,391,387
	38,727	Genzyme Corp.*		2,942,090
				15,292,157
		Cosmetics & Personal Care—3.1%
	39,167	Chattem, Inc.*		2,910,108
		Healthcare - Products—5.0%
	71,719	Johnson & Johnson		4,673,927
		Household Products/Wares—2.5%
	220,346	Prestige Brands Holdings, Inc.*		2,304,819
		Pharmaceuticals—73.1%
	85,366	Abbott Laboratories		4,662,691
	40,282	Allergan, Inc.		2,722,258
	82,920	Bristol-Myers Squibb Co.		2,486,771
	32,213	Cephalon, Inc.*		2,375,387
	77,275	Eli Lilly & Co.		4,184,441
	75,819	Endo Pharmaceuticals Holdings, Inc.*		2,221,497
	64,239	Forest Laboratories, Inc.*		2,509,818
	66,458	Gilead Sciences, Inc.*		3,069,695
	160,824	King Pharmaceuticals, Inc.*		1,704,734
	88,449	KV Pharmaceutical Co., Class A*		2,771,992
	79,145	Medicis Pharmaceutical Corp., Class A		2,349,815
	88,331	Merck & Co., Inc.		5,146,164
	102,558	MGI Pharma, Inc.*		3,341,340
	160,076	Mylan Laboratories, Inc.		2,407,543
	116,722	Perrigo Co.		2,767,479
	178,400	Pfizer, Inc.		4,390,424
	80,516	Schering-Plough Corp.		2,457,348
	104,730	Sciele Pharma, Inc.*		2,664,331
	82,871	Sepracor, Inc.*		2,282,267
	153,276	Valeant Pharmaceuticals International*		2,230,166
	130,447	Warner Chilcott Ltd., Class A (Bermuda)*		2,417,183
	81,056	Watson Pharmaceuticals, Inc.*		2,477,071
	96,072	Wyeth		4,671,981
				68,312,396
		Total Investments (Cost $96,457,055)—100.0%		93,493,407
		Liabilities in excess of other assets—(0.0%)		(25,552	)
		Net Assets—100.0%	$	93,467,855

*  Non-income producing security

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	91,076,224			97.4	%
Bermuda		2,417,183			2.6
Total investments		93,493,407			100.0
Liabilities in excess of other assets		(25,552	)		(0.0	)
Net Assets	$	93,467,855			100.0	%

See Notes to Financial Statements.

57

Schedule of Investments

PowerShares Dynamic Retail Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.2%
		Commercial Services—5.8%
	13,481	Aaron Rents, Inc.	$	285,528
	7,970	Sotheby's		431,734
				717,262
		Distribution/Wholesale—5.5%
	6,944	Genuine Parts Co.		340,742
	5,849	United Stationers, Inc.*		338,716
				679,458
		Food—5.7%
	23,795	Kroger (The) Co.		699,335
		Internet—8.1%
	4,089	Blue Nile, Inc.*		323,195
	18,549	eBay, Inc.*		669,618
				992,813
		Retail—71.6%
	9,702	Advance Auto Parts, Inc.		331,032
	11,007	AnnTaylor Stores Corp.*		341,107
	18,177	AutoNation, Inc.*		321,551
	5,213	AutoZone, Inc.*		648,550
	11,590	Big Lots, Inc.*		277,928
	9,857	BJ's Wholesale Club, Inc.*		353,669
	15,635	Cato (The) Corp., Class A		313,951
	14,599	Collective Brands, Inc.*		269,936
	15,685	Conn's, Inc.*		401,065
	11,757	Copart, Inc.*		451,234
	10,636	Dick's Sporting Goods, Inc.*		354,923
	7,940	Dollar Tree Stores, Inc.*		304,102
	11,784	Family Dollar Stores, Inc.		298,724
	33,720	Gap (The), Inc.		637,308
	16,510	Home Depot (The), Inc.		520,230
	11,444	Jos. A. Bank Clothiers, Inc.*		334,279
	20,366	Lowe's Cos., Inc.		547,642
	6,807	Men's Wearhouse, Inc.		287,664
	9,944	PetSmart, Inc.		297,823
	4,408	Sears Holdings Corp.*		594,154
	12,971	Sonic Automotive, Inc., Class A		327,648
	20,746	TJX (The) Cos., Inc.		600,182
				8,814,702
		Transportation—2.5%
	6,301	Ryder System, Inc.		301,503
		Total Common Stocks (Cost $12,950,980)		12,205,073

Number of Shares			Value
		Money Market Fund—0.8%
	99,601	Liquid Assets Portfolio Private Class** (Cost $99,601)	$	99,601
		Total Investments (Cost $13,050,581)—100.0%		12,304,674
		Liabilities in excess of other assets—(0.0%)		(1,465	)
		Net Assets—100.0%	$	12,303,209

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.

58

Schedule of Investments

PowerShares Dynamic Semiconductors Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Electrical Components & Equipment—2.7%
	245,807	Advanced Energy Industries, Inc.*	$	3,932,912
		Electronics—5.6%
	100,641	Cymer, Inc.*		4,277,243
	301,548	Vishay Intertechnology, Inc.*		3,796,489
				8,073,732
		Semiconductors—88.6%
	307,191	Altera Corp.		6,027,087
	384,726	AMIS Holdings, Inc.*		2,950,848
	346,308	Amkor Technology, Inc.*		3,923,670
	198,325	Analog Devices, Inc.		6,635,955
	342,433	Applied Materials, Inc.		6,650,049
	132,276	ATMI, Inc.*		4,251,351
	149,979	Cree, Inc.*		4,199,412
	159,327	Cypress Semiconductor Corp.*		5,823,402
	422,617	Entegris, Inc.*		3,858,493
	284,047	Intel Corp.		7,640,864
	115,946	International Rectifier Corp.*		3,870,277
	119,739	Intersil Corp., Class A		3,632,881
	74,389	Lam Research Corp.*		3,734,328
	119,084	MEMC Electronic Materials, Inc.*		8,719,330
	364,335	Micrel, Inc.		3,297,232
	277,898	National Semiconductor Corp.		6,986,356
	214,451	NVIDIA Corp.*		7,587,276
	340,403	ON Semiconductor Corp.*		3,472,111
	344,520	Photronics, Inc.*		3,769,049
	223,632	Semtech Corp.*		3,826,344
	110,888	Standard Microsystems Corp.*		4,324,632
	267,939	Teradyne, Inc.*		3,306,367
	213,622	Texas Instruments, Inc.		6,964,077
	71,715	Varian Semiconductor Equipment Associates, Inc.*		3,300,324
	151,000	Verigy Ltd. (Singapore)*		3,471,490
	231,017	Zoran Corp.*		5,890,934
				128,114,139
		Telecommunications—3.2%
	133,382	Atheros Communications*		4,681,708
		Total Investments (Cost $150,764,876)—100.1%		144,802,491
		Liabilities in excess of other assets—(0.1%)		(133,056	)
		Net Assets—100.0%	$	144,669,435

*  Non-income producing security.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	141,331,001			97.7	%
Singapore		3,471,490			2.4
Total investments		144,802,491			100.1
Liabilities in excess of other assets		(133,056	)		(0.1	)
Net Assets	$	144,669,435			100.0	%

See Notes to Financial Statements.

59

Schedule of Investments

PowerShares Dynamic Software Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.1%
		Commercial Services—2.7%
	88,206	Convergys Corp.*	$	1,616,816
		Computers—15.9%
	19,323	DST Systems, Inc.*		1,636,851
	56,306	Jack Henry & Associates, Inc.		1,645,261
	107,531	Magma Design Automation, Inc.*		1,601,137
	51,158	Manhattan Associates, Inc.*		1,542,925
	114,265	NCR Corp.*		3,152,572
				9,578,746
		Electronics—5.3%
	102,960	Cogent, Inc.*		1,520,719
	40,557	Dolby Laboratories, Inc., Class A*		1,681,493
				3,202,212
		Internet—17.4%
	38,678	DealerTrack Holdings, Inc.*		1,898,703
	43,454	j2 Global Communications, Inc.*		1,463,965
	75,767	McAfee, Inc.*		3,132,965
	144,002	Symantec Corp.*		2,704,358
	75,729	Vignette Corp.*		1,305,568
				10,505,559
		Software—58.8%
	44,597	Ansys, Inc.*		1,730,810
	112,611	Aspen Technology, Inc.*		1,963,936
	58,478	Autodesk, Inc.*		2,859,574
	121,103	BEA Systems, Inc.*		2,046,641
	88,461	BMC Software, Inc.*		2,993,520
	107,531	CA, Inc.		2,844,195
	25,903	Cerner Corp.*		1,542,783
	63,903	CSG Systems International, Inc.*		1,311,929
	39,943	Fair Isaac Corp.		1,514,639
	58,226	Fiserv, Inc.*		3,225,719
	105,835	Informatica Corp.*		1,807,662
	71,203	JDA Software Group, Inc.*		1,777,227
	21,339	MicroStrategy, Inc., Class A*		2,098,264
	133,565	Oracle Corp.*		2,961,136
	83,899	Parametric Technology Corp.*		1,602,471
	36,257	SPSS, Inc.*		1,377,766
	64,099	Sybase, Inc.*		1,833,231
				35,491,503
		Total Investments (Cost $53,964,008)—100.1%		60,394,836
		Liabilities in excess of other assets—(0.1%)		(59,033	)
		Net Assets—100.0%	$	60,335,803

*  Non-income producing security.

See Notes to Financial Statements.

60

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Statements of Assets and Liabilities

October 31, 2007 (Unaudited)

	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	$	63,583,984		$	256,289,351		$	30,163,865	$	167,221,464		$	31,749,161	$	23,226,259		$	46,443,131		$	59,577,163
Affiliated investments at value		186,425			—			—		—			—		—			—			—
Cash		81,471			—			33,672		52,936			—		49,221			78,692			21,357
Receivables:
Dividends		83,271			—			13,099		25,056			39,423		5,434			—			36,372
Capital stock sold		—			—			—		—			—		—			5,691,211			—
Expense waivers due from Adviser		4,707			—			8,670		—			8,799		9,253			7,026			6,393
Investments sold		—			—			—		—			—		—			—			—
Other assets		58			4,466			1,832		2,965			1,841		1,101			344			2,203
Total Assets		63,939,916			256,293,817			30,221,138		167,302,421			31,799,224		23,291,268			52,220,404			59,643,488
LIABILITIES:
Due to custodian		—			370,168			—		—			485		—			—			—
Payables:
Investments purchased		—			—			—		—			—		—			5,691,185			—
Capital stock repurchased		—			—			—		—			—		—			—			—
Expense reimbursements due to Adviser		—			7,144			—		1,062			—		—			—			—
Accrued advisory fees		34,085			107,657			13,691		67,557			15,107		9,398			18,145			25,305
Accrued expenses		56,404			82,740			30,984		51,396			32,777		40,758			59,080			38,585
Total Liabilities		90,489			567,709			44,675		120,015			48,369		50,156			5,768,410			63,890
NET ASSETS	$	63,849,427		$	255,726,108		$	30,176,463	$	167,182,406		$	31,750,855	$	23,241,112		$	46,451,994		$	59,579,598
NET ASSETS CONSIST OF:
Paid-in capital	$	68,426,014		$	259,621,211		$	29,060,930	$	132,900,440		$	30,217,786	$	20,921,060		$	44,133,110		$	59,351,982
Undistributed net investment income (loss)		161,743			(641,154	)		23,996		(23,375	)		43,679		296,937			(177,100	)		451,934
Accumulated net realized gain (loss) on investments		(1,174,314	)		(14,381,668	)		522,033		5,145,761			185,943		(797,958	)		679,086			(690,901	)
Net unrealized appreciation (depreciation) of investments		(3,564,016	)		11,127,719			569,504		29,159,580			1,303,447		2,821,073			1,816,898			466,583
Net Assets	$	63,849,427		$	255,726,108		$	30,176,463	$	167,182,406		$	31,750,855	$	23,241,112		$	46,451,994		$	59,579,598
Shares outstanding (unlimited amount authorized, $0.01 par value)		3,000,000			13,000,000			1,500,000		6,700,000			1,800,000		1,100,000			1,600,000			3,300,000
Net asset value	$	21.28		$	19.67		$	20.12	$	24.95		$	17.64	$	21.13		$	29.03		$	18.05
Unaffiliated investments at cost	$	67,148,000		$	245,161,632		$	29,594,361	$	138,061,884		$	30,445,714	$	20,405,186		$	44,626,233		$	59,110,580
Affiliated investments at cost	$	186,425		$	—		$	—	$	—		$	—	$	—		$	—		$	—

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
ASSETS:
Unaffiliated investments at value	$	30,631,662		$	42,680,930		$	25,031,525		$	438,603,517		$	93,493,407		$	12,205,073		$	144,802,491		$	60,394,836
Affiliated investments at value		24,828			181,378			—			—			—			99,601			—			—
Cash		9,602			33,077			6,306			—			—			24,346			—			—
Receivables:
Dividends		18,654			761			2,126			271,949			57,235			2,586			21,903			—
Capital stock sold		—			—			—			—			—			—			—			—
Expense waivers due from Adviser		9,429			8,751			9,676			—			5,238			9,754			—			6,219
Investments sold		—			—			—			—			—			1,756,484			3,610,525			—
Other assets		2,002			1,782			2,567			4,699			2,389			1,785			3,348			2,264
Total Assets		30,696,177			42,906,679			25,052,200			438,880,165			93,558,269			14,099,629			148,438,267			60,403,319
LIABILITIES:
Due to custodian		—			—			—			171,384			9,531			—			38,122			758
Payables:
Investments purchased		—			—			—			—			—			—			—			—
Capital stock repurchased		—			—			—			—			—			1,757,601			3,610,379			—
Expense reimbursements due to Adviser		—			—			—			19,032			—			—			2,621			—
Accrued advisory fees		13,791			18,724			10,427			190,831			39,874			6,048			71,626			26,047
Accrued expenses		33,369			32,262			31,351			97,227			41,009			32,771			46,084			40,711
Total Liabilities		47,160			50,986			41,778			478,474			90,414			1,796,420			3,768,832			67,516
NET ASSETS	$	30,649,017		$	42,855,693		$	25,010,422		$	438,401,691		$	93,467,855		$	12,303,209		$	144,669,435		$	60,335,803
NET ASSETS CONSIST OF:
Paid-in capital	$	31,705,539		$	49,938,466		$	24,838,742		$	372,493,637		$	93,492,405		$	14,989,803		$	158,108,878		$	54,355,827
Undistributed net investment income (loss)		386,988			491,108			(79,506	)		(377,166	)		(12,509	)		2,539			(55,057	)		(72,002	)
Accumulated net realized gain (loss) on investments		(554,823	)		(6,265,127	)		(2,343,404	)		12,037,340			2,951,607			(1,943,226	)		(7,422,001	)		(378,850	)
Net unrealized appreciation (depreciation) of investments		(888,687	)		(1,308,754	)		2,594,590			54,247,880			(2,963,648	)		(745,907	)		(5,962,385	)		6,430,828
Net Assets	$	30,649,017		$	42,855,693		$	25,010,422		$	438,401,691		$	93,467,855		$	12,303,209		$	144,669,435		$	60,335,803
Shares outstanding (unlimited amount authorized, $0.01 par value)		1,700,000			2,600,000			1,200,000			16,000,000			4,900,000			700,000			7,900,000			2,800,000
Net asset value	$	18.03		$	16.48		$	20.84		$	27.40		$	19.08		$	17.58		$	18.31		$	21.55
Unaffiliated investments at cost	$	31,520,349		$	43,989,684		$	22,436,935		$	384,355,637		$	96,457,055		$	12,950,980		$	150,764,876		$	53,964,008
Affiliated investments at cost	$	24,828		$	181,378		$	—		$	—		$	—		$	99,601		$	—		$	—

63

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	424,341		$	102,275		$	88,498		$	636,171		$	616,686		$	372,825		$	22,630		$	783,509
Affiliated dividend income		1,708			—			—			15			5,458			—			—			—
Foreign withholding taxes		(1,282	)		—			—			—			—			—			—			—
Total Income		424,767			102,275			88,498			636,186			622,144			372,825			22,630			783,509
EXPENSES:
Advisory fees		76,596			616,984			59,374			375,069			83,506			36,169			90,600			151,131
Administration & Accounting fees		37,887			42,912			42,912			42,912			42,912			42,912			37,709			42,912
Audit		8,319			8,319			8,319			8,319			8,319			8,319			8,319			8,319
Offering costs		8,000			—			—			—			—			—			7,949			—
Sub-licensing		7,660			37,019			3,562			22,504			5,010			2,170			9,060			9,068
Listing fees and expenses		5,046			5,248			5,056			5,139			5,067			5,051			5,066			5,088
Custodian & transfer agent fees		3,527			8,403			3,565			5,922			3,385			3,428			3,461			3,565
Trustees		2,851			7,196			3,032			5,294			3,260			2,893			3,263			3,755
Printing		1,838			30,964			2,588			14,421			4,513			1,456			3,727			6,831
Registration & filings		282			—			—			—			—			—			2,167			—
Legal		84			4,678			315			2,101			543			213			488			979
Other expenses		3,981			6,218			4,221			5,146			4,342			5,919			4,068			4,632
Total Expenses		156,071			767,941			132,944			486,827			160,857			108,530			175,877			236,280
Net expenses reimbursed to the Adviser under the Expense Agreement		—			9,460			—			—			—			—			—			—
Less fees waived:
Advisory		(48,495	)		—			(58,132	)		(14,240	)		(55,638	)		(36,169	)		(50,148	)		(45,838	)
Other fees assumed by the Adviser		—			—			—			—			—			(26,788	)		—			—
Net Expenses		107,576			777,401			74,812			472,587			105,219			45,573			125,729			190,442
Net Investment Income (Loss)		317,191			(675,126	)		13,686			163,599			516,925			327,252			(103,099	)		593,067
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(889,549	)		(6,768,703	)		(423,828	)		(220,138	)		(1,293,736	)		(162,184	)		(1,317,998	)		(1,917,318	)
In-kind redemptions		3,171			22,509,974			3,531,665			8,952,465			4,229,315			1,004,278			2,222,890			2,290,439
Net realized gain (loss)		(886,378	)		15,741,271			3,107,837			8,732,327			2,935,579			842,094			904,892			373,121
Net change in unrealized appreciation/ depreciation on investments		(3,389,544	)		(11,016,187	)		(1,832,060	)		12,979,851			(2,251,999	)		1,709,746			583,868			(3,544,501	)
Net realized and unrealized gain (loss) on investments		(4,275,922	)		4,725,084			1,275,777			21,712,178			683,580			2,551,840			1,488,760			(3,171,380	)
Net increase (decrease) in net assets resulting from operations	$	(3,958,731	)	$	4,049,958		$	1,289,463		$	21,875,777		$	1,200,505		$	2,879,092		$	1,385,661		$	(2,578,313	)

See Notes to Financial Statements.

64

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	803,274		$	937,043		$	13,049		$	798,820		$	594,146		$	55,432		$	474,372		$	49,766
Affiliated dividend income		1,711			4,750			—			1,265			422			2,441			—			—
Foreign withholding taxes		—			—			—			—			—			—			—			—
Total Income		804,985			941,793			13,049			800,085			594,568			57,873			474,372			49,766
EXPENSES:
Advisory fees		120,445			132,781			53,630			979,968			273,648			39,510			441,961			172,759
Administration & Accounting fees		42,912			42,912			42,912			54,155			42,912			42,912			42,912			42,912
Audit		8,319			8,319			8,319			8,319			8,319			8,319			8,319			8,319
Offering costs		—			—			—			—			—			—			—			—
Sub-licensing		7,227			7,967			3,218			58,798			16,419			2,370			26,696			10,365
Listing fees and expenses		5,082			5,067			5,056			5,264			5,106			5,062			5,135			5,100
Custodian & transfer agent fees		3,457			3,457			3,457			11,717			4,499			3,565			6,695			3,508
Trustees		3,643			3,573			3,011			8,747			4,483			3,043			5,602			3,966
Printing		6,975			5,036			2,930			33,809			11,040			2,895			16,353			8,682
Registration & filings		—			—			—			—			—			—			—			—
Legal		876			620			365			4,828			1,443			422			2,172			1,238
Other expenses		4,549			4,530			4,435			6,148			4,737			4,234			5,489			4,738
Total Expenses		203,485			214,262			127,333			1,171,753			372,606			112,332			561,334			261,587
Net expenses reimbursed to the Adviser under the Expense Agreement		—			—			—			63,006			—			—			—			—
Less fees waived:
Advisory		(51,724	)		(46,957	)		(53,630	)		—			(27,810	)		(39,510	)		(713	)		(43,911	)
Other fees assumed by the Adviser		—			—			(6,129	)		—			—			(23,040	)		—			—
Net Expenses		151,761			167,305			67,574			1,234,759			344,796			49,782			560,621			217,676
Net Investment Income (Loss)		653,224			774,488			(54,525	)		(434,674	)		249,772			8,091			(86,249	)		(167,910	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(1,917,792	)		(2,652,187	)		(550,495	)		857,433			(1,670,638	)		(1,531,254	)		(7,315,385	)		(739,823	)
In-kind redemptions		4,533,291			747,021			1,112,077			35,660,772			5,743,922			924,579			12,509,246			4,365,868
Net realized gain (loss)		2,615,499			(1,905,166	)		561,582			36,518,205			4,073,284			(606,675	)		5,193,861			3,626,045
Net change in unrealized appreciation/ depreciation on investments		(4,869,881	)		(2,198,505	)		2,152,010			24,168,348			(8,994,165	)		(1,511,620	)		(13,941,747	)		(529,230	)
Net realized and unrealized gain (loss) on investments		(2,254,382	)		(4,103,671	)		2,713,592			60,686,553			(4,920,881	)		(2,118,295	)		(8,747,886	)		3,096,815
Net increase (decrease) in net assets resulting from operations	$	(1,601,158	)	$	(3,329,183	)	$	2,659,067		$	60,251,879		$	(4,671,109	)	$	(2,110,204	)	$	(8,834,135	)	$	2,928,905

65

Statements of Changes in Net Assets

	PowerShares Dynamic Banking Portfolio						PowerShares Dynamic Biotechnology & Genome Portfolio						PowerShares Dynamic Building & Construction Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	317,191		$	69,266		$	(675,126	)	$	(1,295,830	)	$	13,686		$	22,440
Net realized gain (loss) on investments		(886,378	)		(209,965	)		15,741,271			(4,168,259	)		3,107,837			(1,824,946	)
Net change in unrealized appreciation/depreciation of investments		(3,389,544	)		(174,472	)		(11,016,187	)		30,260,487			(1,832,060	)		1,243,144
Net increase (decrease) in net assets resulting from operations		(3,958,731	)		(315,171	)		4,049,958			24,796,398			1,289,463			(559,362	)
Undistributed net investment income (loss) included in the price of units issued and redeemed		(19,143	)		(19,989	)		33,972			98,651			10,628			13,852
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(161,019	)		(44,552	)		—			—			(18,567	)		(4,191	)
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(161,019	)		(44,552	)		—			—			(18,567	)		(4,191	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		130,574,541			22,356,336			121,389,547			155,765,402			39,507,576			17,839,986
Value of shares repurchased		(67,341,350	)		(17,260,627	)		(128,329,311	)		(171,967,279	)		(29,300,797	)		(23,983,205	)
Net income equalization		19,143			19,989			(33,972	)		(98,651	)		(10,628	)		(13,852	)
Net increase (decrease) in net assets resulting from shares transactions		63,252,334			5,115,698			(6,973,736	)		(16,300,528	)		10,196,151			(6,157,071	)
Increase (Decrease) in Net Assets		59,113,441			4,735,986			(2,889,806	)		8,594,521			11,477,675			(6,706,772	)
NET ASSETS:
Beginning of period		4,735,986			—			258,615,914			250,021,393			18,698,788			25,405,560
End of period	$	63,849,427		$	4,735,986		$	255,726,108		$	258,615,914		$	30,176,463		$	18,698,788
Undistributed net investment income (loss) at end of period	$	161,743		$	24,714		$	(641,154	)	$	—		$	23,996		$	18,249
CHANGES IN SHARES OUTSTANDING:
Shares sold		5,900,000			900,000			6,400,000			8,900,000			2,000,000			1,100,000
Shares repurchased		(3,100,000	)		(700,000	)		(6,800,000	)		(10,000,000	)		(1,500,000	)		(1,500,000	)
Shares outstanding, beginning of period		200,000			—			13,400,000			14,500,000			1,000,000			1,400,000
Shares outstanding, end of period		3,000,000			200,000			13,000,000			13,400,000			1,500,000			1,000,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

66

	PowerShares Dynamic Energy Exploration & Production Portfolio						PowerShares Dynamic Food & Beverage Portfolio						PowerShares Dynamic Hardware & Consumer Electronics Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	163,599		$	499,053		$	516,925		$	691,123		$	327,252		$	(58,128	)
Net realized gain (loss) on investments		8,732,327			4,218,041			2,935,579			1,049,116			842,094			(283,424	)
Net change in unrealized appreciation/depreciation of investments		12,979,851			7,881,779			(2,251,999	)		2,942,933			1,709,746			285,507
Net increase (decrease) in net assets resulting from operations		21,875,777			12,598,873			1,200,505			4,683,172			2,879,092			(56,045	)
Undistributed net investment income (loss) included in the price of units issued and redeemed		23,323			(44,428	)		13,199			28,365			(30,315	)		17,722
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(306,698	)		(351,098	)		(909,257	)		(306,737	)		—			—
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders		(306,698	)		(351,098	)		(909,257	)		(306,737	)		—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		86,980,557			142,236,445			39,372,165			29,846,194			13,443,422			11,586,059
Value of shares repurchased		(64,855,567	)		(142,790,736	)		(41,226,360	)		(25,178,900	)		(5,601,792	)		(15,773,610	)
Net income equalization		(23,323	)		44,428			(13,199	)		(28,365	)		30,315			(17,722	)
Net increase (decrease) in net assets resulting from shares transactions		22,101,667			(509,863	)		(1,867,394	)		4,638,929			7,871,945			(4,205,273	)
Increase (Decrease) in Net Assets		43,694,069			11,693,484			(1,562,947	)		9,043,729			10,720,722			(4,243,596	)
NET ASSETS:
Beginning of period		123,488,337			111,794,853			33,313,802			24,270,073			12,520,390			16,763,986
End of period	$	167,182,406		$	123,488,337		$	31,750,855		$	33,313,802		$	23,241,112		$	12,520,390
Undistributed net investment income (loss) at end of period	$	(23,375	)	$	96,401		$	43,679		$	422,812		$	296,937		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		3,800,000			7,600,000			2,300,000			1,900,000			700,000			700,000
Shares repurchased		(2,900,000	)		(7,800,000	)		(2,400,000	)		(1,600,000	)		(300,000	)		(1,000,000	)
Shares outstanding, beginning of period		5,800,000			6,000,000			1,900,000			1,600,000			700,000			1,000,000
Shares outstanding, end of period		6,700,000			5,800,000			1,800,000			1,900,000			1,100,000			700,000

67

Statements of Changes in Net Assets (Continued)

	PowerShares Healthcare Services Portfolio						PowerShares Dynamic Insurance Portfolio						PowerShares Dynamic Leisure and Entertainment Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	(103,099	)	$	(54,123	)	$	593,067		$	372,086		$	653,224		$	139,932
Net realized gain (loss) on investments		904,892			849,715			373,121			1,728,304			2,615,499			2,116,697
Net change in unrealized appreciation/ depreciation of investments		583,868			1,233,030			(3,544,501	)		2,466,573			(4,869,881	)		1,377,435
Net increase (decrease) in net assets resulting from operations		1,385,661			2,028,622			(2,578,313	)		4,566,963			(1,601,158	)		3,634,064
Undistributed net investment income (loss) included in the price of units issued and redeemed		(74,001	)		(26,513	)		(3,212	)		26,238			(212,000	)		17,232
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			—			(201,682	)		(333,066	)		(54,236	)		(158,121	)
Tax return of capital		—			—			—			—			—			(21,748	)
Total distributions to shareholders.		—			—			(201,682	)		(333,066	)		(54,236	)		(179,869	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		39,673,478			41,920,078			28,554,890			67,091,384			38,509,268			48,534,706
Value of shares repurchased  ...		(22,648,634	)		(15,907,211	)		(24,596,511	)		(44,088,414	)		(55,677,192	)		(30,217,844	)
Net income equalization  .		74,001			26,513			3,212			(26,238	)		212,000			(17,232	)
Net increase (decrease) in net assets resulting from shares transactions		17,098,845			26,039,380			3,961,591			22,976,732			(16,955,924	)		18,299,630
Increase (Decrease) in Net Assets		18,410,505			28,041,489			1,178,384			27,236,867			(18,823,318	)		21,771,057
NET ASSETS:
Beginning of period  ...		28,041,489			—			58,401,214			31,164,347			49,472,335			27,701,278
End of period  ...	$	46,451,994		$	28,041,489		$	59,579,598		$	58,401,214		$	30,649,017		$	49,472,335
Undistributed net investment income (loss) at end of period	$	(177,100	)	$	—		$	451,934		$	63,761		$	386,988		$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,400,000			1,600,000			1,500,000			3,800,000			2,100,000			2,800,000
Shares repurchased  ...		(800,000	)		(600,000	)		(1,300,000	)		(2,500,000	)		(3,100,000	)		(1,800,000	)
Shares outstanding, beginning of period  ...		1,000,000			—			3,100,000			1,800,000			2,700,000			1,700,000
Shares outstanding, end of period .		1,600,000			1,000,000			3,300,000			3,100,000			1,700,000			2,700,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

68

	PowerShares Dynamic Media Portfolio						PowerShares Dynamic Networking Portfolio						PowerShares Dynamic Oil & Gas Services Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	774,488		$	62,910		$	(54,525	)	$	(131,055	)	$	(434,674	)	$	45,350
Net realized gain (loss) on investments		(1,905,166	)		1,254,097			561,582			3,855,985			36,518,205			(542,568	)
Net change in unrealized appreciation/ depreciation of investments		(2,198,505	)		858,209			2,152,010			(2,673,735	)		24,168,348			4,979,597
Net increase (decrease) in net assets resulting from operations		(3,329,183	)		2,175,216			2,659,067			1,051,195			60,251,879			4,482,379
Undistributed net investment income (loss) included in the price of units issued and redeemed		(195,201	)		(9,491	)		(24,981	)		36,561			12,158			45,370
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(100,340	)		(58,259	)		—			—			—			—
Tax return of capital		—			—			—			—			—			—
Total distributions to shareholders.		(100,340	)		(58,259	)		—			—			—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		70,564,202			45,055,211			13,387,264			43,920,427			260,044,587			192,578,053
Value of shares repurchased  ...		(55,584,361	)		(40,409,878	)		(9,712,945	)		(54,100,512	)		(154,350,737	)		(260,736,085	)
Net income equalization  .		195,201			9,491			24,981			(36,561	)		(12,158	)		(45,370	)
Net increase (decrease) in net assets resulting from shares transactions		15,175,042			4,654,824			3,699,300			(10,216,646	)		105,681,692			(68,203,402	)
Increase (Decrease) in Net Assets		11,550,318			6,762,290			6,333,386			(9,128,890	)		165,945,729			(63,675,653	)
NET ASSETS:
Beginning of period  ...		31,305,375			24,543,085			18,677,036			27,805,926			272,455,962			336,131,615
End of period  ...	$	42,855,693		$	31,305,375		$	25,010,422		$	18,677,036		$	438,401,691		$	272,455,962
Undistributed net investment income (loss) at end of period	$	491,108		$	12,161		$	(79,506	)	$	—		$	(377,166	)	$	45,350
CHANGES IN SHARES OUTSTANDING:
Shares sold		4,200,000			2,900,000			700,000			2,600,000			10,000,000			9,500,000
Shares repurchased  ...		(3,500,000	)		(2,700,000	)		(500,000	)		(3,200,000	)		(6,000,000	)		(13,200,000	)
Shares outstanding, beginning of period  ...		1,900,000			1,700,000			1,000,000			1,600,000			12,000,000			15,700,000
Shares outstanding, end of period .		2,600,000			1,900,000			1,200,000			1,000,000			16,000,000			12,000,000

69

Statements of Changes in Net Assets (Continued)

	PowerShares Dynamic Pharmaceuticals Portfolio						PowerShares Dynamic Retail Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	249,772		$	332,121		$	8,091		$	69,426
Net realized gain (loss) on investments		4,073,284			6,281,890			(606,675	)		2,367,368
Net change in unrealized appreciation/ depreciation of investments		(8,994,165	)		7,374,349			(1,511,620	)		(1,871,851	)
Net increase (decrease) in net assets resulting from operations		(4,671,109	)		13,988,360			(2,110,204	)		564,943
Undistributed net investment income (loss) included in the price of units issuedand redeemed		(29,121	)		(24,592	)		(8,891	)		(3,544	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(233,160	)		(367,491	)		(18,816	)		(54,224	)
Tax return of capital		—			(27,281	)		—			—
Total distributions to shareholders		(233,160	)		(394,772	)		(18,816	)		(54,224	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		66,760,882			72,406,707			23,764,632			77,371,444
Value of shares repurchased		(50,734,049	)		(69,811,556	)		(33,361,649	)		(77,636,176	)
Net income equalization		29,121			24,592			8,891			3,544
Net increase (decrease) in net assets resulting from shares transactions		16,055,954			2,619,743			(9,588,126	)		(261,188	)
Increase (Decrease) in Net Assets		11,122,564			16,188,739			(11,726,037	)		245,987
NET ASSETS:
Beginning of period		82,345,291			66,156,552			24,029,246			23,783,259
End of period	$	93,467,855		$	82,345,291		$	12,303,209		$	24,029,246
Undistributed net investment income (loss) at end of period	$	(12,509	)	$	—		$	2,539		$	22,155
CHANGES IN SHARES OUTSTANDING:
Shares sold		3,400,000			4,200,000			1,300,000			4,300,000
Shares repurchased		(2,700,000	)		(4,000,000	)		(1,800,000	)		(4,400,000	)
Shares outstanding, beginning of period		4,200,000			4,000,000			1,200,000			1,300,000
Shares outstanding, end of period		4,900,000			4,200,000			700,000			1,200,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.

70

	PowerShares Dynamic Semiconductors Portfolio						PowerShares Dynamic Software Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			Year Ended April 30, 2007
OPERATIONS:
Net investment income (loss)	$	(86,249	)	$	(190,009	)	$	(167,910	)	$	(339,292	)
Net realized gain (loss) on investments		5,193,861			(1,261,539	)		3,626,045			6,849,312
Net change in unrealized appreciation/ depreciation of investments		(13,941,747	)		(3,142,437	)		(529,230	)		2,073,236
Net increase (decrease) in net assets resulting from operations		(8,834,135	)		(4,593,985	)		2,928,905			8,583,256
Undistributed net investment income (loss) included in the price of units issuedand redeemed		31,192			(71,444	)		95,908			1,824
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			—			—			—
Tax return of capital		—			—			—			—
Total distributions to shareholders		—			—			—			—
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		131,973,359			159,099,139			34,467,660			99,964,940
Value of shares repurchased		(140,355,796	)		(99,548,000	)		(48,430,016	)		(86,977,854	)
Net income equalization		(31,192	)		71,444			(95,908	)		(1,824	)
Net increase (decrease) in net assets resulting from shares transactions		(8,413,629	)		59,622,583			(14,058,264	)		12,985,262
Increase (Decrease) in Net Assets		(17,216,572	)		54,957,154			(11,033,451	)		21,570,342
NET ASSETS:
Beginning of period		161,886,007			106,928,853			71,369,254			49,798,912
End of period	$	144,669,435		$	161,886,007		$	60,335,803		$	71,369,254
Undistributed net investment income (loss) at end of period	$	(55,057	)	$	—		$	(72,002	)	$	—
CHANGES IN SHARES OUTSTANDING:
Shares sold		6,900,000			8,800,000			1,700,000			5,500,000
Shares repurchased		(7,500,000	)		(5,600,000	)		(2,400,000	)		(4,700,000	)
Shares outstanding, beginning of period		8,500,000			5,300,000			3,500,000			2,700,000
Shares outstanding, end of period		7,900,000			8,500,000			2,800,000			3,500,000

71

Financial Highlights

PowerShares Dynamic Banking Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	23.68		$	25.17
Net investment income**		0.21			0.22
Net realized and unrealized loss on investments		(2.36	)		(1.43	)
Total from operations		(2.15	)		(1.21	)
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		(0.06	)
Distributions to shareholders from:
Net investment income		(0.24	)		(0.22	)
Net asset value at end of period	$	21.28		$	23.68
TOTAL RETURN:***		(9.20	)%		(5.08	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	63,849		$	4,736
Ratio to average net assets of:
Expenses, net of waivers		0.70	%†		0.76	%†
Expenses, prior to waivers		1.02	%†		1.88	%†
Net investment income, net of waivers		2.07	%†		1.58	%†
Portfolio turnover rate ††		36	%		57	%

PowerShares Dynamic Biotechnology & Genome Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	19.30		$	17.24		$	14.71
Net investment loss**		(0.05	)		(0.10	)		(0.08	)
Net realized and unrealized gain on investments		0.42			2.15			2.61
Total from operations		0.37			2.05			2.53
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		0.01			—
Net asset value at end of period	$	19.67		$	19.30		$	17.24
TOTAL RETURN:***		1.92	%		11.95	%		17.20	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	255,726		$	258,616		$	250,021
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.64	%†
Expenses, prior to waivers and reimbursements		0.62	%†(b)		0.66	%(b)		0.67	%†
Net investment loss, net of waivers and reimbursements		(0.55	)%†		(0.56	)%		(0.55	)%†
Portfolio turnover rate ††		47	%		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.

(a)  Amount represents less than $0.005.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01%, and less than 0.01% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

See Notes to Financial Statements.
72

Financial Highlights (Continued)

PowerShares Dynamic Building & Construction Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	18.70		$	18.15		$	15.26
Net investment income**		0.01			0.02			—	(a)
Net realized and unrealized gain on investments		1.42			0.52			2.90
Total from operations		1.43			0.54			2.90
Undistributed net investment income included in price of units issued and redeemed**		0.01			0.01			—
Distributions to shareholders from:
Net investment income		(0.02	)		—	(a)		(0.01	)
Net asset value at end of period	$	20.12		$	18.70		$	18.15
TOTAL RETURN:***		7.70	%		3.06	%		18.99	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	30,176		$	18,699		$	25,406
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.67	%†
Expenses, prior to waivers and reimbursements		1.12	%†(b)		1.65	%		0.80	%†
Net investment income, net of waivers and reimbursements		0.12	%†		0.15	%		—	†(a)
Portfolio turnover rate ††		15	%		59	%		29	%

PowerShares Dynamic Energy Exploration & Production Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	21.29		$	18.63		$	16.03
Net investment income**		0.03			0.09			—	(a)
Net realized and unrealized gain on investments		3.68			2.64			2.62
Total from operations		3.71			2.73			2.62
Undistributed net investment income (loss) included in price of units issued and redeemed**		—	(a)		(0.01	)		—
Distributions to shareholders from:
Net investment income		(0.05	)		(0.06	)		(0.02	)
Net asset value at end of period	$	24.95		$	21.29		$	18.63
TOTAL RETURN:***		17.42	%		14.66	%		16.33	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	167,182		$	123,488		$	111,795
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.66	%†
Expenses, prior to waivers and reimbursements		0.65	%†(c)		0.74	%		0.75	%†
Net investment income (loss), net of waivers and reimbursements		0.22	%†		0.47	%		(0.01	)%†
Portfolio turnover rate ††		20	%		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%.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(c)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
73

Financial Highlights (Continued)

PowerShares Dynamic Food & Beverage Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	17.53		$	15.17		$	14.85
Net investment income**		0.26			0.39			0.11
Net realized and unrealized gain on investments		0.31			2.12			0.30
Total from operations		0.57			2.51			0.41
Undistributed net investment income included in price of units issued and redeemed**		0.01			0.02			—
Distributions to shareholders from:
Net investment income		(0.47	)		(0.17	)		(0.09	)
Net asset value at end of period	$	17.64		$	17.53		$	15.17
TOTAL RETURN:***		3.36	%		16.79	%		2.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	31,751		$	33,314		$	24,270
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.64	%		0.69	%†
Expenses, prior to waivers and reimbursements		0.96	%†(a)		1.15	%		1.07	%†
Net investment income, net of waivers and reimbursements		3.10	%†		2.42	%		0.91	%†
Portfolio turnover rate ††		38	%		50	%		72	%

PowerShares Dynamic Hardware & Consumer Electronics Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	17.89		$	16.76		$	15.30
Net investment income (loss)**		0.43			(0.08	)		(0.03	)
Net realized and unrealized gain on investments		2.85			1.19			1.49
Total from operations		3.28			1.11			1.46
Undistributed net investment income (loss) included in price of units issued and redeemed**		(0.04	)		0.02			—
Net asset value at end of period	$	21.13		$	17.89		$	16.76
TOTAL RETURN:***		18.11	%		6.74	%		9.54	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	23,241		$	12,520		$	16,764
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.72	%		0.68	%†
Expenses, prior to waivers and reimbursements		1.50	%†(b)		1.96	%		1.03	%†
Net investment income (loss), net of waivers and reimbursements		4.52	%†		(0.48	)%		(0.48	)%†
Portfolio turnover rate ††		21	%		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.

(a)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007.

See Notes to Financial Statements.
74

Financial Highlights (Continued)

PowerShares Dynamic Healthcare Services Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period October 12, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	28.04		$	24.88
Net investment loss**		(0.08	)		(0.08	)
Net realized and unrealized gain on investments		1.13			3.28
Total from operations		1.05			3.20
Undistributed net investment loss included in price of units issued and redeemed**		(0.06	)		(0.04	)
Net asset value at end of period	$	29.03		$	28.04
TOTAL RETURN:***		3.53	%		12.70	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	46,452		$	28,041
Ratio to average net assets of:
Expenses, net of waivers		0.69	%†		0.70	%†
Expenses, prior to waivers		0.97	%†		1.20	%†
Net investment loss, net of waivers		(0.57	)%†		(0.56	)%†
Portfolio turnover rate ††		39	%		13	%

PowerShares Dynamic Insurance Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	18.84		$	17.31		$	15.44
Net investment income**		0.18			0.15			0.07
Net realized and unrealized gain (loss) on investments		(0.91	)		1.50			1.86
Total from operations		(0.73	)		1.65			1.93
Undistributed net investment income included in price of units issued and redeemed** .		—	(a)		0.01			—
Distributions to shareholders from:
Net investment income		(0.06	)		(0.13	)		(0.06	)
Net asset value at end of period	$	18.05		$	18.84		$	17.31
TOTAL RETURN:***		(3.87	)%		9.62	%		12.54	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	59,580		$	58,401		$	31,164
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.68	%†
Expenses, prior to waivers and reimbursements		0.78	%†(b)		0.96	%		0.87	%†
Net investment income, net of waivers and reimbursements		1.96	%†		0.87	%		0.81	%†
Portfolio turnover rate ††		35	%		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.

(a)  Amount represents less than $0.005.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
75

Financial Highlights (Continued)

PowerShares Dynamic Leisure and Entertainment Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	18.32		$	16.29		$	14.77
Net investment income**		0.25			0.07			0.03
Net realized and unrealized gain (loss) on investments		(0.44	)		2.04			1.51
Total from operations		(0.19	)		2.11			1.54
Undistributed net investment income (loss) included in price of units issued and redeemed**		(0.08	)		0.01			—
Distributions to shareholders from:
Net investment income		(0.02	)		(0.08	)		(0.02	)
Tax return of capital		—			(0.01	)		—
Total distributions		(0.02	)		(0.09	)		(0.02	)
Net asset value at end of period	$	18.03		$	18.32		$	16.29
TOTAL RETURN:***		(1.48	)%		13.02	%		10.41	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	30,649		$	49,472		$	27,701
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.64	%		0.68	%†
Expenses, prior to waivers and reimbursements		0.84	%†(a)		1.07	%		1.03	%†
Net investment income, net of waivers and reimbursements		2.71	%†		0.42	%		0.22	%†
Portfolio turnover rate ††		31	%		35	%		48	%

PowerShares Dynamic Media Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	16.48		$	14.44		$	14.93
Net investment income**		0.25			0.04			0.02
Net realized and unrealized gain (loss) on investments		(0.16	)		2.05			(0.49	)
Total from operations		0.09			2.09			(0.47	)
Undistributed net investment loss included in price of units issued and redeemed**		(0.06	)		(0.01	)		—
Distributions to shareholders from:
Net investment income		(0.03	)		(0.04	)		(0.02	)
Net asset value at end of period	$	16.48		$	16.48		$	14.44
TOTAL RETURN:***		0.21	%		14.42	%		(3.15	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	42,856		$	31,305		$	24,543
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.64	%		0.68	%†
Expenses, prior to waivers and reimbursements		0.81	%†(b)		1.24	%		1.04	%†
Net investment income, net of waivers and reimbursements		2.92	%†		0.25	%		0.19	%†
Portfolio turnover rate ††		39	%		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.

(a)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
76

Financial Highlights (Continued)

PowerShares Dynamic Networking Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	18.68		$	17.38		$	14.96
Net investment loss**		(0.05	)		(0.09	)		(0.08	)
Net realized and unrealized gain on investments		2.23			1.36			2.50
Total from operations		2.18			1.27			2.42
Undistributed net investment income included in price of units issued and redeemed**		(0.02	)		0.03			—
Net asset value at end of period	$	20.84		$	18.68		$	17.38
TOTAL RETURN:***		11.56	%		7.48	%		16.18	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	25,010		$	18,677		$	27,806
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.64	%		0.68	%†
Expenses, prior to waivers and reimbursements		1.19	%†(b)		1.24	%		1.03	%†
Net investment loss, net of waivers and reimbursements		(0.51	)%†		(0.54	)%		(0.59	)%†
Portfolio turnover rate ††		7	%		62	%		42	%

PowerShares Dynamic Oil & Gas Services Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	22.70		$	21.41		$	16.43
Net investment income (loss)**		(0.03	)		—	(a)		(0.01	)
Net realized and unrealized gain on investments		4.73			1.29			4.99
Total from operations		4.70			1.29			4.98
Undistributed net investment income included in price of units issued and redeemed**		—	(a)		—	(a)		—
Net asset value at end of period	$	27.40		$	22.70		$	21.41
TOTAL RETURN:***		20.71	%		6.03	%		30.31	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	438,402		$	272,456		$	336,132
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.64	%†
Expenses, prior to waivers and reimbursements		0.60	%†(c)		0.65	%(c)		0.67	%†
Net investment income (loss), net of waivers and reimbursements		(0.22	)%†		0.02	%		(0.10	)%†
Portfolio turnover rate ††		31	%		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.

(a)  Amount represents less than $0.005.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(c)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.03%, and less than 0.01% for the six months ended October 31, 2007, and for the year ended April 30, 2007, respectively.

See Notes to Financial Statements.
77

Financial Highlights (Continued)

PowerShares Dynamic Pharmaceuticals Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	19.61		$	16.54		$	14.84
Net investment income**		0.05			0.08			0.06
Net realized and unrealized gain (loss) on investments		(0.53	)		3.09			1.68
Total from operations		(0.48	)		3.17			1.74
Undistributed net investment loss included in price of units issued and redeemed**		(0.01	)		(0.01	)		—
Distributions to shareholders from:
Net investment income		(0.04	)		(0.08	)		(0.04	)
Tax return of capital		—			(0.01	)		—
Total distributions		(0.04	)		(0.09	)		(0.04	)
Net asset value at end of period	$	19.08		$	19.61		$	16.54
TOTAL RETURN:***		(2.49	)%		19.20	%		11.74	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	93,468		$	82,345		$	66,157
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.66	%†
Expenses, prior to waivers and reimbursements		0.68	%†(b)		0.80	%		0.88	%†
Net investment income, net of waivers and reimbursements		0.46	%†		0.43	%		0.42	%†
Portfolio turnover rate ††		20	%		29	%		29	%

PowerShares Dynamic Retail Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	20.02		$	18.29		$	15.13
Net investment income**		0.01			0.07			0.01
Net realized and unrealized gain (loss) on investments		(2.42	)		1.71			3.16
Total from operations		(2.41	)		1.78			3.17
Undistributed net investment income (loss) included in price of units issued and redeemed**		(0.01	)		—	(a)		—
Distributions to shareholders from:
Net investment income		(0.02	)		(0.05	)		(0.01	)
Net asset value at end of period	$	17.58		$	20.02		$	18.29
TOTAL RETURN:***		(12.08	)%		9.72	%		20.98	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	12,303		$	24,029		$	23,783
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.64	%		0.70	%†
Expenses, prior to waivers and reimbursements		1.42	%†(c)		1.41	%		0.97	%†
Net investment income, net of waivers and reimbursements		0.10	%†		0.35	%		0.17	%†
Portfolio turnover rate ††		103	%		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.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of less than 0.01% for the six months ended October 31, 2007.

(c)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007.

See Notes to Financial Statements.
78

Financial Highlights (Continued)

PowerShares Dynamic Semiconductors Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	19.05		$	20.18		$	14.93
Net investment loss**		(0.01	)		(0.04	)		(0.05	)
Net realized and unrealized gain (loss) on investments		(0.73	)		(1.08	)		5.30
Total from operations		(0.74	)		(1.12	)		5.25
Undistributed net investment income (loss) included in price of units issued and redeemed**		—	(a)		(0.01	)		—
Net asset value at end of period	$	18.31		$	19.05		$	20.18
TOTAL RETURN:***		(3.89	)%		(5.60	)%		35.16	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	144,669		$	161,886		$	106,929
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.65	%†
Expenses, prior to waivers and reimbursements		0.63	%†(b)		0.78	%		0.75	%†
Net investment loss, net of waivers and reimbursements		(0.10	)%†		(0.23	)%		(0.33	)%†
Portfolio turnover rate ††		35	%		51	%		42	%

PowerShares Dynamic Software Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			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	$	20.39		$	18.44		$	14.98
Net investment loss**		(0.05	)		(0.10	)		(0.08	)
Net realized and unrealized gain on investments		1.18			2.05			3.54
Total from operations		1.13			1.95			3.46
Undistributed net investment income included in price of units issued and redeemed**		0.03			—	(a)		—
Net asset value at end of period	$	21.55		$	20.39		$	18.44
TOTAL RETURN:***		5.69	%		10.57	%		23.10	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	60,336		$	71,369		$	49,799
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.63	%†		0.63	%		0.67	%†
Expenses, prior to waivers and reimbursements		0.76	%†(c)		0.83	%		0.91	%†
Net investment loss, net of waivers and reimbursements		(0.49	)%†		(0.51	)%		(0.53	)%†
Portfolio turnover rate ††		33	%		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.

(b)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(c)  The expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007.

See Notes to Financial Statements.
79

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of 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"

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 Index	Dynamic Biotechnology & Genome IntellidexSM
Dynamic Building & Construction Portfolio Index	Dynamic Building and Construction IntellidexSM

80

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

Fund	Index
Dynamic Energy Exploration & Production Portfolio IntellidexSM Index	Dynamic Energy Exploration & Production
Dynamic Food & Beverage Portfolio	Dynamic Food & Beverage IntellidexSM Index
Dynamic Hardware & Consumer Electronics Portfolio IntellidexSM Index	Dynamic Hardware & Consumer Electronics
Dynamic Healthcare Services Portfolio	Dynamic Healthcare Services IntellidexSM Index
Dynamic Insurance Portfolio	Dynamic Insurance IntellidexSM Index
Dynamic Leisure and Entertainment Portfolio Index	Dynamic Leisure and Entertainment IntellidexSM
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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

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.

81

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

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

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, sub-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 Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

82

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

For the six months ended October 31, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
Dynamic Banking Portfolio	$	48,495	$	—
Dynamic Building & Construction Portfolio		58,132		—
Dynamic Energy Exploration & Production Portfolio		14,240		—
Dynamic Food & Beverage Portfolio		55,638		—
Dynamic Hardware & Consumer Electronics Portfolio		36,169		26,788
Dynamic Healthcare Services Portfolio		50,148		—
Dynamic Insurance Portfolio		45,838		—
Dynamic Leisure and Entertainment Portfolio		51,724		—
Dynamic Media Portfolio		46,957		—
Dynamic Networking Portfolio		53,630		6,129
Dynamic Pharmaceuticals Portfolio		27,810		—
Dynamic Retail Portfolio		39,510		23,040
Dynamic Semiconductors Portfolio		713		—
Dynamic Software Portfolio		43,911		—

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 six months ended October 31, 2007, the details of expense waivers and reimbursements to the Adviser under the Expense Agreement were as follows:

	Gross Waivers			Gross Reimbusements		Net (Waivers)/ Reimbursements
Dynamic Banking Portfolio	$	(48,495	)	$	—	$	(48,495	)
Dynamic Biotechnology & Genome Portfolio		(6,837	)		16,297		9,460
Dynamic Building & Construction Portfolio		(59,478	)		1,346		(58,132	)
Dynamic Energy Exploration & Production Portfolio		(17,305	)		3,065		(14,240	)
Dynamic Food & Beverage Portfolio		(57,009	)		1,371		(55,638	)
Dynamic Hardware & Consumer Electronics Portfolio		(64,282	)		1,325		(62,957	)
Dynamic Healthcare Services Portfolio		(50,147	)		—		(50,147	)
Dynamic Insurance Portfolio		(47,251	)		1,413		(45,838	)
Dynamic Leisure and Entertainment Portfolio		(53,117	)		1,393		(51,724	)
Dynamic Media Portfolio		(48,321	)		1,364		(46,957	)
Dynamic Networking Portfolio		(61,104	)		1,345		(59,759	)
Dynamic Oil & Gas Services Portfolio		—			63,006		63,006
Dynamic Pharmaceuticals Portfolio		(29,342	)		1,532		(27,810	)
Dynamic Retail Portfolio		(63,889	)		1,339		(62,550	)
Dynamic Semiconductors Portfolio		(8,421	)		7,708		(713	)
Dynamic Software Portfolio		(49,828	)		5,917		(43,911	)

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

83

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

The amounts subject to reimbursement to the Adviser at October 31, 2007 are as follows:

	Reimbursements available during the fiscal years ending:
	04/30/08		04/30/09		04/30/10
Dynamic Banking Portfolio	$	97,476	$	97,476	$	97,476
Dynamic Biotechnology & Genome Portfolio		115,448		115,448		87,272
Dynamic Building & Construction Portfolio		239,898		239,898		213,347
Dynamic Energy Exploration & Production Portfolio		163,189		163,189		134,319
Dynamic Food & Beverage Portfolio		280,011		280,011		204,432
Dynamic Hardware & Consumer Electronics Portfolio		248,248		248,248		215,995
Dynamic Healthcare Services Portfolio		97,671		97,671		97,671
Dynamic Insurance Portfolio		217,074		217,074		188,056
Dynamic Leisure and Entertainment Portfolio		271,652		271,652		199,369
Dynamic Media Portfolio		272,063		272,063		197,961
Dynamic Networking Portfolio		284,243		284,243		209,695
Dynamic Oil & Gas Services Portfolio		20,690		20,690		20,690
Dynamic Pharmaceuticals Portfolio		231,330		231,330		160,677
Dynamic Retail Portfolio		250,003		250,003		216,053
Dynamic Semiconductors Portfolio		190,563		190,563		134,917
Dynamic Software Portfolio		250,026		250,026		182,538

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 a licensing agreement 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 sub-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. Effective July 2, 2007, The Bank of New York became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

84

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

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 may 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 October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation
Dynamic Banking Portfolio	$	67,334,425	$	(3,564,016	)	$	808,748	$	(4,372,764	)
Dynamic Biotechnology & Genome Portfolio		245,161,632		11,127,719			30,127,199		(18,999,480	)
Dynamic Building & Construction Portfolio		29,594,361		569,504			1,828,869		(1,259,365	)
Dynamic Energy Exploration & Production Portfolio(1)		138,061,884		29,159,580			30,100,446		(940,866	)
Dynamic Food & Beverage Portfolio		30,445,714		1,303,447			2,057,959		(754,512	)
Dynamic Hardware & Consumer Electronics Portfolio		20,405,186		2,821,073			3,389,188		(568,115	)
Dynamic Healthcare Services Portfolio		44,626,233		1,816,898			3,247,945		(1,431,047	)
Dynamic Insurance Portfolio		59,110,580		466,583			2,479,303		(2,012,720	)
Dynamic Leisure and Entertainment Portfolio		31,545,177		(888,687	)		1,738,476		(2,627,163	)
Dynamic Media Portfolio		44,171,062		(1,308,754	)		3,328,237		(4,636,991	)
Dynamic Networking Portfolio		22,436,935		2,594,590			3,466,344		(871,754	)
Dynamic Oil & Gas Services Portfolio		384,355,637		54,247,880			62,093,210		(7,845,330	)
Dynamic Pharmaceuticals Portfolio(2)		96,457,055		(2,963,648	)		6,031,512		(8,995,160	)
Dynamic Retail Portfolio		13,050,581		(745,907	)		255,641		(1,001,548	)
Dynamic Semiconductors Portfolio		150,764,876		(5,962,385	)		8,690,679		(14,653,064	)
Dynamic Software Portfolio		53,964,008		6,430,828			7,322,631		(891,803	)

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(1)		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	)

85

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

	Accumulated Earnings		Net Accumulated Capital and other Gains/Losses			Unrealized Appreciation/ Depreciation		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Total Accumulated Earnings/Loss
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(2)		—		(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

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

86

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

	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
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.

87

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

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
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.

88

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

Note 6. Investment Transactions

For the six months ended October 31, 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	$	11,995,175	$	12,884,569
Dynamic Biotechnology & Genome Portfolio		115,185,872		118,816,642
Dynamic Building & Construction Portfolio		3,515,176		3,502,830
Dynamic Energy Exploration & Production Portfolio		29,738,663		30,524,215
Dynamic Food & Beverage Portfolio		12,617,497		12,683,082
Dynamic Hardware & Consumer Electronics Portfolio		3,456,552		3,024,806
Dynamic Healthcare Services Portfolio		14,490,277		14,909,944
Dynamic Insurance Portfolio		21,043,520		20,943,592
Dynamic Leisure and Entertainment Portfolio		14,606,885		14,755,319
Dynamic Media Portfolio		20,678,424		19,705,330
Dynamic Networking Portfolio		1,753,310		1,491,356
Dynamic Oil & Gas Services Portfolio		120,295,044		121,403,380
Dynamic Pharmaceuticals Portfolio		21,939,560		20,964,685
Dynamic Retail Portfolio		24,747,627		16,924,970
Dynamic Semiconductors Portfolio		59,544,493		62,685,421
Dynamic Software Portfolio		22,594,847		24,578,959

For the six months ended October 31, 2007, in-kind transactions were as follows:

	Purchases		Sales
Dynamic Banking Portfolio	$	130,012,863	$	66,027,036
Dynamic Biotechnology & Genome Portfolio		125,621,895		129,320,066
Dynamic Building & Construction Portfolio		38,409,428		28,284,098
Dynamic Energy Exploration & Production Portfolio		86,631,495		63,816,903
Dynamic Food & Beverage Portfolio		37,581,971		39,647,712
Dynamic Hardware & Consumer Electronics Portfolio		13,382,749		5,784,233
Dynamic Healthcare Services Portfolio		38,261,956		21,015,198
Dynamic Insurance Portfolio		29,127,987		24,814,805
Dynamic Leisure and Entertainment Portfolio		37,928,626		54,555,355
Dynamic Media Portfolio		69,230,066		54,757,459
Dynamic Networking Portfolio		12,978,083		9,617,342
Dynamic Oil & Gas Services Portfolio		263,424,301		156,816,567
Dynamic Pharmaceuticals Portfolio		64,726,547		49,665,122
Dynamic Retail Portfolio		13,815,224		31,391,114
Dynamic Semiconductors Portfolio		133,714,306		139,190,621
Dynamic Software Portfolio		34,813,621		47,233,944

There were no purchases or sales of U.S. government or government agency obligations for the six months ended October 31, 2007. Gains on in-kind transactions are not considered taxable gains for Federal income tax purposes.

89

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31,2007 (Unaudited)

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.

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferral Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Only authorized participants are permitted to create or redeem from the Funds. 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 Pronouncement

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.

90

Supplemental Information (Unaudited)

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)		89	None
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006-February 2007); 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)		89	None

  *  This is the date the Trustee began serving 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 19 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
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)		89	None
Philip M. Nussbaum (46) 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)		89	None
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007-Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006-August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995- February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 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)		89	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 19 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 Occupation(s) During Past 5 Years
Bruce T. Duncan (53) 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 (42) 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 (45) 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

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 Semi-Annual Report.
95

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.

This page contains advertising materials and should not be viewed as part of the Semi-Annual Report.
96

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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97

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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98

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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99

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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100

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 Semi-Annual Report.
101

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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the fund's independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-7

2007 Semi-Annual Report to Shareholders

31 October 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	24
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	43
PowerShares FTSE RAFI Consumer Goods Sector Portfolio	44
PowerShares FTSE RAFI Consumer Services Sector Portfolio	46
PowerShares FTSE RAFI Energy Sector Portfolio	49
PowerShares FTSE RAFI Financials Sector Portfolio	50
PowerShares FTSE RAFI Health Care Sector Portfolio	53
PowerShares FTSE RAFI Industrials Sector Portfolio	55
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio	58
PowerShares FTSE RAFI Utilities Sector Portfolio	60
Statements of Assets and Liabilities	62
Statements of Operations	64
Statements of Changes in Net Assets	66
Financial Highlights	70
Notes to Financial Statements	75
Supplemental Information (Unaudited)	84

To My Fellow Investors,

It is exciting to report to you on the recent results of the growing family of PowerShares Exchange-Traded Funds and to express my gratitude for you confidence in and support of PowerShares Capital Management LLC.

PowerShares ETFs have continued to experience excellent growth over the past six months. We have added 24 new funds which are trading on US stock exchanges. Our sister company, PowerShares Capital Management – Ireland has launched 13 new funds trading on five European exchanges. This brings our total offering to 105 ETFs at year end and growing total assets under management to over $14 billion.

On behalf of PowerShares and the Board of Trustees for the PowerShares Exchange-Traded Fund Trust, I am grateful for your participation in our family of ETFs. 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

The major U.S. markets were volatile during the six month reporting period ending October 31, 2007. The S&P 500 Index was up 5.48%, the Dow Jones Industrial Average was up 7.78% and the NASDAQ ended up 13.68%, each hitting their yearly highs during this period. The volatility in the markets was due primarily in response to the deteriorating housing market, the sub-prime crisis, declining dollar vs. major currencies, rising demand in commodities (gold hitting record highs) and the rising price of oil. With the increased volatility in the markets, growth stocks outperformed value stocks. The overall economy remained stable but consumer sentiment began to worsen as uncertainty and volatility in the markets heightened throughout the period. During the September 18th policy meeting, the Federal Reserve took aggressive steps by unanimously voting to cut both the target funds rate and overnight discount rate by 50 bps to help ease pressure on the financial markets and to shield the economy from a potential recession and turmoil caused by the uncertainty of how far reaching the sub-prime crisis would spread. The target funds rate moved from 5.25 to 4.75%, the first cut in four years, and the discount rate moved from 5.75 to 5.25%. The credit crisis, declining dollar, gold reaching new highs and oil nearing $90 per barrel, continue to put pressure on the overall economy which led to fear of inflation and whether a recession was in the near future.

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 RAFI US 1500 Small-Mid Index. The FTSE RAFI US 1500 Small-Mid Index is designed to track the performance of small and medium-sized U.S. companies which are selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. Each of the equities with a fundamental weight ranking of 1,001 to 2,500 is then selected and assigned a weight equal to its fundamental weight.

The PowerShares FTSE RAFI US 1500 Small-Mid Portfolio returned 1.71% to shareholders during the reporting period. The Fund slightly underperformed its benchmark, the Russell 2000 Index by 0.54 bps. Since inception the Fund has outpaced the Russell 2000 by 1.03%. Fund return matched overall trends in the economy during the reporting period. Oil, Aerospace, Health Care and Machinery companies contributed the most to the funds positive return. Retail, Media, Real estate and Household Durables companies dragged on performance during the period.

Sector Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Financials	18.7
Industrials	18.6
Consumer Discretionary	16.3
Information Technology	15.5
Health Care	9.1
Energy	8.2
Materials	5.9
Consumer Staples	2.8
Telecommunication Services	2.2
Utilities	1.5
Other	0.9
Money Market Fund	0.3

Style Allocation (%)

as of 31 October 2007

Small-Cap Value	50.8
Small-Cap Growth	24.2
Mid-Cap Growth	21.0
Mid-Cap Value	3.7
Large-Cap Growth	0.3

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Cabela's, Inc. Class A	0.4
Cox Radio, Inc., Class A	0.4
DryShips, Inc. (Marshall Islands)	0.4
Roper Industries, Inc.	0.4
Denbury Resources, Inc.	0.3
TransDigm Group, Inc.	0.3
Terra Industries, Inc.	0.3
Foster Wheeler Ltd. (Bermuda)	0.3
Cypress Semiconductor Corp.	0.3
CF Industries Holdings, Inc.	0.3
Total	3.4

4

Manager's Analysis (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio (ticker: PRFZ)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE US 1500 Small-Mid Index		1.90		11.42		14.58		16.39
Russell 2000® Index		2.25		9.27		12.68		14.24
S&P Small Cap Index		2.89		11.55		14.05		15.80

Fund

NAV Return	1.71	10.64	13.71	15.36
Share Price Return	1.65	10.66	13.59	15.22

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 1.04%. In the Financial Highlights section of this Semi-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 0.75%. 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, 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 Russell 2000^® Index and the S&P Small Cap Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 2,000 and 600 common stocks, respectively.

^† Average annualized.

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 RAFI Basic Materials Sector Index. The FTSE RAFI Basic Materials Sector Index is designed to track the performance of the largest U.S. equities in the basic materials sector which are 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.

During the six month reporting period the PowerShares FTSE RAFI Basic Materials Sector Portfolio returned 14.01% to shareholders. Metals and mining stocks along with chemical stocks helped boost returns for shareholders. Paper and forest products and commercial services stocks slowed growth slightly. Monsanto Co., Southern Copper Corp. and Freeport-McMoRan Copper & Gold Inc. were the biggest contributors to return. Oil and gas stocks slowed the growth of the Fund during the period.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Chemicals	60.4
Mining	19.1
Forest Products & Paper	10.8
Iron/Steel	7.1
Coal	4.0
Metal/Fabricate Hardware	1.6
Household Products/Wares	1.2
Money Market Fund	0.2
Other	(4.4	)

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	39.3
Mid-Cap Value	28.3
Large-Cap Growth	22.1
Mid-Cap Growth	6.0
Small-Cap Value	3.2
Small-Cap Growth	1.1

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Dow Chemical (The) Co.	11.1
E.I. du Pont de Nemours & Co.	9.4
Alcoa, Inc.	8.1
International Paper Co.	6.0
Freeport-McMoRan Copper & Gold, Inc.	4.8
Weyerhaeuser Co.	4.3
Monsanto Co.	4.0
Southern Copper Corp.	3.4
Air Products & Chemicals, Inc.	3.2
PPG Industries, Inc.	3.2
Total	57.5

6

Manager's Analysis (Continued)

PowerShares FTSE RAFI Basic Materials Sector Portfolio (ticker: PRFM)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Basic Materials Sector Index		15.13		36.87		40.83		46.51
S&P Materials Index		14.70		34.10		38.12		43.36
Dow Jones Basic Materials Index		18.53		37.99		42.84		48.84

Fund

NAV Return	14.01	34.48	38.67	43.85
Share Price Return	13.86	34.41	38.54	43.71

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 1.48%. In the Financial Highlights section of this Semi-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 1.43%. 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, 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 S&P Materials Index and the Dow Jones Basic Materials Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 29 and 90 common stocks, respectively.

^† Average annualized.

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 RAFI Consumer Goods Sector Index. The FTSE RAFI Consumer Goods Sector Index is designed to track the performance of the largest U.S. equities in the consumer goods sector which are 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.

The PowerShares FTSE RAFI Consumer Goods Sector Portfolio returned 2.64% during the reporting period. The Fund benefited most from beverage and automobile stocks. General Motors Corp. and Ford Motor Co. were the largest gainers in the Fund. Household durables stocks continued to drag on performance of the Fund. Continued downward pressure on the entire housing industry has hampered performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Food	28.0
Auto Manufacturers	21.6
Beverages	13.2
Agriculture	10.5
Cosmetics/Personal Care	6.4
Auto Parts & Equipment	6.3
Apparel	2.6
Household Products/Wares	2.6
Home Builders	2.4
Miscellaneous Manufacturing	1.5
Home Furnishings	0.8
Hand/Machine Tools	0.8
Leisure Time	0.7
Toys/Games/Hobbies	0.6
Distribution/Wholesale	0.6
Housewares	0.6
Software	0.6
Textiles	0.4
Office Furnishings	0.3
Electronics	0.2
Electrical Components & Equipment	0.2
Machinery-Diversified	0.1
Pharmaceuticals	0.1
Money Market Fund	1.5
Other	(2.6	)

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Kraft Foods, Inc., Class A	17.4
General Motors Corp.	11.3
Ford Motor Co.	10.3
Altria Group, Inc.	5.3
Coca-Cola (The) Co.	4.3
Procter & Gamble (The) Co.	4.0
PepsiCo, Inc.	3.7
Anheuser-Busch Cos., Inc.	1.7
Kimberly-Clark Corp.	1.6
Johnson Controls, Inc.	1.5
Total	61.1

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	59.3
Mid-Cap Value	23.8
Large-Cap Growth	10.7
Small-Cap Value	4.4
Mid-Cap Growth	1.8

8

Manager's Analysis (Continued)

PowerShares FTSE RAFI Consumer Goods Sector Portfolio (ticker: PRFG)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Consumer Goods Sector Index		4.34		12.28		14.59		16.41
S&P Consumer Staples Index		6.03		13.65		12.79		14.37
Dow Jones Consumer Goods Index		4.01		12.18		13.55		15.23

Fund

NAV Return	2.64	9.76	12.24	13.71
Share Price Return	2.52	9.79	12.16	13.61

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 1.67%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.90% while the Fund's gross annualized total operating expense ratio was 2.72%. 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, 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 S&P Consumer Staples Index and the Dow Jones Consumer Goods Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 39 and 160 common stocks, respectively.

^† Average annualized.

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 RAFI Consumer Services Sector Index. The FTSE RAFI Consumer Services Sector Index is designed to track the performance of the largest U.S. equities in the consumer services sector which are 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.

The PowerShares FTSE RAFI Consumer Services Sector Portfolio took back some prior gains from shareholders and returned -6.19%. The Fund was hurt most by retail and media companies. Overall returns from retail stocks have been disappointing. Sears, Dillard's and J.C. Penny all had disappointing performance for the period. Larger weightings in Lowe's and Home Depot also dragged on performance. Some bright spots in the portfolio came from leisure and restaurant stocks. MGM Mirage, Las Vegas Sands and Hilton hotels all had handsome returns for the period but were offset by losses from Six Flags and Brinker International.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Retail	46.7
Media	23.2
Food	7.8
Commercial Services	5.1
Internet	3.4
Pharmaceuticals	3.1
Lodging	2.9
Leisure Time	2.2
Advertising	1.4
Entertainment	1.4
Airlines	1.4
Household Products/Wares	0.2
Apparel	0.2
Software	0.1
Trucking & Leasing	0.1
Money Market Fund	0.3
Other	0.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Wal-Mart Stores, Inc.	11.5
Time Warner, Inc.	4.6
McDonald's Corp.	3.0
Kroger (The) Co.	2.9
CVS Caremark Corp.	2.9
Home Depot (The), Inc.	2.9
Walt Disney (The) Co.	2.6
Target Corp.	2.6
McKesson Corp.	2.1
CBS Corp., Class B	2.1
Total	37.2

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	37.3
Large-Cap Growth	28.7
Mid-Cap Value	19.9
Mid-Cap Growth	7.6
Small-Cap Value	5.7
Small-Cap Growth	0.8

10

Manager's Analysis (Continued)

PowerShares FTSE RAFI Consumer Services Sector Portfolio (ticker: PRFS)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Consumer Services Sector Index		-5.90		1.39		5.97		6.68
S&P Consumer Discretionary Index		-5.19		-0.07		6.60		7.39
Dow Jones Consumer Services Index		-2.50		3.19		7.54		8.44

Fund

NAV Return	-6.19	0.65	5.19	5.79
Share Price Return	-6.30	0.64	5.12	5.71

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 1.86%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.88% while the Fund's gross annualized total operating expense ratio was 2.39%. 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, 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 S&P Consumer Discretionary Index and the Dow Jones Consumer Services Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 88 and 250 common stocks, respectively.

^† Average annualized.

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 RAFI Oil & Gas Sector Index. The FTSE RAFI Oil & Gas Sector Index is designed to track the performance of the largest U.S. equities in the energy sector which are 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.

The PowerShares FTSE RAFI Energy Sector Portfolio returned 19.36% to shareholders during the reporting period. The Fund continued to shine, producing a return of 52.62% since inception. Energy stocks performed well over the period with Exxon Mobile and Conoco Phillips returning just under 5% during the period to the Fund. Companies that provide equipment and services to energy companies also performed well. FMC Technologies Inc., National Oilwell Varco and Cameron International Corp. all outshined their peers helping overall performance.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Oil & Gas	83.3
Oil & Gas Services	12.6
Pipelines	2.3
Electric	1.6
Transportation	0.2

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	69.4
Large-Cap Growth	13.0
Mid-Cap Value	11.5
Mid-Cap Growth	5.6
Small-Cap Value	0.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Exxon Mobil Corp.	19.7
Chevron Corp.	14.4
ConocoPhillips	9.5
Marathon Oil Corp.	4.5
Occidental Petroleum Corp.	4.2
Schlumberger Ltd. (Netherlands)	3.6
Valero Energy Corp.	3.6
Devon Energy Corp.	3.4
Anadarko Petroleum Corp.	3.0
Apache Corp.	2.7
Total	68.6

12

Manager's Analysis (Continued)

PowerShares FTSE RAFI Energy Sector Portfolio (ticker: PRFE)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Oil & Gas Index		20.34		40.67		47.83		54.65
S&P Energy Index		21.06		38.36		45.91		52.41
Dow Jones Oil & Gas Index		19.85		37.28		44.78		51.09

Fund

NAV Return	19.36	39.37	46.24	52.62
Share Price Return	18.82	38.81	45.60	51.88

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 1.36%. In the Financial Highlights section of this Semi-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 1.34%. 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, 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 S&P Energy Index and the Dow Jones Oil & Gas Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 34 and 70 common stocks, respectively.

^† Average annualized.

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 RAFI Financials Sector Index. The FTSE RAFI Financials Sector Index is designed to track the performance of the largest U.S. equities in the financials sector which are 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.

The PowerShares FTSE RAFI Financials Sector Portfolio returned -8.92% to shareholders during the reporting period. The Fund trailed its benchmark, the S&P Financials Index, slightly during the period. Financial stocks continued to struggle during the reporting period from continued bad news from financial companies hurt by housing and mortgage backed securities. There were few bright spots in the portfolio during the past six months. Berkshire Hathaway performed well over the period helping offset some of the losses. Commercial banks, thrifts and capital market companies contributed most to the negative return. Merrill Lynch, Wachovia and Citigroup all had disappointing negative returns.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Insurance	30.9
Banks	29.5
Diversified Financial Services	27.9
REITS	7.2
Savings & Loans	2.2
Investment Companies	0.5
Forest Products & Paper	0.5
Software	0.3
Commercial Services	0.2
Real Estate	0.1
Money Market Fund	0.2
Other	0.5

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	62.8
Mid-Cap Value	27.9
Large-Cap Growth	3.4
Mid-Cap Growth	2.8
Small-Cap Value	2.6
Small-Cap Growth	0.5

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Bank of America Corp.	8.9
Berkshire Hathaway, Inc., Class B	6.4
JPMorgan Chase & Co.	5.4
American International Group, Inc.	4.7
Merrill Lynch & Co., Inc.	4.6
Citigroup, Inc.	4.1
Wells Fargo & Co.	3.8
Wachovia Corp.	2.8
Morgan Stanley	2.2
Goldman Sachs Group (The), Inc.	2.1
Total	45.0

14

Manager's Analysis (Continued)

PowerShares FTSE RAFI Financials Sector Portfolio (ticker: PRFF)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Financials Sector Index		-8.51		-3.21		0.00		0.00
S&P Financials Index		-7.81		-2.53		0.52		0.58
Dow Jones Financials Index		-8.78		-5.13		-2.20		-2.45

Fund

NAV Return	-8.92	-4.29	-0.96	-1.06
Share Price Return	-9.15	-4.47	-1.15	-1.28

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 1.97%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.81% while the Fund's gross annualized total operating expense ratio was 1.71%. 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, 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 S&P Financials Index and the Dow Jones Financials Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 93 and 300 common stocks, respectively.

^† Average annualized.

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 RAFI Health Care Sector Index. The FTSE RAFI Health Care Sector Index is designed to track the performance of the largest U.S. equities in the health care sector which are 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.

The PowerShares FTSE RAFI Health Care Sector Portfolio returned 0.98% to shareholders during the reporting period. The Fund continues to outpace its benchmark, the S&P Health Care Index, by 0.07%. Pharmaceuticals, health care providers and equipment stocks were mixed during the period. Merck & Co. and Medco Health Solutions performed well boosting the Fund's overall performance. Pfizer and Wyeth both hampered fund performance during the period.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Pharmaceuticals	55.8
Healthcare-Products	22.7
Healthcare-Services	13.3
Biotechnology	5.6
Insurance	1.4
Electronics	0.8
Distribution/Wholesale	0.3
Money Market Fund	0.5
Other	(0.4	)

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	65.0
Large-Cap Growth	22.5
Mid-Cap Growth	5.7
Mid-Cap Value	5.0
Small-Cap Growth	1.0
Small-Cap Value	0.8

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Pfizer, Inc.	14.3
Merck & Co., Inc.	12.1
Johnson & Johnson	10.7
Bristol-Myers Squibb Co.	6.6
Abbott Laboratories	4.9
Eli Lilly & Co.	4.2
Wyeth	4.0
WellPoint, Inc.	3.1
Medco Health Solutions, Inc.	3.0
Schering-Plough Corp.	2.7
Total	65.6

16

Manager's Analysis (Continued)

PowerShares FTSE RAFI Health Care Sector Portfolio (ticker: PRFH)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Health Care Sector Index		1.13		11.74		9.94		11.15
S&P Health Care Index		0.91		10.27		9.15		10.25
Dow Jones Health Care Index		1.29		9.37		8.73		9.78

Fund

NAV Return	0.98	11.13	9.35	10.45
Share Price Return	1.85	12.17	10.19	11.39

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 1.39%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.80% while the Fund's gross annualized total operating expense ratio was 1.67%. 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, 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 S&P Health Care Index and the Dow Jones Health Care Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 51 and 180 common stocks, respectively.

^† Average annualized.

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 RAFI Industrials Sector Index. The FTSE RAFI Industrials Sector Index is designed to track the performance of the largest U.S. equities in the industrials sector which are 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.

The PowerShares FTSE RAFI Industrials Sector Portfolio returned 8.00% to shareholders during the reporting period. Since inception the Fund continues to outpace its benchmark, the S&P Industrials Index. Industrial conglomerates and machinery stocks helped the Fund the most during the reporting period. General Electric boosted the Fund's return the most. Aerospace and Defense companies continued with positive returns, United Technologies and Honeywell International were the top two performers in that industry. Electronic equipment and instrument companies had mixed returns.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Miscellaneous Manufacturing	34.5
Aerospace/Defense	15.4
Transportation	12.7
Electronics	5.0
Commercial Services	5.0
Machinery-Diversified	3.5
Packaging & Containers	3.0
Software	2.7
Machinery-Construction & Mining	2.6
Electrical Componets & Equipment	2.5
Environmental Control	2.5
Engineering & Construction	2.4
Forest Products & Paper	1.6
Auto Manufacturers	1.1
Building Materials	0.8
Distribution/Wholesale	0.7
Metal Fabricate/Hardware	0.7
Household Products/Wares	0.7
Computers	0.5
Chemicals	0.4
Electric	0.3
Mining	0.3
Hand/Machine Tools	0.2
Trucking & Leasing	0.2
Telecommunications	0.2
Textiles	0.2
Internet	0.1
Retail	0.1
Money Market Fund	0.1
Other	0.0

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
General Electric Co.	20.4
United Parcel Service, Inc., Class B	3.9
Boeing Co.	3.3
United Technologies Corp.	3.2
3M Co.	3.0
Honeywell International, Inc.	2.5
Caterpillar, Inc.	2.3
Northrop Grumman Corp.	2.1
Emerson Electric Co.	2.1
Union Pacific Corp.	2.0
Total	44.8

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	51.5
Mid-Cap Value	20.3
Large-Cap Growth	14.7
Mid-Cap Growth	10.0
Small-Cap Value	3.3
Small-Cap Growth	0.2

18

Manager's Analysis (Continued)

PowerShares FTSE RAFI Industrials Sector Portfolio (ticker: PRFN)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Industrials Sector Index		8.39		22.24		24.27		27.42
S&P Industrials Index		10.32		20.91		22.72		25.65
Dow Jones Industrials Index		9.17		20.90		23.03		26.01

Fund

NAV Return	8.00	21.28	23.42	26.38
Share Price Return	8.64	22.06	24.03	27.06

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 1.22%. In the Financial Highlights section of this Semi-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 0.93%. 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, 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 S&P Industrials Index and the Dow Jones Industrials Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 56 and 270 common stocks, respectively.

^† Average annualized.

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 RAFI Telecommunications & Technology Sector Index. The FTSE RAFI Telecommunications & Technology Sector Index is designed to track the performance of the largest U.S. equities in the telecommunications & technology sector which are 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.

The PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio returned 13.55% to shareholders during the reporting period. Computers, software and telecom companies led the charge helping the Fund's performance. Verizon, AT&T and Microsoft outpaced their peers with handsome returns. Apple Inc., EMC Corp. and Leucadia National Corp. were other notables helping overall return. Wireless telecom companies came in negative during the reporting period with Sprint Nextel Corp. ending the period with disappointing returns.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Telecommunications	41.8
Computers	20.7
Software	19.8
Semiconductors	10.0
Internet	2.7
Distribution/Wholesale	1.7
Office/Business Equipment	1.7
Holding Companies-Diversified	0.3
Retail	0.2
Money Market Fund	0.1
Other	1.0

Style Allocation (%)

as of 31 October 2007

Large-Cap Value	53.5
Large-Cap Growth	28.0
Mid-Cap Growth	8.7
Mid-Cap Value	7.5
Small-Cap Value	1.9
Small-Cap Growth	0.4

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Microsoft Corp.	15.8
Verizon Communications, Inc.	14.3
AT&T, Inc.	9.4
International Business Machines Corp.	4.8
Intel Corp.	4.0
Hewlitt-Packard Co.	3.9
Cisco Systems, Inc.	3.7
Dell, Inc.	2.9
Sprint Nextel Corp.	2.9
Oracle Corp.	2.2
Total	63.9

20

Manager's Analysis (Continued)

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio (ticker: PRFQ)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Telecommunications & Technology Sector Index		13.94		23.15		25.41		28.73
S&P Information Technology Index		19.24		26.90		28.75		32.56
Dow Jones Technology Index		18.67		26.38		27.43		31.04

Fund

NAV Return	13.55	22.29	24.27	27.34
Share Price Return	13.43	22.39	24.25	27.32

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 1.40%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.80% while the Fund's gross annualized total operating expense ratio was 1.54%. 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, 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 S&P Information Technology Index and the Dow Jones Technology Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 70 and 252 common stocks, respectively.

^† Average annualized.

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 RAFI Utilities Sector Index. The FTSE RAFI Utilities Sector Index is designed to track the performance of the largest U.S. equities in the utilities sector which are 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.

The PowerShares FTSE RAFI Utilities Sector Portfolio returned 0.90% to shareholders during the reporting period. Electric Utility companies were among the top performers for the fund with Reliant Energy Inc. and Exelon Corp. among the top contributors. Other Utilities had negative returns hampering overall fund growth. Center Point Energ and NiSource Inc. were among the laggards which hurt the Fund.

Industry Breakdown (% of the Fund's

Net Assets) as of 31 October 2007

Electric	84.3
Pipelines	6.6
Gas	6.6
Water	0.2
Other	2.3

Style Allocation (%)

as of 31 October 2007

Mid-Cap Value	44.4
Large-Cap Value	39.6
Large-Cap Growth	7.4
Small-Cap Value	5.6
Mid-Cap Growth	2.4
Small-Cap Growth	0.6

Top Ten Fund Holdings (% of the Fund's

Net Assets) as of 31 October 2007

Security
Reliant Energy, Inc.	13.0
Exelon Corp.	4.9
Southern Co.	4.3
American Electric Power Co., Inc.	4.0
Dominion Resources, Inc.	3.4
Duke Energy Corp.	3.2
Public Service Enterprise Group, Inc.	3.1
FirstEnergy Corp.	2.9
FPL Group, Inc.	2.9
Edison International	2.6
Total	44.3

22

Manager's Analysis (Continued)

PowerShares FTSE RAFI Utilities Sector Portfolio (ticker: PRFU)

Fund Performance History (%)  As of 31 October 2007

Index

			Avg. Ann.†		Fund Inception
	6 Month		1 Year		Avg. Ann.†		Cumulative
FTSE Utilities Sector Index		4.03		21.67		26.18		29.61
S&P Utilities Index		3.97		22.61		26.96		30.50
Dow Jones Utilities Index		2.19		18.25		22.54		25.45

Fund

NAV Return	0.90	17.43	22.20	24.98
Share Price Return	1.53	18.06	22.69	25.54

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 1.44%. In the Financial Highlights section of this Semi-Annual Report, the Fund's net (subsidized) annualized total operating expense ratio was determined to be 0.87% while the Fund's gross annualized total operating expense ratio was 2.12%. 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, 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 S&P Utilities Index and the Dow Jones Utilities Index are unmanaged indexes used as measurements of change in stock market conditions based on the average performance of approximately 31 and 90 common stocks, respectively.

^† Average annualized.

23

Funds' Distribution History (Unaudited)

	Ex-Dividend	10/15/07		9/21/07		9/14/07		8/15/07		7/13/07		6/15/07		5/15/07
	Record	10/17/07		9/25/07		9/18/07		8/17/07		7/17/07		6/19/07		5/17/07
	Payable	10/31/07		9/28/07		9/28/07		8/31/07		7/31/07		6/29/07		5/31/07
Fund	Ticker
PowerShares FTSE RAFI US 1500 Small-Mid Portfolio	PRFZ		—		0.01258		—		—		—		0.11827		—
PowerShares FTSE RAFI Basic Materials Sector Portfolio	PRFM		—		0.25074		—		—		—		0.57096		—
PowerShares FTSE RAFI Consumer Goods Sector Portfolio	PRFG		—		0.25727		—		—		—		0.53722		—
PowerShares FTSE RAFI Consumer Services Sector Portfolio	PRFS		—		0.01420		—		—		—		0.06886		—
PowerShares FTSE RAFI Energy Sector Portfolio	PRFE		—		0.10533		—		—		—		0.21450		—
PowerShares FTSE RAFI Financials Sector Portfolio	PRFF		—		0.24030		—		—		—		0.34985		—
PowerShares FTSE RAFI Health Care Sector Portfolio	PRFH		—		0.14791		—		—		—		0.30188		—
PowerShares FTSE RAFI Industrials Sector Portfolio	PRFN		—		0.13831		—		—		—		0.07512		—
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio	PRFQ		—		0.08488		—		—		—		0.17094		—
PowerShares FTSE RAFI Utilities Sector Portfolio	PRFU		—		0.59405		—		—		—		0.67368		—

24

	4/13/07		3/16/07		3/15/07		2/15/07		1/12/07		12/15/06		11/15/06		10/13/06
	4/17/07		3/20/07		3/20/07		2/20/07		1/16/07		12/19/06		11/17/06		10/17/06
	4/30/07		3/30/07		3/30/07		2/28/07		1/31/07		12/29/06		11/30/06		10/31/06
Fund
PowerShares FTSE RAFI US 1500 Small-Mid Portfolio		—		0.03020		—		—		—		0.14258		—		—
PowerShares FTSE RAFI Basic Materials Sector Portfolio		—		0.05952		—		—		—		0.59859		—		—
PowerShares FTSE RAFI Consumer Goods Sector Portfolio		—		—		—		—		—		0.32984		—		—
PowerShares FTSE RAFI Consumer Services Sector Portfolio		—		—		—		—		—		0.09283		—		—
PowerShares FTSE RAFI Energy Sector Portfolio		—		0.10320		—		—		—		0.10379		—		—
PowerShares FTSE RAFI Financials Sector Portfolio		—		—		—		—		—		0.41582		—		—
PowerShares FTSE RAFI Health Care Sector Portfolio		—		0.23850		—		—		—		0.13869		—		—
PowerShares FTSE RAFI Industrials Sector Portfolio		—		0.11650		—		—		—		0.21147		—		—
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio		—		0.09750		—		—		—		0.14861		—		—
PowerShares FTSE RAFI Utilities Sector Portfolio		—		0.26830		—		—		—		0.38618		—		—

25

Frequency Distribution of Discounts & Premiums (Unaudited)

Since Inception through October 31, 2007

					Closing Price Above NAV (bps)
Ticker	Fund Name	Inception	Days		0-24		25-49		50-99		100-149		150-199		200+
PRFZ	PowerShares FTSE RAFI US 1500 Small-Mid Portfolio	9/20/06		281		102		3		—		—		1		—
PRFM	PowerShares FTSE RAFI Basic Materials Sector Portfolio	9/20/06		281		115		—		—		—		—		—
PRFG	PowerShares FTSE RAFI Consumer Goods Sector Portfolio	9/20/06		281		131		6		1		—		—		—
PRFS	PowerShares FTSE RAFI Consumer Services Sector Portfolio	9/20/06		281		123		3		—		—		—		—
PRFE	PowerShares FTSE RAFI Energy Sector Portfolio	9/20/06		281		124		4		—		—		—		—
PRFF	PowerShares FTSE RAFI Financials Sector Portfolio	9/20/06		281		119		3		—		—		—		—
PRFH	PowerShares FTSE RAFI Health Care Sector Portfolio	9/20/06		281		142		5		2		—		—		—
PRFN	PowerShares FTSE RAFI Industrials Sector Portfolio	9/20/06		281		124		4		—		—		—		—
PRFQ  PowerShares FTSE RAFI	Telecommunications & Technology Sector Portfolio	9/20/06		281		126		5		1		—		—		—
PRFU	PowerShares FTSE RAFI Utilities Sector Portfolio	9/20/06		281		92		4		2		1		—		—

26

	Closing Below Above NAV (bps)
Ticker	-0-24		-25-49		-50-99		-100-149		-150-199		-200+
PRFZ		170		5		—		—		—		—
PRFM		165		1		—		—		—		—
PRFG		139		3		1		—		—		—
PRFS		155		—		—		—		—		—
PRFE		151		2		—		—		—		—
PRFF		158		1		—		—		—		—
PRFH		130		1		1		—		—		—
PRFN		151		2		—		—		—		—
PRFQ  PowerShares FTSE RAFI		149		—		—		—		—		—
PRFU		180		1		1		—		—		—

27

Fees and Expenses (Unaudited)

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust, you incur advisory fees and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month period ended October 31, 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 May 1, 2007		Ending Account Value October 31, 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	$	1,017.14		0.71	%	$	3.60
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.57		0.71	%	$	3.61
PowerShares FTSE RAFI Basic Materials Sector Portfolio Actual	$	1,000.00	$	1,140.14		0.78	%	$	4.20
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.22		0.78	%	$	3.96
PowerShares FTSE RAFI Consumer Goods Sector Portfolio Actual	$	1,000.00	$	1,026.38		0.90	%	$	4.58
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.61		0.90	%	$	4.57
PowerShares FTSE RAFI Consumer Services Sector Portfolio Actual	$	1,000.00	$	938.12		0.88	%	$	4.29
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.71		0.88	%	$	4.47

28

Fees and Expenses (Unaudited) (Continued)

	Beginning Account Value May 1, 2007		Ending Account Value October 31, 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	$	1,193.62		0.77	%	$	4.25
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.27		0.77	%	$	3.91
PowerShares FTSE RAFI Financials Sector Portfolio Actual	$	1,000.00	$	910.81		0.81	%	$	3.89
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.06		0.81	%	$	4.12
PowerShares FTSE RAFI Health Care Sector Portfolio Actual	$	1,000.00	$	1,009.82		0.80	%	$	4.04
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.11		0.80	%	$	4.06
PowerShares FTSE RAFI Industrials Sector Portfolio Actual	$	1,000.00	$	1,080.00		0.73	%	$	3.82
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.47		0.73	%	$	3.71
PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio Actual	$	1,000.00	$	1,135.48		0.80	%	$	4.29
Hypothetical (5% return before expenses)	$	1,000.00	$	1,021.11		0.80	%	$	4.06
PowerShares FTSE RAFI Utilities Sector Portfolio Actual	$	1,000.00	$	1,009.04		0.87	%	$	4.39
Hypothetical (5% return before expenses)	$	1,000.00	$	1,020.76		0.87	%	$	4.42

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended October 31, 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 184 and then dividing the result by 366.

29

Schedule of Investments

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—98.8%
		Consumer Discretionary—16.3%
	3,092	A.C. Moore Arts & Crafts, Inc.*	$	51,698
	6,215	Aaron Rents, Inc.		131,634
	5,184	Aeropostale, Inc.*		118,714
	11,638	AFC Enterprises, Inc.*		155,367
	3,601	Aftermarket Technology Corp.*		124,307
	1,433	Ambassadors Group, Inc.		26,038
	4,592	Ameristar Casinos, Inc.		149,470
	5,748	Applebee's International, Inc.		145,654
	1,209	Arbitron, Inc.		61,200
	885	Avatar Holdings, Inc.*		41,197
	4,416	Bally Technologies, Inc.*		178,097
	3,714	Bebe Stores, Inc.		51,662
	2,700	Big 5 Sporting Goods Corp.		48,195
	1,834	BJ's Restaurants, Inc.*		36,295
	522	Blue Nile, Inc.*		41,259
	7,417	Bluegreen Corp.*		55,850
	9,177	Blyth, Inc.		175,189
	4,975	Bob Evans Farms, Inc.		140,196
	1,834	Bright Horizons Family Solutions, Inc.*		71,159
	5,731	Brookfield Homes Corp.		86,137
	5,322	Brown Shoe Co., Inc.		108,569
	2,308	Buckle (The), Inc.		99,475
	7,922	Building Material Holding Corp.		62,267
	31,168	Cabela's, Inc., Class A*		608,398
	2,950	California Pizza Kitchen, Inc.*		47,731
	10,431	Callaway Golf Co.		180,665
	3,364	Carmike Cinemas, Inc.		53,488
	4,332	Carter's, Inc.*		95,651
	5,192	Cato (The) Corp., Class A		104,255
	3,371	CEC Entertainment, Inc.*		100,456
	1,348	Central European Media Enterprises Ltd., Class A (Bermuda)*		154,683
	13,687	Champion Enterprises, Inc.*		162,328
	2,258	Charlotte Russe Holding, Inc.*		32,718
	4,206	Cheesecake Factory (The), Inc.*		94,341
	9,836	Chico's FAS, Inc.*		129,245
	2,694	Children's Place Retail Stores (The), Inc.*		68,966
	1,141	Chipotle Mexican Grill, Inc., Class A*		158,599
	1,715	Choice Hotels International, Inc.		66,439
	2,681	Christopher & Banks Corp.		36,783
	1,847	Churchill Downs, Inc.		93,920
	6,553	CKE Restaurants, Inc.		106,028
	2,759	CKX, Inc.*		33,549
	2,471	Coinstar, Inc.*		85,126
	4,695	Coldwater Creek, Inc.*		42,020
	3,545	Columbia Sportswear Co.		172,819
	3,187	Conn's, Inc.*		81,492
	8,988	Corinthian Colleges, Inc.*		147,313
	1,071	Courier Corp.		40,473
	40,427	Cox Radio, Inc., Class A*		488,357
	296	CROCS, Inc.*		22,126

Number of Shares			Value
		Common Stocks (Continued)
	6,279	Crown Media Holdings, Inc., Class A*	$	49,479
	1,888	CSS Industries, Inc.		74,765
	3,910	CTC Media, Inc.*		98,102
	11,734	Cumulus Media, Inc., Class A*		120,978
	626	Deckers Outdoor Corp.*		87,509
	1,857	dELiA*s, Inc.*		6,258
	5,494	DeVry, Inc.		300,466
	8,376	Dick's Sporting Goods, Inc.*		279,506
	6,212	Domino's Pizza, Inc.		95,913
	6,794	DreamWorks Animation SKG, Inc., Class A*		221,213
	5,424	Dress Barn (The), Inc.*		88,899
	2,220	Drew Industries, Inc.*		87,868
	2,830	DSW, Inc., Class A*		63,675
	18,407	Emmis Communications Corp., Class A		95,532
	5,987	Entercom Communications Corp., Class A		111,059
	17,313	Entravision Communications Corp., Class A*		157,548
	5,417	Ethan Allen Interiors, Inc.		167,169
	7,507	Finish Line (The), Inc., Class A		28,151
	905	Fisher Communications, Inc.*		43,684
	13,865	Fleetwood Enterprises, Inc.*		124,785
	5,954	Fossil, Inc.*		223,632
	8,305	Fred's, Inc.		88,033
	2,697	Gaylord Entertainment Co.*		146,933
	35,040	Gemstar-TV Guide International, Inc.*		241,426
	3,506	Genesco, Inc.*		161,977
	11,071	Gentex Corp.		230,055
	9,995	Gray Television, Inc.		94,553
	1,624	GSI Commerce, Inc.*		46,268
	2,702	Guess?, Inc.		138,856
	2,303	Gymboree (The) Corp.*		78,371
	6,183	Harte-Hanks, Inc.		109,006
	4,479	Helen of Troy Ltd. (Bermuda)*		80,622
	1,603	Hibbett Sports, Inc.*		37,815
	8,158	HOT Topic, Inc.*		62,490
	999	Iconix Brand Group, Inc.*		22,827
	1,640	IHOP Corp.		103,861
	7,684	Interactive Data Corp.		246,964
	3,707	International Speedway Corp., Class A		164,702
	7,404	Isle of Capri Casinos, Inc.*		149,931
	1,466	ITT Educational Services, Inc.*		186,461
	488	J. Crew Group, Inc.*		18,251
	1,828	Jackson Hewitt Tax Service, Inc.		57,125
	4,424	JAKKS Pacific, Inc.*		117,236
	7,292	Jarden Corp.*		259,012
	8,928	Jo-Ann Stores, Inc.*		172,043
	4,220	John Wiley & Sons, Inc., Class A		185,596
	1,738	Jos. A. Bank Clothiers, Inc.*		50,767
	14,942	Journal Communications, Inc., Class A		133,133
	10,741	Journal Register Co.		24,167
	2,817	Kenneth Cole Productions, Inc., Class A		52,593

See Notes to Financial Statements.
30

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	8,234	Kimball International, Inc., Class B	$	109,759
	7,488	Krispy Kreme Doughnuts, Inc.*		23,962
	2,535	K-Swiss, Inc., Class A		59,319
	4,104	Landry's Restaurants, Inc.		117,867
	10,563	Leapfrog Enterprises, Inc.*		79,117
	7,186	Lee Enterprises, Inc.		115,335
	1,829	Life Time Fitness, Inc.*		110,911
	12,856	Lin TV Corp., Class A*		187,312
	6,467	Lithia Motors, Inc., Class A		109,810
	4,001	LKQ Corp.*		154,279
	5,803	M/I Homes, Inc.		96,330
	4,448	Marcus Corp.		85,580
	3,503	Marine Products Corp.		28,690
	1,640	Martha Stewart Living Omnimedia, Inc., Class A*		22,616
	4,007	Marvel Entertainment, Inc.*		99,133
	2,182	Matthews International Corp., Class A		99,434
	4,955	Media General, Inc., Class A		138,641
	27,954	Mediacom Communications Corp., Class A*		160,736
	5,105	Men's Wearhouse (The), Inc.		215,737
	8,011	Modine Manufacturing Co.		186,336
	6,501	Monaco Coach Corp.		75,412
	665	Morningstar, Inc.*		49,489
	3,965	MTR Gaming Group, Inc.*		34,535
	5,237	Multimedia Games, Inc.*		46,190
	862	National Presto Industries, Inc.		47,358
	5,300	Nautilus, Inc.		34,079
	2,998	NetFlix, Inc.*		79,357
	7,974	New York & Co., Inc.*		56,376
	334	NutriSystem, Inc.*		10,053
	5,028	Oakley, Inc.*		147,069
	5,460	O'Charleys, Inc.		87,524
	1,782	Orient-Express Hotels Ltd., Class A (Bermuda)		115,474
	1,526	Overstock.com, Inc.*		59,712
	2,124	Oxford Industries, Inc.		55,033
	10,892	Pacific Sunwear of California, Inc.*		182,114
	5,862	Palm Harbor Homes, Inc.*		83,416
	1,441	Panera Bread Co., Class A*		59,067
	3,839	Papa John's International, Inc.*		89,449
	4,734	Penn National Gaming, Inc.*		292,324
	2,094	PF Chang's China Bistro, Inc.*		60,956
	3,328	Phillips-Van Heusen Corp.		159,078
	3,697	Pinnacle Entertainment, Inc.*		107,952
	3,393	Pool Corp.		80,007
	1,031	Pre-Paid Legal Services, Inc.*		61,448
	2,258	Priceline.com, Inc.*		210,220
	9,664	PRIMEDIA, Inc.		88,039
	14,587	Quiksilver, Inc.*		196,925
	928	R.H. Donnelley Corp.*		50,901
	22,457	Radio One, Inc., Class D*		78,375

Number of Shares			Value
		Common Stocks (Continued)
	2,333	RC2 Corp.*	$	69,570
	2,310	RCN Corp.		33,726
	1,612	Red Robin Gourmet Burgers, Inc.*		64,512
	5,190	Regis Corp.		174,384
	4,611	Ruby Tuesday, Inc.		73,638
	10,922	Russ Berrie & Co., Inc.*		191,135
	4,690	Sauer-Danfoss, Inc.		121,471
	4,535	Scientific Games Corp., Class A*		163,940
	6,402	Sealy Corp.		84,634
	2,859	Select Comfort Corp.*		32,678
	1,048	Shuffle Master, Inc.*		14,337
	13,249	Sinclair Broadcast Group, Inc., Class A		159,518
	4,460	Skechers U.S.A., Inc., Class A*		109,671
	1,676	Skyline Corp.		59,397
	848	Smith & Wesson Holding Corp.*		10,252
	5,514	Sonic Corp.*		136,637
	1,960	Sotheby's		106,173
	12,970	Source Interlink Cos., Inc.*		41,374
	4,202	Speedway Motorsports, Inc.		152,533
	5,611	Stage Stores, Inc.		105,262
	2,541	Stamps.com, Inc.*		35,269
	5,259	Steak n Shake (The) Co.*		79,674
	7,572	Stein Mart, Inc.		49,748
	1,150	Steiner Leisure Ltd. (Bahamas)*		51,727
	1,506	Steven Madden Ltd.		33,569
	14,949	Stewart Enterprises, Inc., Class A		135,587
	410	Strayer Education, Inc.		76,449
	6,981	Superior Industries International, Inc.		141,086
	5,706	Systemax, Inc.		133,520
	5,040	Tarragon Corp.*		10,433
	5,866	Tempur-Pedic International, Inc.		211,176
	4,171	Texas Roadhouse, Inc., Class A*		52,847
	4,122	Thor Industries, Inc.		197,856
	3,605	Tractor Supply Co.*		149,391
	1,326	Triarc Cos., Inc., Class A		14,997
	2,936	Triarc Cos., Inc., Class B		32,883
	12,301	Trump Entertainment Resorts, Inc.*		95,825
	6,411	Tuesday Morning Corp.		48,852
	3,052	Tween Brands, Inc.*		93,696
	706	Under Armour, Inc., Class A*		43,949
	2,494	UniFirst Corp.		93,849
	1,531	Universal Technical Institute, Inc.*		28,829
	6,153	Urban Outfitters, Inc.*		155,486
	3,098	Vail Resorts, Inc.*		188,018
	9,443	Valassis Communications, Inc.*		93,014
	4,620	ValueVision Media, Inc., Class A*		23,885
	657	Volcom, Inc.*		19,217
	6,927	Warnaco Group (The), Inc.*		281,859
	3,052	Weight Watchers International, Inc.		156,384
	5,516	West Marine, Inc.*		59,518
	3,112	Winnebago Industries, Inc.		80,227
	2,710	WMS Industries, Inc.*		93,956

See Notes to Financial Statements.
31

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	4,329	Wolverine World Wide, Inc.	$	110,996
	1,827	Wynn Resorts Ltd.		294,932
	648	Zumiez, Inc.*		27,125
				21,754,370
		Consumer Staples—2.8%
	631	Alico, Inc.		29,935
	18,335	Alliance One International, Inc.*		119,728
	2,102	Andersons (The), Inc.		104,364
	6,534	Bare Escentuals, Inc.*		161,390
	7,742	Casey's General Stores, Inc.		220,646
	3,219	Central European Distribution Corp.*		171,186
	3,892	Central Garden & Pet Co.*		32,265
	8,364	Central Garden & Pet Co., Class A*		69,588
	1,049	Chattem, Inc.*		77,941
	4,205	Church & Dwight Co., Inc.		198,939
	5,244	Elizabeth Arden, Inc.*		130,576
	2,449	Farmer Bros. Co.		60,956
	9,487	Flowers Foods, Inc.		208,145
	3,704	Hain Celestial Group, Inc.*		129,862
	1,063	Hansen Natural Corp.*		72,284
	5,774	Herbalife Ltd. (Cayman Islands)		254,575
	1,448	J & J Snack Foods Corp.		51,578
	5,071	Lancaster Colony Corp.		203,702
	5,398	Lance, Inc.		114,330
	9,358	Nu Skin Enterprises, Inc., Class A		161,613
	6,006	Prestige Brands Holdings, Inc.*		62,823
	2,779	Ralcorp Holdings, Inc.*		156,458
	2,168	Reddy Ice Holdings, Inc.		60,032
	24,636	Revlon, Inc., Class A*		28,331
	3,854	Sanderson Farms, Inc.		134,119
	4,605	Tootsie Roll Industries, Inc.		118,671
	4,791	TreeHouse Foods, Inc.*		133,669
	5,040	United Natural Foods, Inc.*		145,858
	517	USANA Health Sciences, Inc.*		21,099
	9,764	Vector Group Ltd.		213,635
	2,214	WD-40 Co.		87,674
				3,735,972
		Energy—8.2%
	5,455	Alon USA Energy, Inc.		200,580
	6,834	Alpha Natural Resources, Inc.*		187,525
	265	APCO Argentina, Inc. (Cayman Islands)		28,024
	1,533	Atlas America, Inc.		88,454
	883	ATP Oil & Gas Corp.*		50,640
	1,428	Atwood Oceanics, Inc.*		120,295
	8,058	Aventine Renewable Energy Holdings*		84,528
	2,982	Basic Energy Services, Inc.*		59,014
	3,067	Berry Petroleum Co., Class A		149,424
	3,554	Bill Barrett Corp.*		166,327
	5,153	Bois d'Arc Energy, Inc.*		113,057
	8,090	Brigham Exploration Co.*		59,623
	3,611	Bristow Group, Inc.*		180,153

Number of Shares			Value
		Common Stocks (Continued)
	2,006	Bronco Drilling Co., Inc.*	$	27,282
	4,862	Cabot Oil & Gas Corp.		192,973
	1,529	CARBO Ceramics, Inc.		68,683
	1,040	Carrizo Oil & Gas, Inc.*		53,446
	669	Cheniere Energy, Inc.*		27,095
	2,097	Clayton Williams Energy, Inc.*		62,763
	8,109	Complete Production Services, Inc.*		161,369
	5,458	Comstock Resources, Inc.*		199,490
	2,253	Copano Energy LLC		87,214
	889	Core Laboratories N.V. (Netherlands)*		129,741
	3,072	Crosstex Energy, Inc.		113,265
	7,530	Delek US Holdings, Inc.		180,645
	3,563	Delta Petroleum Corp.*		66,628
	7,679	Denbury Resources, Inc.*		434,630
	1,679	Dril-Quip, Inc.*		89,541
	745	Enbridge Energy Management LLC*		40,841
	5,917	Encore Acquisition Co.*		217,154
	4,285	Energy Partners Ltd.*		65,775
	7,883	EXCO Resources, Inc.*		133,065
	2,816	Exterran Holdings, Inc.*		237,107
	5,211	General Maritime Corp. (Marshall Islands)		146,846
	8,008	Global Industries Ltd.*		197,157
	608	Goodrich Petroleum Corp.*		20,192
	16,968	Grey Wolf, Inc.*		95,530
	1,697	GulfMark Offshore, Inc.*		79,046
	8,768	Harvest Natural Resources, Inc.*		120,648
	4,852	Helix Energy Solutions Group, Inc.*		224,405
	7,734	Helmerich & Payne, Inc.		244,549
	5,286	Hercules Offshore, Inc.*		142,933
	3,201	Holly Corp.		201,023
	2,931	Horizon Offshore, Inc.*		47,189
	2,681	Hornbeck Offshore Services, Inc.*		104,827
	26,337	International Coal Group, Inc.*		141,693
	4,055	ION Geophysical Corp.*		61,433
	3,581	Kinder Morgan Management LLC*		181,915
	7,532	Knightsbridge Tankers Ltd. (Bermuda)		191,915
	1,096	Lufkin Industries, Inc.		65,168
	7,782	Mariner Energy, Inc.*		194,550
	40,158	Meridian Resource (The) Corp.*		101,600
	14,325	Newpark Resources, Inc.*		89,818
	5,657	Nordic American Tanker Shipping Ltd. (Bermuda)		218,869
	3,980	Oceaneering International, Inc.*		307,534
	6,007	Oil States International, Inc.*		259,442
	210	Pacific Ethanol, Inc.*		1,686
	1,080	Parallel Petroleum Corp.*		22,108
	13,047	Parker Drilling Co.*		110,117
	2,745	Penn Virginia Corp.		132,858
	6,212	PetroHawk Energy Corp.*		114,922
	1,062	Petroleum Development Corp.*		48,236
	3,648	PetroQuest Energy, Inc.*		47,059
	3,062	Pioneer Drilling Co.*		37,295

See Notes to Financial Statements.
32

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	4,464	Plains Exploration & Production Co.*	$	227,441
	2,501	Quicksilver Resources, Inc.*		142,557
	4,413	Range Resources Corp.		198,276
	454	Rentech, Inc.*		967
	8,308	Rosetta Resources, Inc.*		157,852
	4,221	RPC, Inc.		47,191
	4,500	St. Mary Land & Exploration Co.		190,620
	5,003	Superior Energy Services, Inc.*		185,511
	4,083	Swift Energy Co.*		193,657
	3,659	TETRA Technologies, Inc.*		72,046
	912	Toreador Resources Corp.*		9,567
	2,816	Tsakos Energy Navigation Ltd. (Bermuda)		195,965
	2,674	Ultra Petroleum Corp. (Canada)*		189,480
	4,083	Unit Corp.*		195,045
	3,537	VeraSun Energy Corp.*		47,962
	91	Verenium Corp.*		484
	6,246	W&T Offshore, Inc.		167,518
	2,720	Warren Resources, Inc.*		41,290
	6,486	Western Refining, Inc.		237,906
	2,531	W-H Energy Services, Inc.*		145,684
	5,617	Whiting Petroleum Corp.*		303,654
				10,979,587
		Financials—18.7%
	2,964	1st Source Corp.		57,027
	2,497	Acadia Realty Trust		66,171
	11,965	Advance America Cash Advance Centers, Inc.		114,385
	1,046	Advanta Corp., Class A		14,895
	2,802	Advanta Corp., Class B		44,272
	1,926	Affiliated Managers Group, Inc.*		253,364
	1,598	Alabama National BanCorp.		125,954
	48	Alexander's, Inc.*		19,294
	1,715	Alexandria Real Estate Equities, Inc.		176,885
	9,965	Alfa Corp.		181,363
	3,022	AMCORE Financial, Inc.		71,652
	6,603	American Equity Investment Life Holding Co.		64,511
	2,730	Anchor BanCorp Wisconsin, Inc.		67,158
	17,811	Anthracite Capital, Inc.		148,188
	14,704	Anworth Mortgage Asset Corp.		100,428
	4,542	Apollo Investment Corp.		94,474
	5,077	Ares Capital Corp.		84,481
	4,351	Argo Group International Holdings, Ltd. (Bermuda)*		185,395
	1,858	Arrow Financial Corp.		41,879
	8,055	Ashford Hospitality Trust, Inc.		79,261
	3,325	Asset Acceptance Capital Corp.		35,777
	6,535	Assured Guaranty Ltd. (Bermuda)		150,762
	2,916	Baldwin & Lyons, Inc., Class B		76,895
	1,440	BancFirst Corp.		65,434
	6,272	Bank Mutual Corp.		69,682
	1,896	Bank of Granite Corp.		23,946

Number of Shares			Value
		Common Stocks (Continued)
	1,141	Bank of the Ozarks, Inc.	$	33,032
	3,099	BankUnited Financial Corp., Class A		26,744
	1,474	Banner Corp.		48,141
	3,091	BioMed Realty Trust, Inc.		73,844
	2,736	Boston Private Financial Holdings, Inc.		78,687
	9,561	Brookline Bancorp, Inc.		102,876
	6,752	Brown & Brown, Inc.		170,083
	1,721	Cadence Financial Corp.		27,915
	3,370	Calamos Asset Management, Inc., Class A		114,647
	837	Camden National Corp.		27,763
	1,774	Capital City Bank Group, Inc.		50,009
	213	Capital Southwest Corp.		26,020
	6,295	CapitalSource, Inc.		114,695
	1,582	Capitol Bancorp Ltd.		33,538
	5,412	Capitol Federal Financial		178,758
	1,066	Cascade Bancorp		20,510
	2,016	Cash America International, Inc.		78,624
	3,807	Cathay General Bancorp		117,903
	2,858	Cedar Shopping Centers, Inc.		36,725
	6,164	Centennial Bank Holdings, Inc.*		33,902
	2,829	Central Pacific Financial Corp.		63,454
	4,369	Chemical Financial Corp.		109,225
	5,603	Chittenden Corp.		199,578
	9,665	Citizens Banking Corp.		147,101
	3,471	Citizens, Inc.*		29,851
	1,554	City Bank		37,218
	1,686	City Holding Co.		63,748
	4,226	CNA Surety Corp.*		83,633
	1,499	CoBiz, Inc.		26,757
	820	Cohen & Steers, Inc.		30,832
	1,228	Columbia Banking System, Inc.		38,154
	4,837	Community Bank System, Inc.		101,142
	2,945	Community Banks, Inc.		89,410
	1,892	Community Trust Bancorp, Inc.		55,152
	5,152	CompuCredit Corp.*		102,679
	2,667	Corporate Office Properties Trust		110,227
	8,425	Corus Bankshares, Inc.		92,844
	7,845	Crawford & Co., Class A*		44,010
	10,038	Crawford & Co., Class B*		67,154
	3,385	Credit Acceptance Corp.*		75,824
	9,290	CVB Financial Corp.		108,879
	5,248	Deerfield Triarc Capital Corp.		50,118
	4,358	Delphi Financial Group, Inc., Class A		168,873
	3,479	DiamondRock Hospitality Co.		66,658
	3,696	Digital Realty Trust, Inc.		162,587
	6,484	Dime Community Bancshares, Inc.		93,305
	1,306	Dollar Financial Corp.*		42,837
	3,198	East West Bancorp, Inc.		107,901
	2,509	EastGroup Properties, Inc.		119,629
	6,076	Eaton Vance Corp.		303,981
	3,013	Encore Capital Group, Inc.*		34,378
	167	Enstar Group Ltd. (Bermuda)*		21,408

See Notes to Financial Statements.
33

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	2,478	Entertainment Properties Trust	$	135,968
	3,243	Extra Space Storage, Inc.		50,980
	10,395	F.N.B. Corp.		172,765
	1,345	Farmers Capital Bank Corp.		40,350
	3,916	FBL Financial Group, Inc., Class A		158,520
	1,890	Federal Agricultural Mortgage Corp., Class C		55,472
	8,699	FelCor Lodging Trust, Inc.		182,157
	2,018	Financial Federal Corp.		54,526
	2,145	First Acceptance Corp.*		9,266
	17,550	First BanCorp		154,265
	2,048	First BanCorp		37,048
	5,212	First Busey Corp.		108,045
	1,725	First Cash Financial Services, Inc.*		33,914
	4,376	First Charter Corp.		132,593
	954	First Citizens BancShares, Inc., Class A		155,340
	13,399	First Commonwealth Financial Corp.		153,955
	1,498	First Community Bancorp		72,953
	1,468	First Community Bancshares, Inc.		50,411
	7,442	First Financial Bancorp		87,444
	2,049	First Financial Bankshares, Inc.		79,972
	1,910	First Financial Corp.		58,580
	1,615	First Financial Holdings, Inc.		46,641
	2,337	First Indiana Corp.		74,317
	2,108	First Marblehead (The) Corp.		81,854
	3,249	First Merchants Corp.		71,640
	4,891	First Midwest Bancorp, Inc.		164,729
	12,547	First Niagara Financial Group, Inc.		165,620
	1,964	FirstFed Financial Corp.*		84,020
	15,311	Flagstar Bancorp, Inc.		123,866
	2,573	Flushing Financial Corp.		43,741
	3,131	Forest City Enterprises, Inc., Class A		178,217
	306	Forest City Enterprises, Inc., Class B		17,414
	9,158	Franklin Street Properties Corp.		148,817
	2,985	Frontier Financial Corp.		66,237
	2,585	GAMCO Investors, Inc., Class A		160,037
	5,041	Getty Realty Corp.		143,316
	1,119	GFI Group, Inc.*		96,592
	3,588	Glacier Bancorp, Inc.		72,980
	3,358	GMH Communities Trust		24,782
	1,713	Gramercy Capital Corp.		45,172
	1,322	Great Southern Bancorp, Inc.		30,935
	672	Greenhill & Co., Inc.		49,715
	2,490	Hancock Holding Co.		94,695
	3,178	Hanmi Financial Corp.		35,022
	4,460	Harleysville Group, Inc.		139,018
	4,415	Harleysville National Corp.		66,534
	3,128	Hilb Rogal & Hobbs Co.		137,851
	5,607	Hilltop Holdings, Inc.*		67,396
	7,214	Horace Mann Educators Corp.		149,258
	1,028	IBERIABANK Corp.		50,958
	1,722	Independent Bank Corp. -MA		50,937

Number of Shares			Value
		Common Stocks (Continued)
	3,055	Independent Bank Corp.	$	32,261
	2,801	Infinity Property & Casualty Corp.		112,656
	10,617	Inland Real Estate Corp.		158,193
	3,272	Integra Bank Corp.		56,377
	391	IntercontinentalExchange, Inc.*		69,676
	7,969	International Bancshares Corp.		174,202
	981	International Securities Exchange Holdings, Inc.		65,776
	3,074	Investment Technology Group, Inc.*		128,801
	4,966	Investors Bancorp, Inc.*		74,490
	6,485	Investors Real Estate Trust		70,362
	6,167	IPC Holdings Ltd. (Bermuda)		184,455
	5,292	Irwin Financial Corp.		51,015
	1,260	Jones Lang LaSalle, Inc.		120,116
	2,580	Kansas City Life Insurance Co.		120,305
	4,538	Kearny Financial Corp.		60,129
	2,605	Kilroy Realty Corp.		169,429
	2,763	KNBT Bancorp, Inc.		47,358
	10,109	Knight Capital Group, Inc., Class A*		135,562
	13,309	LaBranche & Co., Inc.*		72,933
	2,968	Lakeland Bancorp, Inc.		40,246
	2,723	LaSalle Hotel Properties		112,514
	8,575	Lexington Realty Trust		169,699
	2,510	LTC Properties, Inc.		63,603
	4,699	Maguire Properties, Inc.		128,048
	6,096	Max Capital Group Ltd. (Bermuda)		172,456
	2,716	MB Financial, Inc.		90,551
	10,508	MCG Capital Corp.		147,217
	29,634	MFA Mortgage Investments, Inc.		253,666
	2,901	Mid-America Apartment Communities, Inc.		150,852
	2,259	Midland (The) Co.		143,718
	2,355	Midwest Banc Holdings, Inc.		31,322
	7,220	Municipal Mortgage & Equity LLC		155,808
	1,557	Nara Bancorp, Inc.		24,102
	4,464	Nasdaq Stock Market (The), Inc.*		208,468
	7,363	National City Corp.		178,553
	2,448	National Financial Partners Corp.		133,832
	4,610	National Health Investors, Inc.		135,027
	6,233	National Penn Bancshares, Inc.		105,088
	9,864	National Retail Properties, Inc.		250,051
	508	National Western Life Insurance Co., Class A		110,378
	1,626	Navigators Group (The), Inc.*		98,048
	4,817	NBT Bancorp, Inc.		118,835
	6,874	Nelnet, Inc., Class A		127,719
	9,256	NewAlliance Bancshares, Inc.		129,491
	3,460	Northwest Bancorp, Inc.		101,897
	3,947	Ocwen Financial Corp.*		29,445
	12,084	Old National Bancorp		201,923
	1,336	Old Second Bancorp, Inc.		37,876
	2,141	Omega Financial Corp.		58,556
	6,372	Omega Healthcare Investors, Inc.		106,604

See Notes to Financial Statements.
34

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	2,168	optionsXpress Holdings, Inc.	$	64,520
	4,967	Oriental Financial Group		62,038
	5,243	Pacific Capital Bancorp		108,687
	2,202	Park National Corp.		174,531
	2,364	Parkway Properties, Inc.		101,652
	5,606	Partners Trust Financial Group, Inc.		69,627
	843	Peapack-Gladstone Financial Corp.		21,016
	1,447	Peoples Bancorp, Inc.		36,132
	2,232	PFF Bancorp, Inc.		23,771
	3,876	Philadelphia Consolidated Holding Corp.*		158,141
	1,046	Pico Holdings, Inc.*		43,148
	324	Pinnacle Financial Partners, Inc.*		9,458
	2,062	Piper Jaffray Cos.*		105,987
	6,203	Platinum Underwriters Holdings Ltd. (Bermuda)		223,307
	9,001	PMA Capital Corp., Class A*		89,110
	915	Portfolio Recovery Associates, Inc.		41,276
	4,796	Presidential Life Corp.		84,458
	4,120	Primus Guaranty Ltd. (Bermuda)*		37,739
	1,011	PrivateBancorp, Inc.		28,470
	2,847	ProAssurance Corp.*		156,984
	1,986	Prosperity Bancshares, Inc.		64,188
	4,375	Provident Bankshares Corp.		107,931
	7,425	Provident Financial Services, Inc.		117,612
	3,536	Provident New York Bancorp		44,943
	2,114	PS Business Parks, Inc.		123,246
	2,804	Ramco-Gershenson Properties Trust		80,222
	2,723	Renasant Corp.		63,310
	1,488	Resource America, Inc., Class A		23,019
	2,086	RLI Corp.		121,343
	3,592	S&T Bancorp, Inc.		118,967
	1,218	S.Y. Bancorp, Inc.		30,767
	2,019	Safety Insurance Group, Inc.		72,603
	1,795	Sandy Spring Bancorp, Inc.		53,347
	6,973	Santander BanCorp		95,530
	1,690	Saul Centers, Inc.		92,646
	49,325	Scottish Re Group Ltd. (Cayman Islands)*		126,272
	1,734	Seacoast Banking Corp. of Florida		25,403
	5,580	SEI Investments Co.		176,440
	7,989	Selective Insurance Group		194,212
	1,780	Signature Bank*		60,787
	1,941	Simmons First National Corp., Class A		52,485
	2,303	Sovran Self Storage, Inc.		108,955
	3,315	St. Joe (The) Co.		112,246
	4,451	State Auto Financial Corp.		122,492
	2,667	Sterling Bancorp		39,178
	6,511	Sterling Bancshares, Inc.		79,434
	3,334	Sterling Financial Corp.		61,179
	2,757	Sterling Financial Corp. of Spokane		62,033
	5,291	Stewart Information Services Corp.		153,439
	1,156	Suffolk Bancorp		38,183
	2,742	Sun Bancorp, Inc.*		47,464

Number of Shares			Value
		Common Stocks (Continued)
	4,982	Sun Communities, Inc.	$	151,951
	4,121	Sunstone Hotel Investors, Inc.		114,605
	7,888	Susquehanna Bancshares, Inc.		159,101
	2,621	SVB Financial Group*		135,742
	2,306	SWS Group, Inc.		43,791
	2,580	Tanger Factory Outlet Centers, Inc.		108,670
	3,026	Taubman Centers, Inc.		178,141
	337	Tejon Ranch Co.*		13,507
	1,899	Texas Capital Bancshares, Inc.*		42,025
	1,615	TierOne Corp.		36,903
	1,233	Tompkins Trustco, Inc.		51,219
	707	Tower Group, Inc.		21,344
	1,503	TradeStation Group, Inc.*		18,337
	2,002	Triad Guaranty, Inc.*		16,136
	14,980	Trustco Bank Corp.		157,889
	6,084	UCBH Holdings, Inc.		103,854
	3,944	UMB Financial Corp.		165,648
	3,914	Umpqua Holdings Corp.		66,264
	3,707	United America Indemnity Ltd., Class A (Cayman Islands)*		81,739
	5,952	United Bankshares, Inc.		180,346
	3,201	United Community Banks, Inc.		70,870
	5,314	United Community Financial Corp.		34,010
	3,098	United Fire & Casualty Co.		99,260
	1,938	Universal Health Realty Income Trust		71,648
	3,814	Urstadt Biddle Properties, Inc., Class A		63,389
	2,429	USB Holding Co., Inc.		52,928
	4,134	U-Store-It Trust		53,329
	15,005	W.P. Stewart & Co. Ltd. (Bermuda)		97,232
	7,667	Waddell & Reed Financial, Inc., Class A		254,697
	5,120	Washington REIT		180,326
	1,607	Washington Trust Bancorp, Inc.		40,063
	1,819	Wauwatosa Holdings, Inc.*		30,432
	3,189	WesBanco, Inc.		73,570
	1,296	West Coast Bancorp		35,148
	3,237	Westamerica Bancorp		155,635
	2,041	Western Alliance Bancorp*		46,412
	1,261	Wilshire Bancorp, Inc.		12,988
	1,825	Wintrust Financial Corp.		67,050
	1,158	World Acceptance Corp.*		37,357
	620	WSFS Financial Corp.		35,749
	3,715	Zenith National Insurance Corp.		149,269
				24,861,522
		Health Care—9.1%
	3,706	Affymetrix, Inc.*		94,355
	6,710	Albany Molecular Research, Inc.*		121,384
	538	Align Technology, Inc.*		11,137
	13,359	Alliance Imaging, Inc.*		132,388
	521	Allscripts Healthcare Solutions, Inc.*		14,432
	7,857	Alpharma, Inc., Class A		162,011
	1,380	Amedisys, Inc.*		58,581

See Notes to Financial Statements.
35

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	3,291	American Medical Systems Holdings, Inc.*	$	42,092
	6,461	AMERIGROUP Corp.*		226,134
	3,250	AMN Healthcare Services, Inc.*		61,783
	4,508	Amsurg Corp., Class A*		119,237
	1,255	Analogic Corp.		71,723
	3,634	Applera Corp. - Celera Group*		59,271
	1,158	ArthroCare Corp.*		75,085
	488	Aspect Medical Systems, Inc.*		6,681
	2,904	Bio-Rad Laboratories, Inc., Class A*		280,467
	1,977	Brookdale Senior Living, Inc.		72,932
	4,610	Bruker BioSciences Corp.*		47,714
	3,385	Cambrex Corp.		38,555
	1,772	Celgene Corp.*		116,952
	4,621	Centene Corp.*		107,808
	2,913	Cephalon, Inc.*		214,805
	4,017	Cerner Corp.*		239,252
	1,724	Chemed Corp.		98,820
	770	Computer Programs & Systems, Inc.		19,073
	4,643	CONMED Corp.*		132,047
	3,553	Cooper (The) Cos., Inc.		149,226
	1,243	Corvel Corp.*		33,039
	3,405	Covance, Inc.*		280,912
	5,160	Cross Country Healthcare, Inc.*		81,064
	540	Cyberonics, Inc.*		7,830
	2,049	Datascope Corp.		74,030
	931	Dionex Corp.*		81,928
	1,429	DJO, Inc.*		71,379
	1,629	Eclipsys Corp.*		36,750
	3,987	Edwards Lifesciences Corp.*		200,227
	6,066	Endo Pharmaceuticals Holdings, Inc.*		177,734
	1,187	Enzo Biochem, Inc.*		14,375
	1,736	Enzon Pharmaceuticals, Inc.*		16,544
	3,397	eResearch Technology, Inc.*		37,707
	390	ev3, Inc.*		5,721
	1,887	Gen-Probe, Inc.*		132,128
	8,398	Gentiva Health Services, Inc.*		159,394
	961	Geron Corp.*		7,342
	2,314	Greatbatch, Inc.*		57,526
	1,940	Haemonetics Corp.*		99,697
	1,971	HealthExtras, Inc.*		57,435
	2,925	Healthspring, Inc.*		61,425
	1,225	Healthways, Inc.*		74,358
	14,665	Hlth Corp.*		206,923
	3,293	Hologic, Inc.*		223,690
	1,007	ICU Medical, Inc.*		40,381
	973	Idenix Pharmaceuticals, Inc.*		2,520
	1,313	IDEXX Laboratories, Inc.*		159,897
	55	Illumina, Inc.*		3,088
	1,216	ImClone Systems, Inc.*		52,470
	754	Immucor, Inc.*		24,317
	1,319	Integra LifeSciences Holdings Corp.*		63,932
	538	Intuitive Surgical, Inc.*		175,856

Number of Shares			Value
		Common Stocks (Continued)
	9,123	Invacare Corp.	$	246,867
	1,916	inVentiv Health, Inc.*		80,913
	1,926	Inverness Medical Innovations, Inc.*		115,733
	315	Keryx Biopharmaceuticals, Inc.*		3,245
	3,402	Kinetic Concepts, Inc.*		204,460
	2,515	KV Pharmaceutical Co., Class A*		78,820
	425	KV Pharmaceutical Co., Class B*		13,264
	977	Kyphon, Inc.*		69,250
	935	Landauer, Inc.		46,067
	598	LCA-Vision, Inc.		10,208
	677	Lifecell Corp.*		29,829
	235	Luminex Corp.*		3,746
	2,716	Martek Biosciences Corp.*		82,974
	2,167	Matria Healthcare, Inc.*		55,649
	523	Maxygen, Inc.*		3,959
	3,480	MedCath Corp.*		96,500
	494	Medicines (The) Co.*		9,460
	2,482	Medicis Pharmaceutical Corp., Class A		73,691
	1,412	Mentor Corp.		60,109
	1,536	Meridian Bioscience, Inc.		50,826
	2,350	Merit Medical Systems, Inc.*		30,668
	595	MGI Pharma, Inc.*		19,385
	13,818	Millennium Pharmaceuticals, Inc.*		163,329
	2,380	Millipore Corp.*		184,807
	3,945	Molina Healthcare, Inc.*		150,344
	1,005	Momenta Pharmaceuticals, Inc.*		13,075
	245	Myriad Genetics, Inc.*		13,563
	4,581	Nabi Biopharmaceuticals*		17,683
	981	National Healthcare Corp.		48,854
	746	Nektar Therapeutics*		4,461
	1,822	Neurocrine Biosciences, Inc.*		16,854
	347	Nighthawk Radiology Holdings, Inc.*		8,168
	794	Noven Pharmaceuticals, Inc.*		12,275
	93	NuVasive, Inc.*		3,980
	3,683	Odyssey HealthCare, Inc.*		37,751
	22	Onyx Pharmaceuticals, Inc.*		1,028
	1,622	Orthofix International N.V. (Netherlands)*		87,426
	383	OSI Pharmaceuticals, Inc.*		15,921
	253	Palomar Medical Technologies, Inc.*		6,398
	5,171	Par Pharmaceutical Cos., Inc.*		95,353
	2,191	Parexel International Corp.*		100,786
	2,753	PDL BioPharma, Inc.*		58,364
	3,027	Pediatrix Medical Group, Inc.*		198,269
	7,861	Perrigo Co.		186,384
	5,233	Pharmaceutical Product Development, Inc.		221,041
	1,887	PharmaNet Development Group, Inc.*		61,139
	2,387	Pharmion Corp.*		114,862
	2,151	PolyMedica Corp.		113,917
	2,319	PRA International*		70,011
	7,205	PSS World Medical, Inc.*		145,541
	1,893	Psychiatric Solutions, Inc.*		74,963
	1,152	Radiation Therapy Services, Inc.*		35,620

See Notes to Financial Statements.
36

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	4,835	RehabCare Group, Inc.*	$	100,278
	6,497	Res-Care, Inc.*		159,566
	2,238	ResMed, Inc.*		92,720
	4,041	Respironics, Inc.*		202,292
	1,858	Salix Pharmaceuticals Ltd.*		21,739
	2,680	Sciele Pharma, Inc.*		68,179
	4,519	Sierra Health Services, Inc.*		191,154
	1,763	Sirona Dental Systems, Inc.*		59,307
	710	SonoSite, Inc.*		24,985
	7,985	STERIS Corp.		231,883
	4,744	Sunrise Senior Living, Inc.*		175,528
	625	SurModics, Inc.*		35,463
	3,296	Symmetry Medical, Inc.*		56,526
	1,190	Syneron Medical Ltd. (Israel)*		21,765
	1,251	Techne Corp.*		81,615
	2,905	Thoratec Corp.*		58,013
	1,970	TriZetto Group (The), Inc.*		32,190
	666	United Therapeutics Corp.*		45,581
	6,917	Universal American Financial Corp.*		167,806
	10,828	Valeant Pharmaceuticals International		157,547
	2,660	Varian, Inc.*		196,547
	3,396	VCA Antech, Inc.*		156,386
	820	Ventana Medical Systems, Inc.*		72,160
	1,988	ViroPharma, Inc.*		17,117
	860	Vital Signs, Inc.		45,494
	3,865	Waters Corp.*		297,527
	2,371	West Pharmaceutical Services, Inc.		98,017
	3,038	Wright Medical Group, Inc.*		80,507
	818	Young Innovations, Inc.		20,458
	1,443	Zoll Medical Corp.*		35,296
	657	ZymoGenetics, Inc.*		8,837
				12,155,837
		Industrials—18.6%
	5,080	A.O. Smith Corp.		189,941
	1,580	AAON, Inc.		28,851
	2,793	AAR Corp.*		89,516
	8,150	ABM Industries, Inc.		191,688
	20,043	ABX Air, Inc.*		126,672
	7,145	Accuride Corp.*		72,879
	2,127	Actuant Corp., Class A		146,720
	2,954	Administaff, Inc.		117,806
	564	Advisory Board (The) Co. *		36,214
	11,920	AirTran Holdings, Inc.*		124,087
	4,555	Albany International Corp., Class A		170,813
	2,494	American Commercial Lines, Inc.*		37,186
	1,009	American Railcar Industries, Inc.		22,844
	4,095	American Reprographics Co.*		83,047
	238	American Science & Engineering, Inc.		14,385
	1,710	American Woodmark Corp.		43,366
	1,119	Ameron International Corp.		120,707
	6,174	AMETEK, Inc.		290,178

Number of Shares			Value
		Common Stocks (Continued)
	3,855	Apogee Enterprises, Inc.	$	90,708
	6,139	Applied Industrial Technologies, Inc.		217,628
	1,248	Argon ST, Inc.*		25,222
	4,636	Arkansas Best Corp.		127,258
	1,806	Astec Industries, Inc.*		81,848
	2,006	ASV, Inc.*		23,350
	4,183	Atlas Air Worldwide Holdings, Inc.*		245,082
	3,416	Baldor Electric Co.		137,733
	6,597	Barnes Group, Inc.		242,308
	5,710	BE Aerospace, Inc.*		283,844
	4,559	Beacon Roofing Supply, Inc.*		40,985
	3,099	Belden CDT, Inc.		180,579
	5,965	Blount International, Inc.*		72,952
	6,594	Bowne & Co., Inc.		114,604
	4,213	Brady Corp., Class A		155,460
	1,216	Bucyrus International, Inc., Class A		100,320
	1,012	Cascade Corp.		63,736
	10,943	CBIZ, Inc.*		98,487
	4,341	CDI Corp.		119,638
	7,418	Cenveo, Inc.*		167,498
	999	Ceradyne, Inc.*		68,342
	15,658	China Yuchai International Ltd. (Bermuda)		216,080
	1,781	CIRCOR International, Inc.		89,460
	4,270	CLARCOR, Inc.		155,684
	1,317	Clean Harbors, Inc.*		64,836
	1,589	Consolidated Graphics, Inc.*		101,664
	5,204	Copart, Inc.*		199,730
	886	Corporate Executive Board Co.		63,128
	738	CoStar Group, Inc.*		42,435
	6,130	Covanta Holding Corp.*		166,184
	885	CRA International, Inc.*		45,825
	3,650	Cubic Corp.		164,250
	3,991	Curtiss-Wright Corp.		224,653
	1,178	Diamond Management & Technology Consultants, Inc.		12,581
	6,125	Diana Shipping, Inc. (Marshall Islands)		262,150
	5,279	Donaldson Co., Inc.		226,258
	3,190	DRS Technologies, Inc.		183,234
	4,129	DryShips, Inc. (Marshall Islands)		486,643
	7,502	DynCorp International, Inc., Class A*		169,845
	2,627	Eagle Bulk Shipping, Inc. (Marshall Islands)		89,554
	2,616	EDO Corp.		151,728
	6,093	Electro Rent Corp.		88,105
	2,749	Encore Wire Corp.		57,729
	587	Energy Conversion Devices, Inc.*		16,019
	10,985	EnerSys*		199,048
	2,695	Ennis, Inc.		55,086
	3,651	EnPro Industries, Inc.*		149,728
	1,946	ESCO Technologies, Inc.*		80,545
	3,754	Esterline Technologies Corp.*		205,644
	640	Evergreen Solar, Inc.*		7,398
	25,070	ExpressJet Holdings, Inc.*		83,232

See Notes to Financial Statements.
37

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	6,216	Fastenal Co.	$	276,488
	11,646	Federal Signal Corp.		155,940
	1,382	Forward Air Corp.		45,095
	2,791	Foster Wheeler Ltd. (Bermuda)*		413,766
	1,560	Franklin Electric Co., Inc.		67,969
	686	FreightCar America, Inc.		29,635
	3,327	FTI Consulting, Inc.*		180,656
	2,919	G&K Services, Inc., Class A		118,336
	3,862	Gardner Denver, Inc.*		139,534
	1,879	Genco Shipping & Trading Ltd. (Marshall Islands)		135,081
	4,978	GenCorp, Inc.*		58,641
	3,028	General Cable Corp.*		217,986
	3,235	Genesee & Wyoming, Inc., Class A*		94,850
	2,698	Genlyte Group, Inc.*		175,640
	3,819	Geo Group (The), Inc.*		120,795
	4,925	Gibraltar Industries, Inc.		88,749
	10,115	Goodman Global, Inc.*		249,335
	1,387	Gorman-Rupp (The) Co.		53,705
	4,615	Graco, Inc.		181,646
	10,183	GrafTech International Ltd.*		192,459
	3,798	Granite Construction, Inc.		162,630
	2,348	Greenbrier Cos., Inc.		62,715
	7,052	Griffon Corp.*		108,812
	2,352	H&E Equipment Services, Inc.*		41,466
	2,284	Healthcare Services Group, Inc.		50,157
	5,521	Heartland Express, Inc.		76,963
	469	Heico Corp.		25,532
	898	Heico Corp., Class A		38,910
	1,413	Heidrick & Struggles International, Inc.		61,070
	4,243	Herman Miller, Inc.		115,494
	7,894	Hexcel Corp.*		197,587
	2,923	Horizon Lines, Inc., Class A		91,958
	4,110	Hub Group, Inc., Class A*		104,271
	5,740	Hudson Highland Group, Inc.*		65,895
	300	Huron Consulting Group, Inc.*		20,964
	5,820	IDEX Corp.		206,144
	2,098	IHS, Inc., Class A*		132,279
	1,266	II-VI, Inc.*		43,981
	404	Innerworkings, Inc.*		6,500
	3,356	Insituform Technologies, Inc., Class A*		47,185
	6,533	Interface, Inc., Class A		124,976
	5,030	Interline Brands, Inc.*		120,167
	1,432	Ionatron, Inc.*		5,270
	18,259	JetBlue Airways Corp.*		166,705
	3,806	Joy Global, Inc.		220,976
	4,382	Kaman Corp.		165,245
	2,247	Kaydon Corp.		120,866
	269	Kenexa Corp.*		7,887
	4,291	Kirby Corp.*		196,013
	4,195	Knight Transportation, Inc.		66,994
	9,875	Knoll, Inc.		187,526

Number of Shares			Value
		Common Stocks (Continued)
	3,827	Korn/Ferry International*	$	73,325
	5,880	Labor Ready, Inc.*		103,370
	3,164	Landstar System, Inc.		133,173
	1,517	Lawson Products, Inc.		53,687
	3,137	LECG Corp.*		54,929
	3,480	Lincoln Electric Holdings, Inc.		251,430
	747	Lindsay Corp.		36,752
	6,586	Manitowoc (The) Co., Inc.		324,426
	5,879	McDermott International, Inc. (Panama)*		358,972
	2,483	McGrath Rentcorp		85,117
	109	Medis Technologies Ltd.*		1,524
	579	Middleby (The) Corp.*		37,733
	3,576	Mine Safety Appliances Co.		163,745
	2,448	Mobile Mini, Inc.*		43,893
	4,172	Moog, Inc., Class A*		192,538
	4,375	MSC Industrial Direct Co., Class A		213,106
	1,650	MTC Technologies, Inc.*		30,179
	3,842	Navigant Consulting, Inc.*		50,638
	2,798	NCI Building Systems, Inc.*		109,626
	2,983	Nordson Corp.		159,591
	3,920	Old Dominion Freight Line, Inc.*		88,553
	4,747	Orbital Sciences Corp.*		121,191
	4,726	Pacer International, Inc.		69,661
	3,582	Perini Corp.*		205,428
	2,341	Pike Electric Corp.*		46,118
	1,312	Powell Industries, Inc.*		55,222
	6,779	Power-One, Inc.*		38,437
	4,311	Quanta Services, Inc.*		142,263
	2,736	Quintana Maritime Ltd. (Marshall Islands)		76,471
	1,226	Raven Industries, Inc.		52,975
	3,356	Regal-Beloit Corp.		164,578
	5,902	Republic Airways Holdings, Inc.*		125,654
	1,918	Resources Connection, Inc.		43,673
	1,927	Robbins & Myers, Inc.		139,322
	3,986	Rollins, Inc.		121,055
	6,826	Roper Industries, Inc.		483,348
	3,108	Schawk, Inc.		70,614
	3,871	School Specialty, Inc.*		130,646
	2,708	Seaspan Corp. (Marshall Islands)		86,439
	3,565	Simpson Manufacturing Co., Inc.		106,914
	7,637	Skywest, Inc.		208,414
	23,137	Spherion Corp.*		201,755
	10,669	Standard Register (The) Co.		136,883
	2,912	Standex International Corp.		62,433
	3,735	Stericycle, Inc.*		217,863
	4,788	Superior Essex, Inc.*		159,201
	5,590	TAL International Group, Inc.		131,980
	2,097	Taser International, Inc.*		34,915
	3,349	Teledyne Technologies, Inc.*		175,186
	4,436	TeleTech Holdings, Inc.*		110,589
	2,211	Tennant Co.		104,271
	6,952	Tetra Tech, Inc.*		162,329

See Notes to Financial Statements.
38

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	4,276	Thomas & Betts Corp.*	$	239,499
	3,200	Toro (The) Co.		178,112
	9,282	TransDigm Group, Inc.*		422,516
	5,491	Tredegar Corp.		95,653
	1,943	Trex Co., Inc.*		21,062
	2,520	Triumph Group, Inc.		200,642
	7,251	UAP Holding Corp.		230,799
	687	United Industrial Corp.		55,523
	3,326	Universal Forest Products, Inc.		119,104
	3,521	US Airways Group, Inc.*		97,391
	4,302	UTi Worldwide, Inc. (British Virgin Islands)		109,744
	2,115	Valmont Industries, Inc.		202,448
	4,995	Viad Corp.		177,023
	3,356	Vicor Corp.		47,118
	4,825	Volt Information Sciences, Inc.*		75,029
	4,613	Wabash National Corp.		46,822
	3,138	Wabtec Corp.		117,769
	7,874	Walter Industries, Inc.		241,259
	6,434	Waste Connections, Inc.*		217,534
	2,820	Watsco, Inc.		117,425
	1,825	Watson Wyatt Worldwide, Inc., Class A		86,998
	4,496	Watts Water Technologies, Inc., Class A		127,821
	4,656	Williams Scotsman International, Inc.*		131,532
	2,916	Woodward Governor Co.		195,372
	8,818	Xerium Technologies, Inc.		36,242
				24,804,954
		Information Technology—15.5%
	35,352	3Com Corp.*		172,518
	1,817	ACI Worldwide, Inc*		41,555
	2,559	Actel Corp.*		29,147
	27,396	Adaptec, Inc.*		96,708
	9,700	ADC Telecommunications, Inc.*		181,390
	6,523	ADTRAN, Inc.		157,009
	2,524	Advanced Analogic Technologies, Inc.*		30,490
	2,376	Advanced Energy Industries, Inc.*		38,016
	1,082	Advent Software, Inc.*		59,867
	7,048	Agilysys, Inc.		121,930
	1,457	Akamai Technologies, Inc.*		57,100
	17,071	AMIS Holdings, Inc.*		130,935
	6,679	Amphenol Corp., Class A		295,678
	370	Ansoft Corp.*		11,130
	1,944	Ansys, Inc.*		75,447
	18,652	Applied Micro Circuits Corp.*		60,059
	4,834	Ariba, Inc.*		62,552
	7,172	Arris Group, Inc.*		82,478
	13,257	ASE Test Ltd. (Singapore)*		192,227
	2,537	Aspen Technology, Inc.*		44,245
	3,873	Asyst Technologies, Inc.*		18,590
	937	Atheros Communications, Inc.*		32,889
	2,197	ATMI, Inc.*		70,612
	1,672	AudioCodes Ltd. (Israel)*		10,885

Number of Shares			Value
		Common Stocks (Continued)
	5,259	Autodesk, Inc.*	$	257,164
	4,326	Avid Technology, Inc.*		127,141
	3,675	Avocent Corp.*		99,335
	8,995	Axcelis Technologies, Inc.*		42,187
	25,617	BearingPoint, Inc.*		122,705
	2,753	Black Box Corp.		110,065
	1,045	Blackbaud, Inc.		28,163
	675	Blackboard, Inc.*		33,683
	10,734	Borland Software Corp.*		47,015
	14,095	Brightpoint, Inc.*		228,339
	14,391	Brocade Communications Systems, Inc.*		136,858
	3,432	Brooks Automation, Inc.*		44,547
	2,480	Cabot Microelectronics Corp.*		98,406
	3,594	CACI International, Inc., Class A*		193,537
	5,685	CDC Corp., Class A (Cayman Islands)*		41,955
	6,337	Checkpoint Systems, Inc.*		191,694
	17,423	ChipMOS TECHNOLOGIES Ltd. (Bermuda)*		97,917
	14,666	Ciber, Inc.*		114,248
	1,531	Ciena Corp.*		73,274
	4,664	Cirrus Logic, Inc.*		28,684
	24,401	CMGI, Inc.*		34,405
	5,507	CNET Networks, Inc.*		44,497
	5,465	Cogent, Inc.*		80,718
	3,128	Cognex Corp.		56,241
	3,324	Cognizant Technology Solutions Corp., Class A*		137,813
	3,840	Coherent, Inc.*		125,952
	2,138	Cohu, Inc.		35,063
	4,086	CommScope, Inc.*		192,737
	154	Commvault Systems, Inc.*		3,132
	1,336	Comtech Telecommunications Corp.*		72,478
	370	Concur Technologies, Inc.*		13,335
	18,196	Conexant Systems, Inc.*		23,291
	17,981	Credence Systems Corp.*		54,842
	8,441	Cree, Inc.*		236,348
	4,194	CSG Systems International, Inc.*		86,103
	5,612	CTS Corp.		69,308
	2,009	Cymer, Inc.*		85,383
	10,611	Cypress Semiconductor Corp.*		387,831
	1,236	Daktronics, Inc.		36,858
	888	DealerTrack Holdings, Inc.*		43,592
	980	Digital River, Inc.*		51,999
	1,875	Diodes, Inc.*		61,988
	3,401	Ditech Networks, Inc.*		16,903
	74	DivX, Inc.*		927
	3,444	Dolby Laboratories, Inc., Class A*		142,788
	3,055	DSP Group, Inc.*		48,238
	5,971	Dycom Industries, Inc.*		168,681
	26,739	EarthLink, Inc.*		211,505
	2,896	Echelon Corp.*		63,857
	2,980	Electro Scientific Industries, Inc.*		65,024

See Notes to Financial Statements.
39

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	5,418	Electronics for Imaging, Inc.*	$	123,530
	6,191	Emulex Corp.*		134,097
	11,359	Entegris, Inc.*		103,708
	2,854	Epicor Software Corp.*		33,335
	2,362	EPIQ Systems, Inc.*		45,799
	723	Equinix, Inc.*		84,345
	6,213	eSpeed, Inc., Class A*		63,124
	2,428	Euronet Worldwide, Inc.*		77,769
	5,632	Exar Corp.*		68,485
	1,133	Excel Technology, Inc.*		31,883
	12,379	Extreme Networks, Inc.*		54,220
	1,864	F5 Networks, Inc.*		67,160
	1,264	Factset Research Systems, Inc.		89,137
	3,526	Fair Isaac Corp.		133,706
	438	FalconStor Software, Inc.*		6,145
	2,748	FEI Co.*		79,719
	3,951	Finisar Corp.*		9,166
	2,908	FLIR Systems, Inc.*		201,786
	1,253	FormFactor, Inc.*		49,005
	1,449	Forrester Research, Inc.*		34,370
	9,423	Foundry Networks, Inc.*		199,202
	5,448	Gartner, Inc.*		119,311
	7,333	Genesis Microchip, Inc.*		54,118
	3,830	Gevity HR, Inc.		38,223
	1,105	GigaMedia Ltd. (Singapore)*		27,050
	4,544	Global Cash Access Holdings, Inc.*		45,395
	3,332	Global Payments, Inc.		158,470
	2,516	Harmonic, Inc.*		30,997
	2,086	Heartland Payment Systems, Inc.		62,580
	730	Hittite Microwave Corp.*		36,683
	595	Hughes Communications, Inc.*		35,456
	5,804	Hutchinson Technology, Inc.*		137,729
	5,249	Imation Corp.		116,948
	3,423	Informatica Corp.*		58,465
	4,296	InfoSpace, Inc.		83,042
	6,145	infoUSA, Inc.		64,645
	9,409	Integrated Device Technology, Inc.*		126,363
	764	InterDigital, Inc.*		16,418
	6,346	Intermec, Inc.*		161,315
	649	Internap Network Services Corp.*		10,812
	2,433	Interwoven, Inc.*		34,524
	1,463	Itron, Inc.*		157,258
	4,205	Ixia*		43,984
	1,681	j2 Global Communications, Inc.*		56,633
	5,389	Jack Henry & Associates, Inc.		157,467
	3,740	JDA Software Group, Inc.*		93,350
	21,634	KEMET Corp.*		152,952
	224	Knot (The), Inc.*		4,343
	5,256	Kopin Corp.*		20,919
	12,109	Lattice Semiconductor Corp.*		50,616
	8,029	Lawson Software, Inc.*		90,647
	2,047	Littelfuse, Inc.*		65,156

Number of Shares			Value
		Common Stocks (Continued)
	2,907	Loral Space & Communications, Inc.*	$	117,385
	1,937	LTX Corp.*		6,411
	3,322	Macrovision Corp.*		79,728
	1,945	Magma Design Automation, Inc.*		28,961
	1,799	Manhattan Associates, Inc.*		54,258
	3,279	ManTech International Corp., Class A*		130,373
	8,194	MasTec, Inc.*		129,383
	2,890	MAXIMUS, Inc.		138,489
	3,998	MEMC Electronic Materials, Inc.*		292,733
	7,564	Mentor Graphics Corp.*		121,175
	3,850	Mercury Computer Systems, Inc.*		60,214
	6,554	Methode Electronics, Inc.		82,187
	4,818	Micrel, Inc.		43,603
	1,582	MICROS Systems, Inc.*		113,619
	2,917	Microsemi Corp.*		77,621
	416	MicroStrategy, Inc., Class A*		40,905
	593	Midway Games, Inc.*		1,844
	4,975	MKS Instruments, Inc.*		99,898
	14,480	MPS Group, Inc.*		176,801
	4,132	MSC.Software Corp.*		57,022
	1,529	MTS Systems Corp.		68,025
	2,342	Multi-Fineline Electronix, Inc.*		33,280
	9,155	Nam Tai Electronics, Inc. (British Virgin Islands)		110,318
	3,791	National Instruments, Corp.		122,980
	3,137	NAVTEQ*		242,176
	1,544	Net 1 UEPS Technologies, Inc.*		49,439
	2,064	NETGEAR, Inc.*		72,942
	181	Netlogic Microsystems, Inc.*		6,009
	2,327	Newport Corp.*		31,810
	1,118	Novatel Wireless, Inc.*		29,068
	5,485	Nuance Communications, Inc.*		121,273
	5,422	Omnivision Technologies, Inc.*		120,097
	13,253	ON Semiconductor Corp.*		135,181
	4,033	Openwave Systems, Inc.		15,971
	3,199	Orbotech Ltd. (Israel)*		66,219
	1,718	OSI Systems, Inc.*		43,002
	8,132	Palm, Inc.*		73,351
	6,001	Parametric Technology Corp.*		114,619
	2,158	Park Electrochemical Corp.		67,589
	2,344	Pericom Semiconductor Corp.*		35,019
	8,679	Photronics, Inc.*		94,948
	4,108	Plantronics, Inc.		112,354
	7,330	Plexus Corp.*		189,114
	8,459	PMC - Sierra, Inc.*		76,216
	5,066	Polycom, Inc.*		141,747
	18,645	Powerwave Technologies, Inc.*		103,666
	2,982	Progress Software Corp.*		97,541
	10,725	QLogic Corp.*		166,559
	533	Quality Systems, Inc.		19,311
	61,611	Quantum Corp.*		246,444
	7,392	Quest Software, Inc.*		128,621

See Notes to Financial Statements.
40

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	1,240	Rackable Systems, Inc.*	$	16,938
	3,173	Rambus, Inc.*		62,794
	11,737	RealNetworks, Inc.*		85,211
	1,897	Red Hat, Inc.*		40,956
	4,705	Renaissance Learning, Inc.		65,964
	15,058	RF Micro Devices, Inc.*		93,661
	233	Riverbed Technology, Inc.*		7,873
	1,120	Rofin-Sinar Technologies, Inc.*		88,054
	1,316	Rogers Corp.*		64,523
	1,542	Rudolph Technologies, Inc.*		20,092
	8,980	S1 Corp.*		75,612
	2,375	Saifun Semiconductors Ltd. (Israel)*		24,059
	709	Salesforce.com, Inc.*		39,966
	5,395	Sapient Corp.*		37,765
	3,902	ScanSource, Inc.*		144,140
	2,762	SeaChange International, Inc.*		17,152
	5,087	Semtech Corp.*		87,039
	3,108	Silicon Image, Inc.*		19,798
	3,320	Silicon Laboratories, Inc.*		145,084
	10,775	Silicon Storage Technology, Inc.*		35,773
	1,539	SINA Corp. (Cayman Islands)*		88,231
	1,879	Sirf Technology Holdings, Inc.*		56,013
	21,519	Skyworks Solutions, Inc.*		198,405
	1,145	Sohu.com, Inc.*		68,597
	1,102	Sonic Solutions, Inc.*		13,224
	4,781	SonicWALL, Inc.*		49,436
	3,798	Sonus Networks, Inc.*		26,206
	1,154	SPSS, Inc.*		43,852
	4,273	SRA International, Inc., Class A*		117,337
	1,675	Standard Microsystems Corp.*		65,325
	472	Supertex, Inc.*		17,247
	8,170	Sybase, Inc.*		233,662
	17,570	Sycamore Networks, Inc.*		75,024
	4,545	Sykes Enterprises, Inc.*		80,219
	4,513	Symmetricom, Inc.*		21,392
	1,306	Synaptics, Inc.*		70,981
	2,649	Syntel, Inc.		112,794
	10,505	Take-Two Interactive Software, Inc.*		197,284
	3,695	Technitrol, Inc.		108,670
	6,788	Tekelec*		89,602
	5,921	Tektronix, Inc.		224,110
	795	Tessera Technologies, Inc.*		30,361
	4,525	THQ, Inc.*		122,582
	13,561	TIBCO Software, Inc.*		124,490
	3,425	TNS, Inc.		55,314
	670	Trident Microsystems, Inc.*		5,045
	5,361	Trimble Navigation Ltd.*		223,554
	16,332	Triquint Semiconductor, Inc.*		102,402
	2,214	Tyler Technologies, Inc.*		35,690
	220	Ultimate Software Group, Inc.*		7,592
	5,358	United Online, Inc.		94,301
	3,205	ValueClick, Inc.*		87,144

Number of Shares			Value
		Common Stocks (Continued)
	3,803	Varian Semiconductor Equipment Associates, Inc.*	$	175,014
	2,827	Veeco Instruments, Inc.*		51,084
	1,825	VeriFone Holdings, Inc.*		90,210
	2,314	Verigy Ltd. (Singapore)*		53,199
	1,484	Viasat, Inc.*		45,262
	2,108	Vignette Corp.*		36,342
	461	VistaPrint Ltd. (Bermuda)*		21,930
	1,702	Websense, Inc.*		31,317
	4,865	Wind River Systems, Inc.*		60,861
	1,945	Wright Express Corp.*		75,272
	1,469	Xyratex Ltd. (Bermuda)*		25,091
	4,591	Zebra Technologies Corp., Class A*		179,462
	4,639	Zoran Corp.*		118,295
				20,613,149
		Materials—5.9%
	7,282	A. Schulman, Inc.		171,928
	2,373	AMCOL International Corp.		95,727
	1,886	Apex Silver Mines Ltd. (Cayman Islands)*		38,663
	6,533	AptarGroup, Inc.		292,025
	4,952	Arch Chemicals, Inc.		225,910
	9,283	Buckeye Technologies, Inc.*		166,351
	1,708	Carpenter Technology Corp.		247,506
	2,771	Century Aluminum Co.*		161,244
	4,398	CF Industries Holdings, Inc.		386,583
	8,671	Chesapeake Corp.		64,252
	2,332	Cleveland-Cliffs, Inc.		223,056
	9,579	Coeur d'Alene Mines Corp.*		37,837
	4,479	Compass Minerals International, Inc.		165,320
	766	Deltic Timber Corp.		42,835
	3,698	Eagle Materials, Inc.		146,108
	10,448	Ferro Corp.		216,483
	3,432	Florida Rock Industries, Inc.		215,976
	9,911	Georgia Gulf Corp.		119,923
	8,605	Glatfelter		138,282
	7,401	H.B. Fuller Co.		217,811
	6,178	Headwaters, Inc.*		88,654
	3,243	Hecla Mining Co.*		31,198
	3,510	Innospec, Inc.		74,728
	2,332	Metal Management, Inc.		122,593
	2,499	Minerals Technologies, Inc.		175,480
	5,961	Myers Industries, Inc.		126,314
	2,306	Neenah Paper, Inc.		78,404
	2,652	NewMarket Corp.		142,572
	18,716	NL Industries, Inc.		206,999
	4,341	OM Group, Inc.*		229,986
	29,233	PolyOne Corp.*		233,572
	4,863	Quanex Corp.		200,307
	6,254	Rock-Tenn Co., Class A		182,367
	592	Royal Gold, Inc.		20,921
	782	RTI International Metals, Inc.*		61,137

See Notes to Financial Statements.
41

Schedule of Investments (Continued)

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	2,625	Schnitzer Steel Industries, Inc.	$	173,434
	4,127	Schweitzer-Mauduit International, Inc.		115,639
	8,716	Sensient Technologies Corp.		260,521
	5,518	Spartech Corp.		84,812
	3,296	Stepan Co.		114,173
	8,612	Stillwater Mining Co.*		95,852
	2,195	Symyx Technologies, Inc.*		20,216
	11,333	Terra Industries, Inc.*		418,073
	3,173	Texas Industries, Inc.		231,819
	7,610	Titanium Metals Corp.*		267,872
	4,001	Tronox, Inc., Class A		34,049
	4,937	Tronox, Inc., Class B		40,632
	7,387	W.R. Grace & Co.*		218,655
	9,902	Wausau Paper Corp.		99,119
	7,451	Westlake Chemical Corp.		182,848
	4,216	Wheeling-Pittsburgh Corp.*		82,929
	384	Zoltek Cos., Inc.*		16,992
				7,806,687
		Telecommunication Services—2.2%
	4,411	Alaska Communications Systems Group, Inc.		71,767
	330	Cbeyond, Inc.*		12,910
	16,474	Centennial Communications Corp.*		168,694
	646	Cogent Communications Group, Inc.*		17,881
	23,436	Dobson Communications Corp., Class A*		303,262
	4,490	FairPoint Communications, Inc.		83,020
	6,948	General Communication, Inc., Class A*		81,500
	1,715	Global Crossing Ltd. (Bermuda)*		36,169
	3,672	Golden Telecom, Inc.		379,868
	3,392	IDT Corp.		27,475
	12,760	IDT Corp., Class B		102,463
	1,003	InPhonic, Inc.*		381
	4,504	Iowa Telecommunications Services, Inc.		88,819
	788	iPCS, Inc.		28,171
	3,170	Leap Wireless International, Inc.*		226,053
	3,007	Millicom International Cellular S.A. (Luxembourg)*		353,262
	1,500	NeuStar, Inc., Class A*		51,300
	2,321	North Pittsburgh Systems, Inc.		56,354
	4,667	NTELOS Holdings Corp.		140,897
	7,843	Premiere Global Services, Inc.*		129,253
	2,013	SBA Communications Corp., Class A*		71,663
	3,332	SureWest Communications		88,231
	9,038	Syniverse Holdings, Inc.*		150,844
	7,408	Time Warner Telecom, Inc., Class A*		172,162
	8,225	USA Mobility, Inc.		128,639
	2,487	Vonage Holdings Corp.*		5,074
				2,976,112
		Utilities—1.5%
	2,223	American States Water Co.		101,035
	2,707	California Water Service Group		120,164

Number of Shares			Value
		Common Stocks (Continued)
	2,829	Central Vermont Public Service Corp.	$	89,906
	4,004	CH Energy Group, Inc.		187,147
	8,456	El Paso Electric Co.*		205,903
	6,090	Empire District Electric (The) Co.		146,465
	1,377	ITC Holdings Corp.		78,819
	5,660	Laclede Group (The), Inc.		196,911
	4,069	MGE Energy, Inc.		136,312
	4,545	Northwest Natural Gas Co.		218,932
	1,159	Ormat Technologies, Inc.		62,505
	5,544	Otter Tail Corp.		192,044
	1,705	SJW Corp.		59,556
	4,239	South Jersey Industries, Inc.		159,217
				1,954,916
		Total Common Stocks (Cost $129,260,071)		131,643,106
		Money Market Fund—0.3%
	458,878	Liquid Assets Portfolio Private Class** (Cost $458,878)		458,878
		Total Investments (Cost $129,718,949)—99.1%		132,101,984
		Other assets less liabilities—0.9%		1,220,232
		Net Assets—100.0%	$	133,322,216

REIT Real Estate Investment Trust.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	125,532,032		94.1	%
Bermuda		2,841,235		2.1
Marshall Islands		1,283,184		1.0
Cayman Islands		659,459		0.5
Panama		358,972		0.3
Luxembourg		353,262		0.3
Singapore		272,476		0.2
British Virgin Islands		220,062		0.2
Netherlands		217,167		0.2
Canada		189,480		0.1
Israel		122,928		0.1
Bahamas		51,727		0.0
Total investments		132,101,984		99.1
Other assets less liabilities		1,220,232		0.9
Net Assets	$	133,322,216		100.0	%

See Notes to Financial Statements.
42

Schedule of Investments

PowerShares FTSE RAFI Basic Materials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—104.2%
		Chemicals—60.4%
	4,577	Air Products & Chemicals, Inc.	$	447,859
	2,017	Airgas, Inc.		101,798
	1,398	Albemarle Corp.		66,768
	3,083	Ashland, Inc.		181,034
	1,841	Cabot Corp.		64,453
	5,689	Celanese Corp., Series A		238,710
	7,809	Chemtura Corp.		72,780
	1,037	Cytec Industries, Inc.		69,178
	34,858	Dow Chemical (The) Co.		1,570,005
	27,004	E.I. du Pont de Nemours & Co.		1,336,969
	5,521	Eastman Chemical Co.		367,643
	5,259	Ecolab, Inc.		248,067
	2,217	FMC Corp.		127,477
	3,222	Hercules, Inc.		60,606
	14,982	Huntsman Corp.		394,776
	2,017	International Flavors & Fragrances, Inc.		105,308
	2,135	Lubrizol (The) Corp.		144,924
	7,895	Lyondell Chemical Co.		374,618
	5,815	Monsanto Co.		567,719
	3,717	Mosaic (The) Co.*		259,447
	3,455	Olin Corp.		78,705
	5,951	PPG Industries, Inc.		444,778
	5,113	Praxair, Inc.		437,059
	2,483	Rockwood Holdings, Inc.*		97,060
	5,963	Rohm & Haas Co.		309,360
	3,920	RPM International, Inc.		84,006
	2,836	Sigma-Aldrich Corp.		146,536
	2,357	Valhi, Inc.		62,908
	2,880	Valspar (The) Corp.		72,086
				8,532,637
		Coal—4.0%
	2,802	Arch Coal, Inc.		114,882
	2,197	CONSOL Energy, Inc.		124,131
	2,240	Foundation Coal Holdings, Inc.		95,693
	2,288	Massey Energy Co.		72,484
	2,844	Peabody Energy Corp.		158,552
				565,742
		Forest Products & Paper—10.8%
	2,088	AbitibiBowater, Inc.		71,528
	22,817	International Paper Co.		843,316
	7,979	Weyerhaeuser Co.		605,686
				1,520,530
		Household Products/Wares—1.2%
	2,846	Avery Dennison Corp.		164,783
		Iron/Steel—7.1%
	2,891	AK Steel Holding Corp.*		144,926
	1,001	Allegheny Technologies, Inc.		102,272
	4,727	Nucor Corp.		293,168
	1,353	Reliance Steel & Aluminum Co.		78,948

Number of Shares			Value
		Common Stocks (Continued)
	1,897	Steel Dynamics, Inc.	$	100,958
	2,655	United States Steel Corp.		286,475
				1,006,747
		Metal Fabricate/Hardware—1.6%
	2,806	Commercial Metals Co.		88,052
	5,788	Worthington Industries, Inc.		144,700
				232,752
		Mining—19.1%
	28,848	Alcoa, Inc.		1,142,092
	5,785	Freeport-McMoRan Copper & Gold, Inc., Class B		680,779
	6,879	Newmont Mining Corp.		349,866
	3,458	Southern Copper Corp.		483,083
	3,966	USEC, Inc.*		34,901
				2,690,721
		Total Common Stocks (Cost $12,680,902)		14,713,912
		Money Market Fund—0.2%
	34,763	Liquid Assets Portfolio Private Class** (Cost $34,763)		34,763
		Total Investments (Cost $12,715,665)—104.4%		14,748,675
		Liabilities in excess of other assets—(4.4%)		(626,082	)
		Net Assets—100.0%	$	14,122,593

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
43

Schedule of Investments

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—101.1%
		Agriculture—10.5%
	3,941	Altria Group, Inc.	$	287,417
	2,078	Archer-Daniels-Midland Co.		74,351
	510	Bunge Ltd. (Bermuda)		58,747
	520	Carolina Group		44,606
	1,175	Reynolds American, Inc.		75,705
	186	Universal Corp.		9,066
	476	UST, Inc.		25,380
				575,272
		Apparel—2.6%
	169	Coach, Inc.*		6,179
	685	Hanesbrands, Inc.*		21,262
	505	Jones Apparel Group, Inc.		10,575
	188	Kellwood Co.		3,115
	316	Liz Claiborne, Inc.		8,997
	902	NIKE, Inc., Class B		59,766
	210	Timberland (The) Co., Class A*		4,097
	307	VF Corp.		26,749
				140,740
		Auto Manufacturers—21.6%
	63,710	Ford Motor Co.*		565,108
	15,696	General Motors Corp.		615,126
				1,180,234
		Auto Parts & Equipment—6.3%
	408	American Axle & Manufacturing Holdings, Inc.		11,204
	917	ArvinMeritor, Inc.		13,599
	328	Autoliv, Inc.		20,723
	161	BorgWarner, Inc.		17,019
	629	Cooper Tire & Rubber Co.		14,014
	1,491	Goodyear Tire & Rubber (The) Co.*		44,954
	1,851	Johnson Controls, Inc.		80,926
	899	Lear Corp.*		31,941
	415	Tenneco, Inc.*		12,703
	2,423	TRW Automotive Holdings Corp.*		71,939
	3,078	Visteon Corp.*		19,545
	136	WABCO Holdings, Inc.		6,912
				345,479
		Beverages—13.2%
	1,816	Anheuser-Busch Cos., Inc.		93,124
	66	Brown-Forman Corp., Class A		5,069
	144	Brown-Forman Corp., Class B		10,653
	3,803	Coca-Cola (The) Co.		234,874
	2,731	Coca-Cola Enterprises, Inc.		70,487
	651	Constellation Brands, Inc., Class A*		16,353
	562	Molson Coors Brewing Co., Class B		32,163
	886	Pepsi Bottling Group (The), Inc.		38,169
	557	PepsiAmericas, Inc.		19,896
	2,731	PepsiCo, Inc.		201,329
				722,117

Number of Shares			Value
		Common Stocks (Continued)
		Cosmetics/Personal Care—6.4%
	491	Alberto-Culver Co.	$	12,761
	827	Avon Products, Inc.		33,890
	874	Colgate-Palmolive Co.		66,660
	470	Estee Lauder (The) Cos., Inc., Class A		20,633
	3,124	Procter & Gamble (The) Co.		217,181
				351,125
		Distribution/Wholesale—0.6%
	668	Genuine Parts Co.		32,779
		Electrical Components & Equipment—0.2%
	107	Energizer Holdings, Inc.*		11,160
		Electronics—0.2%
	123	Garmin Ltd. (Cayman Islands)		13,210
		Food—28.0%
	891	Campbell Soup Co.		32,949
	455	Chiquita Brands International, Inc.*		8,531
	2,923	ConAgra Foods, Inc.		69,363
	256	Corn Products International, Inc.		10,890
	596	Dean Foods Co.		16,551
	883	Del Monte Foods Co.		9,130
	478	Fresh Del Monte Produce, Inc. (Cayman Islands)		17,342
	1,020	General Mills, Inc.		58,885
	1,175	H.J. Heinz Co.		54,966
	466	Hershey (The) Co.		20,089
	406	Hormel Foods Corp.		14,811
	160	J.M. Smucker (The) Co.		8,549
	1,089	Kellogg Co.		57,488
	28,415	Kraft Foods, Inc., Class A		949,346
	284	McCormick & Co., Inc.		9,949
	289	Pilgrim's Pride Corp.		8,583
	4,418	Sara Lee Corp.		73,075
	3	Seaboard Corp.		4,896
	914	Smithfield Foods, Inc.*		26,204
	2,763	Tyson Foods, Inc., Class A		43,655
	502	Wm. Wrigley Jr. Co.		30,958
				1,526,210
		Hand/Machine Tools—0.8%
	200	Black & Decker (The) Corp.		17,982
	188	Snap-On, Inc.		9,383
	263	Stanley Works (The)		15,136
				42,501
		Home Builders—2.4%
	248	Beazer Homes USA, Inc.		2,785
	617	Centex Corp.		15,462
	1,316	D.R. Horton, Inc.		16,700
	477	Hovnanian Enterprises, Inc., Class A*		5,423
	401	KB Home		11,084

See Notes to Financial Statements.
44

Schedule of Investments (Continued)

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	697	Lennar Corp., Class A	$	15,926
	249	M.D.C. Holdings, Inc.		10,087
	177	Meritage Homes Corp.*		2,848
	22	NVR, Inc.*		10,467
	1,149	Pulte Homes, Inc.		17,051
	231	Ryland Group, Inc.		6,567
	380	Standard-Pacific Corp.		1,824
	649	Toll Brothers, Inc.*		14,869
	384	WCI Communities, Inc.*		2,097
				133,190
		Home Furnishings—0.8%
	421	Furniture Brands International, Inc.		5,073
	72	Harman International Industries, Inc.		6,062
	425	La-Z-Boy, Inc.		3,353
	376	Whirlpool Corp.		29,772
				44,260
		Household Products/Wares—2.6%
	478	ACCO Brands Corp.*		10,248
	361	Clorox (The) Co.		22,588
	1,255	Kimberly-Clark Corp.		88,967
	135	Scotts Miracle-Gro (The) Co., Class A		6,195
	659	Spectrum Brands, Inc.*		2,840
	269	Tupperware Brands Corp.		9,711
				140,549
		Housewares—0.6%
	1,028	Newell Rubbermaid, Inc.		29,976
		Leisure Time—0.7%
	447	Brunswick Corp.		9,973
	386	Harley-Davidson, Inc.		19,879
	118	Polaris Industries, Inc.		5,803
				35,655
		Machinery - Diversified—0.1%
	246	Briggs & Stratton Corp.		5,537
		Miscellaneous Manufacturing—1.5%
	2,303	Eastman Kodak Co.		66,004
	810	Leggett & Platt, Inc.		15,738
				81,742
		Office Furnishings—0.3%
	134	HNI Corp.		5,810
	554	Steelcase, Inc., Class A		9,900
				15,710
		Pharmaceuticals—0.1%
	118	NBTY, Inc.*		4,201
		Software—0.6%
	341	Activision, Inc.*		8,065
	357	Electronic Arts, Inc.*		21,820
				29,885

Number of Shares			Value
		Common Stocks (Continued)
		Textiles—0.4%
	255	Mohawk Industries, Inc.*	$	21,762
		Toys/Games/Hobbies—0.6%
	433	Hasbro, Inc.		12,925
	956	Mattel, Inc.		19,971
				32,896
		Total Common Stocks (Cost $5,127,299)		5,516,190
		Money Market Fund—1.5%
	81,581	Liquid Assets Portfolio Private Class** (Cost $81,581)		81,581
		Total Investments (Cost $5,208,880)—102.6%		5,597,771
		Liabilities in excess of other assets—(2.6%)		(139,784	)
		Net Assets—100.0%	$	5,457,987

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	5,508,472			100.9	%
Bermuda		58,747			1.1
Cayman Islands		30,552			0.6
Total investments		5,597,771			102.6
Liabilities in excess of other assets		(139,784	)		(2.6	)
Net Assets	$	5,457,987			100.0	%

See Notes to Financial Statements.
45

Schedule of Investments

PowerShares FTSE RAFI Consumer Services Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.2%
		Advertising—1.4%
	977	Clear Channel Outdoor Holdings, Inc., Class A*	$	24,835
	231	Getty Images, Inc.*		6,526
	3,100	Interpublic Group of Cos., Inc.*		32,085
	299	Lamar Advertising Co., Class A		15,985
	1,435	Omnicom Group, Inc.		73,156
				152,587
		Airlines—1.4%
	387	Alaska Air Group, Inc.*		9,830
	1,794	AMR Corp.*		43,056
	1,113	Continental Airlines, Inc., Class B*		38,232
	3,778	Southwest Airlines Co.		53,685
				144,803
		Apparel—0.2%
	228	Polo Ralph Lauren Corp.		15,686
		Commercial Services—5.1%
	374	Apollo Group, Inc., Class A*		29,643
	7,306	Avis Budget Group, Inc.*		152,476
	489	Career Education Corp.*		17,477
	364	Dollar Thrifty Automotive Group*		12,558
	2,364	H&R Block, Inc.		51,535
	641	Live Nation, Inc.*		13,102
	3,428	McKesson Corp.		226,591
	991	Rent-A-Center, Inc.*		15,856
	1,548	Service Corp. International		22,400
				541,638
		Entertainment—1.4%
	739	International Game Technology		32,228
	4,484	Regal Entertainment Group, Class A		101,203
	2,340	Six Flags, Inc.*		7,582
	825	Warner Music Group Corp.		8,399
				149,412
		Food—7.8%
	1,010	Great Atlantic & Pacific Tea Co., Inc.*		32,694
	10,603	Kroger (The) Co.		311,622
	461	Nash Finch Co.		17,264
	1,487	Pathmark Stores, Inc.*		19,480
	795	Performance Food Group Co.*		21,457
	507	Ruddick Corp.		17,238
	4,350	Safeway, Inc.		147,900
	2,354	SUPERVALU, Inc.		91,218
	4,012	Sysco Corp.		137,571
	311	Weis Markets, Inc.		13,650
	409	Whole Foods Market, Inc.		20,262
				830,356

Number of Shares			Value
		Common Stocks (Continued)
		Household Products/Wares—0.2%
	658	American Greetings Corp., Class A	$	17,332
		Internet—3.4%
	683	Amazon.com, Inc.*		60,889
	2,493	eBay, Inc.*		89,997
	1,866	Expedia, Inc.*		60,944
	2,007	IAC/InterActiveCorp*		59,126
	4,415	Liberty Media Corp. Interactive, Series A*		93,731
				364,687
		Leisure Time—2.2%
	3,536	Carnival Corp. (Panama)		169,658
	1,572	Royal Caribbean Cruises Ltd. (Liberia)		67,407
				237,065
		Lodging—2.9%
	330	Boyd Gaming Corp.		13,801
	760	Harrah's Entertainment, Inc.		67,070
	165	Las Vegas Sands Corp.*		21,958
	805	Marriott International, Inc., Class A		33,094
	852	MGM MIRAGE*		78,052
	984	Starwood Hotels & Resorts Worldwide, Inc.		55,950
	143	Station Casinos, Inc.		12,841
	815	Wyndham Worldwide Corp.		26,756
				309,522
		Media—23.2%
	1,102	Belo Corp., Class A		20,387
	919	Cablevision Systems Corp., Class A*		26,954
	7,661	CBS Corp., Class B		219,871
	8,184	Charter Communications, Inc., Class A*		16,941
	2,947	Clear Channel Communications, Inc.		111,308
	10,274	Comcast Corp., Class A*		216,268
	3,365	DIRECTV Group (The), Inc.*		89,105
	1,622	Discovery Holding Co., Class A*		46,243
	531	Dow Jones & Co., Inc.		31,759
	606	E.W. Scripps Co., Class A		27,276
	1,009	EchoStar Communications Corp., Class A*		49,401
	1,835	Gannett Co., Inc.		77,822
	605	Hearst-Argyle Television, Inc.		13,492
	3,223	Idearc, Inc.		86,957
	970	Liberty Global, Inc., Series A*		38,073
	1,008	Liberty Global, Inc., Series C*		36,973
	218	Liberty Media Corp. - Capital, Series A*		27,246
	451	McClatchy Co., Class A		7,482
	1,103	McGraw-Hill (The) Cos., Inc.		55,194
	199	Meredith Corp.		12,388
	1,381	New York Times (The) Co., Class A		27,012
	6,908	News Corp., Class A		149,696
	3,143	News Corp., Class B		72,069
	673	Scholastic Corp.*		26,637
	4,293	Sun-Times Media Group, Inc., Class A*		9,488
	26,496	Time Warner, Inc.		483,816

See Notes to Financial Statements.
46

Schedule of Investments (Continued)

PowerShares FTSE RAFI Consumer Services Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	1,811	Tribune Co.	$	54,801
	2,835	Viacom, Inc., Class B*		117,057
	8,109	Walt Disney (The) Co.		280,815
	44	Washington Post (The) Co., Class B		37,356
				2,469,887
		Pharmaceuticals—3.1%
	2,323	AmerisourceBergen Corp.		109,437
	3,016	Cardinal Health, Inc.		205,178
	674	Omnicare, Inc.		19,883
				334,498
		Retail—46.7%
	231	Abercrombie & Fitch Co., Class A		18,295
	647	Advance Auto Parts, Inc.		22,076
	469	American Eagle Outfitters, Inc.		11,153
	370	AnnTaylor Stores Corp.*		11,466
	910	Asbury Automotive Group, Inc.		16,680
	4,678	AutoNation, Inc.*		82,754
	309	AutoZone, Inc.*		38,443
	597	Barnes & Noble, Inc.		23,068
	866	Bed Bath & Beyond, Inc.*		29,392
	2,113	Best Buy Co., Inc.		102,523
	885	Big Lots, Inc.*		21,222
	1,048	BJ's Wholesale Club, Inc.*		37,602
	5,406	Blockbuster, Inc., Class A*		28,436
	3,190	Blockbuster, Inc., Class B*		14,834
	820	Borders Group, Inc.		12,644
	686	Brinker International, Inc.		17,418
	572	Burger King Holdings, Inc.		15,124
	583	CarMax, Inc.*		12,167
	278	CBRL Group, Inc.		11,092
	1,314	Charming Shoppes, Inc.*		9,750
	1,954	Circuit City Stores, Inc.		15,495
	600	Collective Brands, Inc.*		11,094
	2,987	Costco Wholesale Corp.		200,906
	7,393	CVS Caremark Corp.		308,805
	639	Darden Restaurants, Inc.		27,477
	1,072	Dillard's, Inc., Class A		24,688
	593	Dollar Tree Stores, Inc.*		22,712
	989	Family Dollar Stores, Inc.		25,071
	1,333	Foot Locker, Inc.		19,848
	592	GameStop Corp., Class A*		35,058
	5,368	Gap (The), Inc.		101,455
	479	Group 1 Automotive, Inc.		14,873
	9,794	Home Depot (The), Inc.		308,609
	1,412	J. C. Penney Co., Inc.		79,411
	378	Jack in the Box, Inc.*		11,858
	1,359	Kohl's Corp.*		74,704
	3,167	Limited Brands, Inc.		69,706
	415	Longs Drug Stores Corp.		21,792
	6,440	Lowe's Cos., Inc.		173,172
	2,654	Macy's, Inc.		85,008

Number of Shares			Value
		Common Stocks (Continued)
	5,319	McDonald's Corp.	$	317,543
	769	Nordstrom, Inc.		30,329
	2,133	Office Depot, Inc.*		40,015
	791	OfficeMax, Inc.		25,035
	459	O'Reilly Automotive, Inc.*		15,156
	313	Pantry (The), Inc.*		8,770
	1,381	Penske Automotive Group, Inc.		30,769
	738	PEP Boys-Manny, Moe & Jack		10,856
	540	PetSmart, Inc.		16,173
	1,906	Pier 1 Imports, Inc.*		9,702
	1,116	RadioShack Corp.		23,012
	11,338	Rite Aid Corp.*		44,332
	646	Ross Stores, Inc.		17,455
	1,950	Saks, Inc.		41,262
	1,779	Sally Beauty Holdings, Inc.*		16,456
	937	Sears Holdings Corp.*		126,298
	870	Sonic Automotive, Inc., Class A		21,976
	2,812	Staples, Inc.		65,632
	1,284	Starbucks Corp.*		34,257
	511	Talbots (The), Inc.		7,517
	4,499	Target Corp.		276,059
	503	Tiffany & Co.		27,253
	393	Tim Hortons, Inc.		14,895
	2,577	TJX (The) Cos., Inc.		74,553
	3,826	Walgreen Co.		151,701
	27,202	Wal-Mart Stores, Inc.		1,229,801
	833	Wendy's International, Inc.		28,955
	643	Williams-Sonoma, Inc.		20,216
	1,838	Yum! Brands, Inc.		74,016
	646	Zale Corp.*		13,618
				4,981,493
		Software—0.1%
	144	Dun & Bradstreet (The) Corp.		13,946
		Trucking & Leasing—0.1%
	212	AMERCO, Inc.*		13,680
		Total Common Stocks (Cost $10,488,936)		10,576,592
		Money Market Fund—0.3%
	32,424	Liquid Assets Portfolio Private Class** (Cost $32,424)		32,424
		Total Investments (Cost $10,521,360)—99.5%		10,609,016
		Other assets less liabilities—0.5%		48,546
		Net Assets—100.0%	$	10,657,562

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
47

Schedule of Investments (Continued)

PowerShares FTSE RAFI Consumer Services Sector Portfolio

October 31, 2007 (Unaudited)

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	10,371,951		97.3	%
Panama		169,658		1.6
Liberia		67,407		0.6
Total investments		10,609,016		99.5
Other assets less liabilities		48,546		0.5
Net Assets	$	10,657,562		100.0	%

See Notes to Financial Statements.
48

Schedule of Investments

PowerShares FTSE RAFI Energy Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—100.0%
		Electric—1.6%
	35,142	Dynegy, Inc., Class A*	$	323,658
	4,196	OGE Energy Corp.		160,707
				484,365
		Oil & Gas—83.3%
	15,395	Anadarko Petroleum Corp.		908,613
	7,736	Apache Corp.		803,074
	7,665	Chesapeake Energy Corp.		302,614
	46,838	Chevron Corp.		4,286,145
	2,963	Cimarex Energy Co.		120,031
	2,834	CNX Gas Corp.*		90,461
	33,224	ConocoPhillips		2,822,711
	10,752	Devon Energy Corp.		1,004,237
	1,266	Diamond Offshore Drilling, Inc.		143,349
	1,741	ENSCO International, Inc.		96,608
	3,301	EOG Resources, Inc.		292,469
	63,684	Exxon Mobil Corp.		5,858,291
	4,367	Forest Oil Corp.*		212,193
	1,743	Frontier Oil Corp.		79,812
	2,868	GlobalSantaFe Corp. (Cayman Islands)		232,394
	10,936	Hess Corp.		783,127
	22,448	Marathon Oil Corp.		1,327,350
	4,764	Murphy Oil Corp.		350,773
	5,875	Nabors Industries Ltd. (Bermuda)*		164,970
	3,658	Newfield Exploration Co.*		196,947
	2,711	Noble Corp. (Cayman Islands)		143,547
	2,251	Noble Energy, Inc.		172,292
	18,309	Occidental Petroleum Corp.		1,264,236
	2,840	Patterson-UTI Energy, Inc.		56,630
	3,208	Pioneer Natural Resources Co.		163,672
	2,229	Pogo Producing Co.		132,759
	4,329	Pride International, Inc.*		159,740
	1,905	Rowan Cos., Inc.		74,257
	1,401	Southwestern Energy Co.*		72,474
	2,175	Stone Energy Corp.*		96,962
	5,683	Sunoco, Inc.		418,269
	4,194	Tesoro Corp.		253,863
	3,214	Transocean, Inc. (Cayman Islands)*		383,655
	15,174	Valero Energy Corp.		1,068,705
	3,708	XTO Energy, Inc.		246,137
				24,783,367
		Oil & Gas Services—12.6%
	4,795	Baker Hughes, Inc.		415,822
	4,279	BJ Services Co.		107,788
	1,522	Cameron International Corp.*		148,182
	3,349	Dresser-Rand Group, Inc.*		129,606
	1,650	Exterran Holdings, Inc.*		138,930
	2,035	FMC Technologies, Inc.*		123,382
	1,260	Grant Prideco, Inc.*		61,942
	14,886	Halliburton Co.		586,806
	4,761	National Oilwell Varco, Inc.*		348,696

Number of Shares			Value
		Common Stocks (Continued)
	11,121	Schlumberger Ltd. (Netherlands)	$	1,073,955
	528	SEACOR Holdings, Inc.*		48,391
	2,622	Smith International, Inc.		173,183
	5,989	Weatherford International Ltd. (Bermuda)*		388,746
				3,745,429
		Pipelines—2.3%
	39,044	El Paso Corp.		689,517
		Transportation—0.2%
	1,216	Tidewater, Inc.		66,479
		Total Common Stocks (Cost $26,119,069)		29,769,157
		Money Market Fund—0.0%
	5,457	Liquid Assets Portfolio Private Class** (Cost $5,457)		5,457
		Total Investments (Cost $26,124,526)—100.0%		29,774,614
		Liabilities in excess of other assets—(0.0%)		(7,299	)
		Net Assets—100.0%	$	29,767,315

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	27,387,347			92.0	%
Netherlands		1,073,955			3.6
Cayman Islands		759,596			2.5
Bermuda		553,716			1.9
Total investments		29,774,614			100.0
Liabilities in excess of other assets		(7,299	)		(0.0	)
Net Assets	$	29,767,315			100.0	%

See Notes to Financial Statements.
49

Schedule of Investments

PowerShares FTSE RAFI Financials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.3%
		Banks—29.5%
	678	Associated Banc-Corp	$	19,567
	497	BancorpSouth, Inc.		12,057
	26,958	Bank of America Corp.		1,301,533
	240	Bank of Hawaii Corp.		12,758
	4,606	Bank of New York Mellon (The) Corp.		225,003
	3,290	BB&T Corp.		121,631
	216	BOK Financial Corp.		11,781
	1,292	Capital One Financial Corp.		84,742
	215	City National Corp.		14,534
	705	Colonial BancGroup (The), Inc.		13,522
	1,132	Comerica, Inc.		52,842
	581	Commerce Bancorp, Inc.		23,676
	295	Commerce Bancshares, Inc.		13,915
	232	Cullen/Frost Bankers, Inc.		12,338
	3,226	Fifth Third Bancorp		100,909
	880	First Horizon National Corp.		22,950
	710	FirstMerit Corp.		15,052
	1,378	Fremont General Corp.		3,817
	943	Fulton Financial Corp.		12,363
	2,216	Huntington Bancshares, Inc.		39,689
	2,626	KeyCorp		74,710
	410	M&T Bank Corp.		40,787
	1,023	Marshall & Ilsley Corp.		43,682
	4,558	National City Corp.		110,531
	707	Northern Trust Corp.		53,173
	1,053	People's United Financial, Inc.		18,722
	1,778	PNC Financial Services Group, Inc.		128,300
	2,128	Popular, Inc.		22,450
	2,534	Regions Financial Corp.		68,722
	379	South Financial Group (The), Inc.		7,830
	1,084	State Street Corp.		86,471
	1,809	SunTrust Banks, Inc.		131,333
	1,313	Synovus Financial Corp.		34,611
	711	TCF Financial Corp.		16,189
	332	Trustmark Corp.		8,961
	9,141	U.S. Bancorp		303,116
	793	UnionBanCal Corp.		42,830
	636	Valley National Bancorp		13,025
	8,850	Wachovia Corp.		404,711
	285	Webster Financial Corp.		10,328
	16,283	Wells Fargo & Co.		553,786
	342	Whitney Holding Corp.		8,776
	336	Wilmington Trust Corp.		12,220
	410	Zions Bancorp		24,235
				4,334,178
		Commercial Services—0.2%
	351	Equifax, Inc.		13,513
	240	Moody's Corp.		10,493
				24,006

Number of Shares			Value
		Common Stocks (Continued)
		Diversified Financial Services—27.9%
	3,354	American Express Co.	$	204,426
	788	AmeriCredit Corp.*		11,119
	1,096	Ameriprise Financial, Inc.		69,026
	544	Bear Stearns (The) Cos., Inc.		61,798
	2,480	Charles Schwab (The) Corp.		57,635
	1,148	CIT Group, Inc.		40,456
	14,378	Citigroup, Inc.		602,438
	35	CME Group, Inc.		23,319
	3,835	Countrywide Financial Corp.		59,519
	2,459	Discover Financial Services		47,459
	1,317	E*Trade Financial Corp.*		14,671
	317	Federated Investors, Inc., Class B		13,631
	453	Franklin Resources, Inc.		58,745
	4,727	Freddie Mac		246,891
	2,789	Friedman Billings Ramsey Group, Inc., Class A		11,993
	1,270	Goldman Sachs Group (The), Inc.		314,858
	458	IndyMac Bancorp, Inc.		6,146
	685	Janus Capital Group, Inc.		23,639
	395	Jefferies Group, Inc.		10,558
	17,040	JPMorgan Chase & Co.		800,880
	529	Lazard Ltd., Class A (Bermuda)		26,556
	211	Legg Mason, Inc.		17,500
	2,044	Lehman Brothers Holdings, Inc.		129,467
	10,289	Merrill Lynch & Co., Inc.		679,280
	4,919	Morgan Stanley		330,852
	201	Nuveen Investments, Inc., Class A		13,025
	678	NYSE Euronext		63,644
	406	Raymond James Financial, Inc.		15,124
	1,537	SLM Corp.		72,485
	95	Student Loan Corp.		15,778
	515	T. Rowe Price Group, Inc.		33,084
	824	TD Ameritrade Holding Corp.*		15,771
	1,076	Thornburg Mortgage, Inc.		11,298
				4,103,071
		Forest Products & Paper—0.5%
	1,088	Plum Creek Timber Co., Inc.		48,601
	237	Potlatch Corp.		11,296
	393	Rayonier, Inc.		18,978
				78,875
		Insurance—30.9%
	1,620	ACE Ltd. (Cayman Islands)		98,188
	1,626	AFLAC, Inc.		102,080
	29	Alleghany Corp.*		11,398
	463	Allied World Assurance Holdings Ltd. (Bermuda)		22,182
	3,531	Allstate (The) Corp.		185,024
	394	AMBAC Financial Group, Inc.		14,511
	681	American Financial Group, Inc.		20,362
	10,869	American International Group, Inc.		686,051

See Notes to Financial Statements.
50

Schedule of Investments (Continued)

PowerShares FTSE RAFI Financials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	214	American National Insurance	$	27,670
	1,746	AON Corp.		79,129
	289	Arch Capital Group Ltd. (Bermuda)*		21,609
	457	Arthur J. Gallagher & Co.		12,161
	480	Aspen Insurance Holdings Ltd. (Bermuda)		13,133
	606	Assurant, Inc.		35,415
	592	Axis Capital Holdings Ltd. (Bermuda)		23,526
	214	Berkshire Hathaway, Inc., Class B*		944,597
	1,947	Chubb (The) Corp.		103,872
	900	Cincinnati Financial Corp.		35,802
	1,376	CNA Financial Corp.		54,531
	469	Commerce Group (The), Inc.		17,114
	2,036	Conseco, Inc.*		32,148
	328	Endurance Specialty Holdings Ltd. (Bermuda)		12,861
	277	Erie Indemnity Co., Class A		15,761
	265	Everest Re Group Ltd. (Bermuda)		28,233
	1,255	Fidelity National Title Group, Inc., Class A		19,314
	700	First American Corp.		21,070
	5,092	Genworth Financial, Inc., Class A		139,012
	342	Hanover Insurance Group (The), Inc.		15,756
	1,493	Hartford Financial Services Group (The), Inc.		144,866
	385	HCC Insurance Holdings, Inc.		11,508
	200	LandAmerica Financial Group, Inc.		5,558
	890	Lincoln National Corp.		55,509
	1,890	Loews Corp.		92,780
	30	Markel Corp.*		16,297
	4,233	Marsh & McLennan Cos., Inc.		109,592
	756	MBIA, Inc.		32,538
	370	Mercury General Corp.		18,985
	3,462	MetLife, Inc.		238,359
	465	MGIC Investment Corp.		9,002
	853	Montpelier Re Holdings Ltd. (Bermuda)		15,269
	737	Nationwide Financial Services, Inc., Class A		39,540
	316	Odyssey Re Holdings Corp.		11,749
	1,898	Old Republic International Corp.		29,096
	354	PartnerRe Ltd. (Bermuda)		29,470
	946	Phoenix (The) Cos., Inc.		13,036
	451	PMI Group (The), Inc.		7,230
	963	Principal Financial Group, Inc.		65,166
	2,711	Progressive (The) Corp.		50,154
	428	Protective Life Corp.		18,348
	2,022	Prudential Financial, Inc.		195,568
	375	Radian Group, Inc.		4,721
	333	Reinsurance Group of America, Inc.		19,024
	297	RenaissanceRe Holdings Ltd. (Bermuda)		17,327
	680	Safeco Corp.		39,372
	275	StanCorp Financial Group, Inc.		15,161
	454	Torchmark Corp.		29,583
	298	Transatlantic Holdings, Inc.		22,210
	2,862	Travelers (The) Cos., Inc.		149,425
	562	Unitrin, Inc.		26,026
	2,995	Unum Group		69,903

Number of Shares			Value
		Common Stocks (Continued)
	694	W.R. Berkley Corp.	$	20,882
	21	Wesco Financial Corp.		8,358
	43	White Mountains Insurance Group Ltd. (Bermuda)		23,117
	479	Willis Group Holdings Ltd. (Bermuda)		20,276
	968	XL Capital Ltd., Class A (Cayman Islands)		69,648
				4,537,163
		Investment Companies—0.5%
	1,191	Allied Capital Corp.		35,111
	809	American Capital Strategies Ltd.		35,118
	483	Tri-Continental Corp.		11,805
				82,034
		Real Estate—0.1%
	357	CB Richard Ellis Group, Inc., Class A*		8,704
	307	W.P. Carey & Co. LLC		10,730
				19,434
		REITS—7.2%
	448	AMB Property Corp.		29,277
	905	American Financial Realty Trust		6,100
	2,574	Annaly Capital Management, Inc.		43,989
	641	Apartment Investment & Management Co., Class A		29,954
	237	AvalonBay Communities, Inc.		29,068
	470	Boston Properties, Inc.		50,919
	307	Brandywine Realty Trust		7,942
	205	BRE Properties, Inc.		11,234
	252	Camden Property Trust		15,712
	336	CBL & Associates Properties, Inc.		11,125
	284	Colonial Properties Trust		8,898
	291	Cousins Properties, Inc.		8,378
	432	Developers Diversified Realty Corp.		21,773
	890	Duke Realty Corp.		28,614
	184	Equity Lifestyle Properties, Inc.		9,244
	376	Equity One, Inc.		9,844
	1,365	Equity Residential		57,029
	77	Essex Property Trust, Inc.		9,504
	163	Federal Realty Investment Trust		14,380
	370	First Industrial Realty Trust, Inc.		15,078
	599	General Growth Properties, Inc.		32,562
	380	Glimcher Realty Trust		8,436
	755	HCP, Inc.		25,700
	402	Health Care REIT, Inc.		17,805
	391	Healthcare Realty Trust, Inc.		10,338
	405	Highwoods Properties, Inc.		14,564
	255	Home Properties, Inc.		13,112
	645	Hospitality Properties Trust		25,542
	1,012	Host Hotels & Resorts, Inc.		22,426
	1,746	HRPT Properties Trust		16,395
	2,567	IMPAC Mortgage Holdings, Inc.		2,875
	829	iStar Financial, Inc.		25,293

See Notes to Financial Statements.
51

Schedule of Investments (Continued)

PowerShares FTSE RAFI Financials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	687	Kimco Realty Corp.	$	28,524
	576	Liberty Property Trust		21,669
	207	Macerich (The) Co.		17,742
	567	Mack-Cali Realty Corp.		22,448
	408	Nationwide Health Properties, Inc.		12,738
	389	Newcastle Investment Corp.		5,777
	399	Novastar Financial, Inc.		2,107
	238	Pennsylvania REIT		9,080
	278	Post Properties, Inc.		11,398
	731	ProLogis		52,441
	375	Public Storage, Inc.		30,364
	475	Realty Income Corp.		14,032
	311	Redwood Trust, Inc.		8,195
	233	Regency Centers Corp.		16,655
	492	Senior Housing Properties Trust		11,031
	353	Simon Property Group, Inc.		36,750
	83	SL Green Realty Corp.		10,015
	619	Strategic Hotels & Resorts, Inc.		13,519
	606	UDR, Inc.		14,386
	341	Ventas, Inc.		14,625
	493	Vornado Realty Trust		55,077
	386	Weingarten Realty Investors		14,768
				1,056,451
		Savings & Loans—2.2%
	619	Astoria Financial Corp.		16,088
	148	Downey Financial Corp.		6,028
	2,061	Hudson City Bancorp, Inc.		32,275
	2,028	New York Community Bancorp, Inc.		37,741
	1,479	Sovereign Bancorp, Inc.		21,342
	563	Washington Federal, Inc.		13,602
	7,004	Washington Mutual, Inc.		195,272
				322,348
		Software—0.3%
	204	Mastercard, Inc., Class A		38,668
	317	MoneyGram International, Inc.		5,056
				43,724
		Total Common Stocks (Cost $15,475,838)		14,601,284
		Money Market Fund—0.2%
	24,483	Liquid Assets Portfolio Private Class** (Cost $24,483)		24,483
		Total Investments (Cost $15,500,321)—99.5%		14,625,767
		Other assets less liabilities—0.5%		74,682
		Net Assets—100.0%	$	14,700,449

REIT Real Estate Investment Trust.

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	14,204,372		96.6	%
Bermuda		253,559		1.7
Cayman Islands		167,836		1.2
Total investments		14,625,767		99.5
Other assets less liabilities		74,682		0.5
Net Assets	$	14,700,449		100.0	%

See Notes to Financial Statements.
52

Schedule of Investments

PowerShares FTSE RAFI Health Care Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Biotechnology—5.6%
	6,712	Amgen, Inc.*	$	390,035
	1,996	Biogen Idec, Inc.*		148,582
	769	Charles River Laboratories International, Inc.*		44,602
	2,164	Genentech, Inc.*		160,417
	1,598	Genzyme Corp.*		121,400
	613	Invitrogen Corp.*		55,703
				920,739
		Distribution/Wholesale—0.3%
	1,062	Owens & Minor, Inc.		43,054
		Electronics—0.8%
	1,403	Applera Corp. - Applied Biosystems Group		52,107
	1,455	Thermo Fisher Scientific, Inc.*		85,569
				137,676
		Healthcare - Products—22.7%
	687	Advanced Medical Optics, Inc.*		18,858
	1,404	Alcon, Inc. (Switzerland)		213,703
	4,902	Baxter International, Inc.		294,169
	677	Beckman Coulter, Inc.		47,945
	1,655	Becton, Dickinson & Co.		138,126
	8,795	Boston Scientific Corp.*		121,987
	6,487	Covidien Ltd. (Bermuda)		269,859
	575	CR Bard, Inc.		48,076
	604	Dade Behring Holdings, Inc.		46,466
	1,072	DENTSPLY International, Inc.		44,467
	974	Henry Schein, Inc.*		58,343
	818	Hillenbrand Industries, Inc.		45,170
	27,048	Johnson & Johnson		1,762,718
	6,267	Medtronic, Inc.		297,306
	1,022	Patterson Cos., Inc.*		39,970
	1,806	St. Jude Medical, Inc.*		73,558
	1,423	Stryker Corp.		101,033
	543	Varian Medical Systems, Inc.*		26,482
	1,236	Zimmer Holdings, Inc.*		85,890
				3,734,126
		Healthcare - Services—13.3%
	5,478	Aetna, Inc.		307,699
	898	Apria Healthcare Group, Inc.*		21,705
	1,577	Community Health Systems, Inc.*		51,931
	1,485	Coventry Health Care, Inc.*		89,560
	899	DaVita, Inc.*		58,606
	2,981	Health Management Associates, Inc., Class A		19,704
	2,089	Health Net, Inc.*		111,991
	2,220	Humana, Inc.*		166,389
	1,349	Kindred Healthcare, Inc.*		28,653
	851	Laboratory Corp. of America Holdings*		58,506
	878	LifePoint Hospitals, Inc.*		26,797
	971	Lincare Holdings, Inc.*		33,762
	732	Magellan Health Services, Inc.*		30,817

Number of Shares			Value
		Common Stocks (Continued)
	788	Manor Care, Inc.	$	52,465
	1,698	Quest Diagnostics, Inc.		90,300
	23,983	Tenet Healthcare Corp.*		84,180
	8,420	UnitedHealth Group, Inc.		413,843
	823	Universal Health Services, Inc., Class B		40,121
	6,340	WellPoint, Inc.*		502,318
				2,189,347
		Insurance—1.4%
	4,510	CIGNA Corp.		236,730
		Pharmaceuticals—55.8%
	14,685	Abbott Laboratories		802,095
	964	Allergan, Inc.		65,147
	673	Barr Pharmaceuticals, Inc.*		38,576
	36,076	Bristol-Myers Squibb Co.		1,081,919
	12,754	Eli Lilly & Co.		690,629
	3,385	Express Scripts, Inc.*		213,593
	1,673	Forest Laboratories, Inc.*		65,364
	1,766	Gilead Sciences, Inc.*		81,572
	1,515	Hospira, Inc.*		62,615
	3,158	King Pharmaceuticals, Inc.*		33,475
	5,235	Medco Health Solutions, Inc.*		494,079
	34,057	Merck & Co., Inc.		1,984,161
	2,347	Mylan Laboratories, Inc.		35,299
	95,549	Pfizer, Inc.		2,351,462
	914	PharMerica Corp.*		14,578
	14,500	Schering-Plough Corp.		442,540
	2,068	Watson Pharmaceuticals, Inc.*		63,198
	13,568	Wyeth		659,812
				9,180,114
		Total Common Stocks (Cost $15,743,588)		16,441,786
		Money Market Fund—0.5%
	75,560	Liquid Assets Portfolio Private Class** (Cost $75,560)		75,560
		Total Investments (Cost $15,819,148)—100.4%		16,517,346
		Liabilities in excess of other assets—(0.4%)		(65,581	)
		Net Assets—100.0%	$	16,451,765

*  Non-income producing security.

**  Affiliated investment.

See Notes to Financial Statements.
53

Schedule of Investments (Continued)

PowerShares FTSE RAFI Health Care Sector Portfolio

October 31, 2007 (Unaudited)

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	16,033,784			97.5	%
Bermuda		269,859			1.6
Switzerland		213,703			1.3
Total investments		16,517,346			100.4
Liabilities in excess of other assets		(65,581	)		(0.4	)
Net Assets	$	16,451,765			100.0	%

See Notes to Financial Statements.
54

Schedule of Investments

PowerShares FTSE RAFI Industrials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—99.9%
		Aerospace/Defense—15.4%
	1,404	Alliant Techsystems, Inc.*	$	154,988
	25,539	Boeing Co.		2,517,890
	12,385	General Dynamics Corp.		1,126,540
	5,598	Goodrich Corp.		389,957
	3,630	L-3 Communications Holdings, Inc.		397,993
	12,979	Lockheed Martin Corp.		1,428,209
	18,860	Northrop Grumman Corp.		1,577,073
	20,353	Raytheon Co.		1,294,654
	2,786	Rockwell Collins, Inc.		208,421
	604	Sequa Corp., Class A*		104,987
	129	Sequa Corp., Class B*		22,349
	31,344	United Technologies Corp.		2,400,637
				11,623,698
		Auto Manufacturers—1.1%
	1,597	Oshkosh Truck Corp.		86,557
	13,758	PACCAR, Inc.		764,395
				850,952
		Building Materials—0.8%
	5,957	American Standard Cos., Inc.		222,017
	5,736	Builders FirstSource, Inc.*		41,586
	3,368	Lennox International, Inc.		120,238
	947	Martin Marietta Materials, Inc.		122,494
	2,376	USG Corp.*		94,446
				600,781
		Chemicals—0.4%
	4,543	Sherwin-Williams (The) Co.		290,389
		Commercial Services—5.0%
	19,606	Accenture Ltd., Class A (Bermuda)		765,615
	1,509	Alliance Data Systems Corp.*		121,324
	2,369	ChoicePoint, Inc.*		93,149
	6,548	Convergys Corp.*		120,025
	3,521	Corrections Corp. of America*		99,609
	4,542	Deluxe Corp.		183,224
	4,591	Hewitt Associates, Inc., Class A*		161,970
	5,481	Iron Mountain, Inc.*		190,355
	5,282	Kelly Services, Inc., Class A		111,080
	4,565	Manpower, Inc.		341,188
	1,708	Monster Worldwide, Inc.*		69,311
	8,863	PHH Corp.*		198,177
	5,413	Quanta Services, Inc.*		178,629
	12,127	R.R. Donnelley & Sons Co.		488,597
	2,676	Robert Half International, Inc.		80,521
	8,758	United Rentals, Inc.*		299,436
	10,759	Western Union (The) Co.		237,128
				3,739,338

Number of Shares			Value
		Common Stocks (Continued)
		Computers—0.5%
	5,360	Affiliated Computer Services, Inc., Class A*	$	271,537
	3,668	Ceridian Corp.*		131,828
				403,365
		Distribution/Wholesale—0.7%
	2,405	United Stationers, Inc.*		139,274
	3,316	W.W. Grainger, Inc.		298,174
	1,671	WESCO International, Inc.*		77,952
				515,400
		Electric—0.3%
	8,161	MDU Resources Group, Inc.		229,814
		Electrical Components & Equipment—2.5%
	29,859	Emerson Electric Co.		1,560,730
	2,985	Hubbell, Inc., Class B		164,175
	3,157	Molex, Inc.		90,164
	2,684	Molex, Inc., Class A		73,273
				1,888,342
		Electronics—5.0%
	9,789	Agilent Technologies, Inc.*		360,725
	9,739	Arrow Electronics, Inc.*		389,365
	7,909	Avnet, Inc.*		329,963
	7,780	AVX Corp.		120,201
	4,127	Benchmark Electronics, Inc.*		84,645
	90,057	Flextronics International Ltd. (Singapore)*		1,108,602
	9,334	Jabil Circuit, Inc.		202,828
	929	Mettler Toledo International, Inc.*		98,799
	5,009	PerkinElmer, Inc.		137,848
	20,832	Tyco Electronics Ltd. (Bermuda)		743,077
	14,305	Vishay Intertechnology, Inc.*		180,100
				3,756,153
		Engineering & Construction—2.4%
	4,533	EMCOR Group, Inc.*		156,071
	3,531	Fluor Corp.		557,899
	4,108	Jacobs Engineering Group, Inc.*		358,012
	4,112	Shaw Group (The), Inc.*		306,755
	3,619	URS Corp.*		223,690
	1,997	Washington Group International, Inc.*		194,408
				1,796,835
		Environmental Control—2.5%
	48,920	Allied Waste Industries, Inc.*		618,349
	7,181	Nalco Holding Co.		178,520
	6,492	Republic Services, Inc.		221,961
	24,423	Waste Management, Inc.		888,753
				1,907,583
		Forest Products & Paper—1.6%
	8,261	Louisiana-Pacific Corp.		135,976
	14,251	MeadWestvaco Corp.		479,404
	30,001	Smurfit-Stone Container Corp.*		363,312

See Notes to Financial Statements.
55

Schedule of Investments (Continued)

PowerShares FTSE RAFI Industrials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	4,406	Temple-Inland, Inc.	$	236,470
				1,215,162
		Hand/Machine Tools—0.2%
	1,696	Kennametal, Inc.		154,692
		Household Products/Wares—0.7%
	5,996	Fortune Brands, Inc.		502,285
		Internet—0.1%
	2,149	CheckFree Corp.*		102,142
		Machinery - Construction & Mining—2.6%
	23,730	Caterpillar, Inc.		1,770,496
	2,606	Terex Corp.*		193,417
				1,963,913
		Machinery - Diversified—3.5%
	3,909	AGCO Corp.*		233,289
	4,241	Cummins, Inc.		508,750
	8,079	Deere & Co.		1,251,437
	2,336	Flowserve Corp.		184,451
	719	NACCO Industries, Inc., Class A		74,481
	4,389	Rockwell Automation, Inc.		302,314
	3,799	Tecumseh Products Co., Class A*		68,648
	1,079	Tecumseh Products Co., Class B*		17,491
				2,640,861
		Metal Fabricate/Hardware—0.7%
	3,113	Mueller Industries, Inc.		111,943
	1,604	Precision Castparts Corp.		240,296
	6,530	Timken (The) Co.		217,188
				569,427
		Mining—0.3%
	2,269	Vulcan Materials Co.		194,022
		Miscellaneous Manufacturing—34.5%
	26,697	3M Co.		2,305,553
	1,540	Acuity Brands, Inc.		73,612
	2,082	Brink's (The) Co.		130,437
	2,354	Carlisle Cos., Inc.		92,865
	6,730	Cooper Industries Ltd., Class A (Bermuda)		352,585
	2,473	Crane Co.		117,319
	5,217	Danaher Corp.		446,940
	7,234	Dover Corp.		332,764
	5,926	Eaton Corp.		548,629
	374,130	General Electric Co.		15,399,190
	3,419	Harsco Corp.		207,260
	31,790	Honeywell International, Inc.		1,920,434
	17,344	Illinois Tool Works, Inc.		993,117
	12,264	Ingersoll-Rand Co. Ltd., Class A (Bermuda)		617,492
	5,206	ITT Corp.		348,386
	3,996	Pall Corp.		160,120
	6,612	Parker Hannifin Corp.		531,407

Number of Shares			Value
		Common Stocks (Continued)
	5,074	Pentair, Inc.	$	179,569
	3,039	SPX Corp.		307,851
	1,951	Teleflex, Inc.		142,833
	11,586	Textron, Inc.		801,867
	2,291	Trinity Industries, Inc.		82,797
				26,093,027
		Packaging & Containers—3.0%
	4,168	Ball Corp.		206,649
	5,227	Bemis Co., Inc.		147,192
	11,826	Crown Holdings, Inc.*		293,285
	19,408	Graphic Packaging Corp.*		95,487
	1,251	Greif, Inc., Class A		79,564
	368	Greif, Inc., Class B		21,462
	14,603	Owens-Illinois, Inc.*		648,665
	4,581	Packaging Corp. of America		145,859
	5,651	Pactiv Corp.*		155,233
	7,326	Sealed Air Corp.		182,637
	1,691	Silgan Holdings, Inc.		92,278
	5,478	Sonoco Products Co.		169,380
				2,237,691
		Retail—0.1%
	1,857	World Fuel Services Corp.		82,246
		Software—2.7%
	14,786	Automatic Data Processing, Inc.		732,794
	3,738	Broadridge Financial Solutions, Inc.		74,760
	11,850	Fidelity National Information Services, Inc.		546,522
	4,788	Fiserv, Inc.*		265,255
	3,814	IMS Health, Inc.		96,151
	5,972	Paychex, Inc.		249,510
	3,100	Total System Services, Inc.		92,876
				2,057,868
		Telecommunications—0.2%
	1,901	Anixter International, Inc.*		136,587
		Textiles—0.2%
	4,973	Cintas Corp.		182,012
		Transportation—12.7%
	2,093	Alexander & Baldwin, Inc.		109,631
	11,870	Burlington Northern Santa Fe Corp.		1,034,471
	2,703	C.H. Robinson Worldwide, Inc.		134,934
	3,059	Con-way, Inc.		130,344
	17,067	CSX Corp.		764,090
	2,550	Expeditors International of Washington, Inc.		129,158
	9,090	FedEx Corp.		939,361
	4,013	J.B. Hunt Transport Services, Inc.		111,240
	2,816	Kansas City Southern*		108,951
	15,024	Norfolk Southern Corp.		775,990
	2,236	Overseas Shipholding Group, Inc.*		166,358
	5,180	Ryder System, Inc.		247,863

See Notes to Financial Statements.
56

Schedule of Investments (Continued)

PowerShares FTSE RAFI Industrials Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	3,828	Ship Finance International Ltd. (Bermuda)	$	104,811
	3,787	Teekay Shipping Corp. (Marshall Islands)		211,883
	11,649	Union Pacific Corp.		1,491,537
	38,864	United Parcel Service, Inc., Class B		2,918,685
	4,204	Werner Enterprises, Inc.		79,960
	5,453	YRC Worldwide, Inc.*		134,035
				9,593,302
		Trucking & Leasing—0.2%
	3,408	GATX Corp.		139,626
		Total Common Stocks (Cost $70,272,607)		75,467,513
		Money Market Fund—0.1%
	74,134	Liquid Assets Portfolio Private Class** (Cost $74,134)		74,134
		Total Investments (Cost $70,346,741)—100.0%		75,541,647
		Liabilities in excess of other assets—(0.0%)		(24,769	)
		Net Assets—100.0%	$	75,516,878

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value			Net Assets
United States	$	71,637,582			94.8	%
Bermuda		2,583,580			3.4
Singapore		1,108,602			1.5
Marshall Islands		211,883			0.3
Total investments		75,541,647			100.0
Liabilities in excess of other assets		(24,769	)		(0.0	)
Net Assets	$	75,516,878			100.0	%

See Notes to Financial Statements.
57

Schedule of Investments

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—98.9%
		Computers—20.7%
	1,578	Apple, Inc.*	$	299,741
	1,806	Cadence Design Systems, Inc.*		35,398
	3,572	Computer Sciences Corp.*		208,569
	18,424	Dell, Inc.*		563,775
	750	Diebold, Inc.		31,380
	453	DST Systems, Inc.*		38,374
	9,360	Electronic Data Systems Corp.		202,082
	13,342	EMC Corp.		338,753
	14,493	Hewlett-Packard Co.		748,999
	7,839	International Business Machines Corp.		910,266
	1,054	Lexmark International, Inc., Class A*		44,257
	1,577	NCR Corp.*		43,509
	709	Network Appliance, Inc.*		22,326
	1,434	Perot Systems Corp., Class A*		20,936
	1,113	SanDisk Corp.*		49,417
	3,358	Seagate Technology (Cayman Islands)		93,487
	27,442	Sun Microsystems, Inc.*		156,694
	1,012	Synopsys, Inc.*		28,599
	1,577	Teradata Corp.*		44,992
	6,450	Unisys Corp.*		39,216
	1,535	Western Digital Corp.*		39,787
				3,960,557
		Distribution/Wholesale—1.7%
	9,323	Ingram Micro, Inc., Class A*		198,020
	3,411	Tech Data Corp.*		134,155
				332,175
		Holding Companies-Diversified—0.3%
	1,217	Leucadia National Corp.		61,653
		Internet—2.7%
	1,684	Check Point Software Technologies (Israel)*		42,538
	287	Google, Inc., Class A*		202,909
	837	McAfee, Inc.*		34,610
	3,419	Symantec Corp.*		64,209
	1,481	VeriSign, Inc.*		50,487
	3,692	Yahoo!, Inc.*		114,821
				509,574
		Office/Business Equipment—1.7%
	3,003	IKON Office Solutions, Inc.		39,640
	2,556	Pitney Bowes, Inc.		102,342
	10,490	Xerox Corp.*		182,945
				324,927
		Retail—0.2%
	1,353	Insight Enterprises, Inc.*		37,397
		Semiconductors—10.0%
	5,784	Advanced Micro Devices, Inc.*		75,655
	1,140	Altera Corp.		22,367
	2,009	Amkor Technology, Inc.*		22,762

Number of Shares			Value
		Common Stocks (Continued)
	1,543	Analog Devices, Inc.	$	51,629
	7,049	Applied Materials, Inc.		136,892
	4,608	Atmel Corp.*		22,533
	1,092	Broadcom Corp., Class A*		35,545
	1,444	Fairchild Semiconductor International, Inc.*		26,353
	28,307	Intel Corp.		761,457
	613	International Rectifier Corp.*		20,462
	879	Intersil Corp., Class A		26,669
	753	KLA-Tencor Corp.		39,645
	449	Lam Research Corp.*		22,540
	1,141	Linear Technology Corp.		37,676
	5,168	LSI Logic Corp.*		34,109
	1,996	Marvell Technology Group Ltd. (Bermuda)*		35,988
	713	Microchip Technology, Inc.		23,650
	9,159	Micron Technology, Inc.*		96,261
	1,064	National Semiconductor Corp.		26,749
	934	Novellus Systems, Inc.*		26,535
	1,697	NVIDIA Corp.*		60,040
	2,804	Spansion, Inc., Class A*		19,768
	1,226	Teradyne, Inc.*		15,129
	7,420	Texas Instruments, Inc.		241,891
	1,274	Xilinx, Inc.		31,086
				1,913,391
		Software—19.8%
	936	Adobe Systems, Inc.*		44,834
	2,033	BEA Systems, Inc.*		34,358
	928	BMC Software, Inc.*		31,404
	2,569	CA, Inc.		67,950
	696	Citrix Systems, Inc.*		29,921
	2,777	Compuware Corp.*		27,770
	1,341	Intuit, Inc.*		43,140
	82,410	Microsoft Corp.		3,033,512
	3,434	Novell, Inc.*		25,961
	18,795	Oracle Corp.*		416,685
	1,700	SYNNEX Corp.*		38,029
				3,793,564
		Telecommunications—41.8%
	4,665	ALLTEL Corp.		331,915
	1,183	Amdocs Ltd. (Guernsey)*		40,695
	1,532	American Tower Corp., Class A*		67,684
	2,478	Andrew Corp.*		36,327
	43,047	AT&T, Inc.		1,798,933
	1,540	CenturyTel, Inc.		67,837
	4,793	Cincinnati Bell, Inc.*		25,978
	21,249	Cisco Systems, Inc.*		702,492
	6,680	Citizens Communications Co.		87,909
	4,000	Corning, Inc.		97,080
	798	Crown Castle International Corp.*		32,774
	3,530	Embarq Corp.		186,808
	616	Harris Corp.		37,305
	1,434	JDS Uniphase Corp.*		21,883

See Notes to Financial Statements.
58

Schedule of Investments (Continued)

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks (Continued)
	3,830	Juniper Networks, Inc.*	$	137,880
	3,787	Level 3 Communications, Inc.*		11,475
	21,154	Motorola, Inc.		397,484
	349	NII Holdings, Inc.*		20,242
	4,493	QUALCOMM, Inc.		191,986
	18,816	Qwest Communications International, Inc.*		135,099
	32,806	Sprint Nextel Corp.		560,983
	643	Telephone & Data Systems, Inc.		44,881
	706	Telephone & Data Systems, Inc., Special Shares		46,490
	3,916	Tellabs, Inc.*		34,500
	897	U.S. Cellular Corp.*		84,452
	2,554	UTStarcom, Inc.*		8,173
	59,527	Verizon Communications, Inc.		2,742,408
	2,778	Virgin Media, Inc.		61,422
				8,013,095
		Total Common Stocks (Cost $16,293,919)		18,946,333
		Money Market Fund—0.1%
	25,090	Liquid Assets Portfolio Private Class** (Cost $25,090)		25,090
		Total Investments (Cost $16,319,009)—99.0%		18,971,423
		Other assets less liabilities—1.0%		189,525
		Net Assets—100.0%	$	19,160,948

*  Non-income producing security.

**  Affiliated investment.

COUNTRY BREAKDOWN

October 31, 2007 (Unaudited)

	Value		Net Assets
United States	$	18,758,715		97.9	%
Cayman Islands		93,487		0.5
Israel		42,538		0.2
Guernsey		40,695		0.2
Bermuda		35,988		0.2
Total investments		18,971,423		99.0
Other assets less liabilities		189,525		1.0
Net Assets	$	19,160,948		100.0	%

See Notes to Financial Statements.
59

Schedule of Investments

PowerShares FTSE RAFI Utilities Sector Portfolio

October 31, 2007 (Unaudited)

Number of Shares			Value
		Common Stocks—97.7%
		Electric—84.3%
	3,796	AES (The) Corp.*	$	81,272
	742	Allegheny Energy, Inc.		45,010
	402	ALLETE, Inc.		17,563
	1,023	Alliant Energy Corp.		40,920
	2,150	Ameren Corp.		116,229
	5,004	American Electric Power Co., Inc.		241,243
	8,861	Aquila, Inc.*		37,039
	678	Avista Corp.		14,950
	414	Black Hills Corp.		18,390
	5,884	CenterPoint Energy, Inc.		98,616
	507	Cleco Corp.		13,359
	2,952	CMS Energy Corp.		50,095
	2,988	Consolidated Edison, Inc.		140,705
	1,116	Constellation Energy Group, Inc.		105,685
	2,221	Dominion Resources, Inc.		203,510
	959	DPL, Inc.		27,849
	2,179	DTE Energy Co.		108,078
	10,110	Duke Energy Corp.		193,809
	2,663	Edison International		154,853
	2,293	Energy East Corp.		63,929
	1,277	Entergy Corp.		153,074
	3,590	Exelon Corp.		297,181
	2,547	FirstEnergy Corp.		177,526
	2,521	FPL Group, Inc.		172,487
	1,045	Great Plains Energy, Inc.		31,183
	972	Hawaiian Electric Industries, Inc.		22,550
	569	IDACORP, Inc.		19,852
	521	Integrys Energy Group, Inc.		28,035
	2,019	Mirant Corp.*		85,525
	1,617	Northeast Utilities		49,852
	343	NorthWestern Corp.		9,460
	818	NRG Energy, Inc.*		37,350
	1,117	NSTAR		39,274
	2,341	Pepco Holdings, Inc.		66,695
	2,978	PG&E Corp.		145,714
	1,161	Pinnacle West Capital Corp.		46,904
	659	PNM Resources, Inc.		16,482
	1,305	Portland General Electric Co.		36,736
	2,184	PPL Corp.		112,913
	3,199	Progress Energy, Inc.		153,552
	1,979	Public Service Enterprise Group, Inc.		189,192
	1,408	Puget Energy, Inc.		39,776
	28,564	Reliant Energy, Inc.*		786,082
	1,199	SCANA Corp.		48,667
	1,401	Sierra Pacific Resources		23,635
	7,045	Southern Co.		258,270
	2,611	TECO Energy, Inc.		43,943
	351	UIL Holdings Corp.		12,348
	344	Unisource Energy Corp.		10,912
	1,006	Westar Energy, Inc.		26,780
	956	Wisconsin Energy Corp.		45,773

Number of Shares			Value
		Common Stocks (Continued)
	5,531	Xcel Energy, Inc.	$	124,724
				5,085,551
		Gas—6.6%
	582	AGL Resources, Inc.		23,006
	849	Atmos Energy Corp.		23,814
	279	Energen Corp.		17,856
	279	New Jersey Resources Corp.		13,741
	526	Nicor, Inc.		22,760
	3,893	NiSource, Inc.		79,612
	651	Piedmont Natural Gas Co., Inc.		16,620
	1,624	Sempra Energy		99,893
	670	Southern Union Co.		21,105
	386	Southwest Gas Corp.		11,487
	956	UGI Corp.		25,449
	841	Vectren Corp.		23,582
	635	WGL Holdings, Inc.		21,539
				400,464
		Pipelines—6.6%
	424	Equitable Resources, Inc.		23,880
	658	National Fuel Gas Co.		31,906
	902	ONEOK, Inc.		45,046
	647	Questar Corp.		36,931
	4,742	Spectra Energy Corp.		123,197
	3,825	Williams (The) Cos., Inc.		139,574
				400,534
		Water—0.2%
	538	Aqua America, Inc.		12,514
		Total Investments (Cost $5,630,726)—97.7%		5,899,063
		Other assets less liabilities—2.3%		137,176
		Net Assets—100.0%	$	6,036,239

*  Non-income producing security.

See Notes to Financial Statements.
60

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Statements of Assets and Liabilities

PowerShares Exchange-Traded Funds

October 31, 2007 (Unaudited)

	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
ASSETS:
Unaffiliated investments at value	$	131,643,106	$	14,713,912	$	5,516,190	$	10,576,592		$	29,769,157
Affiliated investments at value		458,878		34,763		81,581		32,424			5,457
Cash		904,791		—		—		74,526			17,916
Receivables:
Dividends		72,235		16,150		3,908		2,427			16,594
Expense waivers due from Adviser		2,233		9,800		10,443		9,978			8,491
Investments sold		379,881		—		—		—			—
Other assets		1,052		308		199		139			231
Total Assets		133,462,176		14,774,933		5,612,321		10,696,086			29,817,846
LIABILITIES:
Due to custodian		—		610,750		117,934		—			—
Payables:
Investments purchased		41,365		—		—		658			—
Accrued advisory fees		55,289		5,898		2,279		4,530			12,303
Accrued expenses		43,306		35,692		34,121		33,336			38,228
Total Liabilities		139,960		652,340		154,334		38,524			50,531
NET ASSETS	$	133,322,216	$	14,122,593	$	5,457,987	$	10,657,562		$	29,767,315
NET ASSETS CONSIST OF:
Paid-in capital	$	129,975,723	$	8,426,667	$	3,975,685	$	9,887,880		$	24,545,993
Undistributed net investment income/distributions in excess of net investment income		618,493		31,369		6,680		(933	)		(11,220	)
Accumulated net realized gain on investments		344,965		3,631,547		1,086,731		682,959			1,582,454
Net unrealized appreciation (depreciation) of investments		2,383,035		2,033,010		388,891		87,656			3,650,088
Net Assets	$	133,322,216	$	14,122,593	$	5,457,987	$	10,657,562		$	29,767,315
Shares outstanding (unlimited amount authorized, $0.01 par value)		2,300,000		200,000		100,000		200,000			400,000
Net asset value	$	57.97	$	70.61	$	54.58	$	53.29		$	74.42
Unaffiliated investments at cost	$	129,260,071	$	12,680,902	$	5,127,299	$	10,488,936		$	26,119,069
Affiliated investments at cost	$	458,878	$	34,763	$	81,581	$	32,424		$	5,457

See Notes to Financial Statements.
62

	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
ASSETS:
Unaffiliated investments at value	$	14,601,284		$	16,441,786	$	75,467,513	$	18,946,333	$	5,899,063
Affiliated investments at value		24,483			75,560		74,134		25,090		—
Cash		84,582			—		—		161,282		158,468
Receivables:
Dividends		18,136			17,286		45,422		42,107		6,259
Expense waivers due from Adviser		9,635			9,568		4,999		8,720		9,770
Investments sold		198,489			—		—		20,095		—
Other assets		200			269		503		208		225
Total Assets		14,936,809			16,544,469		75,592,571		19,203,835		6,073,785
LIABILITIES:
Due to custodian		—			48,805		2,007		—		—
Payables:
Investments purchased		197,620			—		—		—		—
Accrued advisory fees		6,351			6,887		30,977		7,858		2,468
Accrued expenses		32,389			37,012		42,709		35,029		35,078
Total Liabilities		236,360			92,704		75,693		42,887		37,546
NET ASSETS	$	14,700,449		$	16,451,765	$	75,516,878	$	19,160,948	$	6,036,239
NET ASSETS CONSIST OF:
Paid-in capital	$	15,337,306		$	14,728,423	$	69,244,639	$	15,610,069	$	4,304,250
Undistributed net investment income/distributions in excess of net investment income		43,919			2,802		110,829		25,125		5,678
Accumulated net realized gain on investments		193,778			1,022,342		966,504		873,340		1,457,974
Net unrealized appreciation (depreciation) of investments		(874,554	)		698,198		5,194,906		2,652,414		268,337
Net Assets	$	14,700,449		$	16,451,765	$	75,516,878	$	19,160,948	$	6,036,239
Shares outstanding (unlimited amount authorized, $0.01 par value)		300,000			300,000		1,200,000		300,000		100,000
Net asset value	$	49.00		$	54.84	$	62.93	$	63.87	$	60.36
Unaffiliated investments at cost	$	15,475,838		$	15,743,588	$	70,272,607	$	16,293,919	$	5,630,726
Affiliated investments at cost	$	24,483		$	75,560	$	74,134	$	25,090	$	—

63

Statements of Operations

Six Months Ended October 31, 2007 (Unaudited)

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	1,040,291		$	237,459		$	80,916		$	44,368		$	140,779
Affiliated dividend income		8,198			2,034			2,486			801			758
Foreign withholding tax		(757	)		—			—			—			—
Total Income		1,047,732			239,493			83,402			45,169			141,537
EXPENSES:
Advisory fees		297,085			47,380			18,017			21,181			52,317
Sub-licensing		59,417			9,476			3,603			4,236			10,463
Administration & Accounting fees		34,457			42,912			42,912			42,912			42,912
Printing		12,255			2,975			1,887			1,354			2,206
Audit		8,319			8,319			8,319			8,319			8,319
Offering costs		7,538			7,581			7,358			7,571			7,717
Listing fee and expenses		7,250			5,684			5,450			5,334			5,518
Custodian & transfer agent fees		4,921			3,437			3,437			3,437			3,437
Trustees		4,687			3,101			2,861			2,831			3,080
Legal		1,553			433			275			197			321
Other expenses		5,207			4,057			4,024			4,006			4,034
Total Expenses		442,689			135,355			98,143			101,378			140,324
Less fees waived:
Advisory		(19,232	)		(47,380	)		(18,017	)		(21,181	)		(52,317	)
Other fees assumed by the Adviser		—			(14,061	)		(47,540	)		(42,974	)		(7,046	)
Net Expenses		423,457			73,914			32,586			37,223			80,961
Net Investment Income		624,275			165,579			50,816			7,946			60,576
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(31,964	)		(176,893	)		(41,296	)		4,085			3,042
In-kind redemptions		804,385			3,785,030			1,178,180			708,214			1,609,567
Net realized gain		772,421			3,608,137			1,136,884			712,299			1,612,609
Net change in unrealized appreciation/depreciation on investments		(550,422	)		(1,326,204	)		(833,596	)		(1,048,022	)		1,528,307
Net realized and unrealized gain (loss) on investments		221,999			2,281,933			303,288			(335,723	)		3,140,916
Net increase (decrease) in net assets resulting from operations	$	846,274		$	2,447,512		$	354,104		$	(327,777	)	$	3,201,492

See Notes to Financial Statements.
64

	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
INVESTMENT INCOME:
Unaffiliated dividend income	$	199,966		$	155,172		$	402,119		$	111,371		$	135,436
Affiliated dividend income		803			2,419			1,641			1,374			723
Foreign withholding tax		(56	)		(654	)		—			—			—
Total Income		200,713			156,937			403,760			112,745			136,159
EXPENSES:
Advisory fees		34,084			36,335			125,153			36,570			22,642
Sub-licensing		6,817			7,267			25,031			7,314			4,528
Administration & Accounting fees		42,912			42,912			42,912			34,457			34,457
Printing		1,264			2,554			4,694			1,966			2,137
Audit		8,319			8,319			8,319			8,319			8,319
Offering costs		7,583			7,510			7,618			7,593			7,518
Listing fee and expenses		5,315			5,594			6,055			5,467			5,504
Custodian & transfer agent fees		3,437			3,437			3,545			3,546			3,437
Trustees		2,889			2,987			3,427			2,965			2,899
Legal		184			372			684			286			312
Other expenses		4,024			4,045			4,505			4,173			4,032
Total Expenses		116,828			121,332			231,943			112,656			95,785
Less fees waived:
Advisory		(34,084	)		(36,335	)		(49,102	)		(36,570	)		(22,641	)
Other fees assumed by the Adviser		(27,443	)		(26,618	)		—			(17,294	)		(33,928	)
Net Expenses		55,301			58,379			182,841			58,792			39,216
Net Investment Income		145,412			98,558			220,919			53,953			96,943
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments		(239,176	)		(116,848	)		(152,271	)		30,551			(57,559	)
In-kind redemptions		456,523			1,187,433			1,158,962			912,826			1,522,292
Net realized gain		217,347			1,070,585			1,006,691			943,377			1,464,733
Net change in unrealized appreciation/depreciation on investments		(1,576,498	)		(806,426	)		2,289,158			1,455,842			(1,978,923	)
Net realized and unrealized gain (loss) on investments		(1,359,151	)		264,159			3,295,849			2,399,219			(514,190	)
Net increase (decrease) in net assets resulting from operations	$	(1,213,739	)	$	362,717		$	3,516,768		$	2,453,172		$	(417,247	)

65

Statements of Changes in Net Assets

	PowerShares FTSE RAFI US 1500 Small-Mid Portfolio						PowerShares FTSE RAFI Basic Materials Sector Portfolio						PowerShares FTSE RAFI Consumer Goods Sector Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	624,275		$	220,625		$	165,579		$	302,713		$	50,816		$	187,607
Net realized gain on investments		772,421			1,884,437			3,608,137			1,794,601			1,136,884			519,025
Net change in unrealized appreciation/ depreciation of investments		(550,422	)		2,933,457			(1,326,204	)		3,359,214			(833,596	)		1,222,487
Net increase (decrease) in net assets resulting from operations		846,274			5,038,519			2,447,512			5,456,528			354,104			1,929,119
Undistributed net investment income (loss) included in the price of units issued and redeemed		146,754			40,491			11,302			(71,185	)		(53,342	)		(23,621	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(264,216	)		(107,528	)		(246,510	)		(203,385	)		(79,449	)		(98,952	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		69,622,031			102,455,043			19,828,656			42,703,830			10,751,881			29,685,007
Value of shares repurchased		(22,561,749	)		(21,706,158	)		(32,989,055	)		(22,874,983	)		(21,755,460	)		(15,328,263	)
Net income equalization		(146,754	)		(40,491	)		(11,302	)		71,185			53,342			23,621
Net increase (decrease) in net assets resulting from shares transactions		46,913,528			80,708,394			(13,171,701	)		19,900,032			(10,950,237	)		14,380,365
Increase (Decrease) in Net Assets		47,642,340			85,679,876			(10,959,397	)		25,081,990			(10,728,924	)		16,186,911
NET ASSETS:
Beginning of period		85,679,876			—			25,081,990			—			16,186,911			—
End of period	$	133,322,216		$	85,679,876		$	14,122,593		$	25,081,990		$	5,457,987		$	16,186,911
Undistributed net investment income/distributions in excess of net investment income at end of period	$	618,493		$	111,680		$	31,369		$	100,998		$	6,680		$	88,655
CHANGES IN SHARES OUTSTANDING:
Shares sold		1,200,000			1,900,000			300,000			800,000			200,000			600,000
Shares repurchased		(400,000	)		(400,000	)		(500,000	)		(400,000	)		(400,000	)		(300,000	)
Shares outstanding, beginning of period		1,500,000			—			400,000			—			300,000			—
Shares outstanding, end of period		2,300,000			1,500,000			200,000			400,000			100,000			300,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
66

	PowerShares FTSE RAFI Consumer Services Sector Portfolio						PowerShares FTSE RAFI Energy Sector Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the period September 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the period September 20, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	7,946		$	26,344		$	60,576		$	107,604
Net realized gain on investments		712,299			1,181,150			1,612,609			3,367,103
Net change in unrealized appreciation/ depreciation of investments		(1,048,022	)		1,135,678			1,528,307			2,121,781
Net increase (decrease) in net assets resulting from operations		(327,777	)		2,343,172			3,201,492			5,596,488
Undistributed net investment income (loss) included in the price of units issued and redeemed		(6,931	)		1,129			9,724			(15,535	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(9,726	)		(18,566	)		(95,949	)		(93,175	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		16,524,431			30,486,275			35,371,900			47,515,291
Value of shares repurchased		(16,906,931	)		(21,433,316	)		(27,497,635	)		(34,231,097	)
Net income equalization		6,931			(1,129	)		(9,724	)		15,535
Net increase (decrease) in net assets resulting from shares transactions		(375,569	)		9,051,830			7,864,541			13,299,729
Increase (Decrease) in Net Assets		(720,003	)		11,377,565			10,979,808			18,787,507
NET ASSETS:
Beginning of period		11,377,565			—			18,787,507			—
End of period	$	10,657,562		$	11,377,565		$	29,767,315		$	18,787,507
Undistributed net investment income/distributions in excess of net investment income at end of period	$	(933	)	$	7,778		$	(11,220	)	$	14,429
CHANGES IN SHARES OUTSTANDING:
Shares sold		300,000			600,000			500,000			900,000
Shares repurchased		(300,000	)		(400,000	)		(400,000	)		(600,000	)
Shares outstanding, beginning of period		200,000			—			300,000			—
Shares outstanding, end of period		200,000			200,000			400,000			300,000

67

Statements of Changes in Net Assets (Continued)

	PowerShares FTSE RAFI Financials Sector Portfolio						PowerShares FTSE RAFI Health Care Sector Portfolio						PowerShares FTSE RAFI Industrials Sector Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	145,412		$	143,324		$	98,558		$	204,380		$	220,919		$	214,250
Net realized gain on investments		217,347			807,406			1,070,585			524,455			1,006,691			2,066,518
Net change in unrealized appreciation/ depreciation of investments		(1,576,498	)		701,944			(806,426	)		1,504,624			2,289,158			2,905,748
Net increase (decrease) in net assets resulting from operations		(1,213,739	)		1,652,674			362,717			2,233,459			3,516,768			5,186,516
Undistributed net investment income (loss) included in the price of units issued and redeemed		(19,504	)		(25,026	)		(6,792	)		(4,231	)		60,989			8,755
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(142,060	)		(83,164	)		(104,749	)		(188,595	)		(177,063	)		(208,432	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		10,720,622			41,076,550			16,273,363			45,224,207			49,593,398			68,623,129
Value of shares repurchased		(10,983,334	)		(26,327,100	)		(21,982,352	)		(25,366,285	)		(18,344,124	)		(32,673,314	)
Net income equalization		19,504			25,026			6,792			4,231			(60,989	)		(8,755	)
Net increase (decrease) in net assets resulting from shares transactions		(243,208	)		14,774,476			(5,702,197	)		19,862,153			31,188,285			35,941,060
Increase (Decrease) in Net Assets		(1,618,511	)		16,318,960			(5,451,021	)		21,902,786			34,588,979			40,927,899
NET ASSETS:
Beginning of period		16,318,960			—			21,902,786			—			40,927,899			—
End of period	$	14,700,449		$	16,318,960		$	16,451,765		$	21,902,786		$	75,516,878		$	40,927,899
Undistributed net investment income at end of period	$	43,919		$	60,071		$	2,802		$	15,785		$	110,829		$	5,984
CHANGES IN SHARES OUTSTANDING:
Shares sold		200,000			800,000			300,000			900,000			800,000			1,300,000
Shares repurchased		(200,000	)		(500,000	)		(400,000	)		(500,000	)		(300,000	)		(600,000	)
Shares outstanding, beginning of period		300,000			—			400,000			—			700,000			—
Shares outstanding, end of period		300,000			300,000			300,000			400,000			1,200,000			700,000

*  Commencement of Investment Operations.

See Notes to Financial Statements.
68

	PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio						PowerShares FTSE RAFI Utilities Sector Portfolio
	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007			Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
OPERATIONS:
Net investment income	$	53,953		$	133,344		$	96,943		$	300,932
Net realized gain on investments		943,377			1,535,580			1,464,733			1,460,332
Net change in unrealized appreciation/ depreciation of investments		1,455,842			1,196,572			(1,978,923	)		2,247,260
Net increase (decrease) in net assets resulting from operations		2,453,172			2,865,496			(417,247	)		4,008,524
Undistributed net investment income (loss) included in the price of units issued and redeemed		(4,076	)		(11,299	)		10,076			(61,710	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(59,652	)		(98,444	)		(194,141	)		(208,132	)
SHAREHOLDER TRANSACTIONS:
Proceeds from shares sold		23,577,926			41,066,412			5,875,886			47,129,478
Value of shares repurchased		(23,758,698	)		(26,885,264	)		(17,566,526	)		(32,591,603	)
Net income equalization		4,076			11,299			(10,076	)		61,710
Net increase (decrease) in net assets resulting from shares transactions		(176,696	)		14,192,447			(11,700,716	)		14,599,585
Increase (Decrease) in Net Assets		2,212,748			16,948,200			(12,302,028	)		18,338,267
NET ASSETS:
Beginning of period		16,948,200			—			18,338,267			—
End of period	$	19,160,948		$	16,948,200		$	6,036,239		$	18,338,267
Undistributed net investment income at end of period	$	25,125		$	34,900		$	5,678		$	92,800
CHANGES IN SHARES OUTSTANDING:
Shares sold		400,000			800,000			100,000			900,000
Shares repurchased		(400,000	)		(500,000	)		(300,000	)		(600,000	)
Shares outstanding, beginning of period		300,000			—			300,000			—
Shares outstanding, end of period		300,000			300,000			100,000			300,000

69

Financial Highlights

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	57.12		$	50.52
Net investment income**		0.31			0.27
Net realized and unrealized gain on investments		0.60			6.45
Total from operations		0.91			6.72
Undistributed net investment income included in price of units issued and redeemed**		0.07			0.05
Distributions to shareholders from:
Net investment income		(0.13	)		(0.17	)
Net asset value at end of period	$	57.97		$	57.12
TOTAL RETURN***		1.71	%		13.42	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	133,322		$	85,680
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.71	%†		0.73	%†
Expenses, prior to waivers and reimbursements		0.75	%†(a)		0.92	%†
Net investment income, net of waivers and reimbursements		1.05	%†		0.83	%†
Portfolio turnover rate ††		3	%		9	%

PowerShares FTSE RAFI Basic Materials Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	62.70		$	50.27
Net investment income**		0.55			0.78
Net realized and unrealized gain on investments		8.14			12.49
Total from operations		8.69			13.27
Undistributed net investment income (loss) included in price of units issued and redeemed**		0.04			(0.18	)
Distributions to shareholders from:
Net investment income		(0.82	)		(0.66	)
Net asset value at end of period	$	70.61		$	62.70
TOTAL RETURN***		14.01	%		26.17	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	14,123		$	25,082
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.78	%†		0.76	%†
Expenses, prior to waivers and reimbursements		1.43	%†(b)		1.18	%†
Net investment income, net of waivers and reimbursements		1.75	%†		2.23	%†
Portfolio turnover rate ††		12	%		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.

(a)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007.

See Notes to Financial Statements.
70

Financial Highlights (Continued)

PowerShares FTSE RAFI Consumer Goods Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	53.96		$	49.03
Net investment income**		0.40			0.54
Net realized and unrealized gain on investments		1.42			4.79
Total from operations		1.82			5.33
Undistributed net investment loss included in price of units issued and redeemed**		(0.41	)		(0.07	)
Distributions to shareholders from:
Net investment income		(0.79	)		(0.33	)
Net asset value at end of period	$	54.58		$	53.96
TOTAL RETURN***		2.64	%		10.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	5,458		$	16,187
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.90	%†		0.76	%†
Expenses, prior to waivers and reimbursements		2.72	%†(a)		1.27	%†
Net investment income, net of waivers and reimbursements		1.41	%†		1.67	%†
Portfolio turnover rate ††		1	%		1	%

PowerShares FTSE RAFI Consumer Services Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	56.89		$	50.53
Net investment income**		0.05			0.10
Net realized and unrealized gain (loss) on investments		(3.53	)		6.35
Total from operations		(3.48	)		6.45
Undistributed net investment income (loss) included in price of units issued and redeemed**		(0.04	)		—	(b)
Distributions to shareholders from:
Net investment income		(0.08	)		(0.09	)
Net asset value at end of period	$	53.29		$	56.89
TOTAL RETURN***		(6.19	)%		12.78	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	10,658		$	11,378
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.88	%†		0.77	%†
Expenses, prior to waivers and reimbursements		2.39	%†(c)		1.40	%†
Net investment income, net of waivers and reimbursements		0.19	%†		0.28	%†
Portfolio turnover rate ††		3	%		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)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.04% for the six months ended October 31, 2007.

(b)  Amount represents less than $0.01.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.03% for the six months ended October 31, 2007.

See Notes to Financial Statements.
71

Financial Highlights (Continued)

PowerShares FTSE RAFI Energy Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	62.63		$	49.16
Net investment income**		0.20			0.23
Net realized and unrealized gain on investments		11.88			13.48
Total from operations		12.08			13.71
Undistributed net investment income (loss) included in price of units issued and redeemed**		0.03			(0.03	)
Distributions to shareholders from:
Net investment income		(0.32	)		(0.21	)
Net asset value at end of period	$	74.42		$	62.63
TOTAL RETURN***		19.36	%		27.86	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	29,767		$	18,788
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.77	%†		0.74	%†
Expenses, prior to waivers and reimbursements		1.34	%†(a)		1.09	%†
Net investment income, net of waivers and reimbursements		0.58	%†		0.66	%†
Portfolio turnover rate ††		0	%(b)		1	%

PowerShares FTSE RAFI Financials Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	54.40		$	50.47
Net investment income**		0.54			0.52
Net realized and unrealized gain (loss) on investments		(5.28	)		3.92
Total from operations		(4.74	)		4.44
Undistributed net investment loss included in price of units issued and redeemed**		(0.07	)		(0.09	)
Distributions to shareholders from:
Net investment income		(0.59	)		(0.42	)
Net asset value at end of period	$	49.00		$	54.40
TOTAL RETURN***		(8.92	)%		8.62	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	14,700		$	16,319
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.81	%†		0.78	%†
Expenses, prior to waivers and reimbursements		1.71	%†(c)		1.44	%†
Net investment income, net of waivers and reimbursements		2.13	%†		1.65	%†
Portfolio turnover rate ††		8	%		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.

(a)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

(b)  Amount represents less than 1%.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007.

See Notes to Financial Statements.
72

Financial Highlights (Continued)

PowerShares FTSE RAFI Health Care Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	54.76		$	50.44
Net investment income**		0.34			0.42
Net realized and unrealized gain on investments		0.20			4.29
Total from operations		0.54			4.71
Undistributed net investment loss included in price of units issued and redeemed**		(0.02	)		(0.01	)
Distributions to shareholders from:
Net investment income		(0.44	)		(0.38	)
Net asset value at end of period	$	54.84		$	54.76
TOTAL RETURN***		0.98	%		9.38	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	16,452		$	21,903
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.80	%†		0.75	%†
Expenses, prior to waivers and reimbursements		1.67	%†(a)		1.11	%†
Net investment income, net of waivers and reimbursements		1.36	%†		1.33	%†
Portfolio turnover rate ††		2	%		5	%

PowerShares FTSE RAFI Industrials Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	58.47		$	50.27
Net investment income**		0.26			0.36
Net realized and unrealized gain on investments		4.34			8.15
Total from operations		4.60			8.51
Undistributed net investment income included in price of units issued and redeemed**		0.07			0.02
Distributions to shareholders from:
Net investment income		(0.21	)		(0.33	)
Net asset value at end of period	$	62.93		$	58.47
TOTAL RETURN***		8.00	%		17.01	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	75,517		$	40,928
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.73	%†		0.73	%†
Expenses, prior to waivers and reimbursements		0.93	%†(b)		1.00	%†
Net investment income, net of waivers and reimbursements		0.88	%†		1.05	%†
Portfolio turnover rate ††		8	%		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.

(a)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.02% for the six months ended October 31, 2007.

(b)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.01% for the six months ended October 31, 2007.

See Notes to Financial Statements.
73

Financial Highlights (Continued)

PowerShares FTSE RAFI Telecommunications & Technology Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	56.49		$	50.60
Net investment income**		0.21			0.32
Net realized and unrealized gain on investments		7.45			5.85
Total from operations		7.66			6.17
Undistributed net investment loss included in price of units issued and redeemed**		(0.02	)		(0.03	)
Distributions to shareholders from:
Net investment income		(0.26	)		(0.25	)
Net asset value at end of period	$	63.87		$	56.49
TOTAL RETURN***		13.55	%		12.15	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	19,161		$	16,948
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.80	%†		0.75	%†
Expenses, prior to waivers and reimbursements		1.54	%†(a)		1.17	%†
Net investment income, net of waivers and reimbursements		0.74	%†		0.97	%†
Portfolio turnover rate ††		0	%(b)		4	%

PowerShares FTSE RAFI Utilities Sector Portfolio

	Six Months Ended October 31, 2007 (Unaudited)			For the Period September 20, 2006* Through April 30, 2007
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period	$	61.13		$	49.93
Net investment income**		0.62			0.78
Net realized and unrealized gain (loss) on investments		(0.18	)		11.23
Total from operations		0.44			12.01
Undistributed net investment income (loss) included in price of units issued and redeemed**		0.06			(0.16	)
Distributions to shareholders from:
Net investment income		(1.27	)		(0.65	)
Net asset value at end of period	$	60.36		$	61.13
TOTAL RETURN***		0.90	%		23.87	%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's omitted)	$	6,036		$	18,338
Ratio to average net assets of:
Expenses, net of waivers and reimbursements		0.87	%†		0.75	%†
Expenses, prior to waivers and reimbursements		2.12	%†(c)		1.19	%†
Net investment income, net of waivers and reimbursements		2.14	%†		2.32	%†
Portfolio turnover rate ††		1	%		0	%(b)

*  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)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.04% for the six months ended October 31, 2007.

(b)  Amount represents less than 1%.

(c)  These expenses, prior to waivers, exclude amounts reimbursed to the Adviser under the Expense Agreement of 0.07% for the six months ended October 31, 2007.

See Notes to Financial Statements.
74

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

Note 1. Organization

PowerShares Exchange-Traded Fund Trust (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), is an exchange-traded, management investment company that was organized as a Massachusetts business trust on June 9, 2000. The Trust currently consists of 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"

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

75

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.

The financial statements have been prepared in compliance with all applicable accounting rules and practices, including FIN 48.

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.

76

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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.

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, sub-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 Exchange Commission and state registration fees; and (c) initial fees paid to be listed on an exchange.

For the six months ended October 31, 2007, the Adviser waived and assumed the following fees and expenses:

	Fees Waived		Expenses Assumed
FTSE RAFI US 1500 Small-Mid Portfolio	$	19,232	$	—
FTSE RAFI Basic Materials Portfolio		47,380		14,061
FTSE RAFI Consumer Goods Sector Portfolio		18,017		47,540
FTSE RAFI Consumer Services Sector Portfolio		21,181		42,974
FTSE RAFI Energy Sector Portfolio		52,317		7,046
FTSE RAFI Financials Sector Portfolio		34,084		27,443
FTSE RAFI Health Care Sector Portfolio		36,335		26,618
FTSE RAFI Industrials Sector Portfolio		49,102		—
FTSE RAFI Telecommunications & Technology Sector Portfolio		36,570		17,294
FTSE RAFI Utilities Sector Portfolio		22,641		33,928

77

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 six months ended October 31, 2007, details of expense waivers and reimbursments to the Adviser under the Expense Agreement was as follows:

	Gross Waivers			Gross Reimbusements		Net (Waivers)/ Reimbursements
FTSE RAFI US 1500 Small-Mid Portfolio	$	(22,301	)	$	3,069	$	(19,232	)
FTSE RAFI Basic Materials Portfolio		(63,087	)		1,646		(61,441	)
FTSE RAFI Consumer Goods Sector Portfolio		(66,897	)		1,340		(65,557	)
FTSE RAFI Consumer Services Sector Portfolio		(65,471	)		1,316		(64,155	)
FTSE RAFI Energy Sector Portfolio		(60,690	)		1,327		(59,363	)
FTSE RAFI Financials Sector Portfolio		(62,859	)		1,332		(61,527	)
FTSE RAFI Health Care Sector Portfolio		(64,270	)		1,317		(62,953	)
FTSE RAFI Industrials Sector Portfolio		(50,463	)		1,361		(49,102	)
FTSE RAFI Telecommunications & Technology Sector Portfolio		(56,819	)		2,955		(53,864	)
FTSE RAFI Utilities Sector Portfolio		(59,527	)		2,958		(56,569	)

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

Theamounts subject to reimbursement to the Adviser at October 31, 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	$	70,499	$	70,499	$	70,499
FTSE RAFI Basic Materials Sector Portfolio		117,429		117,429		117,429
FTSE RAFI Consumer Goods Sector Portfolio		122,714		122,714		122,714
FTSE RAFI Consumer Services Sector Portfolio		122,065		122,065		122,065
FTSE RAFI Energy Sector Portfolio		116,312		116,312		116,312
FTSE RAFI Financials Sector Portfolio		118,520		118,520		118,520
FTSE RAFI Health Care Sector Portfolio		119,609		119,609		119,609
FTSE RAFI Industrials Sector Portfolio		103,356		103,356		103,356
FTSE RAFI Telecommunications & Technology Sector Portfolio		110,795		110,795		110,795
FTSE RAFI Utilities Sector Portfolio		113,573		113,573		113,573

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

78

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 Agreement

The Adviser has entered into a licensing agreement 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 sub-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. Effective July 2, 2007, The Bank of New York became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

The custodian has agreed to provide an overdraft protection to the Funds according to the terms of the service agreement.

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.

Note 5. Federal Income Tax

At October 31, 2007, the cost of investments for Federal income tax purposes and accumulated net unrealized appreciation/depreciation on investments were as follows:

	Cost		Unrealized Appreciation/ Depreciation			Gross Unrealized Appreciation		Gross Unrealized Depreciation
FTSE RAFI US 1500 Small-Mid Portfolio	$	129,718,949	$	2,383,035		$	14,050,244	$	(11,667,209	)
FTSE RAFI Basic Materials Sector Portfolio		12,715,665		2,033,010			2,215,139		(182,129	)
FTSE RAFI Consumer Goods Sector Portfolio		5,208,880		388,891			629,798		(240,907	)
FTSE RAFI Consumer Services Sector Portfolio		10,521,360		87,656			681,534		(593,878	)
FTSE RAFI Energy Sector Portfolio		26,124,526		3,650,088			3,711,091		(61,003	)
FTSE RAFI Financials Sector Portfolio		15,500,321		(874,554	)		552,857		(1,427,411	)
FTSE RAFI Health Care Sector Portfolio		15,819,148		698,198			1,253,272		(555,074	)
FTSE RAFI Industrials Sector Portfolio		70,346,741		5,194,906			5,932,320		(737,414	)
FTSE RAFI Telecommunications & Technology Sector Portfolio		16,319,009		2,652,414			2,996,551		(344,137	)
FTSE RAFI Utilities Sector Portfolio		5,630,726		268,337			364,316		(95,979	)

79

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

80

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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

81

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

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 six months ended October 31, 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	$	2,946,038	$	10,424,410
FTSE RAFI Basic Materials Sector Portfolio		2,527,435		2,311,668
FTSE RAFI Consumer Goods Sector Portfolio		50,338		273,549
FTSE RAFI Consumer Services Sector Portfolio		253,228		494,777
FTSE RAFI Energy Sector Portfolio		63,883		1,170,734
FTSE RAFI Financials Sector Portfolio		1,093,958		2,214,265
FTSE RAFI Health Care Sector Portfolio		250,231		2,985,663
FTSE RAFI Industrials Sector Portfolio		4,172,612		3,943,987
FTSE RAFI Telecommunications & Technology Sector Portfolio		65,403		274,041
FTSE RAFI Utilities Sector Portfolio		87,323		1,448,052

For the six months ended October 31, 2007 in-kind transactions were as follows:

	Purchases		Sales
FTSE RAFI US 1500 Small-Mid Portfolio	$	61,342,637	$	7,496,343
FTSE RAFI Basic Materials Sector Portfolio		5,834,211		18,153,538
FTSE RAFI Consumer Goods Sector Portfolio		1,335,074		12,018,157
FTSE RAFI Consumer Services Sector Portfolio		6,060,730		6,210,661
FTSE RAFI Energy Sector Portfolio		17,843,474		8,934,125
FTSE RAFI Financials Sector Portfolio		5,728,627		4,695,974
FTSE RAFI Health Care Sector Portfolio		6,969,804		9,881,654
FTSE RAFI Industrials Sector Portfolio		39,093,817		7,732,488
FTSE RAFI Telecommunications & Technology Sector Portfolio		6,386,155		6,601,811
FTSE RAFI Utilities Sector Portfolio		1,739,519		12,210,689

82

Notes to Financial Statements (Continued)

PowerShares Exchange-Traded Fund Trust

October 31, 2007 (Unaudited)

There were no purchases or sales of U.S. government or government agency obligations for the six months ended October 31, 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.

The Trust has adopted a deferred compensation plan (the "Plan"). Under the Plan, a trustee who is not an "interested person" (as defined in the 1940 Act) and has elected to participate in the Plan (a "participating trustee") may defer receipt of all or a portion of his compensation ("Deferral Fees") from the Trust. The Deferral Fees payable to the participating trustee is credited to the trustee's Deferral Fee Account as of the first business dates of each calendar quarter such Fees would have been paid to the participating trustee. The value of the account increases with contributions to the account or with increases in the value of the shares owned, and the value of the account decreases with withdrawals from the account or with declines in the value of the shares owned.

Note 8. Capital

Shares are created and redeemed by the Trust only in Creation Unit size aggregations of 100,000. Only authorized participants are permitted to create or redeem from the Funds. 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 Pronouncement

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.

83

Supplemental Information (Unaudited)

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 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
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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

84

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
Marc M. Kole (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	Assistant Vice President, Controller, Priority Health (September 2005-present); formerly, Interim CFO, Priority Health (July 2006-February 2007); 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)		89	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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

85

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustee	Position 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
Philip M. Nussbaum (46) 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)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

86

Supplemental Information (Unaudited) (Continued)

Trustees and Officers (Continued)

Name, Address and Age of Independent Trustee	Position 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
Donald H. Wilson (47) c/o PowerShares Capital Management LLC 301 W. Roosevelt Road Wheaton, IL 60187	Trustee	Since 2006	President and Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (August 2007-Present), Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (February 2006- August 2007); formerly, Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (May 1995- February 2006)		89	None

  *  This is the date the Trustee began serving 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 19 Portfolios advised by the Adviser.

87

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)		89	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 19 Portfolios advised by the Adviser.

88

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 (53) 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 (42) 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 (45) 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.

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 (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 Semi-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.

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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  

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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

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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

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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.

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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.

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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.

SEMI-ANNUAL REPORT

The financial statements contained herein have been created from the respective Fund's books and records without any involvement of the fund's independent registered public accounting firm.

There are risks involved in investing in ETFs, including possible loss of money. Investing in securities of small and medium sized companies involves greater risk than is customarily associated with investing in more established companies, and investments in concentrated industry sectors involve greater risks than investments that are more diversified. PowerShares 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-SAR-6

Item 2. Code of Ethics.

Not required for a semi-annual period.

Item 3. Audit Committee Financial Expert.

Not required for a semi-annual period.

Item 4. Principal Accountant Fees and Services.

Not required for a semi-annual period.

Item 5. Audit Committee of Listed Registrants.

Not required for a semi-annual period.

Items 6. Schedule of Investments.

The 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 material 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 first 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)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.

PowerShares Exchange-Traded Fund Trust

By:	/s/ H. Bruce Bond
Name:		H. Bruce Bond
Title:		Chairman and Chief Executive Officer
Date:		December 31, 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:		December 31, 2007

By:	/s/ Bruce T. Duncan
Name:		Bruce T. Duncan
Title:		Chief Financial Officer
Date:		December 31, 2007