N-CSR 1 d137263dncsr.htm N-CSR N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number           811-21977            

                    PowerShares Exchange-Traded Fund Trust II                        

  (Exact name of registrant as specified in charter)

3500 Lacey Road

                             Downers Grove, IL 60515                            

(Address of principal executive offices) (Zip code)

Andrew Schlossberg

President

3500 Lacey Road

                             Downers Grove, IL 60515                            

(Name and address of agent for service)

Registrant’s telephone number, including area code: 800-983-0903

Date of fiscal year end: October 31

Date of reporting period: October 31, 2015

Item 1. Reports to Stockholders.

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

LOGO

 

     October 31, 2015

2015 Annual Report to Shareholders

 

FXEP    PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio
PIZ    PowerShares DWA Developed Markets Momentum Portfolio
PIE    PowerShares DWA Emerging Markets Momentum Portfolio
PXR    PowerShares Emerging Markets Infrastructure Portfolio
FXEU    PowerShares Europe Currency Hedged Low Volatility Portfolio
PAF    PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio
PXF    PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio
PDN    PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio
PXH    PowerShares FTSE RAFI Emerging Markets Portfolio
PAGG    PowerShares Global Agriculture Portfolio
PBD    PowerShares Global Clean Energy Portfolio
PSAU    PowerShares Global Gold and Precious Metals Portfolio
PIO    PowerShares Global Water Portfolio
IPKW    PowerShares International BuyBack AchieversTM Portfolio
FXJP    PowerShares Japan Currency Hedged Low Volatility Portfolio
IDHQ    PowerShares S&P International Developed High Quality Portfolio

 

LOGO

 

Table of Contents

 

The Market Environment      3   
Manager’s Analysis      4   
International Portfolios   
Schedules of Investments   

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP)

   

 

36

  

PowerShares DWA Developed Markets Momentum Portfolio (PIZ)

      39   

PowerShares DWA Emerging Markets Momentum Portfolio (PIE)

      41   

PowerShares Emerging Markets Infrastructure Portfolio (PXR)

      43   

PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)

      45   

PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)

      47   

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)

      49   

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)

      59   

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)

      74   

PowerShares Global Agriculture Portfolio (PAGG)

      78   

PowerShares Global Clean Energy Portfolio (PBD)

      80   

PowerShares Global Gold and Precious Metals Portfolio (PSAU)

      82   

PowerShares Global Water Portfolio (PIO)

      83   

PowerShares International BuyBack AchieversTM Portfolio (IPKW)

      84   

PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP)

      85   

PowerShares S&P International Developed High Quality Portfolio (IDHQ)

      87   
Statements of Assets and Liabilities      92   
Statements of Operations      96   
Statements of Changes in Net Assets      100   
Financial Highlights      106   
Notes to Financial Statements      114   
Report of Independent Registered Public Accounting Firm      131   
Fees and Expenses      132   
Tax Information      134   
Trustees and Officers      135   
Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio, PowerShares Europe Currency Hedged Low Volatility Portfolio and PowerShares Japan Currency Hedged Low Volatility Portfolio      140   

 

 

   2  

 

 

The Market Environment

 

 

 

US Equity

The US economy improved slowly, but steadily, during the fiscal year ended October 31, 2015—although the health of individual economic sectors varied dramatically. The headline story was the continued slowdown in energy markets, as oil prices plummeted when too much supply overwhelmed slowing global demand. However, the more subtle story, which drove the economy forward during the fiscal year, was the improved position of the US consumer.

As the reporting period began in late 2014, economic growth appeared to be stronger in the US than in the rest of the world. US equity markets were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US. The continued strengthening of the US consumer led US equity markets higher through the spring. Continued low interest rates, the increasing availability of credit from lenders and an improving employment picture all contributed to higher consumer confidence. This strength also helped the markets overcome fears that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. In the summer of 2015, however, US equity markets moved sharply lower. A significant downturn in China’s financial markets and weak global economic growth led the US Federal Reserve to delay raising interest rates, which, in turn, increased investor uncertainty and market volatility. In October, however, US markets rallied, recovering from their earlier decline and finishing higher for the fiscal year.

Global Equity

International markets experienced increased volatility during the fiscal year ended October 31, 2015, driven largely by the continued slowdown in energy markets and the economic downturn in China. Developed markets were generally able to withstand these headwinds, even as more fragile emerging markets began to falter.

As the reporting period began in late 2014, international equity markets moved higher, although economic growth appeared to be somewhat stronger in the US than in the rest of the world. Equity markets globally were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US.

Global markets were rattled again amid growing concerns that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. However, those fears subsided when a bailout was ultimately approved. The eurozone also benefited

from generally positive economic data, which helped markets weather subsequent economic volatility.

In the summer of 2015, fears of a potential economic slowdown in China dominated headlines. The combination of a slowing Chinese economy, a sharp sell-off in domestic Chinese equities and the devaluation of China’s currency, the renminbi, contributed to a strong correction in global equity markets. Emerging markets, in particular, were hard hit by events in China and by continued weak commodity prices—as well as by the US Federal Reserve’s decision to delay raising interest rates, which increased investor uncertainty and market volatility.

 

 

 

   3  

 

 

 

FXEP    Manager’s Analysis
   PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP)

 

As an index fund, the PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P EPAC Ex Korea Low Volatility USD Hedged Index (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Index measures the performance of the 200 least volatile stocks in the S&P EPAC Ex-Korea LargeMidCap Index, while also employing a currency-hedged strategy to mitigate exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries in which the component securities of the Index are domiciled. From the constituents of the S&P EPAC Ex-Korea LargeMidCap Index, the Index Provider selects securities with the least volatility over the past 12 months for inclusion in the Index, with the least volatile stocks receiving the greatest weights. To hedge against exchange rate fluctuations, the Fund also will invest in foreign currency forward contracts to “lock in” the contract’s agreed-upon exchange rates. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

The Fund commenced investment operations on October 6, 2015 and began trading on October 9, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 2.20%. On a net asset value (“NAV”) basis, the Fund returned 2.47%. During the same time period, the Index returned 2.49%. During the fiscal period, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI EAFE® Index (Net) (the “Benchmark Index”) returned 2.18%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 910 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of stocks of Europe, Australasia and the Far East.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the health care sector during the fiscal period ended October 31, 2015.

For the fiscal period ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the utilities and information technology sectors,

respectively. The financials sector detracted most significantly from the Fund’s return, followed by the telecommunication services and materials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Direct Line Insurance Group PLC, a financials company (portfolio average weight of 0.53%), and HK Electric Investments & HK Electric Investments Ltd., a utilities company (portfolio average weight of 0.84%). Positions that detracted most significantly from the Fund’s return included Sky Network Television Ltd., a consumer discretionary company (portfolio average weight of 0.62%), and Keppel REIT, a financials company (portfolio average weight of 0.77%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      39.3   
Industrials      17.7   
Consumer Discretionary      10.6   
Consumer Staples      9.8   
Utilities      8.6   
Telecommunication Services      4.6   
Health Care      4.2   
Information Technology      2.4   
Materials      2.2   
Energy      0.5   
Money Market Fund Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
MAN SE      1.2   
HK Electric Investments & HK Electric Investments Ltd.      1.0   
Singapore Press Holdings Ltd.      0.9   
StarHub Ltd.      0.7   
McDonald’s Holdings Co. Japan Ltd.      0.7   
CLP Holdings Ltd.      0.7   
Wilmar International Ltd.      0.7   
Kagome Co. Ltd.      0.7   
Hong Kong & China Gas Co. Ltd.      0.7   
Keppel REIT      0.6   
Total      7.9   

 

* Excluding money market fund holdings.
 

 

 

   4  

 

 

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP) (continued)

 

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
S&P EPAC Ex Korea Low Volatility USD Hedged Index (Net)††     2.49 % 
MSCI EAFE® Index (Net)††     2.18   
Fund  
NAV Return     2.47   
Market Price Return     2.20   

 

Fund Inception: October 9, 2015

Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. See invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index

and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   5  

 

 

 

PIZ    Manager’s Analysis
   PowerShares DWA Developed Markets Momentum Portfolio (PIZ)

 

As an index fund, the PowerShares DWA Developed Markets Momentum Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Dorsey Wright® Developed Markets Technical Leaders Index (Net) (the “Index”). The Fund will invest at least 90% of its total assets in equity securities that comprise the Index, which is comprised of equity securities of large capitalization companies based in countries with developed economies excluding the United States. Dorsey Wright & Associates (“Dorsey Wright”), the Index provider, selects such securities pursuant to its proprietary selection methodology, which is designed to identify companies that demonstrate powerful relative strength characteristics. Relative strength characteristics are based upon each company’s market performance. Dorsey Wright selects securities from a universe of approximately 1,000 constituents by market capitalization within the NASDAQ Developed Market Ex-United States Index. The Index provider then ranks the eligible securities by their relative strength score, selects approximately 100 securities with the greatest score for inclusion in the Index and weights each component security based on its relative strength score. Historically, the Index has consisted of securities of companies listed on exchanges in Australia, Canada, Finland, France, Germany, Hong Kong, Italy, Japan, Norway, Portugal, Singapore, Spain, and Switzerland; however, this universe of countries may change in accordance with the Index methodology. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (4.48)%. On a net asset value (“NAV”) basis, the Fund returned (3.63)%. During the same time period, the Index returned (1.96)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to trading costs, slippage around quarterly rebalances, and the fees and expenses that the Fund incurred during the period.

During this same time period, the MSCI EAFE® Index (Net) (the “Benchmark Index”) returned (0.07)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 910 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the equities market in developed countries outside the U.S.

Relative to the Benchmark Index, the Fund was most overweight in the industrials sector and most underweight in the financials sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund

having a significant overweight position in the industrials sector compared to the Benchmark Index, combined with stock selection within the industrials sector.

For the fiscal year ended October 31, 2015, the consumer discretionary sector contributed most significantly to the Fund’s return, followed by the consumer staples and information technology sectors, respectively. The industrials sector detracted most significantly from the Fund’s return, followed by the financials and utilities sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Constellation Software, Inc., an information technology company (portfolio average weight of 2.9%), and Vestas Wind Systems A/S, an industrials company (portfolio average weight of 1.04%). Positions that detracted most significantly from the Fund’s return included Goldin Financial Holdings, Ltd., a financials company (portfolio average weight of 0.77%), and Hanergy Thin Film Power Group Ltd., an information technology company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Consumer Discretionary      21.6   
Health Care      20.1   
Industrials      17.3   
Financials      10.1   
Information Technology      9.6   
Consumer Staples      9.4   
Materials      9.2   
Utilities      2.1   
Telecommunication Services      0.6   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Ramsay Health Care Ltd.      3.0   
ProSiebenSat.1 Media SE      2.7   
Constellation Software, Inc.      2.6   
Hexpol AB, Class B      2.5   
Genmab A/S      2.3   
Rightmove PLC      2.3   
Bollore SA      2.1   
Goldin Financial Holdings Ltd.      2.1   
CSL Ltd.      2.1   
Alimentation Couche-Tard, Inc., Class B      1.9   
Total      23.6   
 

 

 

   6  

 

 

PowerShares DWA Developed Markets Momentum Portfolio (PIZ) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Dorsey Wright® Developed Markets Technical Leaders Index (Net)††     (1.96 )%      9.71 %      32.05 %      5.58 %      31.20 %        1.95 %      16.36 % 
MSCI EAFE® Index (Net)††     (0.07 )      8.02        26.03        4.81        26.47          (0.16 )      (1.21 ) 
Fund                
NAV Return     (3.63 )      8.52        27.81        4.43        24.23          0.88        7.13   
Market Price Return     (4.48 )      8.08        26.26        4.21        22.87          0.72        5.82   

 

Fund Inception: December 28, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.80% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   7  

 

 

 

PIE    Manager’s Analysis
   PowerShares DWA Emerging Markets Momentum Portfolio (PIE)

 

As an index fund, the PowerShares DWA Emerging Markets Momentum Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Dorsey Wright® Emerging Markets Technical Leaders Index (Net) (the “Index”). The Fund will invest at least 90% of its total assets in equity securities from countries with emerging economies within Dorsey Wright & Associates’ (“Dorsey Wright”) classification definition, and that comprise the Index, as well as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be in the securities that comprise the Index rather than in ADRs and GDRs.

The Index is comprised of equity securities that Dorsey Wright selects pursuant to a proprietary selection methodology, which is designed to identify companies that demonstrate powerful relative strength characteristics. Relative strength characteristics are based upon each company’s market performance. Dorsey Wright selects securities from a universe of approximately 1,000 companies that are located in emerging economies, excluding companies listed on a U.S. stock exchange. Historically, the Index has consisted of securities of companies listed on exchanges in Brazil, Chile, China, India, Indonesia, the Philippines, South Africa, Thailand and Turkey; however, this universe of countries may change in accordance with the Index methodology. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (14.50)%. On a net asset value (“NAV”) basis, the Fund returned (14.74)%. During the same time period, the Index returned (13.58)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to trading costs and slippage around quarterly rebalances, and fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI Emerging Markets IndexSM (Net) (the “Benchmark Index”) returned (14.53)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 830 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of emerging market equities.

Relative to the Benchmark Index, the Fund was most overweight in the consumer discretionary sector and most underweight in the financials sector during the fiscal year ended October 31, 2015. The majority of the Fund’s slight underperformance relative to the Benchmark Index during the period can be attributed to fees and operating expenses incurred by the Fund.

For the fiscal year ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the health care and utilities sectors, respectively. The industrials sector detracted most significantly from the Fund’s return, followed by the consumer discretionary and financials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Samlip General Foods Co., Ltd., a consumer staples company (no longer held at fiscal year-end), and Gruma SAB de CV, Class B, a consumer staples company (portfolio average weight of 1.14%). Positions that detracted most significantly from the Fund’s return included Estacio Participacoes S.A., a consumer discretionary company (no longer held at fiscal year-end), and Alfa SAB de CV, Class A, an industrials company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Consumer Discretionary      19.7   
Industrials      16.6   
Consumer Staples      15.2   
Health Care      14.3   
Financials      12.1   
Information Technology      9.3   
Utilities      7.1   
Telecommunication Services      2.0   
Materials      1.8   
Energy      1.7   
Money Market Fund Plus Other Assets Less Liabilities      0.2   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Gruma SAB de CV, Class B      2.9   
ViroMed Co. Ltd.      2.8   
Shenzhou International Group Holdings Ltd.      2.7   
Hanmi Science Co. Ltd.      2.6   
Universal Robina Corp.      2.6   
Hartalega Holdings Bhd      2.5   
JG Summit Holdings, Inc.      2.4   
China Traditional Chinese Medicine Co. Ltd.      2.4   
Tencent Holdings Ltd.      2.3   
Hanssem Co. Ltd.      2.1   
Total      25.3   

 

* Excluding money market fund holdings.
 

 

 

   8  

 

 

PowerShares DWA Emerging Markets Momentum Portfolio (PIE) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Dorsey Wright® Emerging Markets Technical Leaders Index (Net)††     (13.58 )%      (1.19 )%      (3.54 )%      0.04 %      0.20 %        (1.57 )%      (11.66 )% 
MSCI Emerging Markets IndexSM (Net)††     (14.53 )      (2.87 )      (8.36 )      (2.80 )      (13.22 )        (2.45 )      (17.70 ) 
Fund                
NAV Return     (14.74 )      (2.12 )      (6.23 )      (1.43 )      (6.96 )        (4.95 )      (32.82 ) 
Market Price Return     (14.50 )      (2.30 )      (6.73 )      (1.61 )      (7.81 )        (5.07 )      (33.50 ) 

 

Fund Inception: December 28, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.90% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   9  

 

 

 

PXR    Manager’s Analysis
   PowerShares Emerging Markets Infrastructure Portfolio (PXR)

 

As an index fund, the PowerShares Emerging Markets Infrastructure Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S-Network Emerging Infrastructure Builders IndexSM (the “Index”). The Fund will invest at least 90% of its total assets in the equity securities and American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on those securities of companies included in the Index that are involved in the following sectors related to infrastructure, construction and development in emerging market countries: 1) construction and engineering; 2) construction machinery; 3) construction materials; 4) diversified metals and mining; 5) heavy electrical equipment; 6) industrial machinery; and 7) steel. Historically, the Index has consisted of securities of companies listed on exchanges in countries such as Australia, Bermuda, Brazil, Chile, China, Egypt, Hong Kong, India, Indonesia, Israel, Luxembourg, Malaysia, Mexico, Poland, Russia, Singapore, South Africa, and Taiwan; however, this universe of countries may change in accordance with the Index methodology.

The Index is calculated and maintained by Standard & Poor’s Custom Indices on behalf of S-Network Global Indexes LLC (the “Index Provider”). Emerging market countries are determined according to the Index Provider’s definition, which currently includes those countries identified in the World Bank Country Classification system as “Middle Income” countries. The Index Provider will include stocks only with a minimum market capitalization of $500 million, and it will remove such stocks if their market capitalization falls below $300 million. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (14.74)%. On a net asset value (“NAV”) basis, the Fund returned (14.36)%. During the same time period, the Index returned (13.92)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred.

During this same time period, the MSCI Emerging Markets IndexSM (Net) (the “Benchmark Index”) returned (14.53)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 830 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of emerging market equities.

The Fund performed competitively with the Benchmark Index. Relative to the Benchmark Index, the Fund was most overweight

in the industrials sector and most underweight in the financials sector during the fiscal year ended October 31, 2015.

For the fiscal year ended October 31, 2015, there were no contributing sectors. The materials sector detracted most significantly from the Fund’s return, followed by the industrials and utilities sectors, respectively.

Positions that contributed most significantly to the Fund’s return included China Communications Construction Co. Ltd., H-Shares, an industrials company (portfolio average weight of 3.52%), and CSSC Offshore and Marine Engineering Group Company Ltd., H-Shares, an industrials company (portfolio average weight of 1.98%). Positions that detracted most significantly from the Fund’s return included Empresas ICA SAB de CV, an industrials company (no longer held at fiscal year-end), and Vale SA ADR, a materials company (portfolio average weight of 1.8%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Industrials      58.4   
Materials      37.3   
Utilities      1.6   
Consumer Discretionary      1.2   
Financials      0.9   
Telecommunication Services      0.7   
Money Market Fund Plus Other Assets Less Liabilities      (0.1)   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
China Communications Construction Co. Ltd., H-Shares      3.9   
Taiwan Cement Corp.      2.8   
China Railway Group Ltd., H-Shares      2.8   
Metallurgical Corp. of China Ltd., H-Shares      2.7   
Anhui Conch Cement Co. Ltd., H-Shares      2.7   
Atlas Copco AB, Class A      2.5   
Caterpillar, Inc.      2.4   
ABB Ltd.      2.4   
Xinjiang Goldwind Science & Technology Co. Ltd., H-Shares      2.4   
King Slide Works Co. Ltd.      2.2   
Total      26.8   

 

* Excluding money market fund holdings.
 

 

 

   10  

 

 

PowerShares Emerging Markets Infrastructure Portfolio (PXR) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S-Network Emerging Infrastructure Builders IndexSM     (13.92 )%      (5.88 )%      (16.61 )%      (6.64 )%      (29.06 )%        8.06 %      72.56 % 
MSCI Emerging Markets IndexSM (Net)††     (14.53 )      (2.87 )      (8.36 )      (2.80 )      (13.22 )        8.22        74.35   
Fund                
NAV Return     (14.36 )      (6.79 )      (19.02 )      (7.54 )      (32.43 )        6.57        56.50   
Market Price Return     (14.74 )      (6.89 )      (19.28 )      (7.77 )      (33.25 )        4.72        38.34   

 

Fund Inception: October 16, 2008

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.76% includes the unitary management fee of 0.75% and other expenses of 0.01%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   11  

 

 

 

FXEU    Manager’s Analysis
   PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)

 

As an index fund, the PowerShares Europe Currency Hedged Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P Eurozone Low Volatility USD Hedged Index (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Index measures the performance of the 80 least volatile stocks in the S&P Eurozone BMI Index, while also employing a currency-hedged strategy to mitigate exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries in which the component securities of the Index are domiciled. From the constituents of the S&P Eurozone BMI Index, the Index Provider selects securities with the least volatility over the past 12 months for inclusion in the Index, with the least volatile stocks receiving the greatest weights. To hedge against exchange rate fluctuations, the Fund also will invest in foreign currency forward contracts to “lock in” the contract’s agreed-upon exchange rates. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

The Fund commenced investment operations on May 4, 2015 and began trading on May 7, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 3.25%. On a net asset value (“NAV”) basis, the Fund returned 3.68%. During the same time period, the Index returned 3.73%. During the fiscal period, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI EMU Local Currency Index (Net) (the “Benchmark Index”) returned (2.05)%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 240 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the European Monetary Union stock market. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund being underweight the energy sector relative to the Benchmark Index.

For the period ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the consumer staples and health care sectors, respectively. The

consumer discretionary sector detracted most significantly from the Fund’s return, followed by the materials and industrials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Ackermans & van Haaren NV, a financials company (portfolio average weight of 1.35%), and Rubis SCA, a utilities company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Oesterreichische Post AG, an industrials company (portfolio average weight of 0.89%), and Vienna Insurance Group AG Wiener Versicherung Gruppe, a financials company (portfolio average weight of 1.05%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      32.7   
Consumer Staples      17.6   
Industrials      16.5   
Consumer Discretionary      12.6   
Health Care      7.4   
Utilities      6.3   
Materials      3.4   
Information Technology      2.4   
Telecommunication Services      1.1   
Money Market Fund Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
MAN SE      3.3   
Cofinimmo SA REIT      1.5   
Sodexo SA      1.5   
Muenchener Rueckversicherungs-Gesellschaft AG      1.5   
Kabel Deutschland Holding AG      1.5   
RHOEN KLINIKUM AG      1.4   
Ageas      1.4   
Heineken Holding NV, Class A      1.4   
NN Group NV      1.4   
Danone SA      1.4   
Total      16.3   

 

* Excluding money market fund holdings.
 

 

 

   12  

 

 

PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
S&P Eurozone Low Volatility USD Hedged Index (Net)††     3.73 % 
MSCI EMU Local Currency Index (Net)††     (2.05 ) 
Fund  
NAV Return     3.68   
Market Price Return     3.25   

 

Fund Inception: May 7, 2015

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   13  

 

 

 

PAF    Manager’s Analysis
   PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)

 

As an index fund, the PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the FTSE RAFI Developed Asia Pacific ex Japan Index (Net) (the “Index”). The Fund will invest at least 90% of its total assets in equity securities that are classified as “Asia Pacific” within the country classification definition of FTSE International Limited (“FTSE” or the “Index Provider”), excluding Japanese equity securities, and that comprise the Index, as well as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be securities that comprise the index, rather than ADRs and GDRs. The Index is designed to track the performance of the Asia Pacific companies with the largest fundamental value, selected from the constituents of the FTSE All Cap Developed Index, as determined by FTSE. The Index Provider selects and weights the companies based on their fundamental values, which are derived from the following four fundamental measures of firm size: book value, cash flow, sales and dividends.

Historically, the Index has consisted of securities of companies that were domiciled in Australia, Hong Kong, New Zealand, Singapore and South Korea or primarily listed on an exchange in such countries; however, this universe of countries may change in accordance with the Index methodology. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (15.83)%. On a net asset value (“NAV”) basis, the Fund returned (15.78)%. During the same time period, the Index returned (15.11)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI Pacific ex Japan Index (Net) (the “Benchmark Index”) returned (14.90)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 145 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the Asia Pacific equity markets (excluding Japan). The Fund underperformed the Benchmark Index in part because the Fund employs a fundamental weighting and selection methodology, whereas the Benchmark Index selects and weights stocks based on market capitalization.

Relative to the Benchmark Index, the Fund was most overweight in the information technology sector and most underweight in the financials sector during the fiscal year ended October 31, 2015.

The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to security selection within the industrials sector.

For the fiscal year ended October 31, 2015, the information technology sector contributed most significantly to the Fund’s return, followed by the utilities sector. The financials sector detracted most significantly from the Fund’s return, followed by the materials and consumer staples sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Samsung Electronics Co., Ltd., an information technology company (portfolio average weight of 6.22%), and LG Chem Ltd., a materials company (portfolio average weight of 0.65%). Positions that detracted most significantly from the Fund’s return included BHP Billiton Ltd., a materials company (portfolio average weight of 4.3%), and Australia & New Zealand Banking Group Ltd., a financials company (portfolio average weight of 3.85%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      42.2   
Materials      12.5   
Industrials      9.4   
Information Technology      9.2   
Consumer Discretionary      7.8   
Consumer Staples      5.7   
Energy      4.3   
Telecommunication Services      4.0   
Utilities      3.9   
Health Care      0.9   
Money Market Fund Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Samsung Electronics Co. Ltd.      7.7   
Commonwealth Bank of Australia      4.9   
BHP Billiton Ltd.      4.0   
Westpac Banking Corp.      3.9   
National Australia Bank Ltd.      3.8   
Australia & New Zealand Banking Group Ltd.      3.5   
Hyundai Motor Co.      2.5   
Wesfarmers Ltd.      1.8   
Woolworths Ltd.      1.7   
AIA Group Ltd.      1.7   
Total      35.5   

 

* Excluding money market fund holdings.
 

 

 

   14  

 

 

PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
FTSE RAFI Developed Asia Pacific ex-Japan Index (Net)††     (15.11 )%      (1.86 )%      (5.48 )%      1.26 %      6.48 %        2.93 %      27.28 % 
MSCI Pacific ex Japan Index (Net)††     (14.90 )      (0.32 )      (0.95 )      1.70        8.79          1.61        14.22   
Fund                
NAV Return     (15.78 )      (2.57 )      (7.50 )      0.44        2.20          2.05        18.46   
Market Price Return     (15.83 )      (2.50 )      (7.32 )      0.30        1.49          2.07        18.68   

 

Fund Inception: June 25, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.49% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and

capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   15  

 

 

 

PXF    Manager’s Analysis
   PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)

 

As an index fund, the PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the FTSE RAFI Developed ex U.S. 1000 Index (Net) (the “Index”). The Fund will invest at least 90% of its total assets in the securities of companies originating in countries that are classified as “developed” within the country classification definition of FTSE International Limited (“FTSE” or the “Index Provider”), excluding the United States, and that comprise the Index, and American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be in the securities that comprise the Index, rather than ADRs or GDRs. The Index is designed to track the performance of the companies domiciled in developed markets with the largest fundamental value as determined by FTSE, selected from the constituents of the FTSE RAFI Developed ex U.S. Large/Mid-Cap Index. The Index Provider selects and weights companies based on their fundamental values, which are derived from the following four fundamental measures of firm size: book value, cash flow, sales and dividends.

Historically, the Index has consisted of securities of companies that were domiciled in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland and the United Kingdom or primarily listed on an exchange in such countries; however, this universe of countries may change in accordance with the Index methodology. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (5.55)%. On a net asset value (“NAV”) basis, the Fund returned (3.72)%. During the same time period, the Index returned (3.46)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period, as well as revenue generated from lending portfolio securities.

During this same time period, the MSCI EAFE® Index (Net) (the “Benchmark Index”) returned (0.07)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 910 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the markets of economically developed countries outside the U.S. The Fund underperformed the Benchmark Index in part because the Fund employs a fundamental weighting and selection methodology, whereas the Benchmark Index selects and weights stocks based on market capitalization.

Relative to the Benchmark Index, the Fund was most overweight in the energy sector and most underweight in the health care sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index (on NAV basis) during that period can be attributed to its allocation to the energy sector.

For the fiscal year ended October 31, 2015, the consumer discretionary sector contributed most significantly to the Fund’s return, followed by the consumer staples and health care sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the financials and materials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Tokyo Electric Power Co., Inc., a utilities company (portfolio average weight of 0.3%), and Sony Corp., a consumer discretionary company (portfolio average weight of 0.35%). Positions that detracted most significantly from the Fund’s return included Banco Santander S.A., a financials company (portfolio average weight of 1.31%), and Royal Dutch Shell PLC, Class A, an energy company (portfolio average weight of 1.39%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      28.8   
Industrials      12.2   
Consumer Discretionary      10.9   
Energy      9.7   
Consumer Staples      8.4   
Materials      7.5   
Telecommunication Services      6.2   
Health Care      6.0   
Utilities      6.0   
Information Technology      4.1   
Money Market Fund Plus Other Assets Less Liabilities      0.2   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
BP PLC      1.7   
HSBC Holdings PLC      1.4   
Total SA      1.4   
Royal Dutch Shell PLC, Class A      1.3   
Banco Santander SA      1.1   
Nestle SA      1.0   
Vodafone Group PLC      1.0   
Toyota Motor Corp.      1.0   
Allianz SE      0.8   
Mitsubishi UFJ Financial Group, Inc.      0.8   
Total      11.5   

 

* Excluding money market fund holdings.
 

 

 

   16  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
FTSE RAFI Developed ex U.S. 1000 Index (Net)††     (3.46 )%      7.59 %      24.56 %      3.30 %      17.62 %        0.08 %      0.69 % 
MSCI EAFE® Index (Net)††     (0.07 )      8.02        26.03        4.81        26.47          (0.01 )      (0.11 ) 
Fund                
NAV Return     (3.72 )      7.29        23.49        2.90        15.36          (0.45 )      (3.71 ) 
Market Price Return     (5.55 )      6.92        22.24        2.52        13.27          (0.55 )      (4.48 ) 

 

Fund Inception: June 25, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.45% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   17  

 

 

 

PDN    Manager’s Analysis
   PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)

 

As an index fund, the PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the FTSE RAFI Developed ex U.S. Mid-Small 1500 Index (Net) (the “Index”). The Fund will invest at least 90% of its total assets in securities of small and medium capitalization companies that are classified as “developed” within the country classification definition of FTSE International Limited (“FTSE” or the “Index Provider”), excluding the United States, and that comprise the Index, as well as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be in the securities that comprise the Index, rather than ADRs or GDRs. The Index is designed to track the performance of the small and medium capitalization companies domiciled in developed markets with the largest fundamental value, selected from the constituents of the FTSE Developed All Cap ex U.S. Index, as determined by FTSE. The Index Provider selects and weights companies based on their fundamental values, which are derived from the following four fundamental measures of firm size: book value, cash flow, sales and dividends.

Historically, the Index has consisted of securities of companies that were domiciled in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland and the United Kingdom; however, this universe of countries may change in accordance with the Index methodology. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 0.01%. On a net asset value (“NAV”) basis, the Fund returned 2.18%. During the same time period, the Index returned 2.67%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to the fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI EAFE® Small Cap Index (the “Benchmark Index”) returned 8.45%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 2,130 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of small capitalization equities markets in developed countries around the world, excluding the U.S.

Relative to the Benchmark Index, the Fund was most overweight in the materials sector and most underweight in the financials sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the

Benchmark Index during the period can be attributed to sector allocation differences and underperforming stocks in the financials and the consumer discretionary sectors.

For the fiscal year ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the information technology and consumer discretionary sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the telecommunication services sector.

Positions that contributed most significantly to the Fund’s return included Sohgo Security Services Co., Ltd., an industrials company (portfolio average weight of 0.14%), and Shimadzu Corp., an information technology company (portfolio average weight of 0.19%). Positions that detracted most significantly from the Fund’s return included Lonmin PLC, a materials company (portfolio average weight of 0.07%), and Trican Well Service Ltd., an energy company (portfolio average weight of 0.06%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Industrials      23.7   
Consumer Discretionary      19.1   
Financials      16.6   
Materials      11.1   
Information Technology      9.5   
Consumer Staples      7.9   
Health Care      5.2   
Energy      3.5   
Utilities      2.0   
Telecommunication Services      1.3   
Money Market Fund Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Galenica AG      0.3   
Hanwha Chemical Corp.      0.3   
Shimadzu Corp.      0.2   
Ubisoft Entertainment SA      0.2   
IT Holdings Corp.      0.2   
Just Energy Group, Inc.      0.2   
Pandora A/S      0.2   
Calsonic Kansei Corp.      0.2   
Toyota Boshoku Corp.      0.2   
Pioneer Corp.      0.2   
Total      2.2   

 

* Excluding money market fund holdings.
 

 

 

   18  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
FTSE RAFI Developed ex U.S. Mid-Small 1500 Index (Net)††     2.67 %      9.04 %      29.66 %      5.80 %      32.54 %        3.42 %      31.30 % 
MSCI EAFE® Small Cap Index (Net)††     8.45        12.01        40.51        7.74        45.15          2.46        21.73   
Fund                
NAV Return     2.18        8.51        27.76        5.31        29.55          2.80        25.01   
Market Price Return     0.01        8.38        27.29        5.09        28.15          2.66        23.67   

 

Fund Inception: September 27, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.49% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   19  

 

 

 

PXH    Manager’s Analysis
   PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)

 

As an index fund, the PowerShares FTSE RAFI Emerging Markets Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the FTSE RAFI Emerging Markets Index (Net) (the “Index”). The Fund will invest at least 90% of its total assets in securities of companies domiciled in countries that are classified as emerging markets within the country classification definition of FTSE International Limited (“FTSE” or the “Index Provider”) and that comprise the Index, as well as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that a significant portion of its investments will be in ADRs and GDRs that are based on the securities included in the Index.

The Index is designed to track the performance of securities of companies domiciled in emerging market countries with the highest ranking cumulative score (“Fundamental Value”), selected from the constituents of the FTSE Emerging All Cap Index, as determined by FTSE. The Index Provider selects and weights the securities based on their Fundamental Values, which are derived from the following four fundamental measures of firm size: book value, cash flow, sales and dividends. Historically, the Index has consisted of securities of companies that were domiciled in Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates; however, this universe of countries may change in accordance with the Index methodology. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (22.00)%. On a net asset value (“NAV”) basis, the Fund returned (22.16)%. During the same time period, the Index returned (21.55)%. During the fiscal year, the Fund replicated the majority of the components of the Index and sampled a minority of the Index primarily for exposure to Indian and Russian securities; therefore, the Fund’s performance, on a NAV basis, trailed the return of the Index primarily due to sampling of these Indian and Russian securities, utilizing GDRs and ADRs, and the fees and expenses that the Fund incurred.

During this same time period, the MSCI Emerging Markets IndexSM (Net) (the “Benchmark Index”) returned (14.53)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 830 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the equities markets in emerging market countries.

Relative to the Benchmark Index, the Fund was most overweight in the energy sector and most underweight in the information technology sector during the fiscal year ended October 31, 2015.

The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to its significant overweight position in the energy sector compared to the Benchmark Index, as well as due to stock selection in the energy sector.

For the fiscal year ended October 31, 2015, there were no contributing sectors. The energy sector detracted most significantly from the Fund’s return, followed by the financials and materials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Sberbank Russia ADR, a financials company (portfolio average weight of 1.28%), and China Communications Construction Co. Ltd., H-Shares, an industrials company (portfolio average weight of 0.35%). Positions that detracted most significantly from the Fund’s return included Petroleo Brasileiro SA (Preference Shares), an energy company (portfolio average weight of 2.35%), and Petroleo Brasileiro SA, an energy company (portfolio average weight of 2.14%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      32.9   
Energy      22.6   
Information Technology      10.6   
Telecommunication Services      9.6   
Materials      8.9   
Consumer Staples      4.6   
Consumer Discretionary      3.7   
Industrials      3.5   
Utilities      3.2   
Health Care      0.4   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
China Construction Bank Corp., H-Shares      3.4   
Gazprom PAO ADR      3.4   
Industrial & Commercial Bank of China Ltd., H-Shares      2.7   
China Mobile Ltd.      2.6   
Reliance Industries Ltd. GDR      2.4   
LUKOIL PJSC ADR      2.4   
Sberbank of Russia ADR      2.2   
Taiwan Semiconductor Manufacturing Co. Ltd.      2.2   
Petroleo Brasileiro SA      2.1   
Petroleo Brasileiro SA (Preference Shares)      2.0   
Total      25.4   
 

 

 

   20  

 

 

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
FTSE RAFI Emerging Markets Index
(Net)††		     (21.55 )%      (7.33 )%      (20.43 )%      (5.93 )%      (26.35 )%        (2.70 )%      (19.84 )% 
MSCI Emerging Markets IndexSM (Net)††     (14.53 )      (2.87 )      (8.36 )      (2.80 )      (13.22 )        (1.91 )      (14.47 ) 
Fund                
NAV Return     (22.16 )      (7.53 )      (20.94 )      (6.54 )      (28.71 )        (4.01 )      (28.17 ) 
Market Price Return     (22.00 )      (7.54 )      (20.95 )      (6.83 )      (29.80 )        (4.32 )      (30.04 ) 

 

Fund Inception: September 27, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.49% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   21  

 

 

 

PAGG    Manager’s Analysis
   PowerShares Global Agriculture Portfolio (PAGG)

 

As an index fund, the PowerShares Global Agriculture Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the NASDAQ OMX Global Agriculture IndexSM (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index, as well as potentially in American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be in the securities that comprise the Index, rather than ADRs or GDRs.

The NASDAQ OMX Group, Inc., the Index provider, maintains and calculates the Index, which is designed to measure the overall performance of the most liquid, globally traded securities of companies engaged in agriculture and farming-related activities. The Index may include securities in emerging market countries. In addition, each security, according to a recognized market data vendor, must have a minimum worldwide market capitalization of $500 million, a minimum three-month average daily dollar trading volume of $1 million and a minimum free float of 20% prior to inclusion in the Index. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (12.06)%. On a net asset value (“NAV”) basis, the Fund returned (12.10)%. During the same time period, the Index returned (12.32)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) exceeded the return of the Index primarily due to the Index’s treatment of certain corporate action transactions.

For the fiscal year ended October 31, 2015, there were no contributing sub-industries. The fertilizers & agricultural chemicals sub-industry detracted most significantly from the Fund’s return, followed by the agricultural products sub-industry.

Positions that contributed most significantly to the Fund’s return included Syngenta AG, a fertilizers & agricultural chemicals company (no longer held at fiscal year-end), and Ingredion, Inc., an agricultural products company (portfolio average weight of 4.21%). Positions that detracted most significantly from the Fund’s return included Potash Corp. of Saskatchewan, Inc., a fertilizers & agricultural chemicals company (portfolio average weight of 7.72%), and Mosaic Co. (The), a fertilizers & agricultural chemicals company (portfolio average weight of 7.78%).

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Fertilizers & Agricultural Chemicals      54.0   
Agricultural Products      45.9   
Money Market Fund Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Archer-Daniels-Midland Co.      8.4   
Monsanto Co.      7.9   
Agrium, Inc.      7.5   
Mosaic Co. (The)      6.8   
Potash Corp. of Saskatchewan, Inc.      6.5   
Wilmar International Ltd.      4.6   
Ingredion, Inc.      4.5   
Yara International ASA      4.3   
IOI Corp. Bhd      4.2   
Bunge Ltd.      4.1   
Total      58.8   

 

* Excluding money market fund holdings.
 

 

 

   22  

 

 

PowerShares Global Agriculture Portfolio (PAGG) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
NASDAQ OMX Global Agriculture IndexSM (Net)††     (12.32 )%      (3.50 )%      (10.13 )%      (1.94 )%      (9.33 )%        (2.05 )%      (15.57 )% 
Fund                
NAV Return     (12.10 )      (3.51 )      (10.15 )      (2.14 )      (10.25 )        (1.62 )      (12.10 ) 
Market Price Return     (12.06 )      (3.38 )      (9.80 )      (2.23 )      (10.67 )        (1.34 )      (9.92 ) 

 

Fund Inception: September 18, 2008

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.75% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in their respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   23  

 

 

 

PBD    Manager’s Analysis
   PowerShares Global Clean Energy Portfolio (PBD)

 

As an index fund, the PowerShares Global Clean Energy Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the WilderHill New Energy Global Innovation Index (the “Index”). The Fund generally will invest at least 90% of its total assets in the securities of companies engaged in the business of advancing cleaner energy and conservation that comprise the Index, as well as in American depositary receipts and global depositary receipts that are based on the securities in the Index.

The Index is comprised primarily of companies whose technologies focus on the generation and use of cleaner energy, conservation and efficiency, and the advancement of renewable energy in general, as determined by WilderHill New Energy Finance, LLC (the “Index Provider”). The Index is comprised mainly of companies in wind, solar, biofuels, hydro, wave and tidal, geothermal and other relevant renewable energy businesses and also includes companies involved in energy conversion, storage, conservation, efficiency, materials, pollution control, emerging hydrogen and fuel cells. The Index Provider selects securities principally on the basis of their capital appreciation potential as identified by the Index Provider pursuant to a proprietary index methodology, with a bias placed on renewable energy companies. The Index may include companies in emerging market countries. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (8.10)%. On a net asset value (“NAV”) basis, the Fund returned (7.44)%. During the same time period, the Index returned (6.48)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

For the fiscal year ended October 31, 2015, the heavy electrical equipment sub-industry contributed most significantly to the Fund’s return, followed by the building products and electronic components sub-industries, respectively. The semiconductors sub-industry detracted most significantly from the Fund’s return, followed by the renewable electricity and construction & engineering sub-industries, respectively.

Positions that contributed most significantly to the Fund’s return included Hanergy Thin Film Power Group Ltd., a semiconductor equipment company (no longer held at fiscal year-end), and Nordex SE, a heavy electrical equipment company (portfolio average weight of 2.03%). Positions that detracted most significantly from the Fund’s return included China Singyes Solar Technologies Holdings Ltd., a construction & engineering company (portfolio average weight of 1.14%), and Veeco Instruments, Inc., a semiconductor equipment company (portfolio average weight of 1.57%).

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Renewable Electricity      22.4   
Semiconductors      14.1   
Semiconductor Equipment      10.0   
Heavy Electrical Equipment      9.1   
Building Products      7.7   
Electrical Components & Equipment      6.3   
Electronic Equipment & Instruments      3.6   
Industrial Machinery      2.8   
Oil & Gas Refining & Marketing      2.6   
Electric Utilities      2.5   
Environmental & Facilities Services      2.2   
Automobile Manufacturers      2.1   
Auto Parts & Equipment      1.8   
Independent Power Producers & Energy Traders      1.8   
Electronic Components      1.6   
Packaged Foods & Meats      1.5   
Construction & Engineering      1.3   
Specialty Chemicals      1.2   
Other Diversified Financial Services      1.1   
Research & Consulting Services      1.0   
Application Software      0.9   
Aerospace & Defense      0.5   
Internet Software & Services      0.5   
Coal & Consumable Fuels      0.4   
Homebuilding      0.3   
Asset Management & Custody Banks      0.3   
Electronic Manufacturing Services      0.2   
Diversified Chemicals      0.2   
Money Market Fund Plus Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Seoul Semiconductor Co. Ltd.      2.4   
Acuity Brands, Inc.      2.0   
Rockwool International A/S, Class B      1.9   
Itron, Inc.      1.9   
Nordex SE      1.9   
Gamesa Corp. Tecnologica SA      1.9   
NIBE Industrier AB, Class B      1.9   
Enel Green Power SpA      1.8   
Johnson Controls, Inc.      1.8   
A.O. Smith Corp.      1.8   
Total      19.3   

 

* Excluding money market fund holdings.
 

 

 

   24  

 

 

PowerShares Global Clean Energy Portfolio (PBD) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
WilderHill New Energy Global Innovation Index     (6.48 )%      17.69 %      63.01 %      (2.20 )%      (10.53 )%        (7.25 )%      (46.80 )% 
Fund                
NAV Return     (7.44 )      16.88        59.65        (2.65 )      (12.56 )        (8.21 )      (51.26 ) 
Market Price Return     (8.10 )      17.19        60.96        (2.59 )      (12.29 )        (8.30 )      (51.65 ) 

 

Fund Inception: June 13, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.76% includes the unitary management fee of 0.75% and other expenses of 0.01%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in their respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.
 

 

 

   25  

 

 

 

PSAU    Manager’s Analysis
   PowerShares Global Gold and Precious Metals Portfolio (PSAU)

 

As an index fund, the PowerShares Global Gold and Precious Metals Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the NASDAQ OMX Global Gold and Precious Metals IndexSM (the “Index”). The Fund will invest at least 90% of its total assets in the securities of companies involved in the gold, silver and other precious metals mining industries that comprise the Index, as well as in American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be in the securities that comprise the Index rather than in ADRs and GDRs.

The NASDAQ OMX Group, Inc., the Index provider, calculates and maintains the Index, which is designed to measure the overall performance of the most liquid, globally traded securities of companies involved in gold, silver and other precious metals mining industry activities. In addition, each security, according to a recognized market data vendor, must have a minimum worldwide market capitalization of $500 million, a minimum three-month average daily dollar trading volume of $1 million and a minimum free float of 20% prior to inclusion in the Index. The Index may include securities in emerging market countries. The Index can be comprised of common stocks, ordinary shares, depositary receipts, shares of beneficial interest or limited partnership interests and tracking stocks. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (14.51)%. On a net asset value (“NAV”) basis, the Fund returned (14.63)%. During the same time period, the Index returned (13.82)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred.

For the fiscal year ended October 31, 2015, there were no contributing sub-industries. The precious metals & minerals sub-industry detracted most significantly from the Fund’s return, followed by the gold and silver sub-industries, respectively.

Positions that contributed most significantly to the Fund’s return included Franco-Nevada Corp., a gold company (portfolio average weight of 5.99%), and Agnico Eagle Mines Ltd., a gold company (portfolio average weight of 4.13%). Positions that detracted most significantly from the Fund’s return included Barrick Gold Corp., a gold company (portfolio average weight of 7.47%), and Goldcorp, Inc., a gold company (portfolio average weight of 7.83%).

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Gold      80.2   
Precious Metals & Minerals      13.3   
Silver      6.6   
Money Market Fund Plus Other Assets Less Liabilities      (0.1)   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Newmont Mining Corp.      8.5   
Barrick Gold Corp.      8.2   
Franco-Nevada Corp.      7.3   
Goldcorp, Inc.      7.0   
Newcrest Mining Ltd.      6.2   
Agnico Eagle Mines Ltd.      4.4   
Silver Wheaton Corp.      4.2   
Randgold Resources Ltd.      4.2   
AngloGold Ashanti Ltd.      3.4   
Royal Gold, Inc.      2.9   
Total      56.3   

 

* Excluding money market fund holdings.
 

 

 

   26  

 

 

PowerShares Global Gold and Precious Metals Portfolio (PSAU) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
NASDAQ OMX Global Gold and Precious Metals IndexSM     (13.82 )%      (30.69 )%      (66.71 )%      (20.97 )%      (69.17 )%        (8.49 )%      (46.80 )% 
Fund                
NAV Return     (14.63 )      (31.33 )      (67.62 )      (21.70 )      (70.57 )        (9.19 )      (49.63 ) 
Market Price Return     (14.51 )      (31.77 )      (68.24 )      (21.79 )      (70.74 )        (9.27 )      (49.95 ) 

 

Fund Inception: September 18, 2008

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.75% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in their respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.
 

 

 

   27  

 

 

 

PIO    Manager’s Analysis
   PowerShares Global Water Portfolio (PIO)

 

As an index fund, the PowerShares Global Water Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the NASDAQ OMX Global Water IndexSM (the “Index”). The Fund generally will invest at least 90% of its total assets in securities of companies listed on a global exchange that create products designed to conserve and purify water for homes, businesses and industries that comprise the Index, as well as in American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that are based on the securities in the Index. The Fund anticipates that the majority of its investments will be in the securities that comprise the Index, rather than ADRs or GDRs.

The Index was created by, and is a trademark of, the NASDAQ OMX Group, Inc., the Index provider. A security must have a worldwide market capitalization of $50 million to be included in the Index. The Index may include companies in emerging market countries. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (5.35)%. On a net asset value (“NAV”) basis, the Fund returned (5.07)%. During the same time period, the Index returned (4.26)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

For the fiscal year ended October 31, 2015, the utilities sector contributed most significantly to the Fund’s return, followed by the health care and materials sectors, respectively. The information technology sector detracted most significantly from the Fund’s return, followed by the industrials sector.

Positions that contributed most significantly to the Fund’s return included Veolia Environnement SA, a utilities company (portfolio average weight of 8.39%), and Pall Corp., an industrials company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included SunEdison, Inc., an information technology company (no longer held at fiscal year-end), and Flowserve Corp., an industrials company (no longer held at fiscal year-end).

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Utilities      47.4   
Industrials      38.1   
Materials      9.1   
Health Care      4.1   
Information Technology      1.4   
Other Assets Less Liabilities      (0.1)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Ecolab, Inc.      8.5   
Veolia Environnement SA      8.2   
Geberit AG      7.8   
Pentair PLC      7.8   
HD Supply Holdings, Inc.      6.9   
United Utilities Group PLC      4.4   
Roper Technologies, Inc.      4.4   
Acciona SA      4.4   
Severn Trent PLC      4.2   
Suez Environnement Co.      4.1   
Total      60.7   
 

 

 

   28  

 

 

PowerShares Global Water Portfolio (PIO) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Blended—NASDAQ OMX Global Water IndexSM††     (4.26 )%      11.28 %      37.81 %      5.03 %      27.81 %        0.50 %      4.25 % 
NASDAQ OMX Global Water IndexSM     (4.26 )      11.28        37.81        N/A        N/A          N/A        N/A   
Fund                
NAV Return     (5.07 )      10.33        34.32        4.85        26.74          (0.11 )      (0.92 ) 
Market Price Return     (5.35 )      10.32        34.26        4.74        26.03          (0.41 )      (3.38 ) 

 

Fund Inception: June 13, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.76% includes the unitary management fee of 0.75% and other expenses of 0.01%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in their respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.

 

††  The Blended—NASDAQ OMX Global Water IndexSM performance is comprised of the performance of Palisades Global Water Index, the Fund’s previous underlying index, from Fund inception through date of the change to the Index, March 1, 2012, followed by the performance of the Index, starting from the conversion date through October 31, 2015.
 

 

 

   29  

 

 

 

IPKW    Manager’s Analysis
   PowerShares International BuyBack Achievers™ Portfolio (IPKW)

 

As an index fund, the PowerShares International BuyBack AchieversTM Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the NASDAQ International BuyBack AchieversTM Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index. Strictly in accordance with its guidelines and mandated procedure, the NASDAQ OMX Group, Inc. (“NASDAQ OMX” or the “Index Provider”) includes in the Index common stocks of foreign companies that are classified as “International BuyBack AchieversTM” pursuant to a proprietary selection methodology. To qualify as an “International BuyBack AchieversTM” and have its stock be eligible for inclusion in the Index, an issuer must: (i) have its common stock be included in the NASDAQ Global Ex-US Index (a broad-based index designed to track the performance of the global equity market and whose component securities are issued by companies located throughout the world, excluding the United States); (ii) have a minimum market capitalization of $250 million; (iii) have effected a net reduction of 5% or more of its outstanding shares in its latest fiscal year; and (iv) have a minimum three-month average daily cash volume of $1 million. The Fund generally will invest in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 7.51%. On a net asset value (“NAV”) basis, the Fund returned 9.04%. During the same time period, the Index returned 9.94%. During the fiscal period, the Fund replicated the components of the Index, except for one security where a depositary receipt was held in lieu of a foreign local security. The Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses incurred by the Fund during the period, as well as pricing differences between the local shares and the depositary receipt noted previously.

During this same time period, the MSCI ACWI ex USA® Index (Net) (the “Benchmark Index”) returned (4.68)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 1,840 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the developed and emerging equity markets outside the U.S. The performance of the Fund differed from the Benchmark Index in part because the Fund employs a modified market capitalization weighting methodology and selects stocks based on constituent companies engaging in stock buybacks, whereas the Benchmark Index selects and weights stocks based on market capitalization without any particular focus on companies engaging in such buybacks.

Relative to the Benchmark Index, the Fund was most overweight in the consumer discretionary sector and most underweight in the financials sector during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the

Benchmark Index during the period can be attributed to security selection within the information technology sector.

For the fiscal year ended October 31, 2015, the information technology sector contributed most significantly to the Fund’s return, followed by the consumer discretionary and consumer staples sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the materials and utilities sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Nintendo Co., Ltd., an information technology company (no longer held at fiscal year-end), and Nippon Telegraph and Telephone Corp., a telecommunication services company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included PT Tambang Batubara Bukit Asam (Persero) Tbk, Class B, an energy company (no longer held at fiscal year-end), and ShawCor Ltd., an energy company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Consumer Discretionary      33.5   
Financials      20.0   
Industrials      17.9   
Consumer Staples      12.9   
Telecommunication Services      5.4   
Health Care      5.3   
Information Technology      1.8   
Energy      1.7   
Materials      1.5   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
NTT DoCoMo, Inc.      5.4   
InterContinental Hotels Group PLC      5.4   
Magna International, Inc.      5.1   
Muenchener Rueckversicherungs-Gesellschaft AG      5.0   
L’Oreal SA      4.9   
Koninklijke Ahold NV      4.9   
Dollarama, Inc.      4.6   
Canadian Pacific Railway Ltd.      4.6   
Evergrande Real Estate Group Ltd.      3.1   
Nisshinbo Holdings, Inc.      2.8   
Total      45.8   
 

 

 

   30  

 

 

PowerShares International BuyBack Achievers™ Portfolio (IPKW) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year         Fund Inception†  
Index         Average
Annualized		     Cumulative  
NASDAQ International BuyBack Achievers™ Index     9.94 %        6.92 %      11.82 % 
MSCI ACWI ex USA® Index (Net)††     (4.68 )        (3.22 )      (5.31 ) 
Fund        
NAV Return     9.04          6.08        10.39   
Market Price Return     7.51          5.58        9.52   

 

Fund Inception: February 27, 2014

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.55% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   31  

 

 

 

FXJP    Manager’s Analysis
   PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP)

 

As an index fund, the PowerShares Japan Currency Hedged Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P Japan 500 Low Volatility USD Hedged Index (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Index measures the performance of the 100 least volatile stocks in the S&P Japan 500 Index, while also employing a currency-hedged strategy to mitigate exposure to fluctuations between the value of the U.S. dollar and the Japanese yen. From the constituents of the S&P Japan 500 Index, the Index Provider selects securities with the least volatility over the past 12 months for inclusion in the Index, with the least volatile stocks receiving the greatest weights. To hedge against exchange rate fluctuations, the Fund also will invest in foreign currency forward contracts to “lock in” the contract’s agreed-upon exchange rates. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

The Fund commenced investment operations on October 6, 2015 and began trading on October 9, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 2.42%. On a net asset value (“NAV”) basis, the Fund returned 2.95%. During the same time period, the Index returned 2.96%. During the fiscal period, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI Japan Index (Net) (the “Benchmark Index”) returned 2.90%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 290 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall Japanese stock market. The performance of the Fund differed from the Benchmark Index primarily due to fees and operating expenses that the Fund incurred during the period.

Relative to the Benchmark Index, the Fund was most overweight in the industrials sector and most underweight in the financials sector during the period ended October 31, 2015.

For the period ended October 31, 2015, the industrials sector contributed most significantly to the Fund’s return, followed by the consumer staples and health care sectors, respectively. The

telecommunication services sector was the only detracting sector.

Positions that contributed most significantly to the Fund’s return included Suzuken Co. Ltd., a health care company (portfolio average weight of 0.82%), and Nisshin Seifun Group, Inc., a consumer staples company (portfolio average weight of 0.82%). Positions that detracted most significantly from the Fund’s return included Komatsu Ltd., an industrials company (portfolio average weight of 1.1%), and SoftBank Group Corp., a telecommunication services company (portfolio average weight of 1.01%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Industrials      29.4   
Consumer Discretionary      16.5   
Consumer Staples      14.6   
Materials      9.3   
Health Care      8.8   
Information Technology      6.4   
Utilities      5.0   
Financials      4.8   
Energy      3.0   
Telecommunication Services      1.8   
Money Market Fund Plus Other Assets Less Liabilities      0.4   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
McDonald’s Holdings Co. Japan Ltd.      1.8   
Kagome Co. Ltd.      1.6   
Shochiku Co. Ltd.      1.3   
TonenGeneral Sekiyu K.K.      1.2   
Oracle Corp. Japan      1.2   
Takeda Pharmaceutical Co. Ltd.      1.1   
Autobacs Seven Co. Ltd.      1.1   
Tobu Railway Co., Ltd.      1.1   
Osaka Gas Co. Ltd.      1.1   
Maruha Nichiro Corp.      1.1   
Total      12.6   

 

* Excluding money market fund holdings.
 

 

 

   32  

 

 

PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP) (continued)

 

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
S&P Japan 500 Low Volatility USD Hedged Index (Net)††     2.96 % 
MSCI Japan Index (Net)††     2.90   
Fund  
NAV Return     2.95   
Market Price Return     2.42   

 

Fund Inception: October 9, 2015

Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. See invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index

and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   33  

 

 

 

IDHQ    Manager’s Analysis
   PowerShares S&P International Developed High Quality Portfolio (IDHQ)

 

As an index fund, the PowerShares S&P International Developed High Quality Portfolio (the “Fund”) is passively managed and attempts to track the return of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P International Developed High Quality Rankings Index (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index. The Index is comprised of securities selected to provide exposure to the constituents of the S&P Developed ex United States BMI Index that are identified by S&P Dow Jones Indices LLC (the “Index Provider”) as high quality stocks based on historical records of earnings and dividends.

Historically, the Index has been composed of securities with an adjusted market capitalization of at least $500 million and that are domiciled in the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland and the United Kingdom; however, this universe of countries may change in accordance with the Index methodology. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 4.42%. On a net asset value (“NAV”) basis, the Fund returned 5.60%. During the same time period, the Index returned 6.31%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred, as well as trading costs around the Index’s semi-annual rebalances during the period.

During this same time period, the MSCI EAFE® Index (Net) (the “Benchmark Index”) returned (0.07)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 910 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the international equity markets in developed countries outside the U.S. The performance of the Fund differed from the Benchmark Index in part because the Fund employs a quality ranking-driven weighting and stock selection methodology, as defined by the Index Provider, whereas the Benchmark Index selects and weights stocks based on market capitalization.

Relative to the Benchmark Index, the Fund was most overweight in the consumer discretionary sector and most underweight in the financials sector during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during that period can be attributed to security selection within the consumer discretionary sector.

For the fiscal year ended October 31, 2015, the consumer discretionary sector contributed most significantly to the Fund’s return, followed by the consumer staples and health care sectors, respectively. The industrials sector detracted most significantly from the Fund’s return, followed by the energy and financials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Hanssem Co. Ltd., a consumer discretionary company (portfolio average weight of 0.43%), and Redrow PLC, a consumer discretionary company (portfolio average weight of 0.39%). Positions that detracted most significantly from the Fund’s return included Serco Group PLC, an industrials company (portfolio average weight of 0.45%), and Sa Sa International Holdings Ltd., a consumer discretionary company (portfolio average weight of 0.37%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Consumer Discretionary      24.7   
Industrials      18.7   
Consumer Staples      16.6   
Financials      11.5   
Health Care      10.9   
Materials      5.7   
Information Technology      4.9   
Utilities      3.1   
Energy      2.0   
Telecommunication Services      1.8   
Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Industria de Diseno Textil SA      0.6   
Red Electrica Corp. SA      0.6   
Reckitt Benckiser Group PLC      0.6   
Intertek Group PLC      0.6   
Fresenius Medical Care AG & Co. KGaA      0.6   
British American Tobacco PLC      0.6   
Metro, Inc.      0.6   
K’s Holdings Corp.      0.6   
Getinge AB, Class B      0.6   
Canadian National Railway Co.      0.6   
Total      6.0   
 

 

 

   34  

 

 

PowerShares S&P International Developed High Quality Portfolio (IDHQ) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Blended—S&P International Developed High Quality Rankings Index (Net)††, †††     6.31 %      9.32 %      30.64 %      6.38 %      36.27 %        0.58 %      4.98 % 
MSCI EAFE® Index (Net)†††     (0.07 )      8.02        26.03        4.81        26.47          0.20        1.69   
S&P International Developed High Quality Rankings Index (Net)†††     6.31        9.32        30.64        N/A        N/A          N/A        N/A   
Fund                
NAV Return     5.60        8.58        28.02        5.54        30.94          (0.59 )      (4.82 ) 
Market Price Return     4.42        8.14        26.47        5.56        31.07          (0.80 )      (6.48 ) 

 

Fund Inception: June 13, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.47% includes the unitary management fee of 0.45% and other expenses of 0.02%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  The Blended—S&P International Developed High Quality Rankings Index performance is comprised of the performance of QSG Developed International Opportunities Index, the Fund’s previous underlying index, from Fund inception through date of the change to the Index, March 1, 2012, followed by the performance of the Index, starting from the conversion date through October 31, 2015.

 

††† Reflects invested dividends net of withholding taxes.
 

 

 

   35  

 

 

Schedule of Investments

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—99.9%		    
   Australia—14.1%   
  1,112       AGL Energy Ltd.    $ 13,273   
  1,232       Amcor Ltd.      11,998   
  526       ASX Ltd.      15,469   
  3,022       Aurizon Holdings Ltd.      11,147   
  12,340       AusNet Services      12,722   
  616       Australia & New Zealand Banking Group Ltd.      11,958   
  1,662       Bendigo & Adelaide Bank Ltd.      12,688   
  3,036       Boral Ltd.      11,675   
  1,810       Brambles Ltd.      13,404   
  2,004       Coca-Cola Amatil Ltd.      13,025   
  240       Commonwealth Bank of Australia      13,138   
  188       CSL Ltd.      12,580   
  2,594       Goodman Group REIT      11,234   
  3,942       GPT Group (The) REIT      13,415   
  3,062       Insurance Australia Group Ltd.      12,255   
  1,208       Lend Lease Group      11,204   
  202       Macquarie Group Ltd.      12,351   
  9,598       Mirvac Group REIT      12,360   
  596       National Australia Bank Ltd.      12,820   
  4,388       Scentre Group REIT      12,961   
  866       Sonic Healthcare Ltd.      11,912   
  4,772       Stockland REIT      13,788   
  1,494       Suncorp Group Ltd.      13,974   
  3,154       Sydney Airport      14,514   
  3,984       Telstra Corp. Ltd.      15,349   
  2,058       Transurban Group      15,329   
  5,872       Vicinity Centres REIT(a)      12,191   
  528       Wesfarmers Ltd.      14,846   
  532       Westpac Banking Corp.      11,910   
     

 

 

  
        375,490  
     

 

 

  
   Austria—1.0%   
  598       BUWOG AG      12,782   
  342       Oesterreichische Post AG      12,505   
     

 

 

  
        25,287  
     

 

 

  
   Belgium—2.4%   
  78       Ackermans & van Haaren NV      11,934   
  318       Ageas      14,116   
  256       Colruyt SA      12,735   
  168       Groupe Bruxelles Lambert SA      13,716   
  192       Telenet Group Holding NV(a)      11,224   
     

 

 

  
        63,725  
     

 

 

  
   China—0.4%   
  7,254       Global Logistic Properties Ltd.      11,602   
     

 

 

  
   Denmark—0.9%   
  312       DSV A/S      12,709   
  578       Tryg A/S      10,445   
     

 

 

  
        23,154  
     

 

 

  
   Finland—0.4%   
  238       Sampo Oyj, Class A      11,694   
     

 

 

  
   France—3.4%   
  108       Aeroports de Paris      13,642   
  358       Alstom SA(a)      11,729   
  512       Bureau Veritas SA      11,634   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   France (continued)   
  198       Danone SA    $ 13,869   
  102       Pernod Ricard SA      12,079   
  164       Sodexo SA      14,669   
  488       Vivendi SA      11,814   
     

 

 

  
        89,436  
     

 

 

  
   Germany—4.6%   
  132       Beiersdorf AG      12,603   
  116       Hannover Rueck SE      13,480   
  134       Henkel AG & Co. KGaA      12,435   
  106       Henkel AG & Co. KGaA (Preference Shares)      11,557   
  112       Kabel Deutschland Holding AG      14,321   
  64       Linde AG      11,152   
  310       MAN SE      32,477   
  72       Muenchener Rueckversicherungs-Gesellschaft AG      14,436   
     

 

 

  
        122,461  
     

 

 

  
   Hong Kong—9.2%   
  3,686       Bank of East Asia Ltd. (The)      13,816   
  1,538       Cheung Kong Infrastructure Holdings Ltd.      14,318   
  2,210       CLP Holdings Ltd.      19,248   
  760       Hang Seng Bank Ltd.      13,984   
  33,750       HK Electric Investments & HK Electric Investments Ltd.(b)      25,911   
  8,488       Hong Kong & China Gas Co. Ltd.      17,239   
  1,552       Hongkong Land Holdings Ltd.      11,655   
  2,828       Hysan Development Co. Ltd.      12,571   
  238       Jardine Matheson Holdings Ltd.      12,992   
  430       Jardine Strategic Holdings Ltd.      12,973   
  4,136       Kerry Properties Ltd.      12,274   
  2,248       Link REIT      13,473   
  2,816       MTR Corp. Ltd.      12,790   
  10,516       New World Development Co. Ltd.      11,276   
  1,350       Power Assets Holdings Ltd.      13,474   
  976       Sun Hung Kai Properties Ltd.      13,085   
  1,220       Swire Pacific Ltd., Class A      14,168   
     

 

 

  
        245,247  
     

 

 

  
   Ireland—0.5%   
  168       Kerry Group PLC, Class A      13,724   
     

 

 

  
   Israel—3.1%   
  2,324       Bank Hapoalim BM      12,125   
  3,062       Bank Leumi Le-Israel(a)      11,638   
  148       Check Point Software Technologies
Ltd.(a)		      12,571   
  138       Elbit Systems Ltd.      10,958   
  1,216       Gazit-Globe Ltd.      13,207   
  6,446       Israel Discount Bank Ltd., Class A(a)      11,779   
  930       Mizrahi Tefahot Bank Ltd.      11,303   
     

 

 

  
        83,581  
     

 

 

  
   Italy—0.5%   
  2,386       Terna-Rete Elettrica Nationale SpA      12,198   
     

 

 

  
   Japan—10.8%   
  6       Advance Residence Investment Corp. REIT      12,853   
  3,246       Aozora Bank Ltd.      11,916   
  392       Canon, Inc.      11,824   
  4       Frontier Real Estate Investment Corp. REIT      16,242   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   36  

 

 

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  14       GLP J-REIT REIT    $ 13,968   
  1,774       Hankyu Hanshin Holdings, Inc.      11,628   
  6       Japan Retail Fund Investment Corp. REIT      11,664   
  1,048       Kagome Co. Ltd.      17,881   
  2,966       Kintetsu Group Holdings Co. Ltd.      11,527   
  156       Lawson, Inc.      11,622   
  1,938       Marubeni Corp.      11,280   
  814       McDonald’s Holdings Co. Japan Ltd.      19,285   
  880       Mitsui & Co. Ltd.      11,234   
  8       Nippon Prologis REIT, Inc. REIT      14,141   
  10       ORIX JREIT Inc. REIT      13,507   
  3,096       Osaka Gas Co. Ltd.      12,269   
  260       Takeda Pharmaceutical Co. Ltd.      12,777   
  2,504       Tobu Railway Co., Ltd.      12,180   
  2,136       Tokyo Gas Co. Ltd.      10,649   
  1,252       TonenGeneral Sekiyu K.K.      13,062   
  172       Toyota Motor Corp.      10,646   
  10       United Urban Investment Corp. REIT      13,930   
     

 

 

  
        286,085  
     

 

 

  
   Luxembourg—0.4%   
  376       SES SA FDR, Class A      11,167   
     

 

 

  
   Netherlands—1.4%   
  170       Heineken Holding NV, Class A      13,695   
  430       NN Group NV      13,571   
  332       Wolters Kluwer NV      11,294   
     

 

 

  
        38,560  
     

 

 

  
   New Zealand—3.2%   
  4,174       Auckland International Airport Ltd.      14,855   
  2,698       Fisher & Paykel Healthcare Corp. Ltd.      14,202   
  2,622       Fletcher Building Ltd.      13,234   
  3,108       Ryman Healthcare Ltd.      16,592   
  4,070       Sky Network Television Ltd.      12,502   
  4,638       SKYCITY Entertainment Group Ltd.      12,584   
     

 

 

  
        83,969  
     

 

 

  
   Norway—0.5%   
  830       Gjensidige Forsikring ASA      12,673   
     

 

 

  
   Singapore—15.2%   
  7,454       Ascendas Real Estate Investment Trust REIT      12,721   
  14,652       CapitaLand Commercial Trust Ltd. REIT      14,751   
  5,512       CapitaLand Ltd.      12,201   
  9,900       CapitaLand Mall Trust REIT      13,996   
  2,270       City Developments Ltd.      12,870   
  1,188       DBS Group Holdings Ltd.      14,650   
  22,724       Hutchison Port Holdings Trust      12,612   
  532       Jardine Cycle & Carriage Ltd.      12,391   
  24,886       Keppel REIT      17,148   
  2,392       Keppel Corp. Ltd.      12,092   
  6,612       M1 Ltd.      13,408   
  20,164       Mapletree Greater China Commercial Trust REIT(b)      14,326   
  22,492       Mapletree Logistics Trust REIT      16,381   
  2,404       Oversea-Chinese Banking Corp. Ltd.      15,500   
  5,642       SATS Ltd.      15,268   
  1,736       Singapore Airlines Ltd.      13,387   
  2,342       Singapore Exchange Ltd.      12,341   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Singapore (continued)   
  11,872       Singapore Post Ltd.    $ 16,064   
  8,472       Singapore Press Holdings Ltd.      24,137   
  5,734       Singapore Technologies Engineering Ltd.      13,552   
  5,366       Singapore Telecommunications Ltd.      15,249   
  7,632       StarHub Ltd.      19,618   
  14,254       Suntec REIT      16,793   
  1,066       United Overseas Bank Ltd.      15,474   
  2,786       UOL Group Ltd.      13,050   
  2,768       Venture Corp. Ltd.      16,345   
  8,116       Wilmar International Ltd.      18,139   
     

 

 

  
        404,464  
     

 

 

  
   Spain—2.2%   
  678       Abertis Infraestructuras SA      11,317   
  264       Amadeus IT Holding SA, Class A      11,304   
  566       Gas Natural SDG SA      12,323   
  1,844       Iberdrola SA      13,234   
  796       Telefonica SA      10,578   
     

 

 

  
        58,756  
     

 

 

  
   Sweden—3.3%   
  306       Hennes & Mauritz AB, Class B      11,976   
  584       Industrivarden AB, Class C      10,695   
  238       L E Lundbergforetagen AB, Class B      12,213   
  900       Skandinaviska Enskilda Banken AB, Class A      9,529   
  698       Svenska Handelsbanken AB, Class A      9,552   
  492       Swedbank AB, Class A      11,363   
  378       Swedish Match AB      11,962   
  2,174       TeliaSonera AB      11,196   
     

 

 

  
        88,486  
     

 

 

  
   Switzerland—4.8%   
  6       Givaudan SA      10,774   
  100       Kuehne + Nagel International AG      13,908   
  182       Nestle SA      13,958   
  40       Roche Holding AG      10,977   
  82       Schindler Holding AG      13,376   
  76       Schindler Holding AG-PC      12,382   
  172       Swiss Re AG      16,035   
  24       Swisscom AG      12,417   
  196       Wolseley PLC      11,554   
  44       Zurich Insurance Group AG      11,663   
     

 

 

  
        127,044  
     

 

 

  
   United Kingdom—17.2%   
  178       AstraZeneca PLC      11,410   
  1,908       BAE Systems PLC      12,974   
  228       British American Tobacco PLC      13,590   
  1,024       British Land Co. PLC (The) REIT      13,767   
  1,758       BT Group PLC      12,625   
  518       Bunzl PLC      14,872   
  860       Compass Group PLC      14,862   
  236       Derwent London PLC REIT      14,142   
  450       Diageo PLC      13,055   
  2,680       Direct Line Insurance Group PLC      16,324   
  3,458       G4S PLC      12,962   
  600       GlaxoSmithKline PLC      13,019   
  1,350       Hammerson PLC REIT      13,271   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   37  

 

 

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  1,480       HSBC Holdings PLC    $ 11,602   
  732       Inmarsat PLC      11,135   
  2,312       Intu Properties PLC REIT      12,358   
  660       Land Securities Group PLC REIT      13,649   
  3,230       Legal & General Group PLC      13,050   
  10,142       Lloyds Banking Group PLC      11,549   
  1,020       National Grid PLC      14,568   
  114       Next PLC      14,085   
  628       Pearson PLC      8,356   
  502       Prudential PLC      11,777   
  148       Reckitt Benckiser Group PLC      14,501   
  752       RELX NV      12,917   
  806       RELX PLC      14,464   
  1,376       Sage Group PLC (The)      11,582   
  386       Severn Trent PLC      13,371   
  802       Sky PLC      13,575   
  500       SSE PLC      11,699   
  380       Travis Perkins PLC      11,244   
  314       Unilever PLC      14,029   
  834       United Utilities Group PLC      12,732   
  184       Whitbread PLC      14,112   
  560       WPP PLC      12,610   
     

 

 

  
        455,838  
     

 

 

  
   United States—0.4%   
  398       QIAGEN NV(a)      9,699   
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $2,566,859)		      2,654,340  
     

 

 

  
     
   Money Market Fund—0.0%   
  351       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $351)		      351   
     

 

 

  
   Total Investments
(Cost $2,567,210)—99.9%		      2,654,691   
   Other assets less liabilities—0.1%      1,377  
     

 

 

  
   Net Assets—100.0%    $ 2,656,068  
     

 

 

  

Investment Abbreviations:

FDR—Fiduciary Depositary Receipt

PC—Participation Certificate

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $40,237, which represented 1.51% of the Fund’s Net Assets.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   38  

 

 

Schedule of Investments

PowerShares DWA Developed Markets Momentum Portfolio (PIZ)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—100.0%		    
   Australia—5.1%   
  81,326       CSL Ltd.    $ 5,441,886   
  182,165       Ramsay Health Care Ltd.      8,059,168   
     

 

 

  
        13,501,054  
     

 

 

  
   Belgium—1.7%   
  10,419       Ackermans & van Haaren NV      1,594,045   
  13,658       Anheuser-Busch InBev NV      1,639,991   
  21,693       KBC Groep NV      1,327,560   
     

 

 

  
        4,561,596  
     

 

 

  
   Canada—10.5%   
  116,147       Alimentation Couche-Tard, Inc., Class B      4,993,518   
  12,500       CCL Industries, Inc., Class B      1,769,882   
  50,099       CGI Group, Inc., Class A(a)      1,859,830   
  16,161       Constellation Software, Inc.      6,978,993   
  28,811       Dollarama, Inc.      1,945,103   
  96,602       Element Financial Corp.(a)      1,248,549   
  29,590       Magna International, Inc.      1,559,618   
  172,472       Metro, Inc.      4,928,901   
  49,482       Open Text Corp.      2,292,280   
     

 

 

  
        27,576,674  
     

 

 

  
   China—0.5%   
  1,081,715       Sino Biopharmaceutical Ltd.      1,352,475   
     

 

 

  
   Denmark—9.7%   
  23,208       Coloplast A/S, Class B      1,672,742   
  61,717       Genmab A/S(a)      6,115,753   
  88,865       Novo Nordisk A/S, Class B      4,742,573   
  86,662       Novozymes A/S, Class B      4,037,089   
  40,730       Pandora A/S      4,720,824   
  74,395       Vestas Wind Systems A/S      4,356,017   
     

 

 

  
        25,644,998  
     

 

 

  
   Finland—1.5%   
  40,488       Orion Oyj, Class B      1,454,459   
  50,941       Sampo Oyj, Class A      2,502,978   
     

 

 

  
        3,957,437  
     

 

 

  
   France—7.8%   
  1,118,527       Bollore SA      5,562,586   
  9,001       Christian Dior SE      1,780,784   
  28,870       Essilor International SA      3,814,194   
  16,908       Ingenico Group      2,005,955   
  8,002       LVMH Moet Hennessy Louis Vuitton SE      1,499,164   
  32,024       Rubis SCA      2,582,044   
  42,718       Safran SA      3,261,193   
     

 

 

  
        20,505,920  
     

 

 

  
   Germany—8.8%   
  20,431       Adidas AG      1,840,511   
  13,094       Continental AG      3,163,340   
  47,265       Freenet AG      1,601,842   
  20,318       Fresenius Medical Care AG & Co. KGaA      1,837,962   
  19,807       Fresenius SE & Co. KGaA      1,460,477   
  15,860       Henkel AG & Co. KGaA      1,471,834   
  129,198       ProSiebenSat.1 Media SE      7,020,328   
  30,406       United Internet AG      1,587,201   
  64,235       Wirecard AG      3,335,343   
     

 

 

  
        23,318,838  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Hong Kong—2.6%   
  2,932,237       Goldin Financial Holdings Ltd.(a)    $ 5,486,050   
  369,424       Techtronic Industries Co. Ltd.      1,356,126   
     

 

 

  
        6,842,176  
     

 

 

  
   Ireland—2.8%   
  76,558       Glanbia PLC      1,491,811   
  20,767       Kerry Group PLC, Class A      1,696,433   
  63,931       Kingspan Group PLC      1,555,789   
  17,121       Ryanair Holdings PLC ADR      1,338,691   
  46,591       Smurfit Kappa Group PLC      1,334,533   
     

 

 

  
        7,417,257  
     

 

 

  
   Israel—1.2%   
  53,142       NICE Systems Ltd.      3,270,510   
     

 

 

  
   Italy—0.5%   
  57,040       Recordati SpA      1,424,639   
     

 

 

  
   Japan—7.3%   
  52,381       Alps Electric Co. Ltd.      1,645,113   
  46,958       Don Quijote Holdings Co. Ltd.      1,741,347   
  111,451       Fuji Heavy Industries Ltd.      4,366,607   
  26,877       Hoshizaki Electric Co. Ltd.      1,962,182   
  105,179       M3, Inc.      2,054,335   
  41,720       Olympus Corp.      1,419,189   
  7,728       Ryohin Keikaku Co. Ltd.      1,564,492   
  31,488       Sohgo Security Services Co. Ltd.      1,531,672   
  27,278       Sysmex Corp.      1,575,535   
  17,870       Tsuruha Holdings, Inc.      1,424,565   
     

 

 

  
        19,285,037  
     

 

 

  
   Luxembourg—1.0%   
  7,152       Eurofins Scientific SE      2,601,226   
     

 

 

  
   Singapore—0.7%   
  361,556       Singapore Exchange Ltd.      1,905,236   
     

 

 

  
   South Africa—0.8%   
  91,632       Mondi PLC      2,128,406   
     

 

 

  
   Spain—5.5%   
  221,064       Gamesa Corp. Tecnologica SA      3,512,794   
  95,274       Industria de Diseno Textil SA      3,589,361   
  33,945       Red Electrica Corp. SA      3,007,287   
  72,864       Viscofan SA      4,277,198   
     

 

 

  
        14,386,640  
     

 

 

  
   Sweden—5.5%   
  75,152       ASSA ABLOY AB, Class B      1,504,642   
  13,048       Autoliv, Inc. SDR      1,575,112   
  68,554       Hexagon AB, Class B      2,396,296   
  672,549       Hexpol AB, Class B      6,590,085   
  139,596       Trelleborg AB, Class B      2,374,017   
     

 

 

  
        14,440,152  
     

 

 

  
   Switzerland—9.3%   
  3,299       EMS-CHEMIE HOLDING AG      1,400,590   
  1,098       Galenica AG      1,615,115   
  13,322       Geberit AG      4,315,206   
  937       Givaudan SA      1,682,465   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   39  

 

 

PowerShares DWA Developed Markets Momentum Portfolio (PIZ) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Switzerland (continued)   
  34,796       Kuehne + Nagel International AG    $ 4,839,495   
  3,971       Partners Group Holding AG      1,442,169   
  23,683       Schindler Holding AG-PC      3,858,473   
  26,319       Sonova Holding AG      3,604,428   
  18,207       Swiss Re AG      1,697,412   
     

 

 

  
        24,455,353  
     

 

 

  
   United Kingdom—16.1%   
  34,897       Bellway PLC      1,399,112   
  27,024       Berkeley Group Holdings PLC (The)      1,384,795   
  48,902       Croda International PLC      2,188,692   
  18,145       DCC PLC      1,458,604   
  24,778       Derwent London PLC REIT      1,484,764   
  121,494       Essentra PLC      1,579,889   
  126,955       Hargreaves Lansdown PLC      2,831,239   
  130,212       Hiscox Ltd.      1,945,636   
  245,115       Howden Joinery Group PLC      1,754,983   
  120,933       IG Group Holdings PLC      1,411,038   
  766,922       ITV PLC      2,989,511   
  455,411       Legal & General Group PLC      1,839,928   
  29,329       Reckitt Benckiser Group PLC      2,873,558   
  100,895       Rightmove PLC      5,982,012   
  148,790       RPC Group PLC      1,495,940   
  45,932       Spirax-Sarco Engineering PLC      2,157,205   
  827,691       Taylor Wimpey PLC      2,531,005   
  71,275       Travis Perkins PLC      2,109,076   
  61,331       WH Smith PLC      1,614,968   
  18,984       Whitbread PLC      1,455,975   
     

 

 

  
        42,487,930  
     

 

 

  
   United States—1.1%   
  30,254       Valeant Pharmaceuticals International, Inc.(a)      2,822,026   
     

 

 

  
   Total Investments
(Cost $250,020,325)—100.0%		      263,885,580   
   Other assets less liabilities—0.0%      110,798  
     

 

 

  
   Net Assets—100.0%    $ 263,996,378  
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

PC—Participation Certificate

REIT—Real Estate Investment Trust

SDR—Swedish Depositary Receipt

Notes to Schedule of Investments:

(a)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   40  

 

 

Schedule of Investments

PowerShares DWA Emerging Markets Momentum Portfolio (PIE)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—99.8%		    
   China—21.5%   
  492,500       AAC Technologies Holdings, Inc.    $ 3,139,250   
  514,016       ANTA Sports Products Ltd.      1,442,542   
  1,464,000       Beijing Enterprises Water Group Ltd.      1,169,296   
  4,055,875       China Dongxiang Group Co. Ltd.      1,030,964   
  1,602,000       China Power International Development Ltd.      1,012,864   
  964,000       China Resources Gas Group Ltd.      2,655,630   
  6,120,000       China Traditional Chinese Medicine Co. Ltd.(a)      4,643,243   
  1,358,000       CSPC Pharmaceutical Group Ltd.      1,268,619   
  7,444,000       CT Environmental Group Ltd.      2,650,990   
  208,000       ENN Energy Holdings Ltd.      1,198,333   
  784,000       Guangdong Investment Ltd.      1,106,690   
  1,692,895       Haitian International Holdings Ltd.      2,975,088   
  290,000       Hengan International Group Co. Ltd.      3,141,314   
  9,067       NetEase, Inc. ADR      1,310,454   
  1,065,456       Shenzhou International Group Holdings Ltd.      5,258,473   
  35,689       TAL Education Group, Class A ADR(a)      1,372,242   
  240,872       Tencent Holdings Ltd.      4,556,307   
  766,800       Xinjiang Goldwind Science & Technology Co. Ltd., H-Shares      1,446,513   
  136,500       Zhuzhou CSR Times Electric Co. Ltd., H-Shares      890,321   
     

 

 

  
        42,269,133  
     

 

 

  
   India—1.3%   
  19,844       Dr Reddy’s Laboratories Ltd. ADR      1,285,693   
  34,664       WNS (Holdings) Ltd. ADR(a)      1,181,002   
     

 

 

  
        2,466,695  
     

 

 

  
   Indonesia—0.6%   
  1,203,116       PT Bank Central Asia Tbk      1,133,896   
     

 

 

  
   Malaysia—6.5%   
  2,180,100       Cahya Mata Sarawak Bhd      2,699,751   
  1,422,500       Hap Seng Consolidated Bhd      2,003,288   
  4,025,600       Hartalega Holdings Bhd      4,882,071   
  4,312,500       Sunway Bhd      3,111,907   
     

 

 

  
        12,697,017  
     

 

 

  
   Mexico—6.4%   
  619,900       Alsea SAB de CV      2,035,736   
  368,100       Gruma SAB de CV, Class B      5,676,696   
  219,297       Grupo Aeroportuario del Centro Norte SAB de CV, Class B      1,127,216   
  129,946       Grupo Aeroportuario del Pacifico SAB de CV, Class B      1,169,603   
  195,000       Industrias Bachoco SAB de CV, Series B      889,305   
  129,000       Promotora y Operadora de Infraestructura SAB de CV(a)      1,616,407   
     

 

 

  
        12,514,963  
     

 

 

  
   Philippines—13.2%   
  1,962,207       Aboitiz Equity Ventures, Inc.      2,346,937   
  3,577,861       Aboitiz Power Corp.      3,209,529   
  1,445,746       Ayala Land, Inc.      1,107,005   
  20,821       Globe Telecom, Inc.      1,013,923   
  3,107,659       JG Summit Holdings, Inc.      4,739,147   
  560,891       Metropolitan Bank & Trust Co.      1,018,876   
  2,251,213       Robinsons Land Corp.      1,471,318   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Philippines (continued)   
  485,033       Security Bank Corp.    $ 1,472,089   
  1,149,406       Semirara Mining and Power Corp.      3,287,174   
  65,500       SM Investments Corp.      1,224,103   
  1,190,920       Universal Robina Corp.      5,102,489   
     

 

 

  
        25,992,590  
     

 

 

  
   Russia—0.5%   
  149,285       Sistema JSFC GDR(b)      1,037,531   
     

 

 

  
   South Africa—14.0%   
  216,664       AVI Ltd.      1,382,529   
  162,575       Brait SE(a)      1,870,125   
  210,304       Clicks Group Ltd.      1,539,963   
  114,807       Discovery Ltd.      1,230,670   
  325,053       EOH Holdings Ltd.      3,602,113   
  202,819       Famous Brands Ltd.      1,980,205   
  271,070       FirstRand Ltd.      997,175   
  116,293       Hyprop Investments Ltd. REIT      1,057,083   
  69,869       Mondi Ltd.      1,629,137   
  16,873       Naspers Ltd., Class N      2,477,181   
  374,529       Netcare Ltd.      1,069,064   
  107,496       Pioneer Foods Group Ltd.      1,545,484   
  162,870       PSG Group Ltd.      3,148,719   
  188,859       Resilient Property Income Fund Ltd. REIT      1,668,819   
  212,951       RMB Holdings Ltd.      1,040,798   
  533,457       Super Group Ltd.(a)      1,258,043   
     

 

 

  
        27,497,108  
     

 

 

  
   South Korea—18.4%   
  3,453       Amorepacific Corp.      1,143,377   
  23,846       AMOREPACIFIC Group      3,367,577   
  16,297       CJ CGV Co. Ltd.      1,486,679   
  7,756       CJ Corp.      1,632,771   
  49,604       Dongsuh Cos., Inc.      1,468,475   
  45,263       Hanmi Science Co. Ltd.(a)      5,220,898   
  20,453       Hanssem Co. Ltd.      4,189,093   
  17,994       Hotel Shilla Co. Ltd.      1,736,187   
  45,163       Hyundai Greenfood Co. Ltd.      944,816   
  11,110       KEPCO Plant Service & Engineering Co. Ltd.      1,013,499   
  14,205       Korea Aerospace Industries Ltd.      1,121,398   
  18,374       Korea Electric Terminal Co. Ltd.      1,589,120   
  14,865       Korea Kolmar Co. Ltd.      1,170,893   
  8,035       SK Holdings Co. Ltd.      1,881,799   
  39,171       ViroMed Co. Ltd.(a)      5,459,648   
  928       Young Poong Corp.      1,019,127   
  41,626       Youngone Corp.      1,748,946   
     

 

 

  
        36,194,303  
     

 

 

  
   Taiwan—10.4%   
  530,000       Chicony Electronics Co. Ltd.      1,266,900   
  1,291,800       China Life Insurance Co. Ltd.      1,070,415   
  497,000       Elite Material Co. Ltd.      1,021,144   
  652,000       Feng Tay Enterprise Co. Ltd.      3,745,683   
  273,000       Giant Manufacturing Co. Ltd.      2,064,519   
  900,000       Hota Industrial Manufacturing Co. Ltd.      2,994,132   
  81,000       King Slide Works Co. Ltd.      1,064,164   
  228,000       Merida Industry Co. Ltd.      1,337,933   
  164,000       President Chain Store Corp.      1,091,195   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   41  

 

 

PowerShares DWA Emerging Markets Momentum Portfolio (PIE) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Taiwan (continued)   
  533,000       Taiwan Paiho Ltd.    $ 1,278,996   
  352,000       Taiwan Secom Co. Ltd.      1,059,356   
  253,000       Taiwan Semiconductor Manufacturing Co. Ltd.      1,063,795   
  765,000       Uni-President Enterprises Corp.      1,296,071   
     

 

 

  
        20,354,303   
     

 

 

  
   Thailand—6.4%   
  3,810,600       Bangkok Dusit Medical Services PCL NVDR      2,035,606   
  783,100       Bangkok Life Assurance PCL NVDR      1,133,891   
  3,708,800       BTS Group Holdings PCL NVDR      1,006,253   
  361,735       Bumrungrad Hospital PCL NVDR      2,196,802   
  917,700       Central Pattana PCL NVDR      1,186,876   
  489,717       Delta Electronics Thailand PCL NVDR      1,163,452   
  410,500       Glow Energy PCL NVDR      989,678   
  939,440       Intouch Holdings PCL NVDR      1,980,966   
  72,862       Siam Cement PCL (The) NVDR      930,044   
     

 

 

  
        12,623,568   
     

 

 

  
   Turkey—0.6%   
  97,947       Ford Otomotiv Sanayi AS      1,153,861   
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $191,306,052)		      195,934,968   
     

 

 

  
     
   Money Market Fund—0.1%   
  230,299       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $230,299)		      230,299   
     

 

 

  
   Total Investments
(Cost $191,536,351)—99.9%		      196,165,267   
   Other assets less liabilities—0.1%      102,800   
     

 

 

  
   Net Assets—100.0%    $ 196,268,067   
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

GDR—Global Depositary Receipt

NVDR—Non-voting Depositary Receipt

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $1,037,531, which represented 0.53% of the Fund’s Net Assets.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   42  

 

 

Schedule of Investments

PowerShares Emerging Markets Infrastructure Portfolio (PXR)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.1%    
   Australia—0.4%   
  5,976       CIMIC Group Ltd.    $ 118,186   
     

 

 

  
   Brazil—4.1%   
  145,010       Cia Siderurgica Nacional SA ADR(a)      178,362   
  186,843       Gerdau SA (Preference Shares) ADR      259,712   
  40,500       Iochpe-Maxion SA      168,590   
  89,704       Vale SA ADR(a)      391,110   
  42,060       WEG SA      157,575   
     

 

 

  
        1,155,349  
     

 

 

  
   Chile—0.5%   
  52,186       CAP SA      138,080   
     

 

 

  
   China—33.6%   
  772,950       Angang Steel Co. Ltd., H-Shares      323,139   
  247,174       Anhui Conch Cement Co. Ltd., H-Shares      757,459   
  832,919       BBMG Corp. H-Shares      587,872   
  783,637       China Communications Construction Co. Ltd., H-Shares      1,083,933   
  588,797       China Machinery Engineering Corp., H-Shares      513,576   
  858,673       China Molybdenum Co. Ltd., H-Shares      479,743   
  601,312       China National Building Material Co. Ltd., H-Shares      376,300   
  394,630       China Railway Construction Corp. Ltd., H-Shares      593,719   
  807,412       China Railway Group Ltd., H-Shares      768,855   
  382,010       Chongqing Iron & Steel Co. Ltd., H-Shares(b)      61,614   
  543,379       CSG Holding Co. Ltd., Class B      431,893   
  52,540       CSSC Offshore and Marine Engineering Group Company Ltd., H-Shares(b)      130,026   
  242,221       Dongfang Electric Corp. Ltd., H-Shares      290,974   
  286,185       First Tractor Co. Ltd., H-Shares      195,711   
  480,885       Harbin Electric Co. Ltd., H-Shares      287,907   
  157,000       Huaxin Cement Co. Ltd., Class B      104,719   
  263,862       Jiangxi Copper Co. Ltd., H-Shares      349,315   
  1,341,399       Lonking Holdings Ltd.      216,352   
  2,058,056       Metallurgical Corp. of China Ltd., H-Shares      759,479   
  588,526       Shanghai Electric Group Co. Ltd., H-Shares      365,261   
  356,163       Xinjiang Goldwind Science & Technology Co. Ltd., H-Shares      671,876   
     

 

 

  
        9,349,723  
     

 

 

  
   France—1.5%   
  12,972       Alstom SA(b)      425,014   
     

 

 

  
   India—2.2%   
  13,225       Larsen & Toubro Ltd. GDR(c)      283,015   
  18,054       Mahindra & Mahindra Ltd. GDR(c)      326,777   
     

 

 

  
        609,792  
     

 

 

  
   Indonesia—4.7%   
  78,600       PT Indocement Tunggal Prakarsa Tbk      103,364   
  1,690,899       PT Pembangunan Perumahan Persero Tbk      470,672   
  172,335       PT Semen Indonesia (Persero) Tbk      123,389   
  390,928       PT Tower Bersama Infrastructure Tbk(b)      204,211   
  90,657       PT United Tractors Tbk      119,882   
  436,105       PT Vale Indonesia Tbk      71,211   
  935,800       PT Waskita Karya Persero Tbk      111,441   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Indonesia (continued)   
  449,768       PT Wijaya Karya Persero Tbk    $ 96,608   
     

 

 

  
        1,300,778  
     

 

 

  
   Israel—0.6%   
  4,942       Caesarstone Sdot-Yam Ltd.      175,490   
     

 

 

  
   Italy—1.6%   
  41,076       Italcementi SpA      458,284   
     

 

 

  
   Malaysia—4.4%   
  754,974       Dialog Group Bhd      281,182   
  336,884       Gamuda Bhd      352,881   
  552,514       IJM Corp. Bhd      426,989   
  71,024       Lafarge Malaysia Bhd      150,447   
     

 

 

  
        1,211,499  
     

 

 

  
   Mexico—4.1%   
  79,889       Cemex SAB de CV ADR(b)      504,100   
  17,489       Grupo Carso SAB de CV, Series A1      77,918   
  44,504       Promotora y Operadora de Infraestructura SAB de CV(b)      557,648   
     

 

 

  
        1,139,666  
     

 

 

  
   Netherlands—0.4%   
  3,750       OCI NV(b)      106,564   
     

 

 

  
   Philippines—0.9%   
  2,331,367       Metro Pacific Investments Corp.      259,926   
     

 

 

  
   Russia—3.9%   
  56,680       Evraz PLC(b)      74,187   
  23,349       Magnitogorsk Iron & Steel Works OJSC GDR(c)      115,227   
  136,455       Mechel ADR(a)(b)      137,820   
  39,429       MMC Norilsk Nickel PJSC ADR      585,521   
  4,977       Novolipetsk Steel OJSC GDR(c)      61,217   
  10,436       Severstal PAO GDR(c)      122,727   
     

 

 

  
        1,096,699  
     

 

 

  
   Singapore—1.0%   
  170,289       Sembcorp Marine Ltd.      284,524   
     

 

 

  
   South Africa—6.0%   
  20,885       African Rainbow Minerals Ltd.      79,990   
  24,871       Assore Ltd.      144,110   
  272,557       Murray & Roberts Holdings Ltd.      206,886   
  349,438       PPC Ltd.      421,401   
  100,411       Reunert Ltd.      490,759   
  33,863       Wilson Bayly Holmes-Ovcon Ltd.      317,644   
     

 

 

  
        1,660,790  
     

 

 

  
   Spain—1.4%   
  11,149       ACS Actividades de Construccion y Servicios SA      381,111   
     

 

 

  
   Sweden—2.5%   
  26,455       Atlas Copco AB, Class A(a)      694,794   
     

 

 

  
   Switzerland—2.4%   
  35,837       ABB Ltd.(b)      676,564   
     

 

 

  
   Taiwan—11.6%   
  498,234       Asia Cement Corp.      517,979   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   43  

 

 

PowerShares Emerging Markets Infrastructure Portfolio (PXR) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Taiwan (continued)   
  736,845       China Steel Corp.    $ 446,009   
  405,000       CTCI Corp.      528,963   
  46,000       King Slide Works Co. Ltd.      604,340   
  694,573       Taiwan Cement Corp.      774,518   
  54,000       Yeong Guan Energy Technology Group Co. Ltd.      346,820   
     

 

 

  
        3,218,629  
     

 

 

  
   Thailand—6.6%   
  302,007       CH Karnchang PCL NVDR      239,874   
  313,700       Gunkul Engineering PCL NVDR      213,440   
  1,203,800       Italian-Thai Development PCL NVDR(b)      279,225   
  17,807       Siam Cement PCL (The) NVDR      227,297   
  14,400       Siam City Cement PCL NVDR      136,844   
  532,200       Sino-Thai Engineering & Construction PCL NVDR      377,818   
  7,198,527       Superblock PCL NVDR(b)      301,562   
  1,012,600       TPI Polene PCL NVDR      71,744   
     

 

 

  
        1,847,804  
     

 

 

  
   Turkey—2.0%   
  161,673       Aksa Enerji Uretim AS(b)      145,481   
  34,654       Cimsa Cimento Sanayi ve Ticaret AS      189,243   
  158,201       Tekfen Holding AS      226,576   
     

 

 

  
        561,300  
     

 

 

  
   United Arab Emirates—1.3%   
  36,171       Orascom Construction Ltd.(b)      361,710   
     

 

 

  
   United States—2.4%   
  9,326       Caterpillar, Inc.      680,705   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $34,636,617)—100.1%		      27,912,981   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—3.4%   
  939,825       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $939,825)		      939,825  
     

 

 

  
   Total Investments
(Cost $35,576,442)—103.5%		      28,852,806   
   Other assets less liabilities—(3.5)%      (981,144 ) 
     

 

 

  
   Net Assets—100.0%    $ 27,871,662   
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

GDR—Global Depositary Receipt

NVDR—Non-voting Depositary Receipt

Notes to Schedule of Investments:

(a)  All or a portion of this security was out on loan at October 31, 2015.
(b)  Non-income producing security.
(c)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $908,963, which represented 3.26% of the Fund’s Net Assets.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2J.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   44  

 

 

Schedule of Investments

PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Austria—3.7%   
  104,024       BUWOG AG    $ 2,223,511   
  60,187       Oesterreichische Post AG      2,200,673   
  63,133       Vienna Insurance Group AG Wiener Versicherung Gruppe      2,030,825   
     

 

 

  
        6,455,009  
     

 

 

  
   Belgium—8.0%   
  13,679       Ackermans & van Haaren NV      2,092,805   
  55,637       Ageas      2,469,747   
  23,376       Cofinimmo SA REIT      2,620,964   
  44,366       Colruyt SA      2,207,116   
  29,698       Groupe Bruxelles Lambert SA      2,424,684   
  33,716       Telenet Group Holding NV(a)      1,970,973   
     

 

 

  
        13,786,289  
     

 

 

  
   Finland—1.2%   
  41,532       Sampo Oyj, Class A      2,040,668   
     

 

 

  
   France—23.5%   
  18,499       Aeroports de Paris      2,336,733   
  15,239       Air Liquide SA      1,984,701   
  62,744       Alstom SA(a)      2,055,740   
  18,180       bioMerieux      2,122,724   
  89,537       Bureau Veritas SA      2,034,518   
  127,295       CNP Assurances      1,826,608   
  34,752       Danone SA      2,434,234   
  26,466       Dassault Systemes      2,100,291   
  72,143       Eutelsat Communications SA      2,391,580   
  21,142       Fonciere des Regions REIT      2,002,649   
  16,703       Gecina SA REIT      2,147,693   
  146,072       Groupe Eurotunnel SE      2,056,514   
  11,063       L’Oreal SA      2,029,255   
  85,510       Mercialys SA REIT      1,974,658   
  27,880       Orpea      2,248,228   
  18,200       Pernod Ricard SA      2,155,217   
  57,405       SCOR SE      2,147,779   
  28,439       Sodexo SA      2,543,684   
  84,369       Vivendi SA      2,042,439   
     

 

 

  
        40,635,245  
     

 

 

  
   Germany—30.7%   
  11,544       Allianz SE      2,032,044   
  149,382       alstria office REIT-AG REIT      2,094,864   
  32,163       Axel Springer SE      1,816,946   
  23,311       Beiersdorf AG      2,225,616   
  33,181       Brenntag AG      2,014,104   
  20,631       Deutsche Boerse AG      1,908,666   
  47,469       Deutsche EuroShop AG      2,300,395   
  33,537       Fielmann AG      2,361,724   
  36,470       Fraport AG Frankfurt Airport Services Worldwide      2,324,536   
  23,052       Fresenius Medical Care AG & Co. KGaA      2,085,279   
  20,376       Hannover Rueck SE      2,367,879   
  23,496       Henkel AG & Co. KGaA      2,180,468   
  18,516       Henkel AG & Co. KGaA (Preference Shares)      2,018,780   
  19,788       Kabel Deutschland Holding AG      2,530,158   
  25,129       LEG Immobilien AG      2,013,898   
  11,279       Linde AG      1,965,462   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Germany (continued)   
  54,194       MAN SE    $ 5,677,635   
  20,118       MTU Aero Engines AG      1,870,540   
  12,644       Muenchener Rueckversicherungs-Gesellschaft AG      2,535,046   
  83,548       RHOEN KLINIKUM AG      2,504,786   
  30,125       Symrise AG      1,993,327   
  171,273       TAG Immobilien AG      2,227,792   
  63,335       Talanx AG      2,040,821   
     

 

 

  
        53,090,766  
     

 

 

  
   Ireland—2.5%   
  94,429       Glanbia PLC      1,840,046   
  29,128       Kerry Group PLC, Class A      2,379,434   
     

 

 

  
        4,219,480  
     

 

 

  
   Italy—3.6%   
  45,132       DiaSorin SpA      2,031,095   
  763,094       Hera SpA      2,014,655   
  417,383       Terna-Rete Elettrica Nationale SpA      2,133,796   
     

 

 

  
        6,179,546  
     

 

 

  
   Luxembourg—1.1%   
  65,336       SES SA FDR, Class A      1,940,382   
     

 

 

  
   Netherlands—9.0%   
  59,354       Aalberts Industries NV      1,938,441   
  43,171       Eurocommercial Properties NV CVA      2,072,081   
  30,354       Heineken Holding NV, Class A      2,445,383   
  25,053       Heineken NV      2,300,329   
  77,217       NN Group NV      2,436,957   
  36,214       Wereldhave NV REIT      2,271,416   
  58,490       Wolters Kluwer NV      1,989,695   
     

 

 

  
        15,454,302  
     

 

 

  
   Spain—13.2%   
  119,049       Abertis Infraestructuras SA      1,987,078   
  46,346       Amadeus IT Holding SA, Class A      1,984,361   
  110,810       Ebro Foods SA      2,112,732   
  71,790       Enagas SA      2,185,190   
  80,768       Ferrovial SA      2,048,500   
  100,104       Gas Natural SDG SA      2,179,530   
  135,539       Hispania Activos Inmobiliarios SA(a)      2,051,208   
  319,961       Iberdrola SA      2,296,332   
  166,377       Merlin Properties SOCIMI SA REIT      2,142,972   
  136,123       Telefonica SA      1,808,931   
  35,153       Viscofan SA      2,063,520   
     

 

 

  
        22,860,354  
     

 

 

  
   United Kingdom—2.5%   
  131,535       RELX NV      2,259,418   
  46,228       Unilever NV CVA      2,099,824   
     

 

 

  
        4,359,242  
     

 

 

  
   United States—1.0%   
  70,427       QIAGEN NV(a)      1,716,206   
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $168,947,266)		      172,737,489   
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   45  

 

 

PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Money Market Fund—0.0%   
  40,083       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $40,083)		    $ 40,083   
     

 

 

  
   Total Investments
(Cost $168,987,349)—100.0%		      172,777,572   
   Other assets less liabilities—0.0%      34,395   
     

 

 

  
   Net Assets—100.0%    $ 172,811,967   
     

 

 

  

Investment Abbreviations:

CVA—Dutch Certificates

FDR—Fiduciary Depositary Receipt

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   46  

 

 

Schedule of Investments

PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—99.9%		    
   Australia—44.6%   
  10,575       AGL Energy Ltd.    $ 126,223   
  11,982       Amcor Ltd.      116,688   
  49,519       AMP Ltd.      202,437   
  8,909       APA Group      58,476   
  232,383       Arrium Ltd.(a)      16,579   
  12,710       Asciano Ltd.      74,357   
  1,584       ASX Ltd.      46,583   
  22,440       Aurizon Holdings Ltd.      82,771   
  40,530       Australia & New Zealand Banking Group Ltd.      786,808   
  4,452       Bank of Queensland Ltd.      41,514   
  7,704       Bendigo & Adelaide Bank Ltd.      58,812   
  656,750       BGP Holdings PLC(a)      0   
  55,755       BHP Billiton Ltd.      915,699   
  15,486       BlueScope Steel Ltd.      49,276   
  12,594       Boral Ltd.      48,430   
  14,340       Brambles Ltd.      106,196   
  2,352       Caltex Australia Ltd.      53,026   
  2,619       CIMIC Group Ltd.      51,795   
  9,895       Coca-Cola Amatil Ltd.      64,313   
  20,026       Commonwealth Bank of Australia      1,096,284   
  4,322       Computershare Ltd.      33,333   
  3,497       Crown Resorts Ltd.      28,592   
  1,942       CSL Ltd.      129,948   
  11,399       Dexus Property Group REIT      62,946   
  12,454       Downer EDI Ltd.      31,543   
  24,052       DUET Group      40,497   
  36,906       Fortescue Metals Group Ltd.      55,031   
  14,466       Goodman Group REIT      62,647   
  19,893       GPT Group (The) REIT      67,699   
  7,006       Iluka Resources Ltd.      32,090   
  24,759       Incitec Pivot Ltd.      69,774   
  31,225       Insurance Australia Group Ltd.      124,977   
  7,127       Lend Lease Group      66,102   
  3,901       Macquarie Group Ltd.      238,517   
  27,839       Medibank Private Ltd.      46,874   
  52,094       Metcash Ltd.      44,228   
  51,177       Mirvac Group REIT      65,904   
  40,184       National Australia Bank Ltd.      864,379   
  12,923       Newcrest Mining Ltd.(a)      113,497   
  8,110       Orica Ltd.      95,355   
  26,488       Origin Energy Ltd.      103,938   
  14,216       OZ Minerals Ltd.      44,221   
  27,134       Qantas Airways Ltd.(a)      76,467   
  27,306       QBE Insurance Group Ltd.      258,129   
  22,785       Santos Ltd.      94,935   
  53,311       Scentre Group REIT      157,464   
  5,020       Sonic Healthcare Ltd.      69,052   
  91,492       South32 Ltd.(a)      95,628   
  40,614       Stockland REIT      117,353   
  26,696       Suncorp Group Ltd.      249,696   
  14,065       Tabcorp Holdings Ltd.      47,364   
  26,463       Tatts Group Ltd.      74,765   
  63,050       Telstra Corp. Ltd.      242,908   
  10,556       Transurban Group      78,625   
  14,528       Wesfarmers Ltd.      408,485   
  19,005       Westfield Corp. REIT      138,981   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Australia (continued)   
  39,625       Westpac Banking Corp.    $ 887,127   
  10,847       Woodside Petroleum Ltd.      229,146   
  21,968       Woolworths Ltd.      377,878   
  8,299       WorleyParsons Ltd.      38,604   
     

 

 

  
        10,060,966  
     

 

 

  
   China—0.5%   
  16,226       China Mengniu Dairy Co. Ltd.      31,530   
  25,464       Global Logistic Properties Ltd.      40,728   
  39,943       Want Want China Holdings Ltd.      33,294   
     

 

 

  
        105,552  
     

 

 

  
   Hong Kong—12.8%   
  63,963       AIA Group Ltd.      376,345   
  11,080       Bank of East Asia Ltd. (The)      41,532   
  44,278       BOC Hong Kong (Holdings) Ltd.      142,259   
  19,477       Cathay Pacific Airways Ltd.      38,803   
  13,482       Cheung Kong Property Holdings Ltd.      94,808   
  13,482       CK Hutchison Holdings Ltd.      185,266   
  16,668       CLP Holdings Ltd.      145,171   
  6,866       Galaxy Entertainment Group Ltd.      23,610   
  27,633       Hang Lung Properties Ltd.      67,816   
  7,982       Hang Seng Bank Ltd.      146,867   
  14,571       Henderson Land Development Co. Ltd.      93,347   
  38,769       Hong Kong & China Gas Co. Ltd.      78,738   
  3,064       Hong Kong Exchanges and Clearing Ltd.      80,572   
  8,735       Hongkong Land Holdings Ltd.      65,600   
  1,375       Jardine Matheson Holdings Ltd.      75,061   
  10,856       Kerry Properties Ltd.      32,217   
  111,115       Li & Fung Ltd.      90,325   
  19,751       Link REIT      118,377   
  14,212       MTR Corp. Ltd.      64,549   
  89,306       New World Development Co. Ltd.      95,758   
  148,228       Noble Group Ltd.      53,449   
  8,459       Power Assets Holdings Ltd.      84,425   
  15,729       Sands China Ltd.      57,131   
  32,414       Sino Land Co. Ltd.      50,272   
  30,583       SJM Holdings Ltd.      25,531   
  18,725       Sun Hung Kai Properties Ltd.      251,033   
  7,887       Swire Pacific Ltd., Class A      91,590   
  14,787       Swire Properties Ltd.      44,551   
  22,236       Wharf Holdings Ltd. (The)      132,984   
  8,735       Wheelock & Co. Ltd.      40,857   
     

 

 

  
        2,888,844  
     

 

 

  
   New Zealand—0.7%   
  11,987       Fletcher Building Ltd.      60,504   
  43,150       Spark New Zealand Ltd.      98,096   
     

 

 

  
        158,600  
     

 

 

  
   Singapore—7.7%   
  22,342       Ascendas Real Estate Investment Trust REIT      38,127   
  32,080       CapitaLand Ltd.      71,009   
  27,971       CapitaLand Mall Trust REIT      39,545   
  6,241       City Developments Ltd.      35,383   
  22,676       ComfortDelGro Corp. Ltd.      49,222   
  21,599       DBS Group Holdings Ltd.      266,344   
  170,830       Golden Agri-Resources Ltd.      47,571   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   47  

 

 

PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Singapore (continued)   
  97,112       Hutchison Port Holdings Trust    $ 53,897   
  1,485       Jardine Cycle & Carriage Ltd.      34,588   
  24,772       Keppel Corp. Ltd.      125,231   
  26,127       Oversea-Chinese Banking Corp. Ltd.      168,459   
  18,941       Sembcorp Industries Ltd.      48,417   
  16,787       Sembcorp Marine Ltd.      28,048   
  10,831       Singapore Airlines Ltd.      83,524   
  19,912       Singapore Press Holdings Ltd.      56,729   
  16,759       Singapore Technologies Engineering Ltd.      39,609   
  92,886       Singapore Telecommunications Ltd.      263,967   
  14,969       United Overseas Bank Ltd.      217,294   
  32,653       Wilmar International Ltd.      72,977   
     

 

 

  
        1,739,941  
     

 

 

  
   South Korea—32.4%   
  3,550       BNK Financial Group, Inc.      43,595   
  344       CJ Corp.      72,418   
  1,043       Daelim Industrial Co. Ltd.      68,432   
  3,218       Daewoo Shipbuilding & Marine Engineering Co. Ltd.      19,589   
  2,044       Doosan Heavy Industries & Construction Co. Ltd.      36,934   
  4,547       Doosan Infracore Co. Ltd.(a)      24,968   
  320       E-Mart, Inc.      59,646   
  1,446       GS Holdings Corp.      63,672   
  5,840       Hana Financial Group, Inc.      142,408   
  1,032       Hankook Tire Co. Ltd.      39,604   
  1,640       Hanwha Corp.      54,017   
  881       Hyosung Corp.      90,414   
  1,548       Hyundai Engineering & Construction Co. Ltd.      46,981   
  2,096       Hyundai Heavy Industries Co. Ltd.(a)      175,027   
  923       Hyundai Mobis Co. Ltd.      194,307   
  4,131       Hyundai Motor Co.      565,270   
  1,556       Hyundai Steel Co.      71,109   
  7,068       Industrial Bank of Korea      86,796   
  6,068       KB Financial Group, Inc.      192,411   
  5,817       Kia Motors Corp.      284,714   
  6,102       Korea Electric Power Corp.      275,113   
  1,574       Korea Gas Corp.      58,815   
  106       Korea Zinc Co. Ltd.      44,072   
  1,163       Korean Air Lines Co. Ltd.(a)      31,471   
  5,613       KT Corp.(a)      145,488   
  1,463       KT&G Corp.      146,294   
  811       LG Chem Ltd.      216,613   
  1,517       LG Corp.      87,822   
  5,320       LG Display Co. Ltd.      100,796   
  4,081       LG Electronics, Inc.      175,762   
  1,118       LG International Corp.      34,274   
  4,614       LG Uplus Corp.      44,317   
  329       Lotte Chemical Corp.      69,404   
  290       Lotte Shopping Co. Ltd.      59,015   
  519       OCI Co. Ltd.      37,421   
  1,583       POSCO      252,713   
  971       Samsung Electro-Mechanics Co. Ltd.      55,532   
  1,449       Samsung Electronics Co. Ltd.      1,743,808   
  551       Samsung Fire & Marine Insurance Co. Ltd.      154,418   
  5,957       Samsung Heavy Industries Co. Ltd.      69,495   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   South Korea (continued)   
  1,119       Samsung Life Insurance Co. Ltd.    $ 106,987   
  575       Samsung SDI Co. Ltd.      53,715   
  5,881       Shinhan Financial Group Co. Ltd.      224,655   
  253       SK Holdings Co. Ltd.      59,253   
  3,839       SK Hynix, Inc.      103,379   
  2,922       SK Innovation Co. Ltd.(a)      303,721   
  6,562       SK Networks Co. Ltd.      40,809   
  552       SK Telecom Co. Ltd.      116,690   
  1,274       S-Oil Corp.      76,325   
  11,474       Woori Bank      99,840   
     

 

 

  
        7,320,329  
     

 

 

  
   United Kingdom—1.0%   
  6,513       Rio Tinto Ltd.      235,355   
     

 

 

  
   United States—0.2%   
  4,712       Sims Metal Management Ltd.      33,080   
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $26,351,508)		      22,542,667   
     

 

 

  
     
   Money Market Fund—0.1%   
  28,199       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $28,199)		      28,199   
     

 

 

  
   Total Investments
(Cost $26,379,707)—100.0%		      22,570,866   
   Other assets less liabilities—0.0%      7,396   
     

 

 

  
   Net Assets—100.0%    $ 22,578,262   
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   48  

 

 

Schedule of Investments

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—99.8%		    
   Australia—5.0%   
  39,106       AGL Energy Ltd.    $ 466,770   
  44,251       Amcor Ltd.      430,942   
  184,651       AMP Ltd.      754,866   
  32,831       APA Group      215,494   
  872,044       Arrium Ltd.(a)      62,216   
  47,063       Asciano Ltd.      275,332   
  5,931       ASX Ltd.      174,421   
  83,299       Aurizon Holdings Ltd.      307,251   
  150,471       Australia & New Zealand Banking Group Ltd.      2,921,090   
  16,698       Bank of Queensland Ltd.      155,705   
  28,531       Bendigo & Adelaide Bank Ltd.      217,803   
  231,466       BGP Holdings PLC(a)      0   
  206,659       BHP Billiton Ltd.      3,394,089   
  136,225       BHP Billiton PLC      2,189,064   
  58,100       BlueScope Steel Ltd.      184,873   
  46,466       Boral Ltd.      178,685   
  53,416       Brambles Ltd.      395,578   
  8,690       Caltex Australia Ltd.      195,916   
  9,830       CIMIC Group Ltd.      194,406   
  36,555       Coca-Cola Amatil Ltd.      237,590   
  74,809       Commonwealth Bank of Australia      4,095,270   
  16,210       Computershare Ltd.      125,018   
  13,124       Crown Resorts Ltd.      107,304   
  7,274       CSL Ltd.      486,736   
  42,120       Dexus Property Group REIT      232,591   
  46,724       Downer EDI Ltd.      118,340   
  115,310       DUET Group      194,152   
  135,376       Fortescue Metals Group Ltd.(b)      201,861   
  53,531       Goodman Group REIT      231,824   
  73,500       GPT Group (The) REIT      250,132   
  26,276       Iluka Resources Ltd.      120,353   
  91,491       Incitec Pivot Ltd.      257,833   
  115,194       Insurance Australia Group Ltd.      461,059   
  26,420       Lend Lease Group      245,042   
  14,545       Macquarie Group Ltd.      889,320   
  104,458       Medibank Private Ltd.      175,880   
  195,471       Metcash Ltd.      165,956   
  189,348       Mirvac Group REIT      243,838   
  149,419       National Australia Bank Ltd.      3,214,080   
  48,126       Newcrest Mining Ltd.(a)      422,670   
  30,216       Orica Ltd.      355,269   
  98,426       Origin Energy Ltd.      386,221   
  53,338       OZ Minerals Ltd.      165,915   
  100,624       Qantas Airways Ltd.(a)      283,571   
  101,310       QBE Insurance Group Ltd.      957,705   
  84,928       Santos Ltd.      353,857   
  196,555       Scentre Group REIT      580,561   
  18,601       Sonic Healthcare Ltd.      255,863   
  368,435       South32 Ltd.(a)      385,090   
  149,876       Stockland REIT      433,063   
  99,668       Suncorp Group Ltd.      932,228   
  52,770       Tabcorp Holdings Ltd.      177,702   
  98,038       Tatts Group Ltd.      276,983   
  233,975       Telstra Corp. Ltd.      901,419   
  39,114       Transurban Group      291,337   
  54,146       Wesfarmers Ltd.      1,522,427   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Australia (continued)   
  70,337       Westfield Corp. REIT    $ 514,365   
  147,300       Westpac Banking Corp.      3,297,761   
  40,205       Woodside Petroleum Ltd.      849,341   
  81,915       Woolworths Ltd.      1,409,043   
  30,562       WorleyParsons Ltd.      142,165   
     

 

 

  
        39,663,236  
     

 

 

  
   Austria—0.3%   
  2,695       Andritz AG      136,348   
  26,878       Erste Group Bank AG(a)      791,853   
  6,221       Immoeast AG(a)      0   
  77,029       IMMOFINANZ AG(a)      198,430   
  22,628       OMV AG      604,904   
  26,236       Raiffeisen Bank International AG(a)      416,756   
  10,843       voestalpine AG      394,486   
     

 

 

  
        2,542,777  
     

 

 

  
   Belgium—0.8%   
  17,812       Ageas      790,681   
  17,840       Anheuser-Busch InBev NV      2,142,146   
  3,778       Colruyt SA      187,948   
  9,812       Delhaize Group SA      914,905   
  12,501       KBC Groep NV      765,032   
  10,651       Proximus SADP      370,794   
  3,590       Solvay SA      407,673   
  3,584       UCB SA      311,658   
  8,989       Umicore SA      383,783   
     

 

 

  
        6,274,620  
     

 

 

  
   Canada—6.2%   
  5,579       Agnico Eagle Mines Ltd.      157,603   
  5,606       Agrium, Inc.      521,244   
  11,201       Alimentation Couche-Tard, Inc., Class B      481,565   
  4,906       AltaGas Ltd.      126,592   
  16,539       ARC Resources Ltd.(b)      243,721   
  5,109       ATCO Ltd., Class I      145,849   
  38,583       Bank of Montreal(b)      2,242,405   
  63,851       Bank of Nova Scotia      3,000,877   
  71,060       Barrick Gold Corp.      545,842   
  13,967       Baytex Energy Corp.      56,792   
  15,713       BCE, Inc.      678,793   
  64,545       BlackBerry Ltd.(a)(b)      470,145   
  244,133       Bombardier, Inc., Class B      264,966   
  30,181       Bonavista Energy Corp.(b)      67,358   
  33,024       Brookfield Asset Management, Inc., Class A      1,153,007   
  18,345       Cameco Corp.      259,678   
  25,797       Canadian Imperial Bank of Commerce(b)      1,977,241   
  14,693       Canadian National Railway Co.      896,954   
  54,077       Canadian Natural Resources Ltd.      1,253,193   
  74,769       Canadian Oil Sands Ltd.      564,046   
  2,431       Canadian Pacific Railway Ltd.      341,419   
  3,980       Canadian Tire Corp. Ltd., Class A      349,891   
  7,838       Canadian Utilities Ltd., Class A      206,082   
  7,951       Capital Power Corp.      114,189   
  15,284       Celestica, Inc.(a)      171,256   
  63,995       Cenovus Energy, Inc.      952,820   
  6,407       CGI Group, Inc., Class A(a)      237,848   
  7,850       CI Financial Corp.      187,198   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   49  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Canada (continued)   
  9,224       Cominar Real Estate Investment Trust REIT    $ 108,431   
  24,132       Crescent Point Energy Corp.(b)      328,683   
  7,672       Dream Office Real Estate Investment Trust REIT      123,083   
  36,360       Eldorado Gold Corp.      127,004   
  10,920       Empire Co. Ltd., Class A      228,608   
  24,958       Enbridge, Inc.      1,066,154   
  76,637       Encana Corp.      582,824   
  29,540       Enerplus Corp.(b)      139,307   
  752       Fairfax Financial Holdings Ltd.      370,106   
  11,761       Finning International, Inc.      187,874   
  32,898       First Quantum Minerals Ltd.      175,510   
  12,477       Fortis, Inc.      360,954   
  4,386       George Weston Ltd.      369,157   
  7,368       Gibson Energy, Inc.      98,157   
  38,129       Goldcorp, Inc.      487,559   
  17,726       Great-West Lifeco, Inc.      469,586   
  13,892       H&R Real Estate Investment Trust REIT      222,765   
  23,696       Husky Energy, Inc.      320,028   
  65,375       IAMGOLD Corp.(a)      117,923   
  6,215       IGM Financial, Inc.      179,560   
  11,361       Imperial Oil Ltd.      377,817   
  7,335       Industrial Alliance Insurance and Financial Services, Inc.      240,510   
  4,881       Intact Financial Corp.      348,406   
  9,487       Inter Pipeline Ltd.(b)      177,652   
  5,140       Keyera Corp.      158,519   
  92,049       Kinross Gold Corp.(a)      185,034   
  10,084       Loblaw Cos. Ltd.      531,041   
  35,649       Lundin Mining Corp.(a)      120,161   
  17,273       Magna International, Inc.      910,418   
  109,501       Manulife Financial Corp.      1,814,485   
  2,723       Methanex Corp.      108,579   
  12,222       Metro, Inc.      349,280   
  18,363       National Bank of Canada      607,866   
  4,889       Onex Corp.      296,251   
  11,869       Pembina Pipeline Corp.(b)      298,188   
  94,180       Pengrowth Energy Corp.(b)      92,139   
  214,335       Penn West Petroleum Ltd.(b)      249,008   
  23,492       Potash Corp. of Saskatchewan, Inc.      475,460   
  26,622       Power Corp. of Canada      598,021   
  18,609       Power Financial Corp.      460,122   
  5,776       Quebecor, Inc., Class B      135,929   
  15,306       RioCan Real Estate Investment Trust REIT(b)      298,317   
  22,433       Rogers Communications, Inc., Class B      892,108   
  72,613       Royal Bank of Canada      4,149,711   
  7,295       Saputo, Inc.      173,851   
  18,619       Shaw Communications, Inc., Class B      386,369   
  6,959       Silver Wheaton Corp.      94,517   
  5,732       Smart Real Estate Investment Trust REIT      136,077   
  9,021       SNC-Lavalin Group, Inc.      288,967   
  40,606       Sun Life Financial, Inc.      1,368,689   
  86,897       Suncor Energy, Inc.      2,584,295   
  62,412       Teck Resources Ltd., Class B      365,404   
  10,177       TELUS Corp.      339,454   
  85,646       Toronto-Dominion Bank (The)      3,513,951   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Canada (continued)   
  33,392       TransAlta Corp.    $ 155,686   
  34,552       TransCanada Corp.      1,161,989   
  4,220       Vermilion Energy, Inc.      148,402   
  87,964       Yamana Gold, Inc.      192,286   
     

 

 

  
        48,516,806  
     

 

 

  
   Chile—0.0%   
  31,090       Antofagasta PLC      252,801   
     

 

 

  
   China—0.0%   
  60,224       China Mengniu Dairy Co. Ltd.      117,027   
  95,622       Global Logistic Properties Ltd.      152,941   
  147,429       Want Want China Holdings Ltd.      122,888   
     

 

 

  
        392,856  
     

 

 

  
   Colombia—0.0%   
  102,154       Pacific Exploration and Production Corp.(b)      199,100   
     

 

 

  
   Denmark—0.8%   
  326       A.P. Moeller - Maersk A/S, Class A      469,115   
  519       A.P. Moeller - Maersk A/S, Class B      768,752   
  6,497       Carlsberg A/S, Class B      535,065   
  39,372       Danske Bank A/S      1,087,640   
  6,444       DSV A/S      262,487   
  3,871       FLSmidth & Co. A/S(b)      147,244   
  8,616       ISS A/S      304,633   
  3,180       Jyske Bank A/S(a)      155,957   
  25,302       Novo Nordisk A/S, Class B      1,350,325   
  76,372       TDC A/S      402,154   
  7,557       Vestas Wind Systems A/S      442,482   
     

 

 

  
        5,925,854  
     

 

 

  
   Finland—0.8%   
  8,780       Elisa Oyj      332,476   
  32,346       Fortum Oyj      487,728   
  6,916       Kesko Oyj, Class B      221,859   
  8,494       Kone Oyj, Class B      364,619   
  8,016       Metso Oyj      197,198   
  10,709       Neste Oyj      262,501   
  240,022       Nokia Oyj      1,795,000   
  7,398       Nokian Renkaat Oyj      280,552   
  4,368       Orion Oyj, Class B      156,913   
  18,878       Sampo Oyj, Class A      927,567   
  49,821       Stora Enso Oyj, Class R      464,769   
  42,090       UPM-Kymmene Oyj      792,735   
  6,572       Wartsila Oyj Abp      282,114   
     

 

 

  
        6,566,031  
     

 

 

  
   France—10.4%   
  6,049       Accor SA      302,295   
  63,748       Air France-KLM(a)(b)      469,767   
  12,391       Air Liquide SA      1,613,782   
  24,025       Airbus Group SE      1,681,525   
  173,981       Alcatel-Lucent(a)      710,904   
  21,839       Alstom SA(a)      715,531   
  4,481       Arkema SA      329,715   
  3,483       Atos SE      279,136   
  199,913       AXA SA      5,371,785   
  103,645       BNP Paribas SA      6,326,798   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   50  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   France (continued)   
  24,176       Bouygues SA    $ 920,423   
  6,459       Bureau Veritas SA      146,766   
  6,985       Cap Gemini SA      625,226   
  66,157       Carrefour SA      2,168,294   
  8,551       Casino Guichard Perrachon SA      494,396   
  52,371       CGG SA(a)(b)      211,679   
  1,782       Christian Dior SE      352,556   
  42,090       Cie de Saint-Gobain      1,775,169   
  13,487       Cie Generale des Etablissements Michelin      1,349,796   
  11,699       CNP Assurances      167,874   
  94,989       Credit Agricole SA      1,208,789   
  23,420       Danone SA      1,640,474   
  6,319       Edenred      116,745   
  5,600       Eiffage SA      351,058   
  32,332       Electricite de France SA      604,843   
  225,951       Engie SA      3,982,317   
  3,821       Essilor International SA      504,816   
  2,558       Eurazeo SA      181,070   
  6,448       Eutelsat Communications SA      213,755   
  5,203       Faurecia      207,082   
  1,836       Fonciere des Regions REIT      173,913   
  1,605       Gecina SA REIT      206,373   
  11,205       Groupe Eurotunnel SE      157,753   
  2,144       ICADE REIT      159,533   
  3,253       Kering      605,672   
  4,190       Klepierre REIT      199,835   
  14,384       Lagardere SCA      421,225   
  8,972       Legrand SA      494,951   
  6,199       L’Oreal SA      1,137,065   
  7,537       LVMH Moet Hennessy Louis Vuitton SE      1,412,047   
  51,392       Natixis SA      316,778   
  3,311       Neopost SA      82,769   
  5,142       Nexans SA(a)      205,648   
  226,007       Orange SA      4,003,277   
  6,434       Pernod Ricard SA      761,905   
  53,104       Peugeot SA(a)      940,048   
  5,990       Publicis Groupe SA      390,791   
  14,456       Renault SA      1,369,007   
  30,373       Rexel SA      417,046   
  8,280       Safran SA      632,115   
  57,042       Sanofi      5,787,602   
  24,875       Schneider Electric SE      1,513,498   
  12,669       SCOR SE      474,004   
  79,979       Societe Generale SA      3,738,038   
  4,421       Sodexo SA      395,430   
  33,108       Suez Environnement Co.      633,074   
  26,964       Technicolor SA(b)      183,719   
  7,811       Technip SA      409,893   
  1,896       Teleperformance      149,709   
  5,511       Thales SA      401,364   
  218,808       Total SA      10,670,124   
  3,303       Unibail-Rodamco SE REIT      927,124   
  3,237       Valeo SA      503,108   
  17,173       Vallourec SA(b)      191,599   
  63,978       Veolia Environnement SA      1,496,507   
  33,968       Vinci SA      2,303,147   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   France (continued)   
  122,052       Vivendi SA    $ 2,954,685   
  2,014       Wendel SA      242,833   
  4,411       Zodiac Aerospace      112,070   
     

 

 

  
        82,199,645  
     

 

 

  
   Germany—8.6%   
  9,751       Adidas AG      878,411   
  37,900       Allianz SE      6,671,385   
  6,280       Aurubis AG      421,782   
  55,998       BASF SE      4,610,292   
  25,677       Bayer AG      3,441,984   
  20,758       Bayerische Motoren Werke AG      2,140,775   
  2,155       Beiersdorf AG      205,748   
  4,685       Bilfinger SE(b)      211,126   
  7,129       Brenntag AG      432,734   
  156,228       Commerzbank AG(a)      1,727,499   
  3,507       Continental AG      847,246   
  58,118       Daimler AG      5,069,878   
  135,727       Deutsche Bank AG      3,818,739   
  7,164       Deutsche Boerse AG      662,774   
  38,114       Deutsche Lufthansa AG(a)      565,438   
  57,841       Deutsche Post AG      1,729,612   
  256,282       Deutsche Telekom AG      4,814,149   
  5,860       Deutsche Wohnen BR AG      166,071   
  392,220       E.ON SE      4,158,053   
  4,709       Evonik Industries AG      171,919   
  6,584       Freenet AG      223,136   
  7,606       Fresenius Medical Care AG & Co. KGaA      688,037   
  15,525       Fresenius SE & Co. KGaA      1,144,742   
  5,578       GEA Group AG      224,688   
  4,295       Hannover Rueck SE      499,119   
  8,959       HeidelbergCement AG      670,789   
  3,139       Henkel AG & Co. KGaA      291,304   
  4,576       Henkel AG & Co. KGaA (Preference Shares)      498,917   
  3,873       HOCHTIEF AG      362,116   
  1,277       HUGO BOSS AG      132,022   
  30,667       Infineon Technologies AG      379,245   
  13,070       K+S AG      331,419   
  14,928       Kloeckner & Co. SE(b)      133,752   
  7,394       LANXESS AG      398,996   
  2,367       Leoni AG      97,084   
  7,057       Linde AG      1,229,743   
  1,774       MAN SE      185,853   
  2,778       Merck KGaA      272,594   
  30,146       METRO AG      933,421   
  2,100       MTU Aero Engines AG      195,255   
  14,755       Muenchener Rueckversicherungs-Gesellschaft AG      2,958,289   
  5,599       Osram Licht AG      330,956   
  6,691       Porsche Automobil Holding SE (Preference Shares)      314,866   
  9,622       ProSiebenSat.1 Media SE      522,838   
  110,521       RWE AG      1,545,011   
  7,217       Salzgitter AG      209,312   
  22,763       SAP SE      1,807,433   
  45,154       Siemens AG      4,563,963   
  11,464       Suedzucker AG      215,156   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   51  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Germany (continued)   
  2,363       Symrise AG    $ 156,356   
  5,317       Talanx AG      171,328   
  37,495       ThyssenKrupp AG      759,829   
  22,213       TUI AG      414,756   
  2,334       Volkswagen AG      325,118   
  11,942       Volkswagen AG (Preference Shares)      1,441,856   
     

 

 

  
        67,374,914  
     

 

 

  
   Greece—0.1%   
  438,312       Alpha Bank AE(a)      55,681   
  21,421       Hellenic Telecommunications Organization SA      200,423   
  204,272       National Bank of Greece SA(a)      152,990   
  19,908       OPAP SA      177,031   
  238,819       Piraeus Bank SA(a)      24,534   
     

 

 

  
        610,659  
     

 

 

  
   Hong Kong—1.4%   
  237,716       AIA Group Ltd.      1,398,672   
  40,925       Bank of East Asia Ltd. (The)      153,401   
  163,838       BOC Hong Kong (Holdings) Ltd.      526,389   
  73,511       Cathay Pacific Airways Ltd.      146,451   
  49,726       Cheung Kong Property Holdings Ltd.      349,682   
  49,726       CK Hutchison Holdings Ltd.      683,323   
  61,606       CLP Holdings Ltd.      536,561   
  26,249       Galaxy Entertainment Group Ltd.      90,261   
  106,272       Hang Lung Properties Ltd.      260,809   
  29,362       Hang Seng Bank Ltd.      540,254   
  53,480       Henderson Land Development Co. Ltd.      342,613   
  143,725       Hong Kong & China Gas Co. Ltd.      291,897   
  11,418       Hong Kong Exchanges and Clearing Ltd.      300,253   
  32,512       Hongkong Land Holdings Ltd.      244,165   
  5,071       Jardine Matheson Holdings Ltd.      276,826   
  40,492       Kerry Properties Ltd.      120,168   
  415,931       Li & Fung Ltd.      338,107   
  72,531       Link REIT      434,712   
  54,827       MTR Corp. Ltd.      249,017   
  334,794       New World Development Co. Ltd.      358,981   
  547,739       Noble Group Ltd.      197,507   
  31,612       Power Assets Holdings Ltd.      315,504   
  59,002       Sands China Ltd.      214,308   
  122,336       Sino Land Co. Ltd.      189,737   
  111,749       SJM Holdings Ltd.      93,291   
  73,505       Sun Hung Kai Properties Ltd.      985,428   
  29,055       Swire Pacific Ltd., Class A      337,409   
  54,198       Swire Properties Ltd.      163,291   
  82,096       Wharf Holdings Ltd. (The)      490,981   
  33,028       Wheelock & Co. Ltd.      154,484   
     

 

 

  
        10,784,482  
     

 

 

  
   India—0.0%   
  30,614       Vedanta Resources PLC      233,801   
     

 

 

  
   Ireland—0.4%   
  1,610,825       Bank of Ireland(a)      603,216   
  42,926       CRH PLC      1,180,712   
  24,509       Experian PLC      419,397   
  3,306       Kerry Group PLC, Class A      270,063   
  4,598       Shire PLC      349,731   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Ireland (continued)   
  13,505       Smurfit Kappa Group PLC    $ 386,832   
     

 

 

  
        3,209,951  
     

 

 

  
   Israel—0.4%   
  66,267       Bank Hapoalim BM      345,717   
  73,802       Bank Leumi Le-Israel(a)      280,506   
  234,172       Bezeq The Israeli Telecommunication Corp. Ltd.      504,376   
  43,618       Israel Chemicals Ltd.      241,786   
  31,085       Teva Pharmaceutical Industries Ltd.      1,908,230   
     

 

 

  
        3,280,615  
     

 

 

  
   Italy—3.8%   
  181,973       A2A SpA      250,668   
  123,244       Assicurazioni Generali SpA      2,347,080   
  16,338       Atlantia SpA      454,804   
  226,101       Banca Monte dei Paschi di Siena SpA(a)      417,603   
  39,560       Banca Popolare dell’Emilia Romagna SC      320,976   
  274,701       Banca Popolare di Milano Scarl      259,449   
  34,576       Banco Popolare SC(a)      519,826   
  78,853       Enel Green Power SpA      167,677   
  987,015       Enel SpA      4,574,925   
  353,382       Eni SpA      5,800,801   
  37,321       Finmeccanica SpA(a)      490,597   
  875,423       Intesa Sanpaolo SpA      3,063,570   
  21,048       Italcementi SpA      234,832   
  3,524       Luxottica Group SpA      248,165   
  65,489       Mediaset SpA      334,222   
  29,954       Mediobanca SpA      302,762   
  18,815       Mediolanum SpA      154,113   
  13,588       Prysmian SpA      294,946   
  42,655       Saipem SpA(a)(b)      402,631   
  133,781       Snam SpA      696,049   
  19,744       Societa Cattolica di Assicurazioni SCRL      155,398   
  1,511,002       Telecom Italia SpA(a)      2,118,124   
  861,347       Telecom Italia SpA RSP      973,371   
  82,490       Terna-Rete Elettrica Nationale
SpA(b)		      421,715   
  588,021       UniCredit SpA      3,819,398   
  81,366       Unione di Banche Italiane SpA      612,089   
  69,219       Unipol Gruppo Finanziario SpA      324,202   
  62,054       UnipolSai SpA      150,531   
     

 

 

  
        29,910,524  
     

 

 

  
   Japan—22.7%   
  120,254       Aeon Co. Ltd.      1,792,724   
  8,737       Air Water, Inc.      144,151   
  19,097       Aisin Seiki Co. Ltd.      765,146   
  27,047       Ajinomoto Co., Inc.      606,722   
  12,931       Alfresa Holdings Corp.      249,994   
  7,947       Alps Electric Co. Ltd.      249,589   
  17,827       Amada Holdings Co. Ltd.      159,989   
  80,420       ANA Holdings, Inc.      241,443   
  39,824       Aozora Bank Ltd.      146,195   
  116,869       Asahi Glass Co. Ltd.      675,017   
  20,426       Asahi Group Holdings Ltd.      634,234   
  74,532       Asahi Kasei Corp.      461,058   
  68,399       Astellas Pharma, Inc.      1,000,408   
  11,458       Bandai Namco Holdings, Inc.      283,423   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   52  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  20,897       Bank of Kyoto Ltd. (The)    $ 213,169   
  66,668       Bank of Yokohama Ltd. (The)      419,482   
  5,825       Benesse Holdings, Inc.      157,119   
  31,236       Bridgestone Corp.      1,158,586   
  13,851       Brother Industries Ltd.      178,826   
  69,742       Canon, Inc.      2,103,674   
  7,273       Central Japan Railway Co.      1,337,979   
  42,395       Chiba Bank Ltd. (The)      311,968   
  53,812       Chubu Electric Power Co., Inc.      833,657   
  5,849       Chugai Pharmaceutical Co. Ltd.      189,514   
  20,876       Chugoku Electric Power Co., Inc. (The)      317,270   
  14,681       Cosmo Energy Holdings Co. Ltd.(a)      200,856   
  12,189       Credit Saison Co. Ltd.      252,618   
  50,911       Dai Nippon Printing Co. Ltd.      530,732   
  13,509       Daicel Corp.      180,008   
  34,226       Daido Steel Co. Ltd.      131,884   
  23,995       Daihatsu Motor Co. Ltd.      296,271   
  105,310       Dai-ichi Life Insurance Co. Ltd. (The)      1,845,707   
  52,860       Daiichi Sankyo Co. Ltd.      1,044,497   
  8,738       Daikin Industries Ltd.      567,689   
  4,423       Daito Trust Construction Co. Ltd.      481,609   
  42,292       Daiwa House Industry Co. Ltd.      1,120,076   
  74,877       Daiwa Securities Group, Inc.      516,305   
  46,692       Denka Co. Ltd.      218,612   
  22,227       Denso Corp.      1,042,878   
  12,241       Dentsu, Inc.      694,849   
  84,991       DIC Corp.      232,418   
  22,877       East Japan Railway Co.      2,193,386   
  42,149       Ebara Corp.      184,069   
  11,848       Eisai Co. Ltd.      746,962   
  10,703       Electric Power Development Co. Ltd.      355,215   
  3,235       FANUC Corp.      577,837   
  834       Fast Retailing Co. Ltd.      306,716   
  41,760       Fuji Electric Co. Ltd.      187,907   
  17,616       Fuji Heavy Industries Ltd.      690,188   
  32,026       FUJIFILM Holdings Corp.      1,287,675   
  40,542       Fujikura Ltd.      209,975   
  197,470       Fujitsu Ltd.      941,245   
  60,206       Fukuoka Financial Group, Inc.      319,801   
  150,465       Furukawa Electric Co. Ltd.      276,803   
  26,892       Gunma Bank Ltd. (The)      170,478   
  21,388       Hachijuni Bank Ltd. (The)      147,106   
  15,827       Hakuhodo DY Holdings, Inc.      167,877   
  52,749       Hankyu Hanshin Holdings, Inc.      345,759   
  15,095       Hino Motors Ltd.      174,123   
  25,256       Hiroshima Bank Ltd. (The)      141,689   
  9,182       Hitachi Construction Machinery Co. Ltd.      143,199   
  473,950       Hitachi Ltd.      2,760,634   
  29,284       Hokkaido Electric Power Co., Inc.(a)      314,741   
  67,915       Hokuhoku Financial Group, Inc.      151,954   
  12,429       Hokuriku Electric Power Co.      186,628   
  148,090       Honda Motor Co. Ltd.      4,962,718   
  13,833       Hoya Corp.      576,475   
  9,998       Ibiden Co. Ltd.      139,023   
  20,671       Idemitsu Kosan Co. Ltd.      340,705   
  85,536       IHI Corp.      243,832   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  12,240       Iida Group Holdings Co. Ltd.    $ 231,462   
  84,409       Inpex Corp.      808,242   
  25,048       Isetan Mitsukoshi Holdings Ltd.      405,791   
  30,361       Isuzu Motors Ltd.      357,640   
  169,183       ITOCHU Corp.      2,136,606   
  21,388       Iwatani Corp.(b)      119,280   
  11,652       Iyo Bank Ltd. (The)      126,393   
  23,202       J Front Retailing Co. Ltd.      384,922   
  8,479       Japan Airlines Co. Ltd.      321,805   
  45,556       Japan Display, Inc.(a)      144,209   
  38,599       Japan Tobacco, Inc.      1,346,927   
  47,057       JFE Holdings, Inc.      747,141   
  14,088       JGC Corp.      224,614   
  36,718       Joyo Bank Ltd. (The)      192,300   
  11,150       JSR Corp.      177,494   
  16,513       JTEKT Corp.      287,635   
  299,189       JX Holdings, Inc.      1,180,145   
  73,010       Kajima Corp.      421,694   
  29,093       Kaneka Corp.      259,890   
  102,152       Kansai Electric Power Co., Inc. (The)(a)      1,318,855   
  17,056       Kao Corp.      881,810   
  88,286       Kawasaki Heavy Industries Ltd.      357,753   
  113,798       Kawasaki Kisen Kaisha Ltd.      257,442   
  82,524       KDDI Corp.      2,014,632   
  24,287       Keikyu Corp.      201,058   
  25,462       Keio Corp.      208,676   
  494       Keyence Corp.      260,274   
  4,856       Kikkoman Corp.      153,517   
  86,273       Kintetsu Group Holdings Co. Ltd.      335,298   
  77,874       Kirin Holdings Co. Ltd.      1,110,596   
  303,385       Kobe Steel Ltd.      387,166   
  5,257       Koito Manufacturing Co. Ltd.      201,480   
  58,029       Komatsu Ltd.      962,702   
  35,649       Konica Minolta, Inc.      369,562   
  5,166       K’s Holdings Corp.      183,437   
  43,426       Kubota Corp.      680,494   
  22,865       Kuraray Co. Ltd.      284,214   
  6,112       Kurita Water Industries Ltd.      138,929   
  17,186       Kyocera Corp.      783,713   
  16,367       Kyowa Hakko Kirin Co. Ltd.      271,529   
  65,785       Kyushu Electric Power Co., Inc.(a)      800,268   
  3,079       Lawson, Inc.      229,378   
  21,032       LIXIL Group Corp.      453,319   
  5,135       Makita Corp.      283,824   
  245,831       Marubeni Corp.      1,430,882   
  14,716       Marui Group Co. Ltd.      191,823   
  28,142       Mazda Motor Corp.      560,741   
  13,125       Medipal Holdings Corp.      231,013   
  6,090       MEIJI Holdings Co. Ltd.      483,970   
  158,106       Mitsubishi Chemical Holdings Corp.      996,261   
  139,881       Mitsubishi Corp.      2,564,630   
  121,031       Mitsubishi Electric Corp.      1,273,747   
  32,366       Mitsubishi Estate Co. Ltd.      699,218   
  37,973       Mitsubishi Gas Chemical Co., Inc.      213,347   
  219,562       Mitsubishi Heavy Industries Ltd.      1,117,324   
  135,354       Mitsubishi Materials Corp.      475,576   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   53  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  41,104       Mitsubishi Motors Corp.    $ 367,867   
  10,889       Mitsubishi Tanabe Pharma Corp.      185,521   
  1,008,995       Mitsubishi UFJ Financial Group, Inc.      6,610,412   
  190,172       Mitsui & Co. Ltd.      2,427,677   
  134,512       Mitsui Chemicals, Inc.      513,860   
  118,233       Mitsui Engineering & Shipbuilding Co. Ltd.      183,216   
  30,396       Mitsui Fudosan Co. Ltd.      833,733   
  74,469       Mitsui Mining & Smelting Co. Ltd.      144,402   
  148,084       Mitsui OSK Lines Ltd.      398,817   
  1,987,551       Mizuho Financial Group, Inc.      4,122,511   
  45,437       MS&AD Insurance Group Holdings, Inc.      1,352,473   
  5,042       Murata Manufacturing Co. Ltd.      725,120   
  57,650       Nagoya Railroad Co. Ltd.      239,820   
  332,158       NEC Corp.      1,032,188   
  10,078       NGK Insulators Ltd.      220,142   
  6,651       NGK Spark Plug Co. Ltd.      163,747   
  15,592       NH Foods Ltd.      327,022   
  14,135       NHK Spring Co. Ltd.      145,362   
  29,543       Nichirei Corp.      193,648   
  5,099       Nidec Corp.      387,596   
  29,811       Nikon Corp.      388,340   
  5,625       Nintendo Co. Ltd.      908,017   
  57,287       Nippon Electric Glass Co. Ltd.      283,409   
  83,726       Nippon Express Co. Ltd.      435,021   
  17,095       Nippon Paper Industries Co. Ltd.      318,597   
  202,201       Nippon Sheet Glass Co. Ltd.(a)      175,936   
  64,600       Nippon Steel & Sumitomo Metal Corp.      1,322,781   
  90,828       Nippon Telegraph & Telephone Corp.      3,376,461   
  226,082       Nippon Yusen Kabushiki Kaisha      595,766   
  52,452       Nishi-Nippon City Bank Ltd. (The)      154,737   
  228,251       Nissan Motor Co. Ltd.      2,395,524   
  16,340       Nisshin Seifun Group, Inc.      251,583   
  10,797       Nisshin Steel Co. Ltd.      112,019   
  13,604       Nisshinbo Holdings, Inc.      185,896   
  3,211       Nissin Foods Holdings Co. Ltd.      149,275   
  2,601       Nitori Holdings Co. Ltd.      204,545   
  6,670       Nitto Denko Corp.      432,451   
  5,858       NOK Corp.      139,417   
  212,380       Nomura Holdings, Inc.      1,347,405   
  9,572       Nomura Real Estate Holdings, Inc.      206,154   
  20,778       NSK Ltd.      248,286   
  44,631       NTN Corp.      224,496   
  8,254       NTT Data Corp.      413,811   
  66,374       NTT DoCoMo, Inc.      1,296,679   
  60,805       Obayashi Corp.      536,122   
  22,610       Odakyu Electric Railway Co. Ltd.      222,587   
  79,751       OJI Holdings Corp.      415,690   
  7,981       Olympus Corp.      271,490   
  7,022       OMRON Corp.      234,794   
  2,322       Ono Pharmaceutical Co. Ltd.      320,953   
  3,191       Oriental Land Co. Ltd.      195,202   
  64,222       ORIX Corp.      948,096   
  162,620       Osaka Gas Co. Ltd.      644,416   
  20,315       Otsuka Holdings Co. Ltd.      680,786   
  173,320       Panasonic Corp.      2,061,025   
  9,084       Rakuten, Inc.      127,029   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  5,732       Recruit Holdings Co. Ltd.    $ 185,248   
  125,753       Resona Holdings, Inc.      670,683   
  80,741       Ricoh Co. Ltd.      875,823   
  4,165       Rohm Co. Ltd.      208,121   
  3,425       Sankyo Co. Ltd.      132,828   
  10,939       Santen Pharmaceutical Co. Ltd.      149,661   
  38,117       Sapporo Holdings Ltd.      157,932   
  11,750       SBI Holdings, Inc.      134,467   
  8,976       Secom Co. Ltd.      603,755   
  12,387       Sega Sammy Holdings, Inc.      131,286   
  13,568       Seiko Epson Corp.      208,790   
  14,061       Seino Holdings Co. Ltd.      168,254   
  28,363       Sekisui Chemical Co. Ltd.      337,512   
  41,841       Sekisui House Ltd.      701,944   
  47,672       Seven & i Holdings Co. Ltd.      2,177,090   
  380,265       Sharp Corp.(a)(b)      419,103   
  14,429       Shikoku Electric Power Co., Inc.      246,791   
  1,825       Shimamura Co. Ltd.      206,735   
  1,380       Shimano, Inc.      219,336   
  45,605       Shimizu Corp.      401,725   
  15,420       Shin-Etsu Chemical Co. Ltd.      924,369   
  99,751       Shinsei Bank Ltd.      210,785   
  10,248       Shionogi & Co. Ltd.      423,847   
  22,927       Shiseido Co. Ltd.      549,260   
  30,141       Shizuoka Bank Ltd. (The)      305,219   
  238,433       Showa Denko K.K.      302,302   
  34,909       Showa Shell Sekiyu K.K.      309,531   
  1,311       SMC Corp.      340,474   
  33,609       SoftBank Group Corp.      1,893,022   
  291,856       Sojitz Corp.      648,166   
  32,280       Sompo Japan Nipponkoa Holdings, Inc.      1,023,972   
  87,924       Sony Corp.      2,535,534   
  12,251       Sony Financial Holdings, Inc.      221,721   
  6,965       Stanley Electric Co. Ltd.      134,134   
  155,014       Sumitomo Chemical Co. Ltd.      897,906   
  139,621       Sumitomo Corp.      1,539,389   
  69,889       Sumitomo Electric Industries Ltd.      963,996   
  38,124       Sumitomo Heavy Industries Ltd.      173,758   
  35,605       Sumitomo Metal Mining Co. Ltd.      445,671   
  108,504       Sumitomo Mitsui Financial Group, Inc.      4,369,832   
  230,368       Sumitomo Mitsui Trust Holdings, Inc.      892,837   
  13,949       Sumitomo Realty & Development Co. Ltd.      462,828   
  12,988       Sumitomo Rubber Industries Ltd.      195,022   
  5,929       Suntory Beverage & Food Ltd.      241,238   
  6,567       Suzuken Co. Ltd.      253,320   
  25,547       Suzuki Motor Corp.      844,686   
  60,992       T&D Holdings, Inc.      809,689   
  90,367       Taiheiyo Cement Corp.      299,538   
  63,333       Taisei Corp.      414,610   
  2,219       Taisho Pharmaceutical Holdings Co. Ltd.      139,383   
  24,444       Takashimaya Co. Ltd.      220,183   
  42,355       Takeda Pharmaceutical Co. Ltd.      2,081,335   
  6,585       TDK Corp.      423,994   
  94,017       Teijin Ltd.      335,010   
  11,771       Terumo Corp.      352,130   
  57,401       Tobu Railway Co., Ltd.      279,216   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   54  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  41,760       Tohoku Electric Power Co., Inc.    $ 591,059   
  46,307       Tokio Marine Holdings, Inc.      1,800,476   
  72,782       Tokuyama Corp.(a)(b)      147,765   
  509,748       Tokyo Electric Power Co., Inc.(a)      3,501,811   
  4,578       Tokyo Electron Ltd.      277,089   
  152,471       Tokyo Gas Co. Ltd.      760,112   
  76,798       Tokyu Corp.      626,857   
  33,216       Tokyu Fudosan Holdings Corp.      235,340   
  40,208       TonenGeneral Sekiyu K.K.      419,489   
  46,070       Toppan Printing Co. Ltd.      416,128   
  87,826       Toray Industries, Inc.      773,276   
  475,306       Toshiba Corp.(a)      1,351,378   
  57,951       Tosoh Corp.      297,258   
  8,000       TOTO Ltd.      273,793   
  18,834       Toyo Seikan Group Holdings Ltd.      367,082   
  4,221       Toyo Suisan Kaisha Ltd.      156,703   
  104,119       Toyobo Co. Ltd.      153,579   
  7,010       Toyoda Gosei Co. Ltd.      162,536   
  8,875       Toyota Industries Corp.      471,421   
  122,129       Toyota Motor Corp.      7,558,993   
  20,285       Toyota Tsusho Corp.      467,980   
  170,978       Ube Industries Ltd.      361,296   
  5,680       Unicharm Corp.      122,143   
  35,745       UNY Group Holdings Co. Ltd.      199,052   
  13,146       West Japan Railway Co.      929,235   
  125,808       Yamada Denki Co. Ltd.      570,267   
  19,493       Yamaguchi Financial Group, Inc.(b)      241,492   
  8,974       Yamaha Corp.      224,954   
  13,574       Yamaha Motor Co. Ltd.      308,431   
  19,345       Yamato Holdings Co. Ltd.      383,213   
  14,701       Yamazaki Baking Co. Ltd.      285,431   
  7,572       Yokohama Rubber Co. Ltd. (The)      146,828   
     

 

 

  
        178,653,102  
     

 

 

  
   Luxembourg—0.2%   
  190,897       ArcelorMittal SA      1,069,766   
  2,637       RTL Group SA      229,250   
  8,619       SES SA FDR, Class A      255,971   
  26,592       Tenaris SA      335,461   
     

 

 

  
        1,890,448  
     

 

 

  
   Netherlands—4.2%   
  231,370       Aegon NV      1,432,287   
  12,741       Akzo Nobel NV      907,092   
  4,260       ASML Holding NV      398,159   
  24,283       Delta Lloyd NV      192,598   
  11,148       Fugro NV CVA(a)      212,427   
  1,948       Gemalto NV      122,763   
  4,990       Heineken Holding NV, Class A      402,005   
  7,567       Heineken NV      694,791   
  325,221       ING Groep NV CVA      4,754,745   
  72,498       Koninklijke Ahold NV      1,483,173   
  38,920       Koninklijke BAM Groep NV(a)      215,911   
  12,542       Koninklijke DSM NV      672,776   
  338,658       Koninklijke KPN NV      1,249,489   
  56,272       Koninklijke Philips NV      1,528,536   
  8,137       NN Group NV      256,802   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Netherlands (continued)   
  46,210       PostNL NV(a)    $ 191,728   
  6,039       Randstad Holding NV      362,434   
  4,311       Royal Boskalis Westminster NV      210,654   
  391,164       Royal Dutch Shell PLC, Class A      10,209,516   
  245,607       Royal Dutch Shell PLC, Class B      6,448,359   
  13,587       SBM Offshore NV(a)      187,086   
  38,088       TNT Express NV      321,865   
  11,680       Wolters Kluwer NV      397,327   
     

 

 

  
        32,852,523  
     

 

 

  
   New Zealand—0.1%   
  44,266       Fletcher Building Ltd.      223,430   
  160,086       Spark New Zealand Ltd.      363,936   
     

 

 

  
        587,366  
     

 

 

  
   Norway—0.7%   
  60,090       DNB ASA      768,364   
  10,555       Gjensidige Forsikring ASA      161,160   
  17,713       Marine Harvest ASA      238,426   
  81,042       Norsk Hydro ASA      291,727   
  53,338       Orkla ASA      455,420   
  43,900       Petroleum Geo-Services ASA      183,552   
  137,846       Statoil ASA      2,218,751   
  75,858       Storebrand ASA(a)      266,522   
  41,746       Telenor ASA(b)      790,835   
  8,989       Yara International ASA      409,730   
     

 

 

  
        5,784,487  
     

 

 

  
   Portugal—0.2%   
  2,467,984       Banco Comercial Portugues SA(a)      142,583   
  245,392       EDP-Energias de Portugal SA      912,972   
  29,217       Galp Energia SGPS SA      317,485   
  15,276       Jeronimo Martins SGPS SA      215,742   
  331,443       Pharol SGPS SA(a)      140,593   
     

 

 

  
        1,729,375  
     

 

 

  
   Russia—0.0%   
  49,883       Evraz PLC(a)      65,291   
     

 

 

  
   Singapore—0.8%   
  83,790       Ascendas Real Estate Investment Trust REIT      142,991   
  119,121       CapitaLand Ltd.      263,674   
  105,068       CapitaLand Mall Trust REIT      148,543   
  23,216       City Developments Ltd.      131,621   
  83,439       ComfortDelGro Corp. Ltd.      181,117   
  80,065       DBS Group Holdings Ltd.      987,306   
  641,102       Golden Agri-Resources Ltd.      178,529   
  357,925       Hutchison Port Holdings Trust      198,648   
  5,480       Jardine Cycle & Carriage Ltd.      127,638   
  92,652       Keppel Corp. Ltd.      468,387   
  97,261       Oversea-Chinese Banking Corp. Ltd.      627,110   
  69,741       Sembcorp Industries Ltd.      178,274   
  63,070       Sembcorp Marine Ltd.      105,379   
  40,386       Singapore Airlines Ltd.      311,438   
  73,615       Singapore Press Holdings Ltd.      209,728   
  61,195       Singapore Technologies Engineering Ltd.      144,631   
  344,530       Singapore Telecommunications Ltd.      979,100   
  55,449       United Overseas Bank Ltd.      804,911   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   55  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Singapore (continued)   
  121,186       Wilmar International Ltd.    $ 270,841   
     

 

 

  
        6,459,866  
     

 

 

  
   South Africa—0.1%   
  25,461       Investec PLC      213,125   
  15,498       Mondi PLC      359,984   
     

 

 

  
        573,109  
     

 

 

  
   South Korea—3.5%   
  13,326       BNK Financial Group, Inc.      163,645   
  1,274       CJ Corp.      268,199   
  3,857       Daelim Industrial Co. Ltd.      253,062   
  12,071       Daewoo Shipbuilding & Marine Engineering Co. Ltd.      73,482   
  7,665       Doosan Heavy Industries & Construction Co. Ltd.      138,502   
  17,060       Doosan Infracore Co. Ltd.(a)      93,676   
  1,179       E-Mart, Inc.      219,760   
  5,326       GS Holdings Corp.      234,521   
  21,484       Hana Financial Group, Inc.      523,885   
  3,886       Hankook Tire Co. Ltd.      149,127   
  6,053       Hanwha Corp.      199,368   
  3,283       Hyosung Corp.      336,925   
  5,680       Hyundai Engineering & Construction Co. Ltd.      172,385   
  7,826       Hyundai Heavy Industries Co. Ltd.(a)      653,511   
  3,435       Hyundai Mobis Co. Ltd.      723,126   
  15,354       Hyundai Motor Co.      2,100,981   
  5,773       Hyundai Steel Co.      263,825   
  26,200       Industrial Bank of Korea      321,740   
  22,596       KB Financial Group, Inc.      716,500   
  21,689       Kia Motors Corp.      1,061,573   
  22,578       Korea Electric Power Corp.      1,017,946   
  5,801       Korea Gas Corp.      216,765   
  380       Korea Zinc Co. Ltd.      157,993   
  4,366       Korean Air Lines Co. Ltd.(a)      118,145   
  20,664       KT Corp.(a)      535,609   
  5,462       KT&G Corp.      546,176   
  3,035       LG Chem Ltd.      810,629   
  5,622       LG Corp.      325,470   
  19,797       LG Display Co. Ltd.      375,085   
  15,056       LG Electronics, Inc.      648,436   
  4,197       LG International Corp.      128,665   
  17,338       LG Uplus Corp.      166,529   
  1,217       Lotte Chemical Corp.      256,733   
  1,063       Lotte Shopping Co. Ltd.      216,320   
  1,944       OCI Co. Ltd.      140,166   
  5,869       POSCO      936,940   
  3,643       Samsung Electro-Mechanics Co. Ltd.      208,345   
  5,421       Samsung Electronics Co. Ltd.      6,523,935   
  2,060       Samsung Fire & Marine Insurance Co. Ltd.      577,317   
  22,053       Samsung Heavy Industries Co. Ltd.      257,274   
  4,167       Samsung Life Insurance Co. Ltd.      398,406   
  2,117       Samsung SDI Co. Ltd.      197,764   
  21,915       Shinhan Financial Group Co. Ltd.      837,155   
  942       SK Holdings Co. Ltd.      220,617   
  14,311       SK Hynix, Inc.      385,376   
  10,926       SK Innovation Co. Ltd.(a)      1,135,679   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   South Korea (continued)   
  24,644       SK Networks Co. Ltd.    $ 153,262   
  2,061       SK Telecom Co. Ltd.      435,683   
  4,697       S-Oil Corp.      281,396   
  42,617       Woori Bank      370,826   
     

 

 

  
        27,248,435  
     

 

 

  
   Spain—4.2%   
  57,790       Abengoa SA, Class B      56,624   
  21,410       Abertis Infraestructuras SA      357,360   
  3,306       Acciona SA      279,412   
  19,563       ACS Actividades de Construccion y Servicios SA      668,730   
  8,764       Amadeus IT Holding SA, Class A      375,242   
  453,597       Banco Bilbao Vizcaya Argentaria SA      3,928,357   
  236,998       Banco de Sabadell SA      460,506   
  156,488       Banco Popular Espanol SA      599,148   
  1,606,179       Banco Santander SA      9,048,756   
  281,719       Bankia SA      364,727   
  28,560       Bankinter SA      208,127   
  161,766       CaixaBank SA      624,002   
  42,008       Distribuidora Internacional de Alimentacion SA      268,587   
  9,041       Enagas SA      275,196   
  46,081       Endesa SA      1,030,793   
  26,818       Ferrovial SA      680,179   
  17,744       Fomento de Construcciones y Contratas SA(a)      136,030   
  12,129       Gamesa Corp. Tecnologica SA      192,735   
  24,086       Gas Natural SDG SA      524,416   
  389,078       Iberdrola SA      2,792,379   
  13,264       Indra Sistemas SA(a)      142,990   
  20,909       Industria de Diseno Textil SA      787,728   
  111,814       Mapfre SA      334,109   
  4,076       Red Electrica Corp. SA      361,105   
  151,632       Repsol SA      1,922,066   
  495,380       Telefonica SA      6,583,076   
     

 

 

  
        33,002,380  
     

 

 

  
   Sweden—2.0%   
  11,777       Alfa Laval AB      208,467   
  18,828       ASSA ABLOY AB, Class B      376,961   
  16,685       Atlas Copco AB, Class A(b)      438,202   
  10,519       Atlas Copco AB, Class B(b)      256,442   
  17,014       Boliden AB      327,818   
  12,136       Electrolux AB, Class B      360,180   
  7,716       Getinge AB, Class B      194,378   
  27,362       Hennes & Mauritz AB, Class B      1,070,833   
  4,721       Hexagon AB, Class B      165,022   
  17,799       Husqvarna AB, Class B(b)      118,123   
  8,525       Industrivarden AB, Class A      167,770   
  7,216       Industrivarden AB, Class C      132,151   
  9,178       Meda AB, Class A      135,871   
  329       NCC AB, Class A      10,190   
  6,163       NCC AB, Class B      191,547   
  168,724       Nordea Bank AB      1,877,813   
  62,226       Sandvik AB      585,548   
  20,470       Securitas AB, Class B      269,045   
  70,753       Skandinaviska Enskilda Banken AB, Class A      749,115   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   56  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Sweden (continued)   
  24,132       Skanska AB, Class B    $ 473,207   
  19,021       SKF AB, Class B      336,919   
  17,773       SSAB AB, Class A(a)(b)      64,700   
  14,357       SSAB AB, Class B(a)      45,738   
  30,404       Svenska Cellulosa AB (SCA), Class B      902,350   
  62,685       Svenska Handelsbanken AB, Class A      857,854   
  47,067       Swedbank AB, Class A      1,087,021   
  6,260       Swedish Match AB      198,101   
  28,981       Tele2 AB, Class B      291,825   
  146,373       Telefonaktiebolaget LM Ericsson, Class B      1,436,846   
  172,912       TeliaSonera AB      890,530   
  8,756       Trelleborg AB, Class B      148,908   
  102,018       Volvo AB, Class B      1,066,323   
     

 

 

  
        15,435,798  
     

 

 

  
   Switzerland—5.7%   
  109,056       ABB Ltd.(a)      2,064,403   
  1,199       Actelion Ltd.      167,124   
  8,903       Adecco SA      664,733   
  3,012       Aryzta AG      136,277   
  3,210       Baloise Holding AG      386,535   
  2       Chocoladefabriken Lindt & Sprungli AG      148,770   
  23       Chocoladefabriken Lindt & Sprungli AG-PC      140,812   
  14,680       Clariant AG      271,038   
  12,266       Coca-Cola HBC AG      293,626   
  11,148       Compagnie Financiere Richemont SA      959,016   
  125,527       Credit Suisse Group AG      3,142,791   
  723       Geberit AG      234,191   
  210       Givaudan SA      377,073   
  905,577       Glencore PLC      1,573,394   
  414       Helvetia Holding AG      217,342   
  5,918       Julius Baer Group Ltd.      294,894   
  1,844       Kuehne + Nagel International AG      256,467   
  13,112       LafargeHolcim Ltd.      741,561   
  1,819       Lonza Group AG      267,937   
  106,336       Nestle SA      8,155,213   
  63,717       Novartis AG      5,807,733   
  19,251       Roche Holding AG      5,239,709   
  517       Schindler Holding AG      84,335   
  1,080       Schindler Holding AG-PC      175,955   
  211       SGS SA      403,271   
  87       Sika AG      286,308   
  42,155       STMicroelectronics NV      293,230   
  1,196       Sulzer AG      121,208   
  1,370       Swatch Group AG (The)      99,371   
  907       Swatch Group AG (The)-BR      355,991   
  2,860       Swiss Life Holding AG      685,007   
  26,414       Swiss Re AG      2,462,538   
  1,063       Swisscom AG      549,967   
  3,196       Syngenta AG      1,079,005   
  137,392       UBS Group AG      2,756,900   
  11,620       Wolseley PLC      684,996   
  12,108       Zurich Insurance Group AG      3,209,557   
     

 

 

  
        44,788,278  
     

 

 

  
   United Kingdom—16.1%   
  34,127       3i Group PLC      264,056   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  21,336       Aberdeen Asset Management PLC    $ 114,242   
  8,556       Admiral Group PLC      213,140   
  7,348       Aggreko PLC      103,893   
  19,325       Amec Foster Wheeler PLC      212,202   
  31,777       Amlin PLC      323,413   
  122,482       Anglo American PLC      1,033,955   
  8,539       Ashtead Group PLC      131,876   
  8,289       Associated British Foods PLC      442,293   
  63,638       AstraZeneca PLC      4,079,214   
  265,913       Aviva PLC      1,995,884   
  182,700       BAE Systems PLC      1,242,358   
  89,866       Balfour Beatty PLC(a)      345,862   
  1,348,723       Barclays PLC      4,832,483   
  24,144       Barratt Developments PLC      228,389   
  4,082       Berkeley Group Holdings PLC (The)      209,175   
  157,023       BG Group PLC      2,485,688   
  64,867       Booker Group PLC      186,436   
  2,191,653       BP PLC      13,078,817   
  64,521       British American Tobacco PLC      3,845,844   
  30,772       British Land Co. PLC (The) REIT      413,699   
  295,472       BT Group PLC      2,121,919   
  9,928       Bunzl PLC      285,037   
  8,476       Burberry Group PLC      173,840   
  174,503       Cable & Wireless Communications PLC      198,354   
  17,304       Capita PLC      340,735   
  39,655       Carillion PLC      187,098   
  517,866       Centrica PLC      1,808,329   
  111,460       CNH Industrial NV, Class A      757,214   
  41,135       Cobham PLC      176,293   
  57,222       Compass Group PLC      988,901   
  4,109       DCC PLC      330,306   
  113,806       Debenhams PLC      157,219   
  65,571       Diageo PLC      1,902,316   
  91,353       Direct Line Insurance Group PLC      556,441   
  35,911       Drax Group PLC      144,531   
  35,029       DS Smith PLC      209,362   
  6,835       easyJet PLC      184,729   
  132,103       Fiat Chrysler Automobiles NV(a)      1,958,348   
  97,180       FirstGroup PLC(a)      145,207   
  89,792       G4S PLC      336,563   
  63,815       GKN PLC      283,052   
  236,681       GlaxoSmithKline PLC      5,135,696   
  12,367       Greene King PLC      153,465   
  28,549       Hammerson PLC REIT      280,640   
  65,778       Hays PLC      143,137   
  92,501       Home Retail Group PLC      160,430   
  1,430,676       HSBC Holdings PLC      11,215,599   
  27,375       ICAP PLC      186,023   
  9,403       IMI PLC      138,394   
  39,787       Imperial Tobacco Group PLC      2,150,031   
  24,910       Inchcape PLC      307,575   
  26,512       Informa PLC      232,568   
  13,348       Inmarsat PLC      203,054   
  6,999       InterContinental Hotels Group PLC      281,149   
  17,872       Intermediate Capital Group PLC      156,224   
  45,813       International Consolidated Airlines Group SA(a)      412,139   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   57  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  4,466       Intertek Group PLC    $ 181,054   
  35,905       Intu Properties PLC REIT      191,918   
  77,818       ITV PLC      303,339   
  221,266       J Sainsbury PLC      910,350   
  21,283       John Wood Group PLC      196,231   
  9,167       Johnson Matthey PLC      365,972   
  46,645       KAZ Minerals PLC(a)      83,637   
  153,220       Kingfisher PLC      835,551   
  78,040       Ladbrokes PLC      127,274   
  17,656       Lancashire Holdings Ltd.      194,284   
  30,999       Land Securities Group PLC REIT      641,044   
  369,348       Legal & General Group PLC      1,492,221   
  3,603,304       Lloyds Banking Group PLC      4,103,030   
  3,951       London Stock Exchange Group PLC      155,294   
  128,502       Man Group PLC      331,624   
  102,040       Marks & Spencer Group PLC      808,439   
  28,831       Meggitt PLC      157,446   
  42,569       Melrose Industries PLC      175,009   
  199,278       National Grid PLC      2,846,209   
  3,033       Next PLC      374,733   
  330,709       Old Mutual PLC      1,084,315   
  35,933       Pearson PLC      478,088   
  15,962       Pennon Group PLC      199,925   
  5,821       Persimmon PLC      179,260   
  18,676       Petrofac Ltd.      243,148   
  15,480       Phoenix Group Holdings      204,527   
  3,889       Provident Financial PLC      208,414   
  98,455       Prudential PLC      2,309,697   
  16,149       Reckitt Benckiser Group PLC      1,582,225   
  28,979       RELX NV      497,781   
  26,152       RELX PLC      469,322   
  72,532       Rentokil Initial PLC      173,068   
  44,317       Rexam PLC      369,593   
  24,359       Rio Tinto Ltd.      880,243   
  70,374       Rio Tinto PLC      2,563,349   
  72,042       Rolls-Royce Holdings PLC      764,924   
  6,678,293       Rolls-Royce Holdings PLC-Entitlement(a)      10,314   
  187,269       Royal Bank of Scotland Group PLC(a)      918,557   
  44,501       Royal Mail PLC      306,043   
  87,131       RSA Insurance Group PLC      566,384   
  22,558       SABMiller PLC      1,391,800   
  35,638       Sage Group PLC (The)      299,964   
  67,120       Seadrill Ltd.(a)(b)      421,989   
  34,032       Segro PLC REIT      236,410   
  87,159       Serco Group PLC(a)      126,128   
  12,290       Severn Trent PLC      425,736   
  31,015       Sky PLC      524,979   
  20,435       Smith & Nephew PLC      350,314   
  20,090       Smiths Group PLC      298,480   
  78,810       SSE PLC      1,843,969   
  13,032       St. James’s Place PLC      194,121   
  181,752       Standard Chartered PLC      2,024,953   
  121,910       Standard Life PLC      792,461   
  27,059       Subsea 7 SA(a)      211,853   
  31,198       Tate & Lyle PLC      287,888   
  75,906       Taylor Wimpey PLC      232,114   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  1,029,938       Tesco PLC(a)    $ 2,915,635   
  186,649       Thomas Cook Group PLC(a)      354,272   
  9,146       Travis Perkins PLC      270,636   
  47,936       Tullow Oil PLC(a)      150,212   
  50,325       Unilever NV CVA(b)      2,285,923   
  39,434       Unilever PLC      1,761,890   
  30,866       United Utilities Group PLC      471,212   
  2,317,370       Vodafone Group PLC      7,667,888   
  7,957       Weir Group PLC (The)      131,121   
  3,403       Whitbread PLC      260,993   
  29,817       William Hill PLC      146,022   
  330,443       WM Morrison Supermarkets PLC      859,916   
  44,201       WPP PLC      995,289   
     

 

 

  
        126,602,841  
     

 

 

  
   United States—0.3%   
  6,534       Carnival PLC      364,995   
  5,854       QIAGEN NV(a)      142,654   
  17,703       Sims Metal Management Ltd.      124,281   
  16,236       Thomson Reuters Corp.      666,143   
  62,955       Transocean Ltd.(b)      964,363   
  1,480       Valeant Pharmaceuticals International, Inc.(a)      138,051   
     

 

 

  
        2,400,487  
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $843,111,114)—99.8%		      786,012,458   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—1.5%   
  11,818,396       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(c)(d)
(Cost $11,818,396)		      11,818,396  
     

 

 

  
   Total Investments
(Cost $854,929,510)—101.3%		      797,830,854   
   Other assets less liabilities—(1.3)%      (10,294,856 ) 
     

 

 

  
   Net Assets—100.0%    $ 787,535,998   
     

 

 

  

Investment Abbreviations:

CVA—Dutch Certificates

FDR—Fiduciary Depositary Receipt

PC—Participation Certificate

REIT—Real Estate Investment Trust

RSP—Registered Savings Plan Shares

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(d)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2J.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   58  

 

 

Schedule of Investments

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—99.9%		    
   Australia—5.0%   
  22,527       Abacus Property Group REIT    $ 52,555   
  45,870       Adelaide Brighton Ltd.      137,122   
  48,186       ALS Ltd.      177,048   
  82,439       Alumina Ltd.      63,815   
  6,187       Ansell Ltd.      88,812   
  50,311       APN News & Media Ltd.(a)      18,486   
  45,760       Ardent Leisure Group      91,086   
  14,052       Aristocrat Leisure Ltd.      93,437   
  464,600       Atlas Iron Ltd.(a)      9,281   
  167,407       AusNet Services      172,586   
  25,401       Automotive Holdings Group Ltd.      77,020   
  25,805       Aveo Group      56,705   
  56,283       AWE Ltd.(a)      25,298   
  149,789       Beach Energy Ltd.      68,395   
  9,702       Bega Cheese Ltd.      40,147   
  39,801       Bradken Ltd.(a)      27,544   
  8,389       Breville Group Ltd.      39,322   
  22,916       BWP Trust REIT      52,645   
  14,392       Cabcharge Australia Ltd.      28,956   
  24,091       Cardno Ltd.      52,594   
  6,927       carsales.com Ltd.      48,432   
  41,281       Challenger Ltd.      242,389   
  13,181       Charter Hall Group REIT      42,224   
  24,921       Charter Hall Retail REIT      75,387   
  2,338       Cochlear Ltd.      148,373   
  95,633       Cromwell Property Group REIT      68,571   
  55,713       CSR Ltd.      110,103   
  20,972       Dick Smith Holdings Ltd.      10,399   
  18,239       DuluxGroup Ltd.      76,774   
  61,409       Echo Entertainment Group Ltd.      223,881   
  232,050       Fairfax Media Ltd.      156,451   
  14,171       FlexiGroup Ltd.      30,938   
  3,965       Flight Centre Travel Group Ltd.      107,354   
  23,555       Genworth Mortgage Insurance Australia Ltd.      45,374   
  20,652       GrainCorp Ltd., Class A      133,344   
  9,687       GUD Holdings Ltd.      55,566   
  20,214       GWA Group Ltd.      35,766   
  41,928       Harvey Norman Holdings Ltd.      119,056   
  35,715       Healthscope Ltd.      68,798   
  42,293       Investa Office Fund REIT      121,903   
  5,157       InvoCare Ltd.      40,877   
  16,469       IOOF Holdings Ltd.      109,743   
  7,106       IRESS Ltd.      47,605   
  12,603       JB Hi-Fi Ltd.      161,489   
  5,948       M2 Group Ltd.      42,012   
  16,836       Mineral Resources Ltd.      51,410   
  61,795       MMA Offshore Ltd.      18,517   
  124,951       MMG Ltd.(a)      27,569   
  19,729       Monadelphous Group Ltd.      97,404   
  334,523       Mount Gibson Iron Ltd.(a)      51,313   
  166,825       Myer Holdings Ltd.      114,260   
  22,123       Navitas Ltd.      66,291   
  13,031       NIB Holdings Ltd.      33,562   
  68,337       Nine Entertainment Co. Holdings Ltd.      75,570   
  18,089       Nufarm Ltd.      108,020   
  38,008       OceanaGold Corp.      72,626   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Australia (continued)   
  29,825       Oil Search Ltd.    $ 167,037   
  103,327       Orora Ltd.      172,502   
  11,554       Pact Group Holdings Ltd.      42,288   
  2,083       Perpetual Ltd.      66,741   
  6,041       Platinum Asset Management Ltd.      31,894   
  8,389       Premier Investments Ltd.      81,936   
  63,614       Primary Health Care Ltd.      168,380   
  27,219       Qube Holdings Ltd.      44,470   
  3,882       Ramsay Health Care Ltd.      171,744   
  10,912       Recall Holdings Ltd.      59,634   
  161,661       Resolute Mining Ltd.(a)      43,251   
  18,693       SAI Global Ltd.      58,547   
  7,514       Seek Ltd.      68,780   
  19,072       Seven Group Holdings Ltd.      68,715   
  137,260       Seven West Media Ltd.      66,102   
  28,582       Shopping Centres Australasia Property Group REIT      42,007   
  89,251       Sigma Pharmaceuticals Ltd.      53,488   
  79,089       Southern Cross Media Group Ltd.      55,298   
  51,652       Spotless Group Holdings Ltd.      79,230   
  80,158       STW Communications Group Ltd.      42,606   
  11,035       Super Retail Group Ltd.      76,052   
  53,049       Sydney Airport      244,118   
  316,702       Ten Network Holdings Ltd.(a)      37,282   
  6,452       TPG Telecom Ltd.      50,911   
  102,195       Transfield Services Ltd.(a)      73,276   
  235,964       Transpacific Industries Group Ltd.      114,477   
  53,839       Treasury Wine Estates Ltd.      271,953   
  47,921       UGL Ltd.      77,951   
  71,116       Vicinity Centres REIT(a)      147,647   
  8,108       Village Roadshow Ltd.      43,558   
  112,977       Virgin Australia Holdings Ltd.(a)      0   
  14,267       Western Areas Ltd.      24,327   
  91,359       Whitehaven Coal Ltd.(a)      66,484   
     

 

 

  
        7,224,891  
     

 

 

  
   Austria—0.9%   
  990       ams AG      31,837   
  2,589       BUWOG AG      55,340   
  6,301       CA Immobilien Anlagen AG      124,139   
  4,622       Conwert Immobilien Invest SE(a)      66,553   
  844       Flughafen Wien AG      79,909   
  1,152       Lenzing AG      88,519   
  3,247       Oesterreichische Post AG      118,723   
  1,861       RHI AG      42,287   
  789       Schoeller-Bleckmann Oilfield Equipment AG      47,631   
  13,571       Telekom Austria AG      82,182   
  11,627       UNIQA Insurance Group AG      108,543   
  8,127       Verbund AG      115,540   
  4,589       Vienna Insurance Group AG Wiener Versicherung Gruppe      147,616   
  9,221       Wienerberger AG      170,768   
  2,352       Zumtobel AG      53,781   
     

 

 

  
        1,333,368  
     

 

 

  
   Belgium—1.4%   
  1,339       Ackermans & van Haaren NV      204,859   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   59  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Belgium (continued)   
  962       Barco NV    $ 63,505   
  1,274       Befimmo SA REIT      85,720   
  6,716       Bekaert SA NV      200,308   
  4,391       bpost SA      110,446   
  1,502       Cofinimmo SA REIT      168,407   
  509       Compagnie d’Entreprises CFE SA      63,424   
  2,162       D’Ieteren SA/NV      73,511   
  4,764       Econocom Group SA      42,785   
  2,389       Elia System Operator SA      116,143   
  3,455       Euronav SA      51,276   
  1,090       EVS Broadcast Equipment SA      31,944   
  1,472       Fagron      36,334   
  794       Gimv NV      37,478   
  7,090       Mobistar SA(a)      174,418   
  48,924       Nyrstar NV(a)      75,175   
  3,086       Ontex Group NV      95,365   
  3,610       Telenet Group Holding NV(a)      211,034   
  2,809       Tessenderlo Chemie NV(a)      91,134   
  560       Warehouses De Pauw SCA REIT      46,086   
     

 

 

  
        1,979,352  
     

 

 

  
   Cambodia—0.0%   
  77,301       NagaCorp Ltd.      54,858   
     

 

 

  
   Canada—7.4%   
  10,184       Advantage Oil & Gas Ltd.(a)      56,589   
  13,744       Aecon Group, Inc.      158,728   
  25,969       AGF Management Ltd., Class B      107,778   
  16,673       Aimia, Inc.      154,197   
  11,666       Alamos Gold, Inc., Class A      44,850   
  8,647       Algonquin Power & Utilities Corp.      66,686   
  4,759       Allied Properties Real Estate Investment Trust REIT      130,510   
  14,829       Artis Real Estate Investment Trust REIT      151,764   
  86,631       Athabasca Oil Corp.(a)      103,294   
  4,204       ATS Automation Tooling Systems, Inc.(a)      44,246   
  66,878       B2Gold Corp.(a)      72,074   
  26,416       Bankers Petroleum Ltd.(a)      44,419   
  15,628       Bellatrix Exploration Ltd.(a)(b)      25,681   
  8,619       Birchcliff Energy Ltd.(a)      37,550   
  4,118       Black Diamond Group Ltd.      26,470   
  3,903       Boardwalk Real Estate Investment Trust REIT      160,255   
  1,961       Bonterra Energy Corp.      32,540   
  16,142       CAE, Inc.      182,104   
  11,021       Calfrac Well Services Ltd.(b)      19,458   
  15,217       Canaccord Genuity Group, Inc.      58,968   
  9,138       Canadian Apartment Properties REIT      188,019   
  9,252       Canadian Energy Services & Technology Corp.(b)      39,954   
  4,886       Canadian Real Estate Investment Trust REIT      159,051   
  6,672       Canadian Western Bank      128,152   
  4,974       Canfor Corp.(a)      70,332   
  8,743       Cascades, Inc.      62,280   
  1,138       CCL Industries, Inc., Class B      161,130   
  23,981       Centerra Gold, Inc.      134,903   
  12,342       Chartwell Retirement Residences      119,331   
  4,122       Cineplex, Inc.      158,755   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Canada (continued)   
  745       Cogeco Cable, Inc.    $ 38,453   
  1,308       Colliers International Group, Inc.      64,813   
  231       Constellation Software, Inc.      99,755   
  9,068       Corus Entertainment, Inc., Class B      86,428   
  13,718       Cott Corp.      143,120   
  19,169       Crew Energy, Inc.(a)      65,198   
  10,006       Detour Gold Corp.(a)      111,199   
  5,201       DH Corp.      140,326   
  2,344       Dollarama, Inc.      158,249   
  5,641       Dominion Diamond Corp.      59,629   
  1,910       Dorel Industries, Inc., Class B      48,540   
  4,432       Dream Unlimited Corp., Class A(a)      24,966   
  6,482       Dundee Corp., Class A(a)      37,257   
  6,220       Element Financial Corp.(a)      80,391   
  2,604       Emera, Inc.      85,264   
  5,742       Enerflex Ltd.      55,386   
  22,904       Ensign Energy Services, Inc.      143,899   
  14,801       Entertainment One Ltd.      50,220   
  17,504       Extendicare, Inc.(b)      114,923   
  7,126       First Capital Realty, Inc.      105,500   
  9,735       First Majestic Silver Corp.(a)(b)      32,144   
  1,308       FirstService Corp.      45,988   
  3,998       Franco-Nevada Corp.      202,658   
  5,044       Genworth MI Canada, Inc.(b)      124,640   
  5,832       Gildan Activewear, Inc.      167,558   
  3,245       Granite REIT      94,521   
  2,480       Great Canadian Gaming Corp.(a)      34,214   
  3,742       Home Capital Group, Inc.      91,094   
  14,645       HudBay Minerals, Inc.      76,004   
  9,942       Hudson’s Bay Co.      172,723   
  6,371       Innergex Renewable Energy, Inc.      51,519   
  11,426       InnVest REIT      45,762   
  3,962       Jean Coutu Group (PJC), Inc. (The), Class A      60,353   
  40,978       Just Energy Group, Inc.(b)      300,989   
  4,034       Laurentian Bank of Canada      163,321   
  2,245       Linamar Corp.      130,391   
  1,269       MacDonald Dettwiler & Associates Ltd.      75,596   
  9,799       Major Drilling Group International, Inc.      31,082   
  8,019       Manitoba Telecom Services, Inc.(b)      176,089   
  7,459       Maple Leaf Foods, Inc.      118,525   
  8,170       Martinrea International, Inc.      69,252   
  11,690       MEG Energy Corp.(a)      97,212   
  8,852       Mullen Group Ltd.(b)      118,130   
  16,791       Nevsun Resources Ltd.      50,180   
  56,045       New Gold, Inc.(a)      138,790   
  1,951       Norbord, Inc.      36,847   
  4,415       North West Co., Inc. (The)      97,860   
  3,650       Northern Property Real Estate Investment Trust REIT      51,583   
  7,549       Northland Power, Inc.(b)      97,511   
  7,849       Nuvista Energy Ltd.(a)      27,716   
  2,064       Open Text Corp.      95,616   
  15,977       Pan American Silver Corp.      121,139   
  9,104       Parkland Fuel Corp.(b)      158,303   
  3,986       Pason Systems, Inc.      58,616   
  5,420       Peyto Exploration & Development Corp.      111,851   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   60  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Canada (continued)   
  38,479       Precision Drilling Corp.    $ 152,934   
  14,162       Primero Mining Corp.(a)      32,581   
  7,959       Progressive Waste Solutions Ltd.      191,257   
  3,304       Ritchie Bros Auctioneers, Inc.      85,709   
  9,038       RONA, Inc.      94,293   
  9,348       Russel Metals, Inc.(b)      145,755   
  3,648       Secure Energy Services, Inc.      24,230   
  16,903       SEMAFO, Inc.(a)      38,370   
  4,278       ShawCor Ltd.      90,736   
  74,245       Sherritt International Corp.      46,533   
  964       Sierra Wireless, Inc.(a)      24,027   
  8,981       Silver Standard Resources, Inc.(a)      61,848   
  3,700       Stantec, Inc.      92,815   
  1,150       Stella-Jones, Inc.      42,296   
  16,495       Superior Plus Corp.(b)      134,648   
  20,898       Surge Energy, Inc.(b)      46,960   
  1,181       TMX Group Ltd.      41,640   
  6,275       TORC Oil & Gas Ltd.      31,798   
  3,910       Toromont Industries Ltd.      101,698   
  5,664       Tourmaline Oil Corp.(a)      117,795   
  7,852       Transcontinental, Inc., Class A      120,929   
  7,521       TransForce, Inc.      147,046   
  38,525       Trican Well Service Ltd.(a)      25,618   
  8,594       Trilogy Energy Corp.(b)      28,902   
  30,294       Trinidad Drilling Ltd.      52,560   
  33,052       Turquoise Hill Resources Ltd.(a)      89,429   
  14,486       Veresen, Inc.(b)      125,999   
  2,473       West Fraser Timber Co. Ltd.      87,458   
  3,346       Westshore Terminals Investment Corp.      55,777   
  6,921       Whitecap Resources, Inc.(b)      61,415   
  4,228       WSP Global, Inc.      147,100   
     

 

 

  
        10,679,517  
     

 

 

  
   China—0.9%   
  17,352       AAC Technologies Holdings, Inc.      110,603   
  39,146       China Gold International Resources Corp. Ltd.(a)      52,360   
  489,050       China Huarong Energy Co. Ltd.(a)      20,193   
  178,582       China Travel International Investment Hong Kong Ltd.      81,110   
  216,339       FIH Mobile Ltd.      103,562   
  272,922       Honghua Group Ltd.(a)      22,186   
  28,851       Minth Group Ltd.      59,935   
  165,460       Parkson Retail Group Ltd.      24,552   
  2,154,310       Semiconductor Manufacturing International Corp.(a)      200,140   
  369,375       Shougang Fushan Resources Group Ltd.      50,044   
  260,567       Shui On Land Ltd.      71,949   
  91,579       Tingyi Cayman Islands Holding Corp.      157,396   
  63,618       Uni-President China Holdings Ltd.      52,289   
  211,869       Yangzijiang Shipbuilding Holdings Ltd.      189,101   
  91,418       Yingde Gases Group Co. Ltd.      40,931   
     

 

 

  
        1,236,351  
     

 

 

  
   Colombia—0.1%   
  55,265       Gran Tierra Energy, Inc.(a)      133,479   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Colombia (continued)   
  7,628       Parex Resources, Inc.(a)    $ 57,253   
     

 

 

  
        190,732  
     

 

 

  
   Denmark—1.4%   
  6,345       Alm. Brand A/S      36,184   
  2,142       Chr. Hansen Holding A/S      129,322   
  1,907       Coloplast A/S, Class B      137,449   
  1,497       D/S Norden A/S(a)      29,979   
  2,695       DFDS A/S      82,233   
  4,318       GN Store Nord A/S      79,117   
  5,464       H. Lundbeck A/S(a)      161,301   
  2,177       Matas A/S      39,663   
  2,569       NKT Holding A/S      140,490   
  4,533       Novozymes A/S, Class B      211,167   
  2,548       Pandora A/S      295,327   
  543       Rockwool International A/S, Class B      85,417   
  1,495       Royal Unibrew A/S      59,413   
  1,111       SimCorp A/S      54,717   
  5,114       Sydbank A/S      168,997   
  3,955       Topdanmark A/S(a)      105,799   
  6,285       Tryg A/S      113,575   
  943       William Demant Holding(a)      82,271   
     

 

 

  
        2,012,421  
     

 

 

  
   Faroe Islands—0.1%   
  1,869       Bakkafrost P/F      60,299   
     

 

 

  
   Finland—1.4%   
  8,404       Amer Sports Oyj      236,914   
  4,772       Cargotec Oyj, Class B      170,898   
  6,598       Caverion Corp.      57,725   
  14,379       Citycon Oyj      38,057   
  3,119       Cramo Oyj      57,538   
  7,352       Huhtamaki Oyj      260,696   
  10,551       Kemira Oyj      125,643   
  5,285       Konecranes Oyj      142,391   
  14,174       Metsa Board Oyj, Class B      90,656   
  21,997       Outokumpu Oyj(a)(b)      75,230   
  30,295       Outotec Oyj(b)      104,747   
  5,927       Ramirent Oyj      46,355   
  11,464       Sanoma Oyj(b)      50,528   
  17,885       Sponda Oyj      76,340   
  5,375       Tieto Oyj      138,522   
  2,873       Uponor Oyj      38,496   
  13,167       Valmet Oyj      139,486   
  33,880       YIT Oyj      179,268   
     

 

 

  
        2,029,490  
     

 

 

  
   France—3.5%   
  1,755       Aeroports de Paris      221,686   
  1,297       Alten SA      67,625   
  9,840       Altran Technologies SA      123,372   
  743       bioMerieux      86,754   
  32,867       Bollore SA      163,452   
  2,658       Bourbon SA(b)      39,374   
  5,808       Coface SA(a)      47,240   
  2,914       Dassault Systemes      231,249   
  24,368       Derichebourg SA(a)      75,344   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   61  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   France (continued)   
  3,627       Elior Participations SCA(c)    $ 69,193   
  851       Eramet(a)(b)      33,786   
  9,484       Etablissements Maurel et Prom(a)(b)      34,353   
  580       Euler Hermes Group      54,619   
  943       Groupe Fnac SA(a)      61,449   
  15,130       Havas SA      131,868   
  511       Hermes International      197,764   
  609       Iliad SA      128,727   
  2,849       Imerys SA      196,036   
  1,013       Ingenico Group      120,182   
  1,919       Ipsen SA      121,720   
  4,349       Ipsos      88,756   
  3,489       JCDecaux SA      142,795   
  1,615       Korian SA      61,379   
  3,251       Mercialys SA REIT      75,074   
  9,059       Metropole Television SA      175,173   
  3,883       Nexity SA      172,818   
  683       Numericable-SFR SAS(a)      31,084   
  2,039       Orpea      164,424   
  3,800       Plastic Omnium SA      110,441   
  4,921       Rallye SA(b)      91,569   
  1,508       Remy Cointreau SA      105,596   
  3,311       Rubis SCA      266,961   
  2,511       Saft Groupe SA      65,184   
  2,784       SEB SA      284,408   
  1,315       Societe BIC SA      210,702   
  10,966       Societe Television Francaise 1      141,911   
  5,012       Solocal Group(a)(b)      41,031   
  774       Sopra Steria Group      88,492   
  2,402       Tarkett SA      72,039   
  10,189       Ubisoft Entertainment SA(a)      306,988   
  1,554       Vicat      100,079   
  171       Virbac SA      34,256   
     

 

 

  
        5,036,953  
     

 

 

  
   Georgia—0.0%   
  1,912       Bank of Georgia Holdings PLC      59,058   
     

 

 

  
   Germany—4.0%   
  3,377       Aareal Bank AG      129,258   
  7,352       Aixtron SE(a)(b)      47,023   
  5,260       alstria office REIT-AG REIT      73,764   
  3,216       Axel Springer SE      181,678   
  2,829       BayWa AG(b)      96,236   
  873       Bechtle AG      81,006   
  238       Biotest AG      3,604   
  779       Biotest AG (Preference Shares)      11,015   
  2,665       Deutsche EuroShop AG      129,149   
  15,757       Deutz AG      59,407   
  3,422       DIC Asset AG      33,840   
  3,701       DMG Mori AG      147,608   
  403       Draegerwerk AG & Co. KGaA      25,945   
  740       Draegerwerk AG & Co. KGaA (Preference Shares)      53,600   
  1,926       Drillisch AG      99,804   
  544       Duerr AG      45,532   
  1,758       ElringKlinger AG      39,548   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Germany (continued)   
  1,062       Fielmann AG    $ 74,788   
  3,569       Fraport AG Frankfurt Airport Services Worldwide      227,482   
  1,481       FUCHS PETROLUB SE      61,619   
  3,013       FUCHS PETROLUB SE (Preference Shares)      145,164   
  2,196       Gerresheimer AG      172,160   
  1,392       Gerry Weber International AG      22,773   
  2,282       Hamburger Hafen und Logistik AG, Class A      33,161   
  64,374       Heidelberger Druckmaschinen AG(a)      185,955   
  2,020       Indus Holding AG      94,533   
  2,848       Jenoptik AG      46,215   
  1,403       Jungheinrich AG (Preference Shares)      103,947   
  618       Kabel Deutschland Holding AG      79,019   
  3,960       KION Group AG      179,395   
  884       Krones AG      106,830   
  789       KUKA AG      67,015   
  2,018       LEG Immobilien AG      161,727   
  3,204       Nordex SE(a)      105,259   
  1,496       Norma Group SE      77,117   
  956       Pfeiffer Vacuum Technology AG      119,756   
  224       Puma SE      50,379   
  114       Rational AG      45,467   
  2,038       Rheinmetall AG      128,908   
  6,680       RHOEN KLINIKUM AG      200,268   
  299       Sartorius AG (Preference Shares)      67,974   
  4,558       SGL Carbon SE(a)(b)      84,185   
  1,710       Sixt SE      95,902   
  2,115       Sixt SE (Preference Shares)      91,503   
  4,295       SMA Solar Technology AG(a)(b)      208,282   
  4,313       Software AG      125,946   
  6,631       STADA Arzneimittel AG      253,589   
  1,109       Stroeer SE      70,306   
  6,680       TAG Immobilien AG(b)      86,888   
  37,615       Telefonica Deutschland Holding AG      243,325   
  2,883       United Internet AG      150,493   
  1,392       Vossloh AG(a)      102,947   
  1,473       Wacker Chemie AG      129,944   
  1,764       Wacker Neuson SE      24,640   
  3,564       Wincor Nixdorf AG      183,798   
  1,511       Wirecard AG      78,457   
     

 

 

  
        5,745,133  
     

 

 

  
   Gibraltar—0.1%   
  53,949       Bwin.Party Digital Entertainment PLC      93,234   
     

 

 

  
   Greece—0.3%   
  920,623       Eurobank Ergasias SA(a)      31,526   
  2,918       FF Group      59,020   
  6,015       JUMBO SA      58,471   
  9,281       Mytilineos Holdings SA      49,724   
  21,988       Public Power Corp. SA      127,275   
  2,050       Titan Cement Co. SA      45,177   
     

 

 

  
        371,193  
     

 

 

  
   Hong Kong—2.7%   
  12,802       ASM Pacific Technology Ltd.      91,347   
  146,167       Brightoil Petroleum Holdings Ltd.(a)      52,242   
  10,472       Cafe de Coral Holdings Ltd.      35,469   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   62  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Hong Kong (continued)   
  144,383       Champion REIT    $ 75,637   
  12,118       Cheung Kong Infrastructure Holdings Ltd.      112,813   
  55,885       Chow Tai Fook Jewellery Group Ltd.      47,808   
  23,653       Dah Sing Banking Group Ltd.      44,986   
  7,465       Dah Sing Financial Holdings Ltd.      41,948   
  129,776       Esprit Holdings Ltd.      146,185   
  142,381       First Pacific Co. Ltd.      97,553   
  81,130       Fortune REIT      84,583   
  697,441       Global Brands Group Holding Ltd.(a)      144,886   
  67,679       Goldin Properties Holdings Ltd.(a)      58,334   
  11,631       Great Eagle Holdings Ltd.      38,344   
  1,572,723       G-Resources Group Ltd.      35,310   
  72,729       Hopewell Highway Infrastructure Ltd.      33,502   
  23,091       Hopewell Holdings Ltd.      83,573   
  135,833       Huabao International Holdings Ltd.      56,962   
  113,842       Hutchison Telecommunications Hong Kong Holdings Ltd.      42,158   
  43,398       Hysan Development Co. Ltd.      192,909   
  4,677       Jardine Strategic Holdings Ltd.      141,105   
  19,733       Johnson Electric Holdings Ltd.      72,438   
  114,500       Ju Teng International Holdings Ltd.      62,790   
  67,783       K Wah International Holdings Ltd.      29,387   
  35,796       Kerry Logistics Network Ltd.      53,393   
  28,098       Lifestyle International Holdings Ltd.      40,678   
  26,212       Luk Fook Holdings International Ltd.      67,812   
  109,331       NewOcean Energy Holdings Ltd.      44,860   
  57,762       NWS Holdings Ltd.      87,201   
  29,747       Orient Overseas International Ltd.      142,208   
  283,075       Pacific Basin Shipping Ltd.      84,008   
  40,961       Pacific Textile Holdings Ltd.      58,560   
  365,634       PCCW Ltd.      198,148   
  633,613       REXLot Holdings Ltd.      26,979   
  59,877       Sa Sa International Holdings Ltd.      19,238   
  93,837       Shangri-La Asia Ltd.      86,208   
  87,422       Shun Tak Holdings Ltd.      34,968   
  27,003       SmarTone Telecommunications Holding Ltd.      48,082   
  146,727       Sun Art Retail Group Ltd.      120,409   
  67,679       Sun Hung Kai & Co. Ltd.      45,672   
  50,999       Techtronic Industries Co. Ltd.      187,213   
  20,922       Television Broadcasts Ltd.      76,398   
  136,638       Truly International Holdings Ltd.      32,616   
  12,303       VTech Holdings Ltd.      149,460   
  179,628       WH Group Ltd.(a)(c)      99,432   
  222,503       Xinyi Glass Holdings Co. Ltd.      115,700   
  59,158       Yue Yuen Industrial Holdings Ltd.      216,401   
  81,396       Yuexiu Real Estate Investment Trust REIT      43,061   
     

 

 

  
        3,900,974  
     

 

 

  
   Ireland—0.6%   
  27,952       C&C Group PLC      112,084   
  5,962       Glanbia PLC      116,176   
  18,493       Greencore Group PLC      86,253   
  18,100       James Hardie Industries PLC      236,316   
  7,371       Kingspan Group PLC      179,376   
  1,070       Paddy Power PLC      124,344   
  8,207       UDG Healthcare PLC      60,231   
     

 

 

  
        914,780  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Israel—0.9%   
  5,162       Alony Hetz Properties & Investments Ltd. REIT    $ 39,574   
  2,061       Azrieli Group      80,896   
  11,783       Cellcom Israel Ltd.(a)      87,861   
  4,399       Delek Automotive Systems Ltd.      41,719   
  1,991       Elbit Systems Ltd.      158,101   
  8,322       Gazit-Globe Ltd.      90,387   
  113,237       Israel Discount Bank Ltd., Class A(a)      206,928   
  33,534       Migdal Insurance & Financial Holding Ltd.      30,553   
  11,777       Mizrahi Tefahot Bank Ltd.      143,128   
  1,506       NICE Systems Ltd.      92,683   
  197,488       Oil Refineries Ltd.(a)      72,351   
  17,924       Partner Communications Co. Ltd.(a)      81,491   
  399       Paz Oil Co. Ltd.      59,659   
  17,366       Shufersal Ltd.(a)      49,818   
  3,108       Strauss Group Ltd.(a)      44,604   
     

 

 

  
        1,279,753  
     

 

 

  
   Italy—2.5%   
  5,523       ACEA SpA      79,740   
  10,789       Anima Holding SpA(c)      106,369   
  8,051       Ansaldo STS SpA      86,045   
  12,098       Astaldi SpA      97,825   
  10,686       Autogrill SpA(a)      99,982   
  2,461       Azimut Holding SpA      59,509   
  49,706       Banca Carige SpA(a)      91,147   
  3,086       Banca Generali SpA      95,587   
  43,554       Banca Popolare di Sondrio Scarl      199,857   
  112,835       Beni Stabili SpA REIT      93,358   
  1,591       Brembo SpA      70,458   
  1,942       Brunello Cucinelli SpA      35,332   
  9,288       Buzzi Unicem SpA      157,901   
  5,613       Cementir Holding SpA      31,560   
  33,366       CIR-Compagnie Industriali Riunite
SpA(a)		      37,042   
  6,359       Credito Emiliano SpA      45,764   
  158,822       Credito Valtellinese SC(a)      200,882   
  1,177       Danieli & C. Officine Meccaniche SpA      25,301   
  3,747       Danieli & C. Officine Meccaniche SpA-RSP      56,954   
  16,151       Davide Campari-Milano SpA      138,983   
  2,800       De’Longhi SpA      68,913   
  1,049       DiaSorin SpA      47,209   
  671       Ei Towers SpA      40,878   
  9,802       ERG SpA      139,787   
  82,435       Hera SpA      217,638   
  3,107       Interpump Group SpA      45,991   
  75,667       Iren SpA      125,378   
  3,163       MARR SpA      64,744   
  2,393       Moncler SpA      38,726   
  24,527       Parmalat SpA      64,104   
  19,407       Piaggio & C. SpA      48,407   
  20,376       Prada SpA      82,818   
  69,016       RCS MediaGroup SpA(a)      55,387   
  5,221       Recordati SpA      130,400   
  4,273       Safilo Group SpA(a)      53,385   
  35,184       Salini Impregilo SpA      146,525   
  1,475       Salvatore Ferragamo SpA      40,245   
  66,278       Saras SpA(a)      131,419   
  9,510       Societa Iniziative Autostradali e Servizi SpA      109,569   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   63  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Italy (continued)   
  861       Tod’s SpA    $ 72,522   
  12,501       Trevi Finanziaria SpA      16,226   
     

 

 

  
        3,549,867  
     

 

 

  
   Japan—36.1%   
  36,385       77 Bank Ltd. (The)      202,616   
  1,056       ABC-Mart, Inc.      59,243   
  10,646       Accordia Golf Co. Ltd.      96,954   
  17,400       ACOM Co. Ltd.(a)      96,030   
  2,584       Adastria Co. Ltd.      146,250   
  9,380       ADEKA Corp.      138,980   
  6,504       Advantest Corp.(b)      52,334   
  1,942       AEON DELIGHT Co. Ltd.      56,244   
  7,227       AEON Financial Service Co. Ltd.      182,359   
  7,861       AEON Mall Co. Ltd.      132,433   
  3,900       Aica Kogyo Co. Ltd.      77,919   
  21,120       Aichi Steel Corp.      92,408   
  3,375       Aida Engineering Ltd.      32,442   
  19,816       Aiful Corp.(a)      79,313   
  1,910       Ain Holdings, Inc.      91,167   
  5,850       Aisan Industry Co. Ltd.      59,094   
  14,879       Akebono Brake Industry Co. Ltd.(b)      43,771   
  3,422       Alpen Co. Ltd.      56,289   
  5,031       Alpine Electronics, Inc.      66,872   
  5,749       Amano Corp.      75,367   
  13,289       Anritsu Corp.      87,217   
  5,168       AOKI Holdings, Inc.      63,468   
  6,127       Aoyama Trading Co. Ltd.      224,923   
  2,049       Arcland Sakamoto Co. Ltd.      44,996   
  3,702       Arcs Co. Ltd.      75,098   
  5,277       Asahi Diamond Industrial Co. Ltd.      56,192   
  4,833       Asahi Holdings, Inc.      71,529   
  3,476       Asatsu-DK, Inc.      85,924   
  19,000       Ashikaga Holdings Co. Ltd.      85,809   
  7,514       ASICS Corp.      209,526   
  2,495       ASKUL Corp.      92,212   
  11,194       Autobacs Seven Co. Ltd.      197,118   
  4,243       Avex Group Holdings, Inc.      50,280   
  8,113       Awa Bank Ltd. (The)      45,246   
  6,044       Azbil Corp.      153,761   
  4,083       Bank of The Ryukyus Ltd.      58,602   
  14,752       Bic Camera, Inc.      120,656   
  5,600       Bunka Shutter Co. Ltd.      43,714   
  2,040       Calbee, Inc.      74,551   
  36,363       Calsonic Kansei Corp.      292,290   
  2,612       Canon Electronics, Inc.      44,827   
  6,890       Canon Marketing Japan, Inc.      105,398   
  4,344       Capcom Co. Ltd.      92,154   
  13,400       Casio Computer Co. Ltd.(b)      254,508   
  2,342       Cawachi Ltd.      40,717   
  32,402       Central Glass Co. Ltd.      161,104   
  4,221       Century Tokyo Leasing Corp.      144,635   
  3,319       Chiyoda Co. Ltd.      110,565   
  19,501       Chiyoda Corp.      149,156   
  2,265       Chudenko Corp.      49,345   
  13,598       Chugoku Bank Ltd. (The)      194,378   
  8,101       Chugoku Marine Paints Ltd.      58,404   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  29,023       Citizen Holdings Co. Ltd.    $ 221,746   
  4,938       CKD Corp.      45,339   
  12,725       Clarion Co. Ltd.(b)      43,867   
  7,469       CMK Corp.(b)      14,297   
  5,693       Coca-Cola East Japan Co. Ltd.      80,388   
  12,064       Coca-Cola West Co. Ltd.      245,429   
  1,546       cocokara fine, Inc.      61,750   
  3,442       Colowide Co. Ltd.(b)      46,892   
  13,267       COMSYS Holdings Corp.      174,475   
  426       Cosmos Pharmaceutical Corp.      53,411   
  1,554       CyberAgent, Inc.      64,388   
  5,269       Daibiru Corp.      45,147   
  4,821       Daido Metal Co. Ltd.      45,583   
  9,198       Daifuku Co. Ltd.      137,427   
  11,969       Daihen Corp.      60,006   
  7,802       Daiho Corp.      34,654   
  43,033       Daikyo, Inc.      74,886   
  1,175       Daikyonishikawa Corp.      62,998   
  12,978       Daio Paper Corp.(b)      128,947   
  2,848       Daiseki Co. Ltd.      46,068   
  15,705       Daishi Bank Ltd. (The)      71,448   
  53,100       Daiwabo Holdings Co. Ltd.      105,166   
  15,116       DCM Holdings Co. Ltd.      100,836   
  15,645       DeNA Co. Ltd.      253,068   
  9,104       Denki Kogyo Co. Ltd.      39,079   
  1,054       DISCO Corp.      97,037   
  7,203       DMG Mori Co. Ltd.      103,859   
  6,151       Don Quijote Holdings Co. Ltd.      228,098   
  2,600       Doshisha Co. Ltd.      48,133   
  3,650       Doutor Nichires Holdings Co. Ltd.      53,355   
  26,755       Dowa Holdings Co. Ltd.      235,014   
  2,261       DTS Corp.      53,736   
  8,214       Duskin Co. Ltd.      141,648   
  1,508       DyDo Drinco, Inc.      64,606   
  29,677       Dynam Japan Holdings Co. Ltd.      36,531   
  2,075       Eagle Industry Co. Ltd.      42,162   
  1,621       Earth Chemical Co. Ltd.      64,276   
  25,563       EDION Corp.(b)      192,980   
  2,875       EIZO Corp.      67,733   
  4,992       EXEDY Corp.      115,704   
  3,365       Ezaki Glico Co. Ltd.      161,732   
  5,164       F.C.C. Co. Ltd.      92,175   
  4,296       FamilyMart Co. Ltd.      176,753   
  3,428       Fancl Corp.      48,292   
  3,119       Foster Electric Co. Ltd.      77,668   
  2,233       FP Corp.      91,874   
  5,160       Fuji Machine Manufacturing Co. Ltd.      51,140   
  7,344       Fuji Media Holdings, Inc.      87,878   
  6,917       Fuji Oil Holdings, Inc.      98,131   
  2,243       Fuji Seal International, Inc.      76,672   
  2,283       Fuji Soft, Inc.      43,910   
  1,361       Fujimori Kogyo Co. Ltd.      37,782   
  7,953       Fujitec Co. Ltd.      86,532   
  6,244       Fujitsu General Ltd.      79,062   
  6,500       Fukuda Corp.      65,337   
  14,216       Fukuyama Transporting Co. Ltd.(b)      77,515   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   64  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  5,313       Funai Electric Co. Ltd.    $ 55,254   
  38,023       Furukawa Co. Ltd.      90,430   
  4,114       Futaba Corp.      53,694   
  11,420       Futaba Industrial Co. Ltd.      49,399   
  2,483       Fuyo General Lease Co. Ltd.      112,139   
  6,971       Geo Holdings Corp.(b)      104,847   
  5,969       Glory Ltd.      152,100   
  28,398       Godo Steel Ltd.      50,124   
  16,170       Gree, Inc.(b)      82,274   
  44,245       GS Yuasa Corp.      169,390   
  5,386       Gulliver International Co. Ltd.(b)      54,853   
  19,898       Gunze Ltd.      63,482   
  10,910       H2O Retailing Corp.      213,996   
  4,957       Hamamatsu Photonics K.K.      127,340   
  40,641       Hanwa Co. Ltd.      169,401   
  4,550       Happinet Corp.      47,319   
  23,045       Haseko Corp.      236,991   
  15,886       Hazama Ando Corp.      94,388   
  3,682       Heiwa Corp.      68,285   
  4,418       Heiwa Real Estate Co. Ltd.      53,598   
  4,304       Heiwado Co. Ltd.      97,333   
  1,214       Hikari Tsushin, Inc.      93,056   
  1,525       Hirose Electric Co. Ltd.      186,526   
  2,875       HIS Co. Ltd.      97,441   
  5,539       Hisamitsu Pharmaceutical Co., Inc.      216,190   
  4,930       Hitachi Capital Corp.      142,783   
  10,750       Hitachi Chemical Co. Ltd.      172,107   
  5,689       Hitachi High-Technologies Corp.      154,394   
  5,862       Hitachi Koki Co. Ltd.      42,990   
  4,677       Hitachi Kokusai Electric, Inc.      65,112   
  3,650       Hitachi Maxell Ltd.      63,003   
  13,573       Hitachi Metals Ltd.      155,104   
  7,732       Hitachi Transport System Ltd.      137,116   
  28,215       Hitachi Zosen Corp.      155,484   
  1,077       Hogy Medical Co. Ltd.      51,942   
  13,679       Hokkoku Bank Ltd. (The)      51,123   
  25,666       Hokuetsu Kishu Paper Co. Ltd.      179,720   
  1,793       Hokuto Corp.      35,154   
  2,992       Horiba Ltd.      118,763   
  2,142       Hoshizaki Electric Co. Ltd.      156,379   
  11,739       Hosiden Corp.      72,861   
  7,191       House Foods Group, Inc.      124,900   
  5,410       Hulic Co. Ltd.      50,928   
  12,123       Hyakugo Bank Ltd. (The)      62,486   
  12,288       Hyakujushi Bank Ltd. (The)      46,535   
  4,013       IBJ Leasing Co. Ltd.      85,265   
  9,944       Iino Kaiun Kaisha Ltd.      45,322   
  2,574       Inaba Denki Sangyo Co. Ltd.      80,841   
  3,737       Inabata & Co. Ltd.      43,664   
  2,443       Internet Initiative Japan, Inc.      46,036   
  41,020       Iseki & Co. Ltd.(b)      67,984   
  75,839       Ishihara Sangyo Kaisha Ltd.(a)      74,158   
  12,327       IT Holdings Corp.      306,962   
  7,336       Ito EN Ltd.(b)      154,167   
  6,000       Itochu Enex Co. Ltd.      48,428   
  5,624       ITOCHU Techno-Solutions Corp.      123,968   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  19,313       Itoham Foods, Inc.    $ 99,066   
  7,675       Itoki Corp.      56,286   
  4,003       Izumi Co. Ltd.      149,936   
  7,990       J Trust Co. Ltd.      64,754   
  22,478       Jaccs Co. Ltd.      94,811   
  1,645       JAFCO Co. Ltd.      63,455   
  1,617       Japan Airport Terminal Co. Ltd.      88,438   
  3,547       Japan Aviation Electronics Industry Ltd.      63,695   
  13,200       Japan Exchange Group, Inc.      214,832   
  5,057       Japan Petroleum Exploration Co. Ltd.      152,538   
  13,348       Japan Securities Finance Co. Ltd.      72,450   
  53,104       Japan Steel Works Ltd. (The)      198,906   
  7,802       Jeol Ltd.      47,455   
  11,091       J-Oil Mills, Inc.      32,168   
  2,075       Joyful Honda Co. Ltd.      39,411   
  21,350       Juroku Bank Ltd. (The)      95,891   
  43,721       JVC KENWOOD Corp.      115,213   
  6,908       Kagome Co. Ltd.(b)      117,867   
  1,600       Kaken Pharmaceutical Co. Ltd.      111,374   
  22,101       Kamigumi Co. Ltd.      191,569   
  2,255       Kanamoto Co. Ltd.      45,838   
  22,131       Kandenko Co. Ltd.      157,352   
  44,254       Kanematsu Corp.      73,711   
  12,185       Kansai Paint Co. Ltd.      187,104   
  5,200       Kasai Kogyo Co. Ltd.      65,283   
  6,476       Kato Works Co. Ltd.      28,013   
  35,484       Keihan Electric Railway Co. Ltd.      253,174   
  7,627       Keihin Corp.      125,394   
  16,838       Keisei Electric Railway Co. Ltd.      209,158   
  18,368       Keiyo Bank Ltd. (The)      93,001   
  10,111       Kenedix, Inc.      36,866   
  9,710       Kewpie Corp.      223,207   
  14,325       Kinden Corp.      187,201   
  3,609       Kintetsu World Express, Inc.      68,367   
  10,425       Kinugawa Rubber Industrial Co. Ltd.      58,658   
  2,612       Kissei Pharmaceutical Co. Ltd.      67,640   
  12,198       Kitz Corp.      56,606   
  3,985       Kiyo Bank Ltd. (The)      61,026   
  1,876       Kobayashi Pharmaceutical Co. Ltd.      146,442   
  3,221       Koei Tecmo Holdings Co. Ltd.      49,166   
  6,684       Kohnan Shoji Co. Ltd.      98,148   
  6,716       Kokuyo Co. Ltd.      75,411   
  4,932       Komeri Co. Ltd.      106,262   
  5,626       Komori Corp.      67,274   
  9,888       Konami Holdings Corp.      225,988   
  5,733       Konoike Transport Co. Ltd.      71,452   
  1,715       Kose Corp.      168,977   
  38,051       Kumagai Gumi Co. Ltd.      114,776   
  25,401       KUREHA Corp.      97,668   
  6,248       Kuroda Electric Co. Ltd.      127,575   
  36,704       KYB Corp.      105,542   
  3,133       Kyoei Steel Ltd.      52,158   
  3,537       Kyokuto Kaihatsu Kogyo Co. Ltd.      37,751   
  2,225       Kyokuto Securities Co. Ltd.      28,837   
  5,089       KYORIN Holdings, Inc.      86,156   
  898       Kyoritsu Maintenance Co. Ltd.      62,062   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   65  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  15,231       Kyowa Exeo Corp.    $ 159,914   
  6,347       Kyudenko Corp.      131,858   
  10,400       Kyushu Financial Group, Inc.(a)      79,977   
  39,707       Leopalace21 Corp.(a)      213,218   
  5,392       Lintec Corp.      127,388   
  23,086       Lion Corp.(b)      224,021   
  2,169       Mabuchi Motor Co. Ltd.      108,562   
  15,473       Maeda Corp.      113,219   
  7,855       Maeda Road Construction Co. Ltd.      144,179   
  9,320       Makino Milling Machine Co. Ltd.      72,984   
  1,616       Mandom Corp.      64,479   
  13,025       Marudai Food Co. Ltd.      48,463   
  4,677       Maruha Nichiro Corp.      70,538   
  6,242       Maruichi Steel Tube Ltd.      160,867   
  4,753       Matsui Securities Co. Ltd.      42,262   
  5,487       Matsumotokiyoshi Holdings Co. Ltd.      236,895   
  5,257       Megmilk Snow Brand Co. Ltd.      109,910   
  30,870       Meidensha Corp.      109,231   
  1,762       Meitec Corp.      64,464   
  13,897       Minebea Co. Ltd.      155,006   
  2,709       Ministop Co. Ltd.(b)      50,285   
  4,551       Miraca Holdings, Inc.      204,027   
  9,625       Mirait Holdings Corp.      83,907   
  8,079       Misawa Homes Co. Ltd.      48,872   
  10,684       MISUMI Group, Inc.      140,683   
  4,465       Mitsuba Corp.      71,003   
  11,616       Mitsubishi Logistics Corp.      168,067   
  55,057       Mitsubishi Paper Mills Ltd.(a)      37,868   
  19,836       Mitsubishi Steel Manufacturing Co. Ltd.      38,299   
  45,175       Mitsubishi UFJ Lease & Finance Co. Ltd.      239,211   
  18,273       Mitsui-Soko Holdings Co. Ltd.      59,358   
  13,687       Mitsumi Electric Co. Ltd.      83,591   
  4,603       Miura Co. Ltd.      55,347   
  1,064       Mochida Pharmaceutical Co. Ltd.      63,218   
  2,725       Modec, Inc.(b)      37,733   
  13,344       Monex Group, Inc.      37,818   
  25,661       Morinaga & Co. Ltd.      131,628   
  31,408       Morinaga Milk Industry Co. Ltd.      143,148   
  1,758       MOS Food Services, Inc.      38,212   
  3,250       Musashi Seimitsu Industry Co. Ltd.      66,360   
  1,708       Musashino Bank Ltd. (The)      65,532   
  6,545       Nabtesco Corp.      132,446   
  15,825       Nachi-Fujikoshi Corp.      71,601   
  8,287       Nagase & Co. Ltd.      103,832   
  7,433       Namura Shipbuilding Co. Ltd.      65,784   
  45,423       Nankai Electric Railway Co. Ltd.      233,373   
  4,237       NEC Networks & System Integration Corp.      79,807   
  14,981       NET One Systems Co. Ltd.      92,735   
  7,667       Nexon Co. Ltd.      107,246   
  13,848       Nichias Corp.      88,017   
  8,267       Nichicon Corp.      66,931   
  4,019       Nichiha Corp.      54,619   
  8,180       Nichii Gakkan Co.(b)      56,736   
  2,901       Nichi-iko Pharmaceutical Co. Ltd.      81,254   
  3,234       Nifco, Inc.      125,822   
  4,005       Nihon Kohden Corp.      78,557   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  6,000       Nihon Parkerizing Co. Ltd.    $ 53,947   
  8,440       Nihon Unisys Ltd.      93,440   
  7,956       Nikkiso Co. Ltd.      64,611   
  6,230       Nikkon Holdings Co. Ltd.      121,270   
  8,186       Nippo Corp.      143,743   
  21,012       Nippon Chemi-Con Corp.      49,102   
  16,914       Nippon Denko Co. Ltd.      34,340   
  3,765       Nippon Densetsu Kogyo Co. Ltd.      71,790   
  9,938       Nippon Flour Mills Co. Ltd.      62,012   
  2,350       Nippon Gas Co. Ltd.(b)      59,785   
  14,373       Nippon Kayaku Co. Ltd.      150,906   
  9,722       Nippon Koei Co. Ltd.      39,396   
  135,741       Nippon Light Metal Holdings Co. Ltd.      233,968   
  3,432       Nippon Paint Holdings Co. Ltd.      73,290   
  10,974       Nippon Road Co. Ltd. (The)      60,201   
  3,097       Nippon Seiki Co. Ltd.      65,058   
  1,956       Nippon Shinyaku Co. Ltd.      76,992   
  3,300       Nippon Shokubai Co. Ltd.      260,336   
  6,149       Nippon Signal Co. Ltd.      64,254   
  16,404       Nippon Soda Co. Ltd.      128,323   
  24,945       Nippon Steel & Sumikin Bussan Corp.      87,233   
  69,022       Nippon Suisan Kaisha Ltd.      232,790   
  7,673       Nippon Synthetic Chemical Industry Co. Ltd. (The)      57,289   
  4,861       Nippon Television Holdings, Inc.      84,833   
  30,858       Nippon Yakin Kogyo Co. Ltd.(a)(b)      42,960   
  16,945       Nipro Corp.      191,250   
  37,154       Nishimatsu Construction Co. Ltd.      148,708   
  23,803       Nishi-Nippon Railroad Co. Ltd.      123,872   
  1,807       Nishio Rent All Co. Ltd.      42,362   
  9,186       Nissan Chemical Industries Ltd.      229,888   
  3,426       Nissan Shatai Co. Ltd.      39,974   
  2,830       Nissha Printing Co. Ltd.      62,052   
  20,988       Nisshin Oillio Group Ltd. (The)      78,265   
  5,415       Nissin Kogyo Co. Ltd.      83,867   
  1,300       Nitta Corp.      35,658   
  13,390       Nitto Boseki Co. Ltd.      40,722   
  2,384       Nitto Kogyo Corp.      46,346   
  16,398       NOF Corp.      117,949   
  6,700       Nomura Research Institute Ltd.      275,939   
  5,495       Noritz Corp.      86,426   
  23,351       North Pacific Bank Ltd.      90,366   
  1,409       NS Solutions Corp.      69,239   
  14,325       NS United Kaiun Kaisha Ltd.      28,965   
  2,704       NSD Co. Ltd.      37,868   
  7,788       NTT Urban Development Corp.      77,896   
  2,499       OBIC Co. Ltd.      132,949   
  25,894       Ogaki Kyoritsu Bank Ltd. (The)      101,495   
  1,546       Oiles Corp.      24,726   
  4,308       Okabe Co. Ltd.      34,593   
  5,319       Okamura Corp.      49,675   
  15,455       Okasan Securities Group, Inc.      91,699   
  90,110       Oki Electric Industry Co. Ltd.      153,077   
  3,028       Okinawa Electric Power Co., Inc. (The)      74,750   
  10,645       OKUMA Corp.      86,183   
  20,107       Okumura Corp.      107,304   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   66  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  24,709       Onward Holdings Co. Ltd.    $ 156,024   
  2,350       Oracle Corp. Japan      107,495   
  78,726       Orient Corp.(a)(b)      158,528   
  3,987       OSG Corp.      75,693   
  4,243       Otsuka Corp.      206,392   
  6,550       Pacific Industrial Co. Ltd.      73,492   
  23,187       Pacific Metals Co. Ltd.(a)(b)      62,447   
  9,209       PanaHome Corp.      66,010   
  1,813       Paramount Bed Holdings Co. Ltd.      58,443   
  6,364       Park24 Co. Ltd.      134,162   
  40,864       Penta-Ocean Construction Co. Ltd.      186,923   
  2,846       Pigeon Corp.      80,539   
  1,514       Pilot Corp.      64,612   
  898       Piolax, Inc.      47,774   
  105,354       Pioneer Corp.(a)      285,484   
  2,842       Plenus Co. Ltd.      44,134   
  1,320       Pola Orbis Holdings, Inc.      84,554   
  18,051       Press Kogyo Co. Ltd.      78,083   
  29,122       Prima Meat Packers Ltd.      81,809   
  4,425       Raito Kogyo Co. Ltd.      42,682   
  4,437       Relia, Inc.      42,320   
  564       Relo Holdings, Inc.      61,085   
  45,304       Rengo Co. Ltd.      216,618   
  3,109       Resorttrust, Inc.      80,382   
  1,387       Ricoh Leasing Co. Ltd.      42,239   
  2,509       Rinnai Corp.      200,221   
  2,600       Riso Kagaku Corp.      47,508   
  8,535       Rohto Pharmaceutical Co. Ltd.      141,737   
  13,614       Round One Corp.      61,823   
  2,988       Royal Holdings Co. Ltd.      52,716   
  21,336       Ryobi Ltd.      79,386   
  1,171       Ryohin Keikaku Co. Ltd.      237,063   
  2,249       Ryosan Co. Ltd.      54,792   
  2,687       Saizeriya Co. Ltd.      61,210   
  11,430       Sakai Chemical Industry Co. Ltd.      34,003   
  5,475       SAKATA INX Corp.      50,360   
  2,600       Sakata Seed Corp.      55,372   
  1,595       San-A Co. Ltd.      68,201   
  20,363       Sanden Holdings Corp.      70,703   
  6,617       Sangetsu Co. Ltd.      106,267   
  10,445       San-in Godo Bank Ltd. (The)      97,201   
  11,117       Sanken Electric Co. Ltd.      38,968   
  5,168       Sankyo Tateyama, Inc.      72,290   
  47,285       Sankyu, Inc.      268,409   
  2,677       Sanrio Co. Ltd.(b)      71,542   
  21,372       Sanwa Holdings Corp.      173,562   
  8,620       Sanyo Chemical Industries Ltd.      64,217   
  6,476       Sanyo Denki Co. Ltd.      39,712   
  17,199       Sanyo Shokai Ltd.      50,453   
  20,867       Sanyo Special Steel Co. Ltd.      86,632   
  1,950       Sato Holdings Corp.      42,676   
  1,743       Sawai Pharmaceutical Co. Ltd.      112,228   
  15,330       SCREEN Holdings Co. Ltd.      91,465   
  2,685       SCSK Corp.      103,573   
  6,450       Seibu Holdings, Inc.      131,539   
  2,225       Seikagaku Corp.      28,763   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  18,974       Seiko Holdings Corp.    $ 124,528   
  4,982       Seiren Co. Ltd.      59,037   
  16,804       Senko Co. Ltd.(b)      117,109   
  17,391       Senshu Ikeda Holdings, Inc.      75,372   
  27,286       Seven Bank Ltd.      125,266   
  11,238       Shiga Bank Ltd. (The)      60,439   
  3,014       Shima Seiki Manufacturing Ltd.(b)      45,357   
  20,981       Shimadzu Corp.      329,472   
  9,104       Shindengen Electric Manufacturing Co. Ltd.      33,572   
  9,783       Shinko Electric Industries Co. Ltd.      59,991   
  7,701       Shinmaywa Industries Ltd.      84,875   
  4,221       Ship Healthcare Holdings, Inc.      102,976   
  755       SHO-BOND Holdings Co. Ltd.      30,125   
  6,086       Shochiku Co. Ltd.      53,963   
  8,721       Showa Corp.      81,519   
  2,350       Siix Corp.      66,600   
  19,525       Sinfonia Technology Co. Ltd.      33,978   
  20,214       SKY Perfect JSAT Holdings, Inc.      107,205   
  3,906       Sodick Co. Ltd.      29,099   
  4,937       Sohgo Security Services Co. Ltd.      240,151   
  36,354       Sotetsu Holdings, Inc.      208,167   
  4,938       Square Enix Holdings Co. Ltd.      134,217   
  2,600       Star Micronics Co. Ltd.      35,615   
  3,492       Starts Corp., Inc.      55,039   
  2,783       Sugi Holdings Co. Ltd.      136,296   
  27,712       Sumitomo Bakelite Co. Ltd.      114,591   
  16,471       Sumitomo Dainippon Pharma Co.
Ltd.(b)		      183,307   
  16,590       Sumitomo Forestry Co. Ltd.      200,029   
  86,990       Sumitomo Mitsui Construction Co. Ltd.      85,062   
  57,964       Sumitomo Osaka Cement Co. Ltd.      224,795   
  8,874       Sumitomo Riko Co. Ltd.      72,286   
  5,200       Sumitomo Seika Chemicals Co. Ltd.      36,498   
  16,576       Sumitomo Warehouse Co. Ltd. (The)      88,598   
  2,471       Sundrug Co. Ltd.      131,459   
  7,950       Suruga Bank Ltd.      157,979   
  59,462       SWCC Showa Holdings Co. Ltd.(a)(b)      39,420   
  2,817       Sysmex Corp.      162,706   
  6,024       Tachi-S Co. Ltd.      84,763   
  7,790       Tadano Ltd.      93,861   
  5,381       Taihei Dengyo Kaisha Ltd.      57,522   
  4,080       Taikisha Ltd.      99,299   
  1,175       Taiyo Holdings Co. Ltd.      40,700   
  12,088       Taiyo Nippon Sanso Corp.      125,914   
  12,847       Taiyo Yuden Co. Ltd.      182,578   
  19,002       Takara Holdings, Inc.      137,466   
  6,704       Takara Standard Co. Ltd.      50,888   
  8,513       Takasago Thermal Engineering Co. Ltd.      122,960   
  10,033       Takata Corp.(a)(b)      114,651   
  6,981       Takuma Co. Ltd.      55,420   
  1,912       Tamron Co. Ltd.      38,486   
  10,425       Tamura Corp.      33,519   
  11,405       Tekken Corp.      32,039   
  7,836       Temp Holdings Co. Ltd.      117,857   
  5,489       T-Gaia Corp.      84,194   
  7,682       THK Co. Ltd.      146,224   
  30,301       Toa Corp.      69,302   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   67  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  10,911       Toagosei Co. Ltd.    $ 92,225   
  39,836       Toda Corp.      218,203   
  9,279       Toei Co. Ltd.      83,275   
  6,432       Toho Co. Ltd.      168,429   
  38,733       Toho Gas Co. Ltd.      238,801   
  12,710       Toho Holdings Co. Ltd.(b)      283,638   
  23,944       Toho Zinc Co. Ltd.      66,867   
  35,794       Tokai Carbon Co. Ltd.      98,476   
  6,868       Tokai Rika Co. Ltd.      150,820   
  17,309       Tokai Tokyo Financial Holdings, Inc.      106,285   
  898       Token Corp.      71,587   
  5,173       Tokyo Broadcasting System Holdings, Inc.      77,547   
  17,769       Tokyo Dome Corp.      83,047   
  2,826       Tokyo Ohka Kogyo Co. Ltd.      91,097   
  2,475       Tokyo Seimitsu Co. Ltd.      55,191   
  7,770       Tokyo Steel Manufacturing Co. Ltd.      52,283   
  14,236       Tokyo Tatemono Co. Ltd.      178,016   
  12,399       Tokyu Construction Co. Ltd.      95,349   
  12,391       Tomy Co. Ltd.      62,738   
  2,548       Topcon Corp.      37,162   
  6,175       Toppan Forms Co. Ltd.      80,133   
  3,008       Topre Corp.      65,831   
  26,641       Topy Industries Ltd.      60,490   
  14,650       Toshiba Machine Co. Ltd.      50,867   
  3,097       Toshiba Plant Systems & Services Corp.      33,389   
  18,098       Toshiba TEC Corp.      65,988   
  2,384       Totetsu Kogyo Co. Ltd.      51,819   
  650       Towa Pharmaceutical Co. Ltd.      44,491   
  9,803       Toyo Construction Co. Ltd.      45,491   
  26,122       Toyo Engineering Corp.(a)      66,238   
  30,078       Toyo Ink SC Holdings Co. Ltd.      124,873   
  7,635       Toyo Tire & Rubber Co. Ltd.      162,412   
  13,466       Toyota Boshoku Corp.      290,466   
  2,576       TPR Co. Ltd.      63,591   
  2,618       Transcosmos, Inc.      73,545   
  6,343       Trend Micro, Inc.      248,884   
  1,974       Trusco Nakayama Corp.      69,685   
  6,509       TS Tech Co. Ltd.      180,154   
  10,340       TSI Holdings Co. Ltd.      73,003   
  15,026       Tsubakimoto Chain Co.      110,944   
  6,237       Tsumura & Co.      151,228   
  2,354       Tsuruha Holdings, Inc.      187,657   
  3,242       TV Asahi Corp.      54,483   
  1,070       TV TOKYO Holdings Corp.      19,064   
  33,664       UACJ Corp.      65,836   
  2,273       UKC Holdings Corp.      45,846   
  6,230       Ulvac, Inc.      111,822   
  7,152       Unipres Corp.      164,169   
  1,602       United Arrows Ltd.      69,430   
  4,825       United Super Markets Holdings, Inc.      42,302   
  226,912       Unitika Ltd.(a)      114,702   
  12,824       Ushio, Inc.      177,788   
  7,583       USS Co. Ltd.      135,165   
  6,047       Valor Co. Ltd.      142,212   
  12,752       Wacoal Holdings Corp.      161,045   
  9,137       Wacom Co. Ltd.(b)      34,375   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Japan (continued)   
  4,338       Wakita & Co. Ltd.    $ 34,366   
  2,267       Warabeya Nichiyo Co. Ltd.      44,485   
  3,775       WATAMI Co. Ltd.(a)(b)      26,559   
  1,502       Welcia Holdings Co. Ltd.      74,555   
  3,866       XEBIO Holdings Co. Ltd.      69,743   
  52,745       Yahoo! Japan Corp.      225,098   
  3,202       Yakult Honsha Co. Ltd.      170,879   
  4,100       Yamabiko Corp.      38,087   
  4,128       Yamato Kogyo Co. Ltd.      110,833   
  2,050       Yaoko Co. Ltd.      83,155   
  14,508       Yaskawa Electric Corp.      173,964   
  3,983       Yokogawa Bridge Holdings Corp.      37,132   
  19,858       Yokogawa Electric Corp.      223,634   
  3,327       Yorozu Corp.      71,599   
  8,309       Yoshinoya Holdings Co. Ltd.      102,662   
  2,911       Yuasa Trading Co. Ltd.      68,195   
  15,009       Zensho Holdings Co. Ltd.      141,912   
  21,458       Zeon Corp.      176,572   
  2,875       ZERIA Pharmaceutical Co. Ltd.      43,051   
     

 

 

  
        51,905,982  
     

 

 

  
   Jersey Island—0.2%   
  90,384       Centamin PLC      88,778   
  2,962       Randgold Resources Ltd.      199,815   
     

 

 

  
        288,593  
     

 

 

  
   Jordan—0.1%   
  2,332       Hikma Pharmaceuticals PLC      77,937   
     

 

 

  
   Luxembourg—0.2%   
  5,939       APERAM SA(a)      184,318   
  194       Eurofins Scientific SE      70,559   
  16,510       L’Occitane International SA      33,318   
     

 

 

  
        288,195  
     

 

 

  
   Macau—0.1%   
  38,093       MGM China Holdings Ltd.      55,836   
  57,265       Wynn Macau Ltd.      79,210   
     

 

 

  
        135,046  
     

 

 

  
   Mexico—0.1%   
  12,159       Fresnillo PLC      137,082   
     

 

 

  
   Netherlands—1.5%   
  5,949       Aalberts Industries NV      194,288   
  1,422       Altice NV, Class A(a)      24,740   
  467       Altice NV, Class B(a)      8,331   
  4,398       Arcadis NV      111,497   
  2,932       ASM International NV      112,728   
  8,276       BinckBank NV      73,338   
  1,868       Brunel International NV      35,244   
  7,945       Corbion NV      196,198   
  3,245       Eurocommercial Properties NV CVA      155,750   
  4,591       Euronext NV(c)      202,757   
  3,335       Koninklijke Ten Cate NV      90,700   
  3,568       Koninklijke Vopak NV      144,156   
  9,057       NSI NV REIT      39,639   
  5,287       OCI NV(a)      150,241   
  2,707       TKH Group NV CVA      103,030   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   68  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Netherlands (continued)   
  9,839       TomTom NV(a)    $ 107,513   
  8,525       USG People NV      136,549   
  2,057       Vastned Retail NV REIT      100,548   
  2,361       Wereldhave NV REIT      148,087   
     

 

 

  
        2,135,334  
     

 

 

  
   New Zealand—0.8%   
  48,851       Air New Zealand Ltd.      96,183   
  42,208       Auckland International Airport Ltd.      150,215   
  38,277       Chorus Ltd.(a)      73,680   
  19,887       Contact Energy Ltd.      69,834   
  16,379       Fisher & Paykel Healthcare Corp. Ltd.      86,218   
  34,529       Genesis Energy Ltd.      43,571   
  19,419       Infratil Ltd.      40,796   
  36,665       Kiwi Property Group Ltd.      33,738   
  56,240       Mighty River Power Ltd.      106,546   
  9,429       Ryman Healthcare Ltd.      50,336   
  34,431       Sky Network Television Ltd.      105,764   
  46,824       SKYCITY Entertainment Group Ltd.      127,041   
  15,001       Trade Me Ltd.      37,148   
  13,152       Z Energy Ltd.      59,621   
     

 

 

  
        1,080,691  
     

 

 

  
   Norway—0.7%   
  24,753       Akastor ASA(a)(b)      32,470   
  2,985       Aker ASA, Class A      59,088   
  3,209       Atea ASA      29,959   
  10,208       Austevoll Seafood ASA      63,032   
  4,631       BW LPG Ltd.(c)      31,578   
  57,664       BW Offshore Ltd.      24,124   
  47,293       DNO ASA(a)      47,618   
  12,444       Fred Olsen Energy ASA(a)      57,868   
  1,417       Leroy Seafood Group ASA      49,903   
  5,859       Nordic Semiconductor ASA(a)      28,285   
  40,499       Prosafe SE      112,473   
  3,603       Salmar ASA      59,186   
  2,611       Schibsted ASA, Class A      87,941   
  2,611       Schibsted ASA, Class B(a)      81,769   
  2,726       Stolt-Nielsen Ltd.      37,048   
  9,004       TGS Nopec Geophysical Co. ASA      178,233   
  140,176       Vard Holdings Ltd.(a)      38,034   
     

 

 

  
        1,018,609  
     

 

 

  
   Peru—0.0%   
  44,977       Hochschild Mining PLC(a)      51,402   
     

 

 

  
   Portugal—0.5%   
  12,617       Altri SGPS SA      59,945   
  49,438       Banco BPI SA(a)      60,400   
  12,586       CTT-Correios de Portugal SA      143,689   
  15,862       Mota-Engil SGPS SA      40,038   
  10,498       NOS SGPS SA      87,659   
  19,708       Portucel SA      80,659   
  20,864       REN—Redes Energeticas Nacionais SGPS SA      64,003   
  1,947       Semapa-Sociedade de Investimento e Gestao SGPS SA      27,680   
  129,952       Sonae SGPS SA      156,184   
     

 

 

  
        720,257  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Russia—0.2%   
  17,314       Polymetal International PLC    $ 153,620   
  31,681       Polyus Gold International Ltd.      93,086   
  91,106       United Co. RUSAL PLC      35,031   
     

 

 

  
        281,737  
     

 

 

  
   Singapore—1.7%   
  39,140       Ascott Residence Trust REIT      33,816   
  92,068       Biosensors International Group Ltd.(a)      44,703   
  133,259       CapitaLand Commercial Trust Ltd. REIT      134,163   
  28,483       CapitaLand Retail China Trust REIT      30,913   
  45,524       CDL Hospitality Trusts REIT      44,045   
  197,680       Ezra Holdings Ltd.(a)      17,220   
  26,548       First Resources Ltd.      35,637   
  32,291       Frasers Centrepoint Trust REIT      45,076   
  34,879       Frasers Commercial Trust REIT      34,119   
  295,214       Genting Singapore PLC      171,795   
  53,754       Hyflux Ltd.      26,100   
  93,047       Keppel REIT      64,113   
  19,313       M1 Ltd.      39,164   
  72,479       Mapletree Commercial Trust REIT      70,901   
  125,342       Mapletree Greater China Commercial Trust REIT(c)      89,051   
  80,401       Mapletree Industrial Trust REIT      87,548   
  97,901       Mapletree Logistics Trust REIT      71,302   
  156,185       Neptune Orient Lines Ltd.(a)      110,963   
  67,344       Olam International Ltd.      96,171   
  38,538       SATS Ltd.      104,291   
  16,065       SIA Engineering Co. Ltd.      45,769   
  27,181       Singapore Exchange Ltd.      143,232   
  60,491       Singapore Post Ltd.      81,850   
  37,882       SMRT Corp. Ltd.      39,491   
  64,601       Starhill Global REIT      37,363   
  39,941       StarHub Ltd.      102,669   
  151,177       Suntec REIT      178,109   
  135,792       Swiber Holdings Ltd.(a)      25,210   
  42,302       United Engineers Ltd.      60,108   
  35,223       UOL Group Ltd.      164,986   
  10,381       Venture Corp. Ltd.      61,300   
  55,491       Wing Tai Holdings Ltd.      69,141   
     

 

 

  
        2,360,319  
     

 

 

  
   South Africa—0.0%   
  13,777       Petra Diamonds Ltd.      15,883   
     

 

 

  
   South Korea—7.5%   
  504       Amorepacific Corp.      166,887   
  727       AMOREPACIFIC Group      102,668   
  15,768       Asiana Airlines, Inc.(a)      67,011   
  523       Binggrae Co. Ltd.      31,333   
  606       Celltrion, Inc.(a)      40,930   
  3,915       Cheil Worldwide, Inc.(a)      68,681   
  695       CJ CheilJedang Corp.      213,368   
  1,700       CJ E&M Corp.(a)      124,661   
  315       CJ O Shopping Co. Ltd.      48,768   
  1,812       Coway Co. Ltd.      135,417   
  4,421       Daeduck Electronics Co.      28,503   
  1,528       Daesang Corp.      41,683   
  21,077       Daewoo Engineering & Construction Co. Ltd.(a)      120,355   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   69  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   South Korea (continued)   
  7,228       Daewoo International Corp.    $ 126,484   
  15,820       Daewoo Securities Co. Ltd.      154,030   
  4,203       Daishin Securities Co. Ltd.      38,710   
  2,876       Daishin Securities Co. Ltd. (Preference Shares)      18,491   
  2,882       Daou Technology, Inc.      62,820   
  16,870       DGB Financial Group, Inc.      156,855   
  4,238       Dongbu Insurance Co. Ltd.      254,269   
  10,653       Dongkuk Steel Mill Co. Ltd.(a)      63,915   
  1,903       Doosan Corp.      184,449   
  6,342       Doosan Engine Co. Ltd.(a)      21,362   
  6,501       Eusu Holdings Co. Ltd.(a)      50,352   
  440       Fila Korea Ltd.      38,595   
  2,012       Green Cross Holdings Corp.      72,446   
  8,741       GS Engineering & Construction Corp.(a)      178,646   
  198       GS Home Shopping, Inc.      29,560   
  1,924       GS Retail Co. Ltd.      97,208   
  568       Halla Holdings Corp.      28,349   
  313       Hanil Cement Co. Ltd.      32,260   
  22,777       Hanjin Heavy Industries & Construction Co. Ltd.(a)      89,106   
  19,106       Hanjin Shipping Co. Ltd.(a)      84,130   
  1,269       Hanjin Transportation Co. Ltd.      49,478   
  1,974       Hanon Systems      77,744   
  14,897       Hansol Holdings Co. Ltd.(a)      93,821   
  17,905       Hanwha Chemical Corp.      349,446   
  27,913       Hanwha Life Insurance Co. Ltd.      207,869   
  5,983       Hanwha Techwin Co. Ltd.(a)      195,751   
  3,489       Hite Jinro Co. Ltd.      70,083   
  846       Hotel Shilla Co. Ltd.      81,628   
  1,708       Huchems Fine Chemical Corp.      28,091   
  1,223       Hyundai C&F, Inc.(a)      38,888   
  1,777       Hyundai Corp.      52,217   
  1,328       Hyundai Department Store Co. Ltd.      146,190   
  4,225       Hyundai Development Co.-Engineering & Construction      170,660   
  736       Hyundai Glovis Co. Ltd.      126,858   
  3,328       Hyundai Greenfood Co. Ltd.      69,622   
  8,602       Hyundai Marine & Fire Insurance Co. Ltd.      256,162   
  11,019       Hyundai Merchant Marine Co. Ltd.(a)      57,606   
  2,246       Hyundai Mipo Dockyard Co. Ltd.(a)      141,452   
  3,465       Hyundai Rotem Co. Ltd.(a)      49,541   
  18,760       Hyundai Securities Co. Ltd.      113,871   
  1,392       Hyundai Wia Corp.      163,003   
  2,074       iMarketKorea, Inc.      54,031   
  5,979       Kangwon Land, Inc.      221,843   
  7,809       KB Insurance Co. Ltd.      181,860   
  446       KCC Corp.      159,810   
  1,907       Kolon Corp.      107,222   
  3,948       Kolon Industries, Inc.      215,053   
  1,253       Korea Aerospace Industries Ltd.      98,917   
  2,554       Korea Investment Holdings Co. Ltd.      136,655   
  9,494       Korean Reinsurance Co.      113,257   
  3,951       Kumho Industrial Co. Ltd.(a)      60,475   
  2,224       Kumho Petrochemical Co. Ltd.      113,146   
  24,913       Kumho Tire Co., Inc.(a)      150,783   
  1,954       LF Corp.      54,247   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   South Korea (continued)   
  463       LG Hausys Ltd.    $ 69,041   
  224       LG Household & Health Care Ltd.      186,069   
  1,388       LG Innotek Co. Ltd.      112,861   
  48       Lotte Chilsung Beverage Co. Ltd.      94,017   
  48       Lotte Confectionery Co. Ltd.      83,744   
  1,688       Lotte Himart Co. Ltd.      86,173   
  3,019       LS Corp.      102,483   
  574       LS Industrial Systems Co. Ltd.      25,023   
  3,845       Meritz Financial Group, Inc.      49,409   
  7,658       Meritz Fire & Marine Insurance Co. Ltd.      108,148   
  2,297       Mirae Asset Securities Co. Ltd.      51,479   
  293       Naver Corp.      154,204   
  361       NCSOFT Corp.      60,006   
  9,262       NH Investment & Securities Co. Ltd.      82,054   
  606       NHN Entertainment Corp.(a)      29,554   
  346       Nongshim Co. Ltd.      111,990   
  98       Orion Corp.      82,523   
  19,114       Pan Ocean Co. Ltd.(a)      67,483   
  4,315       Poongsan Corp.      97,462   
  894       S1 Corp.      77,633   
  485       Samsung C&T Corp.(a)      65,940   
  4,563       Samsung Card Co. Ltd.      154,495   
  6,414       Samsung Engineering Co. Ltd.(a)      102,394   
  2,021       Samsung Fine Chemicals Co. Ltd.      66,566   
  576       Samsung SDS Co. Ltd.      129,594   
  4,623       Samsung Securities Co., Ltd.      195,861   
  1,600       Seah Besteel Corp.      40,349   
  633       SeAH Steel Corp.      35,480   
  2,552       Seoul Semiconductor Co. Ltd.(a)      42,531   
  912       Shinsegae Co. Ltd.      185,992   
  3,824       SK Chemicals Co. Ltd.      226,747   
  640       SK Gas Co. Ltd.      47,829   
  2,700       SKC Co. Ltd.      91,062   
  7,092       Ssangyong Cement Industrial Co. Ltd.(a)      112,285   
  3,693       Ssangyong Motor Co.(a)      26,822   
  6,719       Sungwoo Hitech Co. Ltd.      52,040   
  4,332       Taihan Electric Wire Co. Ltd.(a)      11,399   
  6,720       Tongyang Life Insurance Co. Ltd.      82,228   
  34       Young Poong Corp.      37,339   
  1,152       Youngone Corp.      48,402   
  14,902       Yuanta Securities Korea Co. Ltd.(a)      52,220   
     

 

 

  
        10,718,513  
     

 

 

  
   Spain—1.6%   
  11,243       Acerinox SA      122,258   
  3,436       Almirall SA      66,536   
  5,172       Applus Services SA      46,277   
  3,794       Bolsas y Mercados Espanoles      136,984   
  5,424       Cia de Distribucion Integral Logista Holdings SA      108,898   
  2,733       CIE Automotive SA      44,047   
  214       Construcciones y Auxiliar de Ferrocarriles SA      60,021   
  7,366       Duro Felguera SA      17,413   
  9,368       Ebro Foods SA      178,613   
  15,580       EDP Renovaveis SA      113,813   
  19,533       Ence Energia y Celulosa SA      68,831   
  3,648       Grifols SA      169,975   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   70  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Spain (continued)   
  3,426       Grupo Catalana Occidente SA    $ 107,027   
  115,043       Liberbank SA(a)      71,674   
  12,676       Mediaset Espana Comunicacion SA      154,798   
  5,790       Melia Hotels International SA      84,170   
  15,242       NH Hotel Group SA(a)      93,783   
  12,210       Obrascon Huarte Lain SA      98,380   
  7,026       Promotora de Informaciones SA, Class A(a)      39,210   
  16,547       Prosegur Compania de Seguridad SA      74,029   
  20,735       Sacyr SA      52,590   
  3,330       Tecnicas Reunidas SA      149,236   
  2,352       Viscofan SA      138,065   
  11,442       Zardoya Otis SA      141,561   
     

 

 

  
        2,338,189  
     

 

 

  
   Sweden—2.5%   
  1,516       AAK AB      109,893   
  3,362       AF AB, Class B      50,088   
  1,146       Avanza Bank Holding AB      45,484   
  9,991       Axfood AB      181,324   
  1,099       Axis Communications AB      44,136   
  6,008       Betsson AB, Class B      98,353   
  8,180       BillerudKorsnas AB      149,227   
  12,041       Castellum AB      181,517   
  17,477       Elekta AB, Class B      135,951   
  8,277       Fabege AB      132,476   
  3,350       Fastighets AB Balder, Class B(a)      68,018   
  323       Fastighets AB Balder (Preference Shares)      12,934   
  2,580       Haldex AB      24,992   
  6,290       Hexpol AB, Class B      61,634   
  6,051       Holmen AB, Class B      183,648   
  6,112       Hufvudstaden AB, Class A      87,099   
  3,213       ICA Gruppen AB      115,110   
  1,728       Indutrade AB      83,032   
  2,007       Intrum Justitia AB      72,565   
  2,943       JM AB      83,809   
  16,542       Klovern AB, Class B      17,242   
  728       Klovern AB (Preference Shares)      25,379   
  14,817       Kungsleden AB      111,682   
  2,081       L E Lundbergforetagen AB, Class B      106,783   
  5,159       Lindab International AB      35,271   
  3,631       Loomis AB, Class B      94,720   
  9,896       Lundin Petroleum AB(a)      143,936   
  5,563       Modern Times Group AB, Class B      159,009   
  2,402       NIBE Industrier AB, Class B      77,823   
  4,020       Nobia AB      49,617   
  21,978       Peab AB, Class B      168,634   
  30,751       Ratos AB, Class B      181,081   
  4,216       Saab AB, Class B      119,514   
  40,144       SAS AB(a)(b)      78,010   
  2,154       SAS AB (Preference Shares)      127,095   
  7,657       Wallenstam AB, Class B      68,265   
  3,875       Wihlborgs Fastigheter AB      76,214   
     

 

 

  
        3,561,565  
     

 

 

  
   Switzerland—3.2%   
  3,988       AFG Arbonia-Forster Holding AG(a)      38,757   
  544       Allreal Holding AG      72,294   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Switzerland (continued)   
  2,509       Ascom Holding AG    $ 47,724   
  404       Autoneum Holding AG      74,468   
  224       Banque Cantonale Vaudoise      138,388   
  112       Barry Callebaut AG      134,866   
  21       Belimo Holding AG      45,164   
  438       Bucher Industries AG      100,064   
  148       Burckhardt Compression Holding AG      51,798   
  1,375       Cembra Money Bank AG      82,298   
  1,915       DKSH Holding AG      117,047   
  199       dorma+kaba Holding AG      124,558   
  1,483       Dufry AG(a)      174,064   
  193       Emmi AG      87,567   
  245       EMS-CHEMIE HOLDING AG      104,015   
  175       Flughafen Zuerich AG      132,970   
  61       Forbo Holding AG      69,617   
  247       Galenica AG      363,327   
  6,648       GAM Holding AG      122,068   
  4,658       Gategroup Holding AG      175,310   
  340       Georg Fischer AG      209,708   
  1,610       Implenia AG      80,030   
  3,591       Kudelski SA      48,451   
  390       Kuoni Reisen Holding AG, Class B      81,027   
  7,339       Logitech International SA      108,326   
  8,226       Meyer Burger Technology AG(a)(b)      59,082   
  390       Mobimo Holding AG      84,429   
  10,328       OC Oerlikon Corp. AG      99,430   
  1,047       Panalpina Welttransport Holding AG      120,021   
  521       Partners Group Holding AG      189,214   
  2,125       PSP Swiss Property AG      185,500   
  498       Rieter Holding AG      82,246   
  105,224       Schmolz + Bickenbach AG(a)      57,642   
  70       Schweiter Technologies AG      56,312   
  991       SFS Group AG      64,140   
  1,546       Sonova Holding AG      211,727   
  256       Straumann Holding AG      72,716   
  2,449       Swiss Prime Site AG      187,821   
  359       Tecan Group AG      49,093   
  555       Valiant Holding AG      64,354   
  399       Valora Holding AG      80,549   
  1,602       Vontobel Holding AG      79,226   
  1,007       Zehnder Group AG      34,426   
     

 

 

  
        4,561,834  
     

 

 

  
   United Kingdom—9.5%   
  27,472       AA PLC      117,482   
  16,503       Acacia Mining PLC      49,190   
  811,379       Afren PLC(a)      0   
  9,252       Alent PLC      71,272   
  12,861       ARM Holdings PLC      203,591   
  26,178       Ashmore Group PLC      109,159   
  3,591       Aveva Group PLC      113,914   
  11,975       Babcock International Group PLC      178,284   
  49,837       BBA Aviation PLC      146,778   
  35,173       Beazley PLC      197,512   
  5,152       Bellway PLC      206,557   
  12,200       Berendsen PLC      193,127   
  2,274       Betfair Group PLC      113,331   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   71  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  6,377       Big Yellow Group PLC REIT    $ 73,865   
  9,900       Bodycote PLC      78,741   
  6,032       Bovis Homes Group PLC      95,487   
  9,215       Brewin Dolphin Holdings PLC      38,425   
  12,516       Britvic PLC      135,115   
  5,294       BTG PLC(a)      45,132   
  50,274       Cairn Energy PLC(a)      116,465   
  20,185       Capital & Counties Properties PLC      138,567   
  10,050       Chemring Group PLC      26,696   
  7,254       Cineworld Group PLC      61,841   
  8,141       Close Brothers Group PLC      184,068   
  6,253       Countrywide PLC      44,906   
  9,025       Crest Nicholson Holdings PLC      75,824   
  5,222       Croda International PLC      233,719   
  15,907       Daily Mail & General Trust PLC NV, Class A      184,005   
  13,247       Dairy Crest Group PLC      131,754   
  12,115       De La Rue PLC      86,629   
  3,506       Derwent London PLC REIT      210,089   
  1,257       Dialog Semiconductor PLC(a)      46,725   
  1,304       Dignity PLC      48,958   
  23,480       Dixons Carphone PLC      167,279   
  4,022       Domino’s Pizza Group PLC      67,768   
  3,563       Dunelm Group PLC      52,110   
  54,154       Electrocomponents PLC      171,536   
  22,687       Elementis PLC      82,199   
  239,228       EnQuest PLC(a)      99,755   
  33,569       Enterprise Inns PLC(a)      55,732   
  7,464       Essentra PLC      97,061   
  12,972       esure Group PLC      53,090   
  29,062       Fenner PLC      68,335   
  39,021       Ferrexpo PLC      20,490   
  992       Fidessa Group PLC      30,013   
  5,267       Galliford Try PLC      121,771   
  15,097       Genel Energy PLC(a)      59,688   
  2,505       Genus PLC      56,290   
  3,321       Go-Ahead Group PLC      124,377   
  11,788       Grafton Group PLC      122,704   
  16,479       Grainger PLC      63,371   
  12,752       Great Portland Estates PLC REIT      175,180   
  6,759       Greggs PLC      124,010   
  20,362       Halfords Group PLC      136,763   
  13,424       Halma PLC      158,289   
  40,913       Hansteen Holdings PLC REIT      78,414   
  3,793       Hargreaves Lansdown PLC      84,588   
  8,164       HellermannTyton Group PLC      59,752   
  49,618       Henderson Group PLC      220,005   
  14,591       Hiscox Ltd.      218,020   
  9,047       HomeServe PLC      56,434   
  14,062       Howden Joinery Group PLC      100,682   
  17,658       Hunting PLC      98,121   
  20,079       IG Group Holdings PLC      234,280   
  60,937       Indivior PLC      193,492   
  16,975       International Personal Finance PLC      97,026   
  12,273       Interserve PLC      105,481   
  15,247       ITE Group PLC      33,025   
  4,406       J D Wetherspoon PLC      52,702   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  5,423       Jardine Lloyd Thompson Group PLC    $ 79,356   
  19,178       Jupiter Fund Management PLC      133,550   
  7,205       Keller Group PLC      90,744   
  6,547       Kier Group PLC      139,231   
  18,520       Laird PLC      96,933   
  27,832       LondonMetric Property PLC REIT      72,728   
  89,362       Lonmin PLC(a)      35,193   
  50,753       Marston’s PLC      126,667   
  19,187       Merlin Entertainments PLC(c)      122,915   
  13,367       Michael Page International PLC      102,146   
  4,104       Micro Focus International PLC      79,608   
  23,308       Mitchells & Butlers PLC(a)      127,681   
  41,582       Mitie Group PLC      206,400   
  18,447       Moneysupermarket.com Group PLC      95,212   
  16,955       Morgan Advanced Materials PLC      73,266   
  11,512       N Brown Group PLC      66,654   
  26,908       National Express Group PLC      124,421   
  5,264       Northgate PLC      32,958   
  6,599       Ocado Group PLC(a)      38,402   
  33,646       Ophir Energy PLC(a)      49,858   
  3,348       Oxford Instruments PLC      26,861   
  23,965       Pace PLC      137,905   
  15,667       Paragon Group of Cos. PLC (The)      101,624   
  13,995       Pets at Home Group PLC      62,356   
  9,346       Playtech PLC      123,555   
  7,374       Poundland Group PLC      31,318   
  30,181       Premier Farnell PLC      46,611   
  94,551       Premier Foods PLC(a)      49,648   
  74,259       Premier Oil PLC(a)      78,560   
  48,999       QinetiQ Group PLC      169,510   
  6,342       Redrow PLC      45,457   
  29,223       Regus PLC      151,012   
  932       Renishaw PLC      27,204   
  7,671       Restaurant Group PLC (The)      84,944   
  998       Rightmove PLC      59,171   
  32,382       Rotork PLC      93,720   
  12,444       RPC Group PLC      125,112   
  10,373       RPS Group PLC      37,647   
  7,008       Savills PLC      99,140   
  3,964       Schroders PLC      182,619   
  18,447       Senior PLC      64,614   
  10,215       Shaftesbury PLC REIT      148,374   
  59,115       SIG PLC      121,882   
  14,659       Soco International PLC      40,072   
  6,088       Spectris PLC      156,736   
  3,199       Spirax-Sarco Engineering PLC      150,242   
  10,674       Spire Healthcare Group PLC(c)      61,802   
  36,318       Spirent Communications PLC      41,226   
  9,598       Sports Direct International PLC(a)      103,317   
  16,708       SSP Group PLC      77,747   
  6,180       St. Modwen Properties PLC      41,986   
  36,626       Stagecoach Group PLC      195,715   
  12,906       SVG Capital PLC(a)      94,677   
  10,697       Synthomer PLC      54,699   
  36,226       TalkTalk Telecom Group PLC      141,547   
  5,720       Telecity Group PLC      103,799   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   72  

 

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  2,894       Telecom Plus PLC    $ 46,974   
  16,412       Tullett Prebon PLC      89,170   
  22,264       UBM PLC      176,049   
  4,228       Ultra Electronics Holdings PLC      109,895   
  7,015       Unite Group PLC (The)      72,046   
  7,430       Vesuvius PLC      41,000   
  2,505       Victrex PLC      71,571   
  4,789       WH Smith PLC      126,104   
  4,315       Workspace Group PLC REIT      63,809   
  7,000       WS Atkins PLC      148,973   
     

 

 

  
        13,668,964  
     

 

 

  
   United States—0.2%   
  21,343       Alacer Gold Corp.(a)      41,435   
  720,033       REC Silicon ASA(a)(b)      129,765   
  42,619       Samsonite International SA      126,206   
     

 

 

  
        297,406  
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $137,418,754)		      143,395,762  
     

 

 

  
     
   Rights—0.0%   
   Australia—0.0%   
  3,177       FlexiGroup Ltd., expiring 10/28/15(a)      1,950   
  59,916       Ten Network Holdings Ltd., expiring 11/30/15(a)      641   
     

 

 

  
        2,591  
     

 

 

  
   Austria—0.0%   
  24,553       Immofinanz AG, expiring 12/31/49(a)      0   
     

 

 

  
   South Korea—0.0%   
  518       SK Chemicals Co. Ltd., expiring 12/04/15(a)      4,362   
     

 

 

  
   Total Rights
(Cost $0)		      6,953  
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $137,418,754)—99.9%		      143,402,715  
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—2.8%   
  4,041,873       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $4,041,873)		      4,041,873  
     

 

 

  
   Total Investments
(Cost $141,460,627)—102.7%		      147,444,588   
   Other assets less liabilities—(2.7)%      (3,823,927 ) 
     

 

 

  
   Net Assets—100.0%    $ 143,620,661  
     

 

 

  

Investment Abbreviations:

CVA—Dutch Certificates

REIT—Real Estate Investment Trust

RSP—Registered Savings Plan Shares

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $783,097, which represented 0.55% of the Fund’s Net Assets.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2J.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   73  

 

 

Schedule of Investments

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Brazil—15.4%   
  18,200       AES Tiete SA    $ 63,971   
  28,000       AES Tiete SA (Preference Shares)      100,675   
  374,450       Ambev SA      1,859,756   
  110,248       Banco Bradesco SA      672,333   
  456,951       Banco Bradesco SA (Preference Shares)      2,496,578   
  449,758       Banco do Brasil SA      1,868,702   
  58,000       Banco do Estado do Rio Grande do SUL SA (Preference Shares), Class B      90,388   
  25,600       BB Seguridade Participacoes SA      177,165   
  311,185       BM&FBOVESPA SA      922,953   
  63,500       BR Malls Participacoes SA      185,033   
  78,209       Braskem SA (Preference Shares), Class A      443,170   
  64,800       BRF SA      1,013,224   
  94,900       CCR SA      299,244   
  211,810       Centrais Eletricas Brasileiras SA(a)      276,635   
  152,800       Centrais Eletricas Brasileiras SA (Preference Shares), Class B      374,879   
  49,921       CESP—Companhia Energetica de Sao Paulo (Preference Shares), Class B      210,404   
  26,779       Cia Brasileira de Distribuicao (Preference Shares), Class A      353,509   
  526,882       Cia Siderurgica Nacional SA      594,921   
  48,760       Cielo SA      464,429   
  117,492       Cia de Saneamento Basico do Estado de Sao Paulo      511,705   
  42,680       Companhia Energetica de Minas Gerais—CEMIG      74,952   
  354,723       Companhia Energetica de Minas Gerais (Preference Shares)—CEMIG      660,783   
  8,400       Companhia Paranaense de Energia—Copel      48,057   
  39,908       Companhia Paranaense de Energia—Copel (Preference Shares), Class B      337,442   
  86,490       CPFL Energia SA(a)      348,557   
  74,500       Cyrela Brazil Realty SA Empreendimentos e Participacoes      173,668   
  108,041       EDP—Energias do Brasil SA      317,069   
  81,567       Embraer SA      600,137   
  32,655       Fibria Celulose SA      447,221   
  368,417       Gerdau SA (Preference Shares)      520,470   
  42,400       Grupo BTG Pactual      316,595   
  608,016       Itau Unibanco Holding SA (Preference Shares)      4,187,214   
  334,853       Itausa—Investimentos Itau SA (Preference Shares)      627,253   
  137,182       JBS SA      508,590   
  54,400       Klabin SA      310,380   
  10,575       Lojas Americanas SA      32,190   
  38,600       Lojas Americanas SA (Preference Shares)      167,811   
  54,400       Lojas Renner SA      261,834   
  150,300       Marfrig Global Foods SA(a)      249,089   
  102,070       Metalurgica Gerdau SA (Preference Shares)      69,044   
  37,300       Natura Cosmeticos SA      222,229   
  121,512       Oi SA(a)      99,267   
  309,308       Oi SA (Preference Shares)(a)      170,602   
  2,493,662       Petroleo Brasileiro SA(a)      6,085,505   
  2,906,847       Petroleo Brasileiro SA (Preference Shares)(a)      5,830,861   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Brazil (continued)   
  23,700       Porto Seguro SA    $ 199,347   
  58,900       Sul America SA      290,083   
  64,943       Telefonica Brasil SA (Preference Shares)      675,002   
  129,466       Tim Participacoes SA      284,622   
  41,554       Tractebel Energia SA      366,171   
  58,696       Ultrapar Participacoes SA      1,023,150   
  39,884       Usinas Siderurgicas de Minas Gerais SA      82,079   
  109,932       Usinas Siderurgicas de Minas Gerais SA (Preference Shares), Class A      79,511   
  645,523       Vale SA      2,865,147   
  976,027       Vale SA (Preference Shares)      3,562,671   
     

 

 

  
        45,074,277  
     

 

 

  
   Chile—1.1%   
  3,418,055       Banco de Chile      362,053   
  10,110,339       Banco Santander Chile      480,438   
  128,731       Cencosud SA      282,905   
  403,324       Empresa Nacional de Electricidad SA      505,782   
  25,880       Empresas COPEC SA      242,687   
  2,866,982       Enersis SA      757,045   
  55,981       LATAM Airlines Group SA(a)      299,289   
  39,889       S.A.C.I. Falabella      267,709   
  10,280       Sociedad Quimica y Minera de Chile SA, Series B      198,048   
     

 

 

  
        3,395,956  
     

 

 

  
   China—25.3%   
  602,387       Agile Property Holdings Ltd.      328,782   
  4,245,277       Agricultural Bank of China Ltd., H-Shares      1,741,911   
  551,738       Aluminum Corp. of China Ltd., H-Shares(a)      178,690   
  113,504       Anhui Conch Cement Co. Ltd., H-Shares      347,830   
  11,512,857       Bank of China Ltd., H-Shares      5,451,825   
  1,295,309       Bank of Communications Co. Ltd., H-Shares      959,352   
  47,774       Beijing Enterprises Holdings Ltd.      302,976   
  540,562       Belle International Holdings Ltd.      525,908   
  1,021,552       China CITIC Bank Corp. Ltd., H-Shares(a)      663,012   
  887,354       China Coal Energy Co. Ltd., H-Shares      381,271   
  617,967       China Communications Construction Co. Ltd., H-Shares      854,777   
  13,658,374       China Construction Bank Corp., H-Shares      9,922,020   
  370,311       China Life Insurance Co. Ltd., H-Shares      1,340,270   
  316,980       China Longyuan Power Group Corp., H-Shares      291,209   
  620,970       China Merchants Bank Co. Ltd., H-Shares      1,630,526   
  110,848       China Merchants Holdings International Co. Ltd.      369,727   
  739,434       China Minsheng Banking Corp. Ltd., H-Shares      745,149   
  629,431       China Mobile Ltd.      7,536,831   
  912,153       China National Building Material Co. Ltd., H-Shares      570,824   
  173,338       China Oilfield Services Ltd., H-Shares      193,689   
  370,899       China Overseas Land & Investment Ltd.      1,206,004   
  162,720       China Pacific Insurance (Group) Co. Ltd., H-Shares      650,872   
  6,958,698       China Petroleum & Chemical Corp. (Sinopec), H-Shares      4,983,261   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   74  

 

 

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   China (continued)   
  363,807       China Railway Construction Corp. Ltd., H-Shares    $ 547,346   
  669,438       China Railway Group Ltd., H-Shares      637,470   
  253,712       China Resources Beer Holdings Co. Ltd.      480,573   
  186,298       China Resources Land Ltd.      486,772   
  263,168       China Resources Power Holdings Co. Ltd.      598,317   
  660,027       China Shenhua Energy Co. Ltd., H-Shares      1,117,347   
  2,738,069       China Telecom Corp. Ltd., H-Shares      1,437,909   
  959,481       China Unicom (Hong Kong) Ltd.      1,184,789   
  131,259       China Vanke Co. Ltd., H-Shares      307,904   
  461,746       Chongqing Rural Commercial Bank Co. Ltd., H-Shares      291,343   
  203,094       CITIC Ltd.      379,977   
  3,247,765       CNOOC Ltd.      3,641,641   
  271,717       COSCO Pacific Ltd.      351,545   
  1,043,313       Country Garden Holdings Co. Ltd.      398,473   
  514,559       Datang International Power Generation Co. Ltd., H-Shares      190,550   
  383,399       Dongfeng Motor Group Co. Ltd., H-Shares      556,045   
  48,326       ENN Energy Holdings Ltd.      278,417   
  1,575,494       Evergrande Real Estate Group Ltd.      1,211,590   
  1,327,822       GCL-Poly Energy Holdings Ltd.(a)      275,841   
  2,967,163       GOME Electrical Appliances Holding Ltd.      547,482   
  133,421       Great Wall Motor Co. Ltd., H-Shares      163,202   
  295,030       Greentown China Holdings Ltd.(a)      259,242   
  324,633       Guangzhou R&F Properties Co. Ltd., H-Shares      323,372   
  35,838       Hengan International Group Co. Ltd.      388,201   
  596,458       Huaneng Power International, Inc., H-Shares      648,784   
  12,535,644       Industrial & Commercial Bank of China Ltd., H-Shares      8,006,534   
  276,677       Jiangxi Copper Co. Ltd., H-Shares      366,280   
  390,571       Kunlun Energy Co. Ltd.      319,508   
  667,908       Lenovo Group Ltd.      623,947   
  491,760       People’s Insurance Co. Group of China Ltd. (The), H-Shares      263,961   
  2,870,683       PetroChina Co. Ltd., H-Shares      2,244,660   
  251,111       PICC Property & Casualty Co. Ltd., H-Shares      573,498   
  292,810       Ping An Insurance (Group) Co. of China Ltd., H-Shares      1,649,160   
  543,217       Poly Property Group Co. Ltd.      176,631   
  204,909       Shimao Property Holdings Ltd.      361,693   
  119,868       Sinopharm Group Co. Ltd., H-Shares      496,479   
  44,626       Tencent Holdings Ltd.      844,140   
  350,965       Yanzhou Coal Mining Co. Ltd., H-Shares      169,367   
  1,266,436       Yuexiu Property Co. Ltd.      218,968   
     

 

 

  
        74,195,674  
     

 

 

  
   Hong Kong—0.0%   
  128,155       China Overseas Property Holdings Ltd.(a)      21,993   
     

 

 

  
   India—7.1%   
  13,401       Axis Bank Ltd. GDR(b)      484,446   
  8,241       Gail India Ltd. GDR(b)      238,165   
  10,132       HDFC Bank Ltd. ADR      619,470   
  115,384       ICICI Bank Ltd. ADR      994,610   
  118,055       Infosys Ltd. ADR      2,143,879   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   India (continued)   
  24,746       Larsen & Toubro Ltd. GDR(b)    $ 529,564   
  35,890       Mahindra & Mahindra Ltd. GDR(b)      649,609   
  134,398       PowerShares India Portfolio(c)      2,674,520   
  246,095       Reliance Industries Ltd. GDR(b)      7,062,927   
  11,949       Reliance Infrastructure Ltd. GDR(b)      203,730   
  67,354       State Bank of India GDR(b)      2,441,583   
  27,591       Tata Motors Ltd. ADR(a)      815,866   
  364,044       Tata Steel Ltd. GDR(b)      1,383,367   
  37,913       Vedanta Ltd. ADR      226,720   
  24,076       Wipro Ltd. ADR      298,061   
     

 

 

  
        20,766,517  
     

 

 

  
   Indonesia—1.7%   
  3,165,965       PT Adaro Energy Tbk      137,625   
  1,925,602       PT Astra International Tbk      830,031   
  533,793       PT Bank Central Asia Tbk      503,082   
  747,705       PT Bank Mandiri Persero Tbk      475,254   
  648,822       PT Bank Negara Indonesia (Persero) Tbk      225,399   
  805,550       PT Bank Rakyat Indonesia (Persero) Tbk      619,427   
  609,084       PT Indofood Sukses Makmur Tbk      245,859   
  1,181,792       PT Perusahaan Gas Negara Persero Tbk      259,023   
  281,007       PT Semen Indonesia (Persero) Tbk      201,196   
  5,909,313       PT Telekomunikasi Indonesia Persero Tbk      1,157,038   
  249,826       PT United Tractors Tbk      330,363   
     

 

 

  
        4,984,297  
     

 

 

  
   Malaysia—2.7%   
  228,700       AMMB Holdings Bhd      254,466   
  466,300       Axiata Group Bhd      669,709   
  596,400       CIMB Group Holdings Bhd      639,992   
  288,900       DiGi.Com Bhd      353,728   
  141,100       Genting Bhd      243,706   
  304,600       IJM Corp. Bhd      235,398   
  279,600       IOI Corp. Bhd      277,257   
  654,000       Malayan Banking Bhd      1,257,458   
  299,300       Maxis Bhd      459,122   
  170,800       MISC Bhd      359,014   
  176,200       Petronas Chemicals Group Bhd      260,445   
  48,900       Petronas Gas Bhd      261,574   
  267,100       Public Bank Bhd      1,124,108   
  338,600       SapuraKencana Petroleum Bhd      166,305   
  237,600       Sime Darby Bhd      462,369   
  133,200       Telekom Malaysia Bhd      206,497   
  136,000       Tenaga Nasional Bhd      400,782   
  100,800       UMW Holdings Bhd      192,871   
     

 

 

  
        7,824,801  
     

 

 

  
   Mexico—4.6%   
  351,256       Alfa SAB de CV, Class A      731,254   
  3,953,471       America Movil SAB de CV, Series L      3,528,016   
  2,463,960       Cemex SAB de CV(a)      1,560,775   
  40,444       Coca-Cola Femsa SAB de CV, Series L      310,681   
  292,785       Empresas ICA SAB de CV(a)      117,087   
  93,692       Fibra Uno Administracion SA de CV REIT      205,651   
  150,449       Fomento Economico Mexicano SAB de CV      1,485,216   
  88,207       Grupo Bimbo SAB de CV,
Series A(a)		      250,126   
  186,932       Grupo Financiero Banorte SAB de CV, Class O      1,005,981   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   75  

 

 

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Mexico (continued)   
  135,533       Grupo Financiero Inbursa SAB de CV, Class O    $ 272,316   
  265,627       Grupo Financiero Santander Mexico SAB de CV, Series B      487,743   
  410,110       Grupo Mexico SAB de CV, Series B      998,432   
  149,404       Grupo Televisa SAB, Series CPO      868,742   
  124,173       Mexichem SAB de CV      321,838   
  125,612       OHL Mexico SAB de CV(a)      165,139   
  484,349       Wal-Mart de Mexico SAB de CV      1,277,043   
     

 

 

  
        13,586,040  
     

 

 

  
   Poland—1.9%   
  16,127       Bank Pekao SA      629,021   
  49,404       Energa SA      211,613   
  44,532       KGHM Polska Miedz SA      1,038,808   
  185,749       Orange Polska SA      341,877   
  167,456       PGE Polska Grupa Energetyczna SA      625,545   
  58,166       Polski Koncern Naftowy Orlen SA      947,803   
  146,167       Powszechna Kasa Oszczednosci Bank Polski SA(a)      1,086,724   
  7,652       Powszechny Zaklad Ubezpieczen SA      746,398   
     

 

 

  
        5,627,789  
     

 

 

  
   Russia—12.8%   
  2,354,707       Gazprom PAO ADR      9,913,317   
  192,353       LUKOIL PJSC ADR      6,982,414   
  15,923       Magnit PJSC GDR(b)      724,815   
  24,396       MegaFon PJSC GDR(b)      315,928   
  75,707       MMC Norilsk Nickel PJSC ADR      1,124,249   
  200,991       Mobile TeleSystems PJSC (MBT) ADR      1,412,967   
  10,056       Novatek OAO GDR(b)      919,621   
  464,979       Rosneft OAO GDR(b)      1,859,916   
  298,494       RusHydro PJSC ADR      290,136   
  1,077,513       Sberbank of Russia ADR      6,608,387   
  32,438       Severstal PAO GDR(b)      381,471   
  58,419       Sistema JSFC GDR(b)      406,012   
  512,468       Surgutneftegas OAO ADR      2,805,762   
  44,011       Tatneft PAO ADR      1,362,141   
  23,907       Uralkali PJSC GDR(a)(b)      287,362   
  959,305       VTB Bank JSC GDR(b)      2,108,552   
     

 

 

  
        37,503,050  
     

 

 

  
   South Africa—8.2%   
  379,526       African Bank Investments Ltd.(a)      0   
  23,427       African Rainbow Minerals Ltd.      89,726   
  82,622       AngloGold Ashanti Ltd.(a)      704,522   
  55,610       Barclays Africa Group Ltd.      715,332   
  37,922       Barloworld Ltd.      214,733   
  46,156       Bidvest Group Ltd. (The)      1,183,432   
  25,869       Exxaro Resources Ltd.      107,679   
  277,060       FirstRand Ltd.      1,019,210   
  21,118       Foschini Group Ltd. (The)      216,233   
  246,843       Gold Fields Ltd.      657,216   
  211,066       Growthpoint Properties Ltd. REIT      387,838   
  135,325       Harmony Gold Mining Co. Ltd.(a)      96,446   
  120,441       Impala Platinum Holdings Ltd.(a)      329,919   
  39,019       Imperial Holdings Ltd.      509,433   
  36,369       Investec Ltd.      301,954   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   South Africa (continued)   
  24,290       Kumba Iron Ore Ltd.    $ 105,417   
  24,616       Liberty Holdings Ltd.      241,656   
  70,237       Life Healthcare Group Holdings Ltd.      196,365   
  18,750       Massmart Holdings Ltd.      156,025   
  23,877       Mediclinic International Ltd.      210,259   
  120,189       MMI Holdings Ltd.      218,499   
  12,217       Mondi Ltd.      284,864   
  11,774       Mr Price Group Ltd.      181,215   
  260,736       MTN Group Ltd.      2,980,024   
  76,306       Nampak Ltd.      123,965   
  5,955       Naspers Ltd., Class N      874,273   
  29,612       Nedbank Group Ltd.      494,347   
  116,940       Netcare Ltd.      333,796   
  320,655       Redefine Properties Ltd. REIT      268,477   
  25,052       Remgro Ltd.      503,085   
  172,151       Sanlam Ltd.      779,294   
  80,929       Sappi Ltd.(a)      320,336   
  102,761       Sasol Ltd.      3,298,528   
  44,113       Shoprite Holdings Ltd.      460,088   
  122,262       Sibanye Gold Ltd.      206,151   
  24,820       SPAR Group Ltd. (The)      357,452   
  197,775       Standard Bank Group Ltd.      2,061,743   
  157,341       Steinhoff International Holdings Ltd.      965,358   
  67,874       Telkom SA SOC Ltd.      357,396   
  14,535       Tiger Brands Ltd.      333,344   
  43,714       Truworths International Ltd.      296,827   
  50,410       Vodacom Group Ltd.      546,904   
  64,438       Woolworths Holdings Ltd.      478,478   
     

 

 

  
        24,167,839  
     

 

 

  
   Taiwan—14.5%   
  847,571       Acer, Inc.(a)      360,296   
  628,811       Advanced Semiconductor Engineering, Inc.      732,178   
  144,738       Asustek Computer, Inc.      1,297,419   
  2,318,000       AU Optronics Corp.      683,329   
  47,000       Catcher Technology Co. Ltd.      463,290   
  775,440       Cathay Financial Holding Co. Ltd.      1,108,334   
  172,894       Cheng Shin Rubber Industry Co. Ltd.      313,689   
  1,643,081       China Development Financial Holding Corp.      442,865   
  466,670       China Life Insurance Co. Ltd.      386,693   
  1,029,360       China Steel Corp.      623,067   
  423,000       Chunghwa Telecom Co. Ltd.      1,299,093   
  1,298,054       Compal Electronics, Inc.      811,696   
  1,674,776       CTBC Financial Holding Co. Ltd.      920,873   
  148,000       Delta Electronics, Inc.      756,788   
  551,598       E.Sun Financial Holding Co. Ltd.      332,180   
  330,562       Far Eastern New Century Corp.      301,404   
  183,000       Far EasTone Telecommunications Co. Ltd.      396,852   
  670,637       First Financial Holding Co. Ltd.      325,366   
  281,920       Formosa Chemicals & Fibre Corp.      646,974   
  146,000       Formosa Petrochemical Corp.      355,741   
  378,280       Formosa Plastics Corp.      879,762   
  143,874       Foxconn Technology Co. Ltd.      378,482   
  789,928       Fubon Financial Holding Co. Ltd.      1,282,339   
  151,900       Highwealth Construction Corp.      224,597   
  2,149,846       Hon Hai Precision Industry Co. Ltd.      5,734,954   
  305,233       HTC Corp.      738,084   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   76  

 

 

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Taiwan (continued)   
  2,460,490       Innolux Corp.    $ 829,928   
  1,011,000       Inventec Corp.      582,368   
  629,683       Lite-On Technology Corp.      655,607   
  108,091       MediaTek, Inc.      847,387   
  867,640       Mega Financial Holding Co. Ltd.      633,421   
  426,940       Nan Ya Plastics Corp.      850,895   
  50,000       Novatek Microelectronics Corp.      170,961   
  404,106       Pegatron Corp.      993,351   
  482,740       Pou Chen Corp.      684,031   
  182,200       Powertech Technology, Inc.      404,097   
  44,000       President Chain Store Corp.      292,760   
  354,000       Quanta Computer, Inc.      605,203   
  86,000       Radiant Opto-Electronics Corp.      267,562   
  1,001,908       Shin Kong Financial Holding Co. Ltd.      240,420   
  337,000       Siliconware Precision Industries Co. Ltd.      446,897   
  1,066,411       SinoPac Financial Holdings Co. Ltd.      353,133   
  190,000       Synnex Technology International Corp.      201,041   
  1,000,188       Taishin Financial Holding Co. Ltd.      392,823   
  551,089       Taiwan Cement Corp.      614,518   
  166,400       Taiwan Mobile Co. Ltd.      525,390   
  1,571,000       Taiwan Semiconductor Manufacturing Co. Ltd.      6,605,619   
  241,000       Teco Electric and Machinery Co. Ltd.      210,834   
  54,000       TPK Holding Co. Ltd.      134,736   
  402,000       Unimicron Technology Corp.      177,079   
  572,941       Uni-President Enterprises Corp.      970,683   
  2,421,000       United Microelectronics Corp.      887,455   
  929,771       Wistron Corp.      469,704   
  237,760       WPG Holdings Ltd.      249,013   
  913,671       Yuanta Financial Holding Co. Ltd.      360,250   
     

 

 

  
        42,453,511  
     

 

 

  
   Thailand—2.4%   
  105,154       Advanced Info Service PCL NVDR      688,856   
  66,697       Bangkok Bank PCL NVDR      314,100   
  310,973       Banpu PCL NVDR      189,727   
  496,079       Charoen Pokphand Foods PCL NVDR      288,714   
  262,021       CP ALL PCL NVDR      368,343   
  2,020,343       IRPC PCL NVDR      231,757   
  97,241       Kasikornbank PCL NVDR      471,612   
  418,502       Krung Thai Bank PCL NVDR      201,206   
  248,020       PTT Exploration & Production PCL NVDR      509,045   
  390,173       PTT Global Chemical PCL NVDR      611,574   
  206,139       PTT PCL NVDR      1,593,821   
  25,659       Siam Cement PCL (The) NVDR      327,523   
  136,390       Siam Commercial Bank PCL (The) NVDR      511,930   
  265,123       Thai Oil PCL NVDR      404,384   
  115,150       Total Access Communication PCL NVDR      220,150   
     

 

 

  
        6,932,742  
     

 

 

  
   Turkey—2.3%   
  246,064       Akbank TAS      632,992   
  16,156       BIM Birlesik Magazalar AS      329,046   
  213,119       Eregli Demir ve Celik Fabrikalari TAS      303,034   
  177,532       Haci Omer Sabanci Holding AS      564,619   
  148,589       KOC Holding AS      673,641   
  42,086       Tupras Turkiye Petrol Rafinerileri AS(a)      1,113,004   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Turkey (continued)   
  79,386       Turk Hava Yollari AO(a)    $ 234,755   
  137,781       Turk Telekomunikasyon AS      297,652   
  120,487       Turkcell Iletisim Hizmetleri AS      480,028   
  306,721       Turkiye Garanti Bankasi AS      797,458   
  114,121       Turkiye Halk Bankasi AS      429,188   
  284,963       Turkiye Is Bankasi AS, Class C      487,401   
  199,980       Turkiye Vakiflar Bankasi TAO      285,725   
  147,905       Yapi ve Kredi Bankasi AS      180,335   
     

 

 

  
        6,808,878  
     

 

 

  
   Total Investments
(Cost $367,990,860)—100.0%		      293,343,364   
   Other assets less liabilities—0.0%      54,281  
     

 

 

  
   Net Assets—100.0%    $ 293,397,645  
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

GDR—Global Depositary Receipt

NVDR—Non-voting Depositary Receipt

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $19,997,068, which represented 6.82% of the Fund’s Net Assets.
(c)  Affiliated company. The Fund’s Adviser also serves as the adviser for PowerShares India Portfolio and therefore, PowerShares India Portfolio is considered to be affiliated. See Note 4.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   77  

 

 

Schedule of Investments

PowerShares Global Agriculture Portfolio (PAGG)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—99.9%   
   Australia—3.1%   
  56,882       GrainCorp Ltd., Class A    $ 367,271   
  55,177       Nufarm Ltd.      329,494   
  22,192       Select Harvests Ltd.      160,862   
     

 

 

  
        857,627  
     

 

 

  
   Canada—14.0%   
  22,195       Agrium, Inc.      2,063,684   
  88,503       Potash Corp. of Saskatchewan, Inc.      1,791,233   
     

 

 

  
        3,854,917  
     

 

 

  
   China—2.1%   
  652,211       China Agri-Industries Holdings Ltd.(a)      240,684   
  220,275       China BlueChemical Ltd., H-Shares      65,939   
  592,200       China Modern Dairy Holdings Ltd.      178,804   
  565,632       Sinofert Holdings Ltd.      99,988   
     

 

 

  
        585,415  
     

 

 

  
   Denmark—0.0%   
  5,591       Auriga Industries A/S, Class B      2,137   
     

 

 

  
   Germany—2.8%   
  30,507       K+S AG      773,573   
     

 

 

  
   Hong Kong—1.0%   
  2,241,514       C.P. Pokphand Co. Ltd.      268,978   
     

 

 

  
   Indonesia—2.6%   
  102,689       PT Astra Agro Lestari Tbk      149,298   
  2,292,521       PT Charoen Pokphand Indonesia Tbk      418,725   
  3,721,884       PT Eagle High Plantations Tbk      63,901   
  868,933       PT Perusahaan Perkebunan London Sumatra Indonesia Tbk      98,400   
     

 

 

  
        730,324  
     

 

 

  
   Ireland—0.4%   
  15,706       Origin Enterprises PLC      118,498   
     

 

 

  
   Israel—3.4%   
  138,407       Israel Chemicals Ltd.      767,226   
  715       Israel Corp. Ltd. (The)      184,546   
     

 

 

  
        951,772  
     

 

 

  
   Japan—2.0%   
  6,528       Hokuto Corp.      127,991   
  14,004       Kumiai Chemical Industry Co. Ltd.(b)      113,494   
  15,251       Nihon Nohyaku Co. Ltd.      99,841   
  9,884       Sakata Seed Corp.      210,498   
     

 

 

  
        551,824  
     

 

 

  
   Malaysia—9.2%   
  577,900       Felda Global Ventures Holdings Bhd      239,446   
  108,300       Genting Plantations Bhd      269,742   
  1,163,890       IOI Corp. Bhd      1,154,137   
  165,674       Kuala Lumpur Kepong Bhd      878,504   
     

 

 

  
        2,541,829  
     

 

 

  
   Netherlands—2.6%   
  24,949       OCI NV(a)      708,979   
     

 

 

  
   Norway—4.3%   
  25,873       Yara International ASA      1,179,326   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Russia—1.2%   
  24,144       Phosagro OAO GDR(c)    $ 325,944   
     

 

 

  
   Singapore—7.3%   
  147,580       First Resources Ltd.      198,108   
  1,978,139       Golden Agri-Resources Ltd.      550,856   
  563,739       Wilmar International Ltd.      1,259,910   
     

 

 

  
        2,008,874  
     

 

 

  
   Taiwan—1.0%   
  226,099       Taiwan Fertilizer Co. Ltd.      289,384   
     

 

 

  
   Turkey—0.2%   
  25,942       Gubre Fabrikalari TAS      58,716   
     

 

 

  
   United Kingdom—0.7%   
  676,153       Sirius Minerals PLC(a)      185,354   
     

 

 

  
   United States—42.0%   
  50,655       Archer-Daniels-Midland Co.      2,312,907   
  15,728       Bunge Ltd.      1,147,515   
  19,858       CF Industries Holdings, Inc.      1,008,191   
  51,327       Darling Ingredients, Inc.(a)      519,429   
  10,760       Fresh Del Monte Produce, Inc.      490,979   
  13,198       Ingredion, Inc.      1,254,602   
  17,275       Intrepid Potash, Inc.(a)      66,681   
  23,336       Monsanto Co.      2,175,382   
  55,817       Mosaic Co. (The)      1,886,056   
  11,041       Scotts Miracle-Gro Co. (The), Class A      730,473   
     

 

 

  
        11,592,215  
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $37,090,718)—99.9%		      27,585,686  
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—0.3%   
  74,853       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $74,853)		      74,853  
     

 

 

  
   Total Investments
(Cost $37,165,571)—100.2%		      27,660,539   
   Other assets less liabilities—(0.2)%      (56,513 ) 
     

 

 

  
   Net Assets—100.0%    $ 27,604,026  
     

 

 

  

Investment Abbreviations:

GDR—Global Depositary Receipt

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $325,944, which represented 1.18% of the Fund’s Net Assets.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   78  

 

 

PowerShares Global Agriculture Portfolio (PAGG) (continued)

October 31, 2015

 

(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2J.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   79  

 

 

Schedule of Investments

PowerShares Global Clean Energy Portfolio (PBD)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Austria—0.8%   
  37,636       Verbund AG    $ 535,065   
     

 

 

  
   Brazil—1.5%   
  85,200       Sao Martinho SA      984,854   
     

 

 

  
   Canada—4.4%   
  124,674       Ballard Power Systems, Inc.(a)(b)      185,817   
  31,359       Boralex, Inc., Class A      333,640   
  40,597       Canadian Solar, Inc.(a)(b)      886,232   
  63,555       Innergex Renewable Energy, Inc.      513,939   
  127,757       TransAlta Renewables, Inc.(a)      986,239   
     

 

 

  
        2,905,867   
     

 

 

  
   China—16.6%   
  86,826       BYD Co. Ltd., H-Shares(b)      542,235   
  7,828,082       China Datang Corp. Renewable Power Co. Ltd., H-Shares(b)      1,050,465   
  521,818       China Everbright International Ltd.      844,324   
  935,535       China Longyuan Power Group Corp., H-Shares      859,474   
  14,907,864       China Power New Energy Development Co. Ltd.      1,038,728   
  294,433       China Singyes Solar Technologies Holdings Ltd.      231,364   
  3,575,296       GCL-Poly Energy Holdings Ltd.(b)      742,729   
  2,938,871       Huaneng Renewables Corp. Ltd., H-Shares      917,674   
  25,583       JA Solar Holdings Co. Ltd.
ADR(a)(b)		      217,967   
  2,570,933       Shunfeng International Clean Energy Ltd.(b)      826,005   
  79,892       Trina Solar Ltd. ADR(a)(b)      814,100   
  994,640       Wasion Group Holdings Ltd.      1,108,849   
  599,796       Xinjiang Goldwind Science & Technology Co. Ltd., H-Shares      1,131,472   
  1,899,768       Xinyi Solar Holdings Ltd.      759,898   
     

 

 

  
        11,085,284   
     

 

 

  
   Denmark—4.9%   
  17,194       Novozymes A/S, Class B      800,971   
  8,241       Rockwool International A/S, Class B      1,296,354   
  19,932       Vestas Wind Systems A/S      1,167,069   
     

 

 

  
        3,264,394   
     

 

 

  
   France—1.0%   
  12,472       Albioma SA      203,903   
  4,912       Blue Solutions SA(a)(b)      118,559   
  12,957       Saft Groupe SA      336,354   
     

 

 

  
        658,816   
     

 

 

  
   Germany—5.9%   
  169,880       Aixtron SE(b)      1,086,540   
  21,913       Capital Stage AG      213,378   
  20,745       CENTROTEC Sustainable AG      332,969   
  38,411       Nordex SE(b)      1,261,889   
  21,498       SMA Solar Technology AG(a)(b)      1,042,527   
     

 

 

  
        3,937,303   
     

 

 

  
   Guernsey—1.5%   
  658,324       Renewables Infrastructure Group Ltd. (The)      1,019,257   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Hong Kong—2.7%   
  1,101,780       China High Speed Transmission Equipment Group Co. Ltd.(b)    $ 992,300   
  5,918,314       FDG Electric Vehicles Ltd.(b)      412,368   
  24,943       Sky Solar Holdings Ltd. ADR(a)(b)      195,553   
  2,112,301       United Photovoltaics Group Ltd.(b)      218,041   
     

 

 

  
        1,818,262  
     

 

 

  
   Ireland—1.6%   
  42,674       Kingspan Group PLC      1,038,491   
     

 

 

  
   Italy—2.3%   
  579,345       Enel Green Power SpA      1,231,949   
  236,681       Falck Renewables SpA      297,791   
     

 

 

  
        1,529,740  
     

 

 

  
   Japan—3.0%   
  111,262       GS Yuasa Corp.      425,963   
  337,475       Meidensha Corp.      1,194,132   
  25,238       Takuma Co. Ltd.      200,356   
  36,646       West Holdings Corp.      215,609   
     

 

 

  
        2,036,060  
     

 

 

  
   New Zealand—1.7%   
  158,276       Contact Energy Ltd.      555,795   
  299,033       Mighty River Power Ltd.      566,512   
     

 

 

  
        1,122,307  
     

 

 

  
   Philippines—0.8%   
  3,829,554       Energy Development Corp.      543,106   
     

 

 

  
   South Korea—2.8%   
  95,099       Seoul Semiconductor Co. Ltd.(b)      1,584,914   
  23,227       Taewoong Co. Ltd.(b)      305,605   
     

 

 

  
        1,890,519  
     

 

 

  
   Spain—6.2%   
  331,540       Abengoa SA, Class B      324,851   
  18,767       Abengoa Yield PLC(a)      347,752   
  157,009       EDP Renovaveis SA      1,146,959   
  78,103       Gamesa Corp. Tecnologica SA      1,241,087   
  110,470       Saeta Yield SA      1,099,497   
     

 

 

  
        4,160,146  
     

 

 

  
   Sweden—1.8%   
  38,124       NIBE Industrier AB, Class B      1,235,187   
     

 

 

  
   Switzerland—0.3%   
  28,928       Meyer Burger Technology AG(a)(b)      207,771   
     

 

 

  
   Taiwan—4.5%   
  1,278,131       Epistar Corp.      1,157,517   
  199,000       Everlight Electronics Co. Ltd.      303,126   
  44,000       Gigasolar Materials Corp.      853,882   
  178,000       Motech Industries, Inc.(b)      232,757   
  341,241       Neo Solar Power Corp.      232,830   
  186,000       Sino-American Silicon Products, Inc.      231,759   
     

 

 

  
        3,011,871  
     

 

 

  
   Thailand—1.5%   
  1,229,894       Energy Absolute PCL NVDR      802,236   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   80  

 

 

PowerShares Global Clean Energy Portfolio (PBD) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Thailand (continued)   
  295,512       SPCG PCL NVDR    $ 199,404   
     

 

 

  
        1,001,640  
     

 

 

  
   Turkey—0.2%   
  452,568       Akenerji Elektrik Uretim AS(b)      144,556   
     

 

 

  
   United Kingdom—4.7%   
  32,943       Dialight PLC      278,807   
  378,039       GCP Infrastructure Investments Ltd.      708,202   
  596,744       Greencoat UK Wind PLC      1,029,900   
  97,949       Infinis Energy PLC      275,316   
  98,702       Intelligent Energy Holdings PLC(b)      152,054   
  22,661       Ricardo PLC      316,729   
  113,877       Utilitywise PLC      353,941   
     

 

 

  
        3,114,949  
     

 

 

  
   United States—29.3%   
  15,985       A.O. Smith Corp.      1,227,968   
  6,022       Acuity Brands, Inc.      1,316,409   
  15,770       Aerovironment, Inc.(b)      363,814   
  51,627       Ameresco, Inc., Class A(b)      334,543   
  38,696       Covanta Holding Corp.      648,545   
  45,006       Cree, Inc.(b)      1,133,701   
  36,538       EnerNOC, Inc.(b)      286,458   
  49,391       Enphase Energy, Inc.(b)      177,808   
  16,063       First Solar, Inc.(b)      916,715   
  191,319       FuelCell Energy, Inc.(a)(b)      169,222   
  34,908       Green Plains, Inc.      715,963   
  34,756       Itron, Inc.(b)      1,276,588   
  27,253       Johnson Controls, Inc.      1,231,290   
  7,555       LSB Industries, Inc.(b)      118,236   
  23,767       Maxwell Technologies, Inc.(a)(b)      142,602   
  34,399       OPOWER, Inc.(a)(b)      331,950   
  13,918       Ormat Technologies, Inc.      524,987   
  48,053       Pattern Energy Group, Inc.      1,123,960   
  71,861       Plug Power, Inc.(a)(b)      173,185   
  25,372       PowerSecure International, Inc.(b)      316,135   
  1,126,425       REC Silicon ASA(a)(b)      203,006   
  25,290       Renewable Energy Group, Inc.(b)      199,538   
  22,542       Silver Spring Networks, Inc.(b)      295,526   
  15,912       SolarCity Corp.(a)(b)      471,791   
  28,669       SolarEdge Technologies, Inc.(a)(b)      530,090   
  81,692       Solazyme, Inc.(a)(b)      267,950   
  37,414       SunEdison, Inc.(a)(b)      273,122   
  32,237       SunPower Corp.(b)      865,241   
  20,382       TerraForm Power, Inc., Class A(b)      371,971   
  4,173       Tesla Motors, Inc.(a)(b)      863,519   
  30,580       Universal Display Corp.(b)      1,049,200   
  52,384       Veeco Instruments, Inc.(b)      943,960   
  57,385       Vivint Solar, Inc.(a)(b)      678,864   
     

 

 

  
        19,543,857  
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $64,668,569)—100.0%		      66,789,302  
     

 

 

  
     
Number
of Shares		           Value  
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—9.8%   
  6,516,215       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(c)(d)
(Cost $6,516,215)		    $ 6,516,215  
     

 

 

  
   Total Investments
(Cost $71,184,784)—109.8%		      73,305,517   
   Other assets less liabilities—(9.8)%      (6,543,444 ) 
     

 

 

  
   Net Assets—100.0%    $ 66,762,073  
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

NVDR—Non-voting Depositary Receipt

Notes to Schedule of Investments:

(a)  All or a portion of this security was out on loan at October 31, 2015.
(b)  Non-income producing security.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(d)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2J.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   81  

 

 

Schedule of Investments

PowerShares Global Gold and Precious Metals Portfolio (PSAU)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.1%   
   Australia—9.3%   
  154,075       Evolution Mining Ltd.    $ 154,444   
  123,277       Newcrest Mining Ltd.(a)      1,082,689   
  100,560       Northern Star Resources Ltd.      198,015   
  52,617       OceanaGold Corp.      100,541   
  63,264       Regis Resources Ltd.      93,882   
     

 

 

  
        1,629,571   
     

 

 

  
   Canada—49.1%   
  27,039       Agnico Eagle Mines Ltd.      763,833   
  160,064       B2Gold Corp.(a)      172,500   
  187,314       Barrick Gold Corp.      1,438,840   
  27,792       Centerra Gold, Inc.      156,341   
  29,494       Detour Gold Corp.(a)      327,774   
  14,581       Dominion Diamond Corp.      154,129   
  123,809       Eldorado Gold Corp.      432,459   
  25,225       Franco-Nevada Corp.      1,278,650   
  95,473       Goldcorp, Inc.      1,220,823   
  67,870       IAMGOLD Corp.(a)      122,424   
  198,050       Kinross Gold Corp.(a)      398,113   
  87,958       New Gold, Inc.(a)      217,819   
  16,298       Osisko Gold Royalties Ltd.      169,165   
  24,628       Pan American Silver Corp.      186,731   
  17,356       Pretium Resources, Inc.(a)      103,869   
  50,996       SEMAFO, Inc.(a)      115,763   
  14,002       Silver Standard Resources, Inc.(a)(b)      96,425   
  54,010       Silver Wheaton Corp.      733,564   
  135,693       Torex Gold Resources, Inc.(a)(b)      128,604   
  163,540       Yamana Gold, Inc.      357,492   
     

 

 

  
        8,575,318   
     

 

 

  
   China—1.5%   
  995,060       Zijin Mining Group Co. Ltd., H-Shares      268,342   
     

 

 

  
   Hong Kong—0.5%   
  3,868,508       G-Resources Group Ltd.      86,853   
     

 

 

  
   Japan—0.5%   
  5,793       Asahi Holdings, Inc.      85,737   
     

 

 

  
   Jersey Island—5.2%   
  187,114       Centamin PLC      183,790   
  10,754       Randgold Resources Ltd.      725,458   
     

 

 

  
        909,248   
     

 

 

  
   Mexico—3.6%   
  29,283       Fresnillo PLC      330,140   
  21,972       Industrias Penoles SAB de CV      291,918   
     

 

 

  
        622,058   
     

 

 

  
   Russia—4.2%   
  44,641       Polymetal International PLC      396,081   
  115,254       Polyus Gold International Ltd.      338,641   
     

 

 

  
        734,722   
     

 

 

  
   South Africa—9.9%   
  10,250       Anglo American Platinum Ltd.(a)      180,187   
  69,973       AngloGold Ashanti Ltd.(a)      596,663   
  134,441       Gold Fields Ltd.      357,947   
  89,570       Impala Platinum Holdings Ltd.(a)      245,356   
  59,892       Northam Platinum Ltd.(a)      131,699   
Number
of Shares		           Value  
   Common Stocks (continued)   
   South Africa (continued)   
  124,870       Sibanye Gold Ltd.    $ 210,549   
     

 

 

  
        1,722,401   
     

 

 

  
   Turkey—0.3%   
  7,932       Koza Altin Isletmeleri AS      44,678   
     

 

 

  
   United Kingdom—0.4%   
  26,311       Acacia Mining PLC      78,425   
     

 

 

  
   United States—15.6%   
  40,364       Alacer Gold Corp.(a)      78,362   
  63,299       Hecla Mining Co.      131,029   
  76,716       Newmont Mining Corp.      1,492,893   
  10,587       Royal Gold, Inc.      506,482   
  20,890       Stillwater Mining Co.(a)      195,113   
  37,929       Tahoe Resources, Inc.      316,570   
     

 

 

  
        2,720,449   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $35,342,525)—100.1%		      17,477,802   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—0.4%   
  75,330       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(c)(d)
(Cost $75,330)		      75,330   
     

 

 

  
   Total Investments
(Cost $35,417,855)—100.5%		      17,553,132   
   Other assets less liabilities—(0.5)%      (81,897 ) 
     

 

 

  
   Net Assets—100.0%    $ 17,471,235   
     

 

 

  

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(d)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2J.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   82  

 

 

Schedule of Investments

PowerShares Global Water Portfolio (PIO)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.1%   
   Brazil—1.4%   
  778,941       Cia de Saneamento Basico do Estado de Sao Paulo    $ 3,392,471   
     

 

 

  
   Canada—0.1%   
  43,105       Pure Technologies Ltd.      183,180   
     

 

 

  
   Cayman Islands—0.5%   
  101,949       Consolidated Water Co. Ltd.      1,128,575   
     

 

 

  
   China—7.5%   
  10,437,548       Beijing Enterprises Water Group Ltd.      8,336,463   
  1,275,989       China Everbright Water Ltd.(a)      646,878   
  7,529,672       China Longyuan Power Group Corp., H-Shares      6,917,493   
  2,985,465       Tianjin Capital Environmental Protection Group Co. Ltd., H-Shares      2,257,368   
     

 

 

  
        18,158,202   
     

 

 

  
   Finland—0.9%   
  135,830       Kemira Oyj      1,617,481   
  43,776       Uponor Oyj      586,572   
     

 

 

  
        2,204,053   
     

 

 

  
   France—12.3%   
  515,244       Suez Environnement Co.      9,852,235   
  847,847       Veolia Environnement SA      19,831,961   
     

 

 

  
        29,684,196   
     

 

 

  
   Hong Kong—0.4%   
  4,888,631       China Water Industry Group Ltd.(a)      1,009,253   
     

 

 

  
   Japan—3.1%   
  299,637       Kurita Water Industries Ltd.      6,810,891   
  46,082       Organo Corp.      190,171   
  64,922       Torishima Pump Manufacturing Co. Ltd.      506,787   
     

 

 

  
        7,507,849   
     

 

 

  
   Malaysia—0.1%   
  523,505       Puncak Niaga Holdings Bhd(a)      346,079   
     

 

 

  
   Netherlands—1.2%   
  118,392       Arcadis NV      3,001,441   
     

 

 

  
   Singapore—0.7%   
  397,104       Hyflux Ltd.      192,810   
  2,404,544       SIIC Environment Holdings Ltd.(a)      1,459,381   
     

 

 

  
        1,652,191   
     

 

 

  
   Spain—4.4%   
  124,797       Acciona SA      10,547,441   
     

 

 

  
   Switzerland—7.8%   
  58,448       Geberit AG      18,932,231   
     

 

 

  
   United Kingdom—20.3%   
  276,187       Halma PLC      3,256,656   
  495,379       Pennon Group PLC      6,204,660   
  335,913       Pentair PLC      18,784,255   
  290,707       Severn Trent PLC      10,070,344   
  706,193       United Utilities Group PLC      10,781,015   
     

 

 

  
        49,096,930   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks (continued)   
   United States—39.4%   
  170,882       American Water Works Co., Inc.    $ 9,801,791   
  170,176       Ecolab, Inc.      20,480,682   
  562,809       HD Supply Holdings, Inc.(a)      16,766,080   
  283,700       Pattern Energy Group, Inc.      6,635,743   
  57,291       Roper Technologies, Inc.      10,676,178   
  412,730       TerraForm Power, Inc., Class A(a)      7,532,322   
  48,199       Valmont Industries, Inc.      5,226,699   
  76,506       Waters Corp.(a)      9,777,467   
  228,926       Xylem, Inc.      8,335,196   
     

 

 

  
        95,232,158   
     

 

 

  
   Total Investments
(Cost $203,211,329)—100.1%		      242,076,250   
   Other assets less liabilities—(0.1)%      (244,570 ) 
     

 

 

  
   Net Assets—100.0%    $ 241,831,680   
     

 

 

  

Notes to Schedule of Investments:

(a)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   83  

 

 

Schedule of Investments

PowerShares International BuyBack AchieversTM Portfolio (IPKW)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Belgium—2.4%   
  27,958       Colruyt SA    $ 1,390,852   
     

 

 

  
   Brazil—2.3%   
  577,400       Cia Siderurgica Nacional SA      651,963   
  321,000       Gafisa SA(a)      208,786   
  244,100       MRV Engenharia e Participacoes SA      471,224   
     

 

 

  
        1,331,973   
     

 

 

  
   Canada—15.9%   
  18,799       Canadian Pacific Railway Ltd.      2,640,208   
  39,951       Dollarama, Inc.      2,697,193   
  56,254       Magna International, Inc.      2,965,014   
  91,768       RONA, Inc.      957,414   
     

 

 

  
        9,259,829   
     

 

 

  
   China—3.1%   
  2,364,531       Evergrande Real Estate Group Ltd.      1,818,377   
     

 

 

  
   Denmark—2.2%   
  47,336       Topdanmark A/S(a)      1,266,276   
     

 

 

  
   Egypt—0.9%   
  492,941       Egyptian Financial Group-Hermes Holding SAE(a)      552,483   
     

 

 

  
   France—4.9%   
  15,518       L’Oreal SA      2,846,423   
     

 

 

  
   Germany—6.8%   
  14,429       Muenchener Rueckversicherungs-Gesellschaft AG      2,892,928   
  34,947       RHOEN KLINIKUM AG      1,047,718   
     

 

 

  
        3,940,646   
     

 

 

  
   Ireland—0.6%   
  42,520       Origin Enterprises PLC      320,803   
     

 

 

  
   Japan—28.9%   
  71,938       Accordia Golf Co. Ltd.      655,147   
  16,364       Aderans Co. Ltd.      114,992   
  11,135       Aiphone Co. Ltd.      171,904   
  38,199       Aoyama Trading Co. Ltd.      1,402,292   
  17,769       Cleanup Corp.      112,791   
  74,103       EDION Corp.      559,419   
  275,114       Fujikura Ltd.      1,424,870   
  66,081       Fujitec Co. Ltd.      718,992   
  78,978       Japan Securities Finance Co. Ltd.      428,677   
  37,159       Nichii Gakkan Co.      257,734   
  38,688       Nippon Gas Co. Ltd.      984,232   
  119,457       Nisshinbo Holdings, Inc.      1,632,356   
  13,439       NS Solutions Corp.      660,396   
  161,368       NTT DoCoMo, Inc.      3,152,476   
  8,552       Roland DG Corp.      196,092   
  37,759       Sankyo Co. Ltd.      1,464,364   
  14,437       Tenma Corp.      245,970   
  49,832       Toho Holdings Co. Ltd.      1,112,058   
  333,631       Yamada Denki Co. Ltd.      1,512,295   
     

 

 

  
        16,807,057   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Luxembourg—1.1%   
  4,163       Cosmo Pharmaceuticals SA(a)    $ 641,501   
     

 

 

  
   Netherlands—4.9%   
  138,202       Koninklijke Ahold NV      2,827,353   
     

 

 

  
   South Africa—0.4%   
  175,561       Caxton and CTP Publishers and Printers Ltd.(a)      228,755   
     

 

 

  
   South Korea—2.6%   
  129,410       Samsung Heavy Industries Co. Ltd.      1,509,717   
     

 

 

  
   Spain—2.6%   
  123,238       Mediaset Espana Comunicacion SA      1,504,971   
     

 

 

  
   Sweden—2.5%   
  45,720       Bure Equity AB      297,497   
  31,177       Intrum Justitia AB      1,127,240   
     

 

 

  
        1,424,737   
     

 

 

  
   Switzerland—4.8%   
  1,132       Forbo Holding AG      1,291,910   
  20,507       Mobilezone Holding AG      304,770   
  24,151       Vontobel Holding AG      1,194,381   
     

 

 

  
        2,791,061   
     

 

 

  
   Thailand—1.0%   
  8,111,544       Bangkok Land PCL NVDR      358,055   
  639,520       MBK PCL NVDR      251,727   
     

 

 

  
        609,782   
     

 

 

  
   United Kingdom—12.1%   
  77,631       InterContinental Hotels Group PLC      3,118,424   
  171,646       Intermediate Capital Group PLC      1,500,409   
  393,150       QinetiQ Group PLC      1,360,084   
  142,570       SVG Capital PLC(a)      1,045,879   
     

 

 

  
        7,024,796   
     

 

 

  
   Total Investments
(Cost $58,606,177)—100.0%		      58,097,392   
   Other assets less liabilities—0.0%      1,289   
     

 

 

  
   Net Assets—100.0%    $ 58,098,681   
     

 

 

  

Investment Abbreviations:

NVDR—Non-voting Depositary Receipt

Notes to Schedule of Investments:

(a)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   84  

 

 

Schedule of Investments(a)

PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—99.6%   
   Consumer Discretionary—16.5%   
  1,712       Autobacs Seven Co. Ltd.    $ 30,147   
  668       Bridgestone Corp.      24,777   
  1,572       Canon Marketing Japan, Inc.      24,047   
  1,970       Daihatsu Motor Co. Ltd.      24,324   
  526       Denso Corp.      24,680   
  1,992       Fuji Media Holdings, Inc.      23,836   
  2,030       McDonald’s Holdings Co. Japan Ltd.      48,094   
  2,478       Nissan Motor Co. Ltd.      26,007   
  4,150       Onward Holdings Co. Ltd.      26,205   
  638       Sankyo Co. Ltd.      24,743   
  1,632       Sekisui House Ltd.      27,379   
  1,216       Shimachu Co. Ltd.      26,764   
  3,836       Shochiku Co. Ltd.      34,013   
  1,146       Toyoda Gosei Co. Ltd.      26,571   
  424       Toyota Motor Corp.      26,243   
  2,130       Wacoal Holdings Corp.      26,900   
     

 

 

  
        444,730   
     

 

 

  
   Consumer Staples—14.6%   
  834       Asahi Group Holdings Ltd.      25,896   
  1,392       Coca-Cola West Co. Ltd.      28,319   
  1,462       House Foods Group, Inc.      25,393   
  1,254       Ito EN Ltd.      26,353   
  2,552       Kagome Co. Ltd.      43,543   
  1,908       Kirin Holdings Co. Ltd.      27,211   
  356       Kobayashi Pharmaceutical Co. Ltd.      27,790   
  384       Lawson, Inc.      28,607   
  1,962       Maruha Nichiro Corp.      29,591   
  1,734       Nisshin Seifun Group, Inc.      26,698   
  592       Nissin Foods Holdings Co. Ltd.      27,521   
  612       Seven & i Holdings Co. Ltd.      27,949   
  656       Suntory Beverage & Food Ltd.      26,691   
  3,972       UNY Group Holdings Co. Ltd.      22,119   
     

 

 

  
        393,681   
     

 

 

  
   Energy—3.0%   
  1,476       Idemitsu Kosan Co. Ltd.      24,328   
  6,020       JX Holdings, Inc.      23,746   
  3,028       TonenGeneral Sekiyu K.K.      31,591   
     

 

 

  
        79,665   
     

 

 

  
   Financials—4.8%   
  7,980       Aozora Bank Ltd.      29,295   
  256       Daito Trust Construction Co. Ltd.      27,875   
  12,646       Mizuho Financial Group, Inc.      26,230   
  1,272       Sony Financial Holdings, Inc.      23,021   
  1,944       Yamaguchi Financial Group, Inc.      24,083   
     

 

 

  
        130,504   
     

 

 

  
   Health Care—8.8%   
  1,716       Astellas Pharma, Inc.      25,098   
  1,232       Daiichi Sankyo Co. Ltd.      24,344   
  1,338       Mitsubishi Tanabe Pharma Corp.      22,796   
  2,446       Nipro Corp.      27,607   
  432       Sawai Pharmaceutical Co. Ltd.      27,816   
  696       Suzuken Co. Ltd.      26,848   
  402       Taisho Pharmaceutical Holdings Co. Ltd.      25,251   
  622       Takeda Pharmaceutical Co. Ltd.      30,565   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Health Care (continued)   
  1,094       Tsumura & Co.    $ 26,526   
     

 

 

  
        236,851   
     

 

 

  
   Industrials—29.4%   
  8,298       ANA Holdings, Inc.      24,913   
  2,558       Dai Nippon Printing Co. Ltd.      26,666   
  284       East Japan Railway Co.      27,229   
  14,852       Furukawa Electric Co. Ltd.      27,323   
  4,362       Hankyu Hanshin Holdings, Inc.      28,592   
  6,122       Hanwa Co. Ltd.      25,518   
  3,186       Keikyu Corp.      26,375   
  3,376       Keio Corp.      27,668   
  1,908       Kinden Corp.      24,934   
  7,306       Kintetsu Group Holdings Co. Ltd.      28,395   
  1,422       Komatsu Ltd.      23,591   
  2,432       Kyowa Exeo Corp.      25,534   
  4,730       Marubeni Corp.      27,531   
  1,318       Mitsubishi Corp.      24,165   
  4,950       Mitsubishi Heavy Industries Ltd.      25,190   
  2,120       Mitsui & Co. Ltd.      27,063   
  8,818       Mitsui OSK Lines Ltd.      23,749   
  2,110       Nagase & Co. Ltd.      26,437   
  6,872       Nagoya Railroad Co. Ltd.      28,587   
  8,948       Nippon Yusen Kabushiki Kaisha      23,580   
  2,654       Odakyu Electric Railway Co. Ltd.      26,128   
  1,256       Park24 Co. Ltd.      26,478   
  414       Secom Co. Ltd.      27,847   
  4,524       Sotetsu Holdings, Inc.      25,905   
  3,856       Taisei Corp.      25,243   
  6,122       Tobu Railway Co., Ltd.      29,779   
  3,520       Tokyu Corp.      28,732   
  3,036       Toppan Printing Co. Ltd.      27,423   
  984       Toyota Tsusho Corp.      22,701   
  366       West Japan Railway Co.      25,871   
     

 

 

  
        789,147   
     

 

 

  
   Information Technology—6.4%   
  1,078       Azbil Corp.      27,424   
  952       Canon, Inc.      28,716   
  704       Nomura Research Institute Ltd.      28,994   
  554       NTT Data Corp.      27,775   
  684       Oracle Corp. Japan      31,288   
  2,508       Ricoh Co. Ltd.      27,205   
     

 

 

  
        171,402   
     

 

 

  
   Materials—9.3%   
  1,632       Air Water, Inc.      26,926   
  3,140       Asahi Kasei Corp.      19,424   
  1,994       Kuraray Co. Ltd.      24,786   
  1,010       Maruichi Steel Tube Ltd.      26,029   
  3,528       NOF Corp.      25,376   
  5,610       Rengo Co. Ltd.      26,824   
  436       Shin-Etsu Chemical Co. Ltd.      26,137   
  6,046       Sumitomo Osaka Cement Co. Ltd.      23,448   
  7,504       Taiheiyo Cement Corp.      24,873   
  2,876       Toray Industries, Inc.      25,322   
     

 

 

  
        249,145   
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   85  

 

 

PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Telecommunication Services—1.8%   
  1,188       NTT DoCoMo, Inc.    $ 23,209   
  442       SoftBank Group Corp.      24,895   
     

 

 

  
        48,104   
     

 

 

  
   Utilities—5.0%   
  1,634       Chugoku Electric Power Co., Inc. (The)      24,833   
  1,756       Hokuriku Electric Power Co.      26,367   
  7,500       Osaka Gas Co. Ltd.      29,721   
  4,312       Toho Gas Co. Ltd.      26,585   
  5,174       Tokyo Gas Co. Ltd.      25,794   
     

 

 

  
        133,300   
     

 

 

  
   Total Common Stocks
(Cost $2,542,485)		      2,676,529   
     

 

 

  
     
   Money Market Fund—0.0%   
  50       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $50)		      50   
     

 

 

  
   Total Investments
(Cost $2,542,535)—99.6%		      2,676,579   
   Other assets less liabilities—0.4%      10,569   
     

 

 

  
   Net Assets—100.0%    $ 2,687,148   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   86  

 

 

Schedule of Investments

PowerShares S&P International Developed High Quality Portfolio (IDHQ)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—99.9%   
   Australia—5.8%   
  1,895       Ansell Ltd.    $ 27,202   
  3,582       ARB Corp. Ltd.      37,797   
  1,433       Australia & New Zealand Banking Group Ltd.      27,819   
  637       Blackmores Ltd.      76,200   
  4,441       carsales.com Ltd.      31,051   
  10,097       Coca-Cola Amatil Ltd.      65,626   
  584       Cochlear Ltd.      37,061   
  1,619       Commonwealth Bank of Australia      88,629   
  521       CSL Ltd.      34,862   
  1,220       Domino’s Pizza Enterprises Ltd.      40,692   
  2,313       JB Hi-Fi Ltd.      29,638   
  8,597       M2 Group Ltd.      60,722   
  3,828       McMillan Shakespeare Ltd.      34,330   
  7,780       Mineral Resources Ltd.      23,757   
  5,314       Monadelphous Group Ltd.      26,235   
  10,867       Navitas Ltd.      32,563   
  2,264       Ramsay Health Care Ltd.      100,162   
  1,119       REA Group Ltd.      38,345   
  13,189       Slater & Gordon Ltd.      26,065   
  2,067       Sonic Healthcare Ltd.      28,432   
  10,414       Super Retail Group Ltd.      71,772   
  12,824       Technology One Ltd.      35,225   
  5,195       TPG Telecom Ltd.      40,992   
  1,165       Wesfarmers Ltd.      32,756   
  3,388       Woolworths Ltd.      58,278   
     

 

 

  
        1,106,211   
     

 

 

  
   Austria—0.1%   
  766       Oesterreichische Post AG      28,008   
     

 

 

  
   Belgium—1.2%   
  1,545       Colruyt SA      76,860   
  865       Delhaize Group SA      80,656   
  898       Kinepolis Group NV      37,487   
  627       Melexis NV      30,717   
     

 

 

  
        225,720   
     

 

 

  
   Canada—6.8%   
  2,463       Alimentation Couche-Tard, Inc., Class B      105,892   
  1,376       Bank of Nova Scotia      64,669   
  827       BCE, Inc.      35,726   
  1,814       Canadian National Railway Co.      110,738   
  661       Canadian Tire Corp. Ltd., Class A      58,110   
  2,425       Canadian Utilities Ltd., Class A      63,760   
  3,270       Canadian Western Bank      62,808   
  2,174       Emera, Inc.      71,184   
  1,213       Fortis, Inc.      35,092   
  2,396       Great-West Lifeco, Inc.      63,473   
  3,131       Home Capital Group, Inc.      76,220   
  1,841       Husky Energy, Inc.      24,864   
  2,760       Imperial Oil Ltd.      91,786   
  1,807       Laurentian Bank of Canada      73,158   
  689       Loblaw Cos. Ltd.      36,284   
  1,929       Manulife Financial Corp.      31,965   
  3,926       Metro, Inc.      112,197   
  940       National Bank of Canada      31,117   
  1,375       Power Corp. of Canada      30,887   
  1,246       Power Financial Corp.      30,808   
  578       Royal Bank of Canada      33,032   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Canada (continued)   
  1,001       TELUS Corp.    $ 33,388   
  1,396       Toromont Industries Ltd.      36,310   
     

 

 

  
        1,313,468   
     

 

 

  
   China—0.4%   
  13,350       ENN Energy Holdings Ltd.      76,912   
     

 

 

  
   Denmark—0.5%   
  538       Coloplast A/S, Class B      38,777   
  1,409       Novozymes A/S, Class B      65,637   
     

 

 

  
        104,414   
     

 

 

  
   Finland—0.4%   
  898       Kone Oyj, Class B      38,548   
  976       Orion Oyj, Class B      35,061   
     

 

 

  
        73,609   
     

 

 

  
   France—6.2%   
  849       Air Liquide SA      110,572   
  181       Christian Dior SE      35,810   
  2,188       CNP Assurances      31,396   
  485       Dassault Systemes      38,489   
  594       Essilor International SA      78,477   
  1,096       Eutelsat Communications SA      36,333   
  4,350       Havas SA      37,913   
  95       Hermes International      36,766   
  602       Ingenico Group      71,421   
  199       Kering      37,052   
  635       Legrand SA      35,031   
  414       LVMH Moet Hennessy Louis Vuitton SE      77,562   
  504       Orpea      40,642   
  305       Pernod Ricard SA      36,118   
  1,391       Plastic Omnium SA      40,427   
  469       Publicis Groupe SA      30,598   
  1,031       Rubis SCA      83,128   
  356       Sanofi      36,121   
  125       Sartorius Stedim Biotech SA      44,372   
  735       Sodexo SA      65,741   
  1,204       Vinci SA      81,635   
  478       Virbac SA      95,757   
     

 

 

  
        1,181,361   
     

 

 

  
   Germany—5.6%   
  927       Adidas AG      83,508   
  440       Bechtle AG      40,828   
  269       Bertrandt AG      31,706   
  932       Bilfinger SE      42,000   
  2,016       CTS Eventim AG & Co. KGaA      79,291   
  779       Deutsche EuroShop AG      37,751   
  1,035       Fielmann AG      72,886   
  1,274       Fresenius Medical Care AG & Co. KGaA      115,246   
  534       Fresenius SE & Co. KGaA      39,375   
  3,134       Gerry Weber International AG      51,272   
  241       Grenkeleasing AG      44,445   
  611       Henkel AG & Co. KGaA (Preference Shares)      66,617   
  915       HOCHTIEF AG      85,550   
  315       HUGO BOSS AG      32,566   
  377       MTU Aero Engines AG      35,053   
  95       Rational AG      37,889   
  1,283       RHOEN KLINIKUM AG      38,465   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   87  

 

 

PowerShares S&P International Developed High Quality Portfolio (IDHQ) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Germany (continued)   
  902       Sixt SE    $ 50,587   
  1,774       Wirecard AG      92,113   
     

 

 

  
        1,077,148   
     

 

 

  
   Hong Kong—2.6%   
  8,472       Bank of East Asia Ltd. (The)      31,756   
  17,922       Chow Sang Sang Holdings International Ltd.      34,965   
  2,545       CK Hutchison Holdings Ltd.      34,973   
  3,930       Dairy Farm International Holdings Ltd.      25,899   
  16,444       Hong Kong & China Gas Co. Ltd.      33,397   
  43,646       Li & Fung Ltd.      35,479   
  20,848       Lifestyle International Holdings Ltd.      30,182   
  12,296       Luk Fook Holdings International Ltd.      31,811   
  223,598       Sa Sa International Holdings Ltd.      71,839   
  10,522       Techtronic Industries Co. Ltd.      38,625   
  469,702       Tongda Group Holdings Ltd.      96,363   
  10,396       Yue Yuen Industrial Holdings Ltd.      38,029   
     

 

 

  
        503,318   
     

 

 

  
   Ireland—1.0%   
  90,204       Bank of Ireland(a)      33,780   
  1,283       CRH PLC      35,233   
  1,985       Experian PLC      33,967   
  807       Paddy Power PLC      93,781   
     

 

 

  
        196,761   
     

 

 

  
   Italy—2.0%   
  1,711       Brembo SpA      75,772   
  4,644       Davide Campari-Milano SpA      39,963   
  532       Luxottica Group SpA      37,464   
  1,981       MARR SpA      40,550   
  3,351       Recordati SpA      83,695   
  10,643       Saipem SpA(a)      100,462   
     

 

 

  
        377,906   
     

 

 

  
   Japan—34.8%   
  535       ABC-Mart, Inc.      30,014   
  2,468       ADEKA Corp.      36,567   
  2,228       AEON DELIGHT Co. Ltd.      64,528   
  1,460       Aica Kogyo Co. Ltd.      29,170   
  1,562       Ain Holdings, Inc.      74,557   
  2,210       Air Water, Inc.      36,462   
  1,572       Arcs Co. Ltd.      31,889   
  3,267       Asahi Group Holdings Ltd.      101,441   
  1,234       ASICS Corp.      34,410   
  11,800       Bank of Yokohama Ltd. (The)      74,247   
  896       Bridgestone Corp.      33,234   
  376       Central Japan Railway Co.      69,171   
  1,116       Century Tokyo Leasing Corp.      38,240   
  4,476       Chiba Bank Ltd. (The)      32,937   
  8,920       Chugoku Marine Paints Ltd.      64,308   
  2,246       COMSYS Holdings Corp.      29,537   
  224       Cosmos Pharmaceutical Corp.      28,085   
  774       CyberAgent, Inc.      32,070   
  2,356       Daihatsu Motor Co. Ltd.      29,090   
  898       Daiichikosho Co. Ltd.      30,064   
  450       Daikin Industries Ltd.      29,236   
  1,686       Daiseki Co. Ltd.      27,272   
  656       Daito Trust Construction Co. Ltd.      71,430   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Japan (continued)   
  1,450       Denso Corp.    $ 68,033   
  4,694       Descente Ltd.      60,564   
  886       Don Quijote Holdings Co. Ltd.      32,856   
  3,400       Dowa Holdings Co. Ltd.      29,865   
  1,568       DTS Corp.      37,266   
  1,568       Eagle Industry Co. Ltd.      31,860   
  106       Fast Retailing Co. Ltd.      38,983   
  1,002       FP Corp.      41,226   
  1,326       Fuji Seal International, Inc.      45,326   
  5,590       Fujitsu General Ltd.      70,781   
  1,124       Glory Ltd.      28,641   
  2,354       GMO Internet, Inc.      33,610   
  9,936       GS Yuasa Corp.      38,040   
  4,502       Gunma Bank Ltd. (The)      28,540   
  1,676       Heiwa Corp.      31,083   
  5,618       Hiroshima Bank Ltd. (The)      31,518   
  1,002       HIS Co. Ltd.      33,960   
  1,240       Hitachi Capital Corp.      35,913   
  558       Hoshizaki Electric Co. Ltd.      40,737   
  3,688       House Foods Group, Inc.      64,057   
  2,802       Iyo Bank Ltd. (The)      30,394   
  786       Izumi Co. Ltd.      29,440   
  1,148       Japan Aviation Electronics Industry Ltd.      20,615   
  800       Kaken Pharmaceutical Co. Ltd.      55,687   
  1,784       KAMEDA SEIKA Co. Ltd.      69,556   
  4,404       Kamigumi Co. Ltd.      38,173   
  1,346       Kanamoto Co. Ltd.      27,361   
  5,522       Kaneka Corp.      49,328   
  4,462       Kansai Paint Co. Ltd.      68,515   
  776       Kao Corp.      40,120   
  2,798       KDDI Corp.      68,307   
  3,250       Kewpie Corp.      74,709   
  2,226       Kikkoman Corp.      70,372   
  1,486       Kintetsu World Express, Inc.      28,150   
  931       Kobayashi Pharmaceutical Co. Ltd.      72,675   
  2,418       Koei Tecmo Holdings Co. Ltd.      36,909   
  2,788       Koito Manufacturing Co. Ltd.      106,853   
  3,130       K’s Holdings Corp.      111,142   
  1,792       Kuroda Electric Co. Ltd.      36,590   
  556       Kyoritsu Maintenance Co. Ltd.      38,426   
  452       Lawson, Inc.      33,673   
  3,138       M3, Inc.      61,291   
  2,464       Maeda Road Construction Co. Ltd.      45,227   
  1,654       MANI, Inc.      30,277   
  1,344       Miraca Holdings, Inc.      60,253   
  2,468       MISUMI Group, Inc.      32,498   
  778       Mitsubishi Pencil Co. Ltd.      35,072   
  2,124       Mitsubishi Tanabe Pharma Corp.      36,188   
  4,920       Mitsubishi UFJ Financial Group, Inc.      32,233   
  12,962       Mitsubishi UFJ Lease & Finance Co. Ltd.      68,637   
  1,132       Mitsui Fudosan Co. Ltd.      31,050   
  3,066       MonotaRO Co. Ltd.      79,651   
  220       Murata Manufacturing Co. Ltd.      31,640   
  1,154       NH Foods Ltd.      24,204   
  3,240       NHK Spring Co. Ltd.      33,320   
  1,456       Nihon Kohden Corp.      28,559   
  7,492       Nihon Nohyaku Co. Ltd.      49,046   
  2,018       Nikkon Holdings Co. Ltd.      39,281   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   88  

 

 

PowerShares S&P International Developed High Quality Portfolio (IDHQ) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Japan (continued)   
  2,214       Nippo Corp.    $ 38,877   
  1,904       Nippon Densetsu Kogyo Co. Ltd.      36,305   
  5,586       Nippon Flour Mills Co. Ltd.      34,856   
  1,114       Nippon Gas Co. Ltd.      28,340   
  3,352       Nippon Kayaku Co. Ltd.      35,194   
  1,110       Nippon Shinyaku Co. Ltd.      43,692   
  1,000       Nippon Telegraph & Telephone Corp.      37,174   
  1,900       Nippon Television Holdings, Inc.      33,158   
  1,460       Nissan Chemical Industries Ltd.      36,538   
  782       Nissin Foods Holdings Co. Ltd.      36,354   
  786       Nitori Holdings Co. Ltd.      61,812   
  900       Nomura Research Institute Ltd.      37,066   
  3,502       NTT Urban Development Corp.      35,027   
  6,750       Odakyu Electric Railway Co. Ltd.      66,451   
  1,902       Oiles Corp.      30,419   
  786       OMRON Corp.      26,281   
  1,114       Oriental Land Co. Ltd.      68,146   
  1,572       OSG Corp.      29,844   
  3,474       Pacific Industrial Co. Ltd.      38,979   
  5,522       PanaHome Corp.      39,582   
  1,124       Paramount Bed Holdings Co. Ltd.      36,233   
  1,120       Pigeon Corp.      31,695   
  668       Relo Holdings, Inc.      72,349   
  1,340       Resorttrust, Inc.      34,645   
  896       Rinnai Corp.      71,502   
  2,022       Rohto Pharmaceutical Co. Ltd.      33,579   
  218       Ryohin Keikaku Co. Ltd.      44,133   
  1,008       Saint Marc Holdings Co. Ltd.      30,113   
  1,558       San-A Co. Ltd.      66,619   
  662       Sawai Pharmaceutical Co. Ltd.      42,625   
  3,242       Seino Holdings Co. Ltd.      38,794   
  3,356       Seiren Co. Ltd.      39,769   
  782       Seven & i Holdings Co. Ltd.      35,712   
  7,160       Seven Bank Ltd.      32,870   
  336       Shimamura Co. Ltd.      38,062   
  558       Shin-Etsu Chemical Co. Ltd.      33,450   
  1,574       Ship Healthcare Holdings, Inc.      38,399   
  3,350       Shizuoka Bank Ltd. (The)      33,923   
  112       SMC Corp.      29,087   
  662       SoftBank Group Corp.      37,287   
  6,648       Sotetsu Holdings, Inc.      38,067   
  1,636       Stanley Electric Co. Ltd.      31,507   
  1,333       Sugi Holdings Co. Ltd.      65,283   
  2,212       Sumitomo Realty & Development Co. Ltd.      73,394   
  4,584       Sumitomo Rubber Industries Ltd.      68,831   
  6,660       Sumitomo Warehouse Co. Ltd. (The)      35,597   
  1,888       Sundrug Co. Ltd.      100,443   
  1,572       Suruga Bank Ltd.      31,238   
  1,112       Suzuki Motor Corp.      36,767   
  1,200       Sysmex Corp.      69,310   
  1,352       Tokai Rika Co. Ltd.      29,690   
  2,906       Toshiba Plant Systems & Services Corp.      31,330   
  3,354       Totetsu Kogyo Co. Ltd.      72,903   
  1,110       Towa Pharmaceutical Co. Ltd.      75,978   
  666       Toyota Industries Corp.      35,377   
  2,238       TPR Co. Ltd.      55,248   
  3,392       Tsubakimoto Chain Co.      25,045   
  1,566       Tsumura & Co.      37,971   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Japan (continued)   
  1,454       Unicharm Corp.    $ 31,267   
  1,104       United Arrows Ltd.      47,847   
  1,906       USS Co. Ltd.      33,974   
  2,785       Valor Co. Ltd.      65,497   
  17,344       Yahoo! Japan Corp.      74,018   
  560       Yakult Honsha Co. Ltd.      29,885   
  1,684       Yamato Holdings Co. Ltd.      33,359   
  1,568       Yamato Kogyo Co. Ltd.      42,099   
  2,232       Yamazaki Baking Co. Ltd.      43,336   
  1,458       Yaoko Co. Ltd.      59,142   
     

 

 

  
        6,665,584  
     

 

 

  
   Jordan—0.2%   
  1,114       Hikma Pharmaceuticals PLC      37,231   
     

 

 

  
   Netherlands—0.6%   
  1,152       Aalberts Industries NV      37,623   
  462       Heineken NV      42,420   
  688       Koninklijke Vopak NV      27,797   
     

 

 

  
        107,840  
     

 

 

  
   New Zealand—0.2%   
  6,440       Ryman Healthcare Ltd.      34,379   
     

 

 

  
   Portugal—0.2%   
  2,886       Jeronimo Martins SGPS SA      40,759   
     

 

 

  
   Singapore—1.3%   
  15,432       ComfortDelGro Corp. Ltd.      33,498   
  1,462       Jardine Cycle & Carriage Ltd.      34,052   
  11,412       Keppel Corp. Ltd.      57,692   
  10,172       Raffles Medical Group Ltd.      31,231   
  33,293       Sembcorp Marine Ltd.      55,627   
  44,710       Super Group Ltd.      28,732   
     

 

 

  
        240,832  
     

 

 

  
   South Korea—3.7%   
  102       Amorepacific Corp.      33,775   
  857       Coway Co. Ltd.      64,047   
  400       Daewoong Pharmaceutical Co. Ltd.      26,736   
  2,179       Hanon Systems      85,818   
  287       Hanssem Co. Ltd.      58,782   
  280       Hyundai Department Store Co. Ltd.      30,823   
  204       Hyundai Glovis Co. Ltd.      35,162   
  385       Hyundai Mobis Co. Ltd.      81,049   
  456       Korea Electric Terminal Co. Ltd.      39,438   
  2,523       Kwang Dong Pharmaceutical Co. Ltd.      25,782   
  1,190       LF Corp.      33,037   
  109       LG Household & Health Care Ltd.      90,543   
  308       OCI Materials Co. Ltd.      25,098   
  47       Ottogi Corp.      43,246   
  2,454       Samsung Engineering Co. Ltd.(a)      39,176   
     

 

 

  
        712,512  
     

 

 

  
   Spain—3.4%   
  2,153       Abertis Infraestructuras SA      35,936   
  122       Construcciones y Auxiliar de Ferrocarriles SA      34,217   
  1,601       Gas Natural SDG SA      34,858   
  1,184       Grupo Catalana Occidente SA      36,988   
  5,289       Iberdrola SA      37,959   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   89  

 

 

PowerShares S&P International Developed High Quality Portfolio (IDHQ) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Spain (continued)   
  3,336       Industria de Diseno Textil SA    $ 125,681   
  20,656       Mapfre SA      61,722   
  13,047       Prosegur Compania de Seguridad SA      58,370   
  1,360       Red Electrica Corp. SA      120,486   
  2,530       Telefonica SA      33,621   
  1,154       Viscofan SA      67,741   
     

 

 

  
        647,579  
     

 

 

  
   Sweden—3.0%   
  1,887       ASSA ABLOY AB, Class B      37,780   
  1,288       Atlas Copco AB, Class A      33,827   
  4,397       Getinge AB, Class B      110,767   
  1,844       Hennes & Mauritz AB, Class B      72,166   
  3,445       Hexpol AB, Class B      33,757   
  768       Indutrade AB      36,903   
  2,293       Intrum Justitia AB      82,906   
  1,300       JM AB      37,021   
  2,502       Loomis AB, Class B      65,269   
  1,304       NIBE Industrier AB, Class B      42,249   
  2,859       Skandinaviska Enskilda Banken AB, Class A      30,270   
     

 

 

  
        582,915  
     

 

 

  
   Switzerland—2.2%   
  17       Belimo Holding AG      36,561   
  81       EMS-CHEMIE HOLDING AG      34,388   
  65       Galenica AG      95,612   
  105       Geberit AG      34,011   
  20       Givaudan SA      35,912   
  2,068       Mobilezone Holding AG      30,734   
  118       Partners Group Holding AG      42,855   
  252       Sonova Holding AG      34,512   
  255       Syngenta AG      86,091   
     

 

 

  
        430,676  
     

 

 

  
   United Kingdom—17.7%   
  5,820       Aberdeen Asset Management PLC      31,163   
  1,594       Admiral Group PLC      39,708   
  2,203       ARM Holdings PLC      34,874   
  8,160       Ashmore Group PLC      34,026   
  1,529       Associated British Foods PLC      81,586   
  1,068       AstraZeneca PLC      68,459   
  2,133       Babcock International Group PLC      31,756   
  10,620       BBA Aviation PLC      31,278   
  1,002       Bellway PLC      40,173   
  2,216       Berendsen PLC      35,079   
  4,241       BG Group PLC      67,135   
  2,076       Bovis Homes Group PLC      32,863   
  1,905       British American Tobacco PLC      113,550   
  1,294       Bunzl PLC      37,151   
  3,559       Capita PLC      70,081   
  6,658       Carillion PLC      31,413   
  832       Croda International PLC      37,238   
  2,272       Dechra Pharmaceuticals PLC      34,019   
  2,400       Diageo PLC      69,628   
  5,613       Diploma PLC      55,610   
  2,307       Essentra PLC      30,000   
  1,018       Fidessa Group PLC      30,799   
  1,350       Galliford Try PLC      31,212   
  3,067       Genus PLC      68,919   
Number
of Shares		           Value  
   Common Stocks (continued)   
   United Kingdom (continued)   
  1,971       Greggs PLC    $ 36,163   
  5,995       Halma PLC      70,690   
  2,055       Hargreaves Lansdown PLC      45,829   
  1,961       IMI PLC      28,862   
  7,328       Intermediate Capital Group PLC      64,056   
  4,953       International Personal Finance PLC      28,310   
  2,895       Intertek Group PLC      117,365   
  13,570       ITE Group PLC      29,393   
  8,811       J Sainsbury PLC      36,251   
  3,148       JD Sports Fashion PLC      46,940   
  3,777       John Wood Group PLC      34,824   
  14,329       Lookers PLC      38,926   
  16,040       Man Group PLC      41,394   
  14,288       Mitie Group PLC      70,921   
  14,042       N Brown Group PLC      81,302   
  598       Next PLC      73,884   
  5,919       Paragon Group of Cos. PLC (The)      38,393   
  1,193       Persimmon PLC      36,739   
  787       Provident Financial PLC      42,176   
  1,081       Rathbone Brothers PLC      37,697   
  1,200       Reckitt Benckiser Group PLC      117,572   
  10,353       Redrow PLC      74,206   
  1,014       Renishaw PLC      29,598   
  3,280       Restaurant Group PLC (The)      36,321   
  710       Rightmove PLC      42,095   
  20,032       Rotork PLC      57,977   
  1,350       SABMiller PLC      83,293   
  4,432       Sage Group PLC (The)      37,304   
  2,346       Savills PLC      33,188   
  8,153       Senior PLC      28,557   
  53,439       Serco Group PLC(a)      77,332   
  1,372       Spirax-Sarco Engineering PLC      64,436   
  1,446       SSE PLC      33,833   
  4,556       Standard Chartered PLC      50,760   
  1,575       Ted Baker PLC      73,630   
  33,323       Tesco PLC(a)      94,334   
  1,088       Travis Perkins PLC      32,195   
  1,181       Victrex PLC      33,743   
  1,465       WH Smith PLC      38,576   
  901       Whitbread PLC      69,102   
  26,794       WM Morrison Supermarkets PLC      69,726   
  3,166       WPP PLC      71,290   
     

 

 

  
        3,386,903  
     

 

 

  
   Total Investments
(Cost $18,399,308)—99.9%		      19,152,046   
   Other assets less liabilities—0.1%      28,340  
     

 

 

  
   Net Assets—100.0%    $ 19,180,386  
     

 

 

  

Notes to Schedule of Investments:

(a)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   90  

 

 

 

(This Page Intentionally Left Blank)

 

Statements of Assets and Liabilities

October 31, 2015

 

        
PowerShares
Developed
EuroPacific
Currency Hedged
Low Volatility
Portfolio (FXEP)		      PowerShares
DWA Developed
Markets
Momentum
Portfolio (PIZ)		      PowerShares
DWA Emerging
Markets
Momentum
Portfolio (PIE)		      PowerShares
Emerging
Markets
Infrastructure
Portfolio (PXR)		  
Assets:           

Unaffiliated investments, at value(a)

   $ 2,654,340       $ 263,885,580       $ 195,934,968       $ 27,912,981   

Affiliated investments, at value

     351         —         230,299         939,825   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     2,654,691         263,885,580         196,165,267         28,852,806   

Foreign currencies, at value

     363         1,123,681         91,151         6,627   

Cash

     —         —         8,611         —   

Cash segregated as collateral

     —         —         —         —   

Receivables:

           

Dividends

     3,006         197,194         119,014         24,467   

Investments sold

     389         47,836         47,431         —   

Foreign tax reclaims

     24         842,694         33,585         1,189   

Settlement proceeds

     —         7,240         —         —   

Securities lending

     —         —         —         3,220   

Shares sold

     —         —         —         —   

Unrealized appreciation on forward foreign currency contracts outstanding

     15,337         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     2,673,810         266,104,225         196,465,059         28,888,309   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     25         759,928         —         50,101   

Due to foreign custodian

     —         —         —         —   

Payables:

           

Investments purchased

     392         1,134,084         47,538         —   

Collateral upon return of securities loaned

     —         —         —         939,825   

Collateral upon return of securities in-kind

     —         —         —         —   

Shares repurchased

     —         —         —         —   

Unrealized depreciation on forward foreign currency contracts outstanding

     16,912         —         —         —   

Accrued unitary management fees

     413         179,844         149,080         17,931   

Accrued expenses

     —         33,991         374         8,790   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     17,742         2,107,847         196,992         1,016,647   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 2,656,068       $ 263,996,378       $ 196,268,067       $ 27,871,662   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 2,566,867       $ 364,613,039       $ 321,779,972       $ 68,137,853   

Undistributed net investment income (loss)

     3,221         688,386         751,831         74,208   

Undistributed net realized gain (loss)

     75         (115,077,106 )       (130,864,213 )       (33,616,773 ) 

Net unrealized appreciation (depreciation)

     85,905         13,772,059         4,600,477         (6,723,626 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 2,656,068       $ 263,996,378       $ 196,268,067       $ 27,871,662   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     100,001         11,300,000         12,250,000         900,000   

Net asset value

   $ 26.56       $ 23.36       $ 16.02       $ 30.97   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 26.52       $ 23.21       $ 15.97       $ 30.67   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 2,566,859       $ 250,020,325       $ 191,306,052       $ 34,636,617   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ 351       $ —       $ 230,299       $ 939,825   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 2,567,210       $ 250,020,325       $ 191,536,351       $ 35,576,442   
 

 

 

     

 

 

     

 

 

     

 

 

  

Foreign currencies, at cost

   $ 360       $ 1,124,514       $ 92,620       $ 6,524   
 

 

 

     

 

 

     

 

 

     

 

 

  

(a) Includes securities on loan with an aggregate value of:

   $ —       $ —       $ —       $ 934,381   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   92  

 

 

 

PowerShares
Europe Currency
Hedged Low
Volatility
Portfolio (FXEU)		      PowerShares
FTSE RAFI
Asia Pacific
ex-Japan
Portfolio (PAF)		      PowerShares
FTSE RAFI
Developed
Markets
ex-U.S.
Portfolio (PXF)		      PowerShares
FTSE RAFI
Developed
Markets
ex-U.S.
Small-Mid
Portfolio (PDN)		      PowerShares
FTSE RAFI
Emerging
Markets
Portfolio (PXH)		      PowerShares
Global
Agriculture
Portfolio  (PAGG)		      PowerShares
Global Clean
Energy
Portfolio  (PBD)		      PowerShares
Global Gold and
Precious Metals
Portfolio (PSAU)		  
                    
$ 172,737,489       $ 22,542,667       $ 786,012,458       $ 143,402,715       $ 290,668,844       $ 27,585,686       $ 66,789,302       $ 17,477,802   
  40,083         28,199         11,818,396         4,041,873         2,674,520         74,853         6,516,215         75,330   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  172,777,572         22,570,866         797,830,854         147,444,588         293,343,364         27,660,539         73,305,517         17,553,132   
  50,397         6,337         89,348         —         20,866         7,212         6,270         —   
  —         —         —         —         —         —         —         —   
  —         —         —         5,872         —         —         9,970         —   
                    
  17,760         10,419         1,717,232         324,554         427,833         40,689         48,067         3,993   
  68,028         124         369,754         89,101         10,240         5,138         6,333         141,050   
  40,812         —         1,280,056         93,664         7,997         205,435         67,506         2,653   
  —         —         11         139         7,257         —         234,653         —   
  —         —         35,045         5,916         —         1,883         23,675         216   
  —         —         —         5,592         —         —         —         —   
  1,726,423         —         —         —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  174,680,992         22,587,746         801,322,300         147,969,426         293,817,557         27,920,896         73,701,991         17,701,044   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  1,030         —         1,493,776         161,370         284,651         212,400         353,597         1,143   
  —         —         —         49,338         —         —         —         —   
                    
  1,810,761         124         87,452         21,876         10,263         5,141         6,377         —   
  —         —         11,818,396         4,041,873         —         74,853         6,516,215         75,330   
  —         —         —         5,872         —         —         9,970         —   
  —         —         —         —         —         —         —         141,050   
  21,932         —         —         —         —         —         —         —   
  35,302         9,360         296,141         59,078         124,998         18,244         41,956         12,286   
  —         —         90,537         9,358         —         6,232         11,803         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  1,869,025         9,484         13,786,302         4,348,765         419,912         316,870         6,939,918         229,809   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 172,811,967       $ 22,578,262       $ 787,535,998       $ 143,620,661       $ 293,397,645       $ 27,604,026       $ 66,762,073       $ 17,471,235   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
$ 169,744,737       $ 35,109,235       $ 886,424,021       $ 148,222,044       $ 479,463,965       $ 46,120,158       $ 282,689,071       $ 48,717,759   
  1,093,304         60,032         3,524,101         (53,616 )       1,841,046         104,045         177,490         22,670   
  (3,520,309 )       (8,782,147 )       (45,200,719 )       (10,521,382 )       (113,219,118 )       (9,094,886 )       (218,211,303 )       (13,403,771 ) 
  5,494,235         (3,808,858 )       (57,211,405 )       5,973,615         (74,688,248 )       (9,525,291 )       2,106,815         (17,865,423 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 172,811,967       $ 22,578,262       $ 787,535,998       $ 143,620,661       $ 293,397,645       $ 27,604,026       $ 66,762,073       $ 17,471,235   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  6,850,001         500,000         20,400,000         5,400,000         19,000,000         1,100,000         5,825,000         1,350,000   
$ 25.23       $ 45.16       $ 38.60       $ 26.60       $ 15.44       $ 25.09       $ 11.46       $ 12.94   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 25.21       $ 45.08       $ 38.34       $ 26.66       $ 15.37       $ 25.05       $ 11.46       $ 12.89   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 168,947,266       $ 26,351,508       $ 843,111,114       $ 137,418,754       $ 364,943,406       $ 37,090,718       $ 64,668,569       $ 35,342,525   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 40,083       $ 28,199       $ 11,818,396       $ 4,041,873       $ 3,047,454       $ 74,853       $ 6,516,215       $ 75,330   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 168,987,349       $ 26,379,707       $ 854,929,510       $ 141,460,627       $ 367,990,860       $ 37,165,571       $ 71,184,784       $ 35,417,855   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 50,004       $ 6,289       $ 89,141       $ (49,193 )     $ 20,880       $ 7,090       $ 6,268       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ —       $ 11,225,071       $ 3,817,217       $ —       $ 71,523       $ 6,083,508       $ 70,843   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   93  

 

 

Statements of Assets and Liabilities (continued)

October 31, 2015

 

    PowerShares
Global Water
Portfolio (PIO)		      PowerShares
International
BuyBack
Achievers™
Portfolio (IPKW)		      PowerShares
Japan Currency
Hedged Low
Volatility
Portfolio (FXJP)		          
PowerShares
S&P
International
Developed High
Quality
Portfolio  (IDHQ)		  
Assets:           

Unaffiliated investments, at value

   $ 242,076,250       $ 58,097,392       $ 2,676,529       $ 19,152,046   

Affiliated investments, at value

     —         —         50         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     242,076,250         58,097,392         2,676,579         19,152,046   

Cash segregated as collateral

     —         4,304,239         —         —   

Receivables:

           

Dividends

     176,310         137,951         655         41,652   

Investments sold

     —         3,038,612         —         4,159   

Foreign tax reclaims

     316,602         24,455         —         38,362   

Settlement proceeds

     51,739         —         —         631   

Securities lending

     529         —         —         —   

Unrealized appreciation on forward foreign currency contracts outstanding

     —         —         10,616         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     242,621,430         65,602,649         2,687,850         19,236,850   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     598,244         107,961         25         35,377   

Due to foreign custodian

     —         21,307         —         694   

Payables:

           

Investments purchased

     —         3,044,287         —         4,186   

Collateral upon return of securities in-kind

     —         4,304,239         —         —   

Unrealized depreciation on forward foreign currency contracts outstanding

     —         —         264         —   

Accrued unitary management fees

     153,765         26,174         413         7,197   

Accrued expenses

     37,741         —         —         9,010   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     789,750         7,503,968         702         56,464   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 241,831,680       $ 58,098,681       $ 2,687,148       $ 19,180,386   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 364,758,735       $ 61,441,634       $ 2,542,510       $ 66,312,060   

Undistributed net investment income

     473,641         305,392         243         63,450   

Undistributed net realized gain (loss)

     (162,240,534 )       (3,137,623 )       —         (47,941,712 ) 

Net unrealized appreciation (depreciation)

     38,839,838         (510,722 )       144,395         746,588   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 241,831,680       $ 58,098,681       $ 2,687,148       $ 19,180,386   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     11,050,000         2,150,000         100,001         950,000   

Net asset value

   $ 21.89       $ 27.02       $ 26.87       $ 20.19   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 21.77       $ 26.96       $ 26.70       $ 20.14   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 203,211,329       $ 58,606,177       $ 2,542,485       $ 18,399,308   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ —       $ —       $ 50       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 203,211,329       $ 58,606,177       $ 2,542,535       $ 18,399,308   
 

 

 

     

 

 

     

 

 

     

 

 

  

Foreign currencies, at cost

   $ —       $ (21,429 )     $ —       $ (743 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   94  

 

 

 

(This Page Intentionally Left Blank)

 

Statements of Operations

For the year ended October 31, 2015

 

        
PowerShares
Developed
EuroPacific
Currency Hedged
Low Volatility
Portfolio (FXEP)(a)		      PowerShares
DWA Developed
Markets
Momentum
Portfolio (PIZ)		      PowerShares
DWA Emerging
Markets
Momentum
Portfolio (PIE)		      PowerShares
Emerging
Markets
Infrastructure
Portfolio (PXR)		  
Investment Income:           

Unaffiliated dividend income

   $ 4,012       $ 7,209,069       $ 5,554,472       $ 871,224   

Affiliated dividend income

     —         221         359         20   

Securities lending income

     —         —         —         18,373   

Foreign withholding tax

     (222 )       (560,070 )       (793,503 )       (86,577 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     3,790         6,649,220         4,761,328         803,040   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:           

Unitary management fees

     413         2,786,467         2,714,298         244,521   

Professional fees

     —         26,856         374         6,938   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Expenses

     413         2,813,323         2,714,672         251,459   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     —         (597 )       (1,036 )       (76 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     413         2,812,726         2,713,636         251,383   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income

     3,377         3,836,494         2,047,692         551,657   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):           

Net realized gain (loss) from:

           

Investment securities

     75         (52,122,296 )       (38,618,474 )       (3,442,757 ) 

In-kind redemptions

     —         15,819,981         4,856,884         10,235   

Foreign currencies

     (156 )       1,952         141,450         (18,229 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     (81 )       (36,300,363 )       (33,620,140 )       (3,450,751 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Change in net unrealized appreciation (depreciation) on:

           

Investment securities

     87,481         11,268,153         (29,025,238 )       (1,877,695 ) 

Foreign currencies

     (1,576 )       (49,434 )       (25,069 )       82   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation)

     85,905         11,218,719         (29,050,307 )       (1,877,613 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     85,824         (25,081,644 )       (62,670,447 )       (5,328,364 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ 89,201       $ (21,245,150 )     $ (60,622,755 )     $ (4,776,707 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period October 6, 2015 (commencement of investment operations) through October 31, 2015.
(b)  For the period May 4, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   96  

 

 

 

PowerShares
Europe Currency
Hedged Low
Volatility
Portfolio (FXEU)(b)		      PowerShares
FTSE RAFI
Asia Pacific
ex-Japan
Portfolio (PAF)		      PowerShares
FTSE RAFI
Developed
Markets
ex-U.S.
Portfolio (PXF)		      PowerShares
FTSE RAFI
Developed
Markets
ex-U.S.
Small-Mid
Portfolio (PDN)		      PowerShares
FTSE RAFI
Emerging
Markets
Portfolio (PXH)		      PowerShares
Global
Agriculture
Portfolio  (PAGG)		      PowerShares
Global Clean
Energy
Portfolio (PBD)		      PowerShares
Global Gold and
Precious Metals
Portfolio (PSAU)		  
                    
$ 617,632       $ 1,717,169       $ 29,729,255       $ 2,889,882       $ 14,217,170       $ 1,533,958       $ 1,064,550       $ 333,025   
  41         38         160         18         17,560         11         —         —   
  —         —         582,345         45,497         —         21,145         305,893         5,721   
  (78,273 )       (60,000 )       (2,691,638 )       (334,581 )       (1,487,046 )       (141,592 )       (104,918 )       (30,993 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  539,400         1,657,207         27,620,122         2,600,816         12,747,684         1,413,522         1,265,525         307,753   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  112,167         183,936         3,730,013         571,695         1,856,371         341,165         506,407         185,874   
  —         —         74,296         7,597         —         4,896         11,192         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  112,167         183,936         3,804,309         579,292         1,856,371         346,061         517,599         185,874   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (88 )       (121 )       (640 )       (78 )       (16,195 )       (44 )       —         (12 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  112,079         183,815         3,803,669         579,214         1,840,176         346,017         517,599         185,862   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  427,321         1,473,392         23,816,453         2,021,602         10,907,508         1,067,505         747,926         121,891   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
                    
  (1,363,869 )       (1,798,263 )       (10,900,828 )       (1,777,110 )       (55,871,978 )       (1,512,036 )       (2,224,013 )       (5,769,749 ) 
  –         (303,002 )       45,612,455         2,622,459         6,330,732         29,430         2,400,597         (2,695,331 ) 
  (1,471,279 )       (48,585 )       (322,778 )       (40,799 )       (606,693 )       9,166         (37,228 )       1,064   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (2,835,148 )       (2,149,850 )       34,388,849         804,550         (50,147,939 )       (1,473,440 )       139,356         (8,464,016 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  3,790,223         (6,647,595 )       (91,786,112 )       1,293,165         (54,063,226 )       (4,353,407 )       (6,852,642 )       871,817   
  1,704,012         31         (19,526 )       471         (27,091 )       (8,209 )       (6,323 )       (11 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  5,494,235         (6,647,564 )       (91,805,638 )       1,293,636         (54,090,317 )       (4,361,616 )       (6,858,965 )       871,806   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  2,659,087         (8,797,414 )       (57,416,789 )       2,098,186         (104,238,256 )       (5,835,056 )       (6,719,609 )       (7,592,210 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 3,086,408       $ (7,324,022 )     $ (33,600,336 )     $ 4,119,788       $ (93,330,748 )     $ (4,767,551 )     $ (5,971,683 )     $ (7,470,319 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   97  

 

 

Statements of Operations (continued)

For the year ended October 31, 2015

 

    PowerShares
Global Water
Portfolio (PIO)		      PowerShares
International
BuyBack
Achievers™
Portfolio (IPKW)		      PowerShares
Japan Currency
Hedged Low
Volatility
Portfolio (FXJP)(a)		          
PowerShares
S&P
International
Developed High
Quality
Portfolio  (IDHQ)		  
Investment Income:           

Unaffiliated dividend income

   $ 5,484,961       $ 845,913       $ 729       $ 417,717   

Affiliated dividend income

     59         8         —         4   

Securities lending income

     329,601         —         —         —   

Foreign withholding tax

     (360,718 )       (89,631 )       (73 )       (39,433 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     5,453,903         756,290         656         378,288   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:           

Unitary management fees

     2,013,387         186,865         413         78,881   

Professional fees

     32,250         —         —         7,833   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Expenses

     2,045,637         186,865         413         86,714   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     (202 )       (47 )       —         (13 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     2,045,435         186,818         413         86,701   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income

     3,408,468         569,472         243         291,587   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):           

Net realized gain (loss) from:

           

Investment securities

     (8,164,239 )       (2,336,929 )       —         71,251   

In-kind redemptions

     10,320,269         2,747,817         —         —   

Foreign currencies

     42,846         (74,505 )       —         (12,301 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     2,198,876         336,383         —         58,950   
 

 

 

     

 

 

     

 

 

     

 

 

  

Change in net unrealized appreciation (depreciation) on:

           

Investment securities

     (20,229,499 )       (75,120 )       134,044         530,564   

Foreign currencies

     (7,583 )       140         10,351         (2,837 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation)

     (20,237,082 )       (74,980 )       144,395         527,727   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     (18,038,206 )       261,403         144,395         586,677   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ (14,629,738 )     $ 830,875       $ 144,638       $ 878,264   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period October 6, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   98  

 

 

 

(This Page Intentionally Left Blank)

 

Statements of Changes in Net Assets

For the years ended October 31, 2015 and 2014

 

        
PowerShares Developed
EuroPacific Currency
Hedged Low Volatility
Portfolio (FXEP)		      PowerShares DWA Developed
Markets Momentum Portfolio (PIZ)		  
    2015(a)      2015      2014  
Operations:        

Net investment income

   $ 3,377       $ 3,836,494       $ 9,271,181   

Net realized gain (loss)

     (81 )       (36,300,363 )       37,707,992   

Net change in unrealized appreciation (depreciation)

     85,905         11,218,719         (57,296,762 ) 
 

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     89,201         (21,245,150 )       (10,317,589 ) 
 

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:        

Net investment income

     —         (4,075,936 )       (19,746,499 ) 
 

 

 

     

 

 

     

 

 

  
Shareholder Transactions:        

Proceeds from shares sold

     2,566,867         135,238,189         311,166,213   

Value of shares repurchased

     —         (229,242,363 )       (405,591,504 ) 

Transaction fees

     —         —         —   
 

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     2,566,867         (94,004,174 )       (94,425,291 ) 
 

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     2,656,068         (119,325,260 )       (124,489,379 ) 
 

 

 

     

 

 

     

 

 

  
Net Assets:        

Beginning of year

     —         383,321,638         507,811,017   
 

 

 

     

 

 

     

 

 

  

End of year

   $ 2,656,068       $ 263,996,378       $ 383,321,638   
 

 

 

     

 

 

     

 

 

  

Undistributed net investment income (loss) at end of year

   $ 3,221       $ 688,386       $ 669,969   
 

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:        

Shares sold

     100,001         5,300,000         11,800,000   

Shares repurchased

     —         (9,650,000 )       (16,150,000 ) 

Shares outstanding, beginning of year

     —         15,650,000         20,000,000   
 

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     100,001         11,300,000         15,650,000   
 

 

 

     

 

 

     

 

 

  

 

(a)  For the period October 6, 2015 (commencement of investment operations) through October 31, 2015.
(b)  For the period May 4, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   100  

 

 

 

PowerShares DWA Emerging
Markets Momentum
Portfolio (PIE)		      PowerShares Emerging Markets
Infrastructure Portfolio (PXR)		      PowerShares
Europe Currency
Hedged Low
Volatility
Portfolio (FXEU)		      PowerShares FTSE RAFI Asia
Pacific ex-Japan
Portfolio (PAF)		  
2015      2014      2015      2014      2015(b)      2015      2014  
                 
$ 2,047,692       $ 2,292,162       $ 551,657       $ 701,169       $ 427,321       $ 1,473,392       $ 1,448,186   
  (33,620,140 )       (3,325,452 )       (3,450,751 )       (5,039,432 )       (2,835,148 )       (2,149,850 )       (417,744 ) 
  (29,050,307 )       (4,914,207 )       (1,877,613 )       2,041,460         5,494,235         (6,647,564 )       (2,632,266 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (60,622,755 )       (5,947,497 )       (4,776,707 )       (2,296,803 )       3,086,408         (7,324,022 )       (1,601,824 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
  (1,862,258 )       (2,061,393 )       (562,003 )       (866,127 )       (19,178 )       (1,354,446 )       (1,506,901 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
  77,328,655         130,567,570         —         —         169,744,737         —         2,886,304   
  (221,746,185 )       (94,058,340 )       (3,600,407 )       (31,640,904 )       —         (13,112,366 )       (5,269,795 ) 
  486,827         391,617         —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (143,930,703 )       36,900,847         (3,600,407 )       (31,640,904 )       169,744,737         (13,112,366 )       (2,383,491 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (206,415,716 )       28,891,957         (8,939,117 )       (34,803,834 )       172,811,967         (21,790,834 )       (5,492,216 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
  402,683,783         373,791,826         36,810,779         71,614,613         —         44,369,096         49,861,312   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 196,268,067       $ 402,683,783       $ 27,871,662       $ 36,810,779       $ 172,811,967       $ 22,578,262       $ 44,369,096   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 751,831       $ 421,844       $ 74,208       $ 94,673       $ 1,093,304       $ 60,032       $ (145,244 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
  4,100,000         6,800,000         —         —         6,850,001         —         50,000   
  (13,150,000 )       (5,400,000 )       (100,000 )       (850,000 )       —         (300,000 )       (100,000 ) 
  21,300,000         19,900,000         1,000,000         1,850,000         —         800,000         850,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  12,250,000         21,300,000         900,000         1,000,000         6,850,001         500,000         800,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   101  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

    PowerShares FTSE RAFI
Developed Markets ex-U.S.
Portfolio (PXF)		      PowerShares FTSE RAFI
Developed Markets ex-U.S.
Small-Mid Portfolio (PDN)		  
    2015      2014      2015      2014  
Operations:           

Net investment income

   $ 23,816,453       $ 27,562,730       $ 2,021,602       $ 1,909,337   

Net realized gain (loss)

     34,388,849         10,243,831         804,550         2,865,338   

Net change in unrealized appreciation (depreciation)

     (91,805,638 )       (49,575,018 )       1,293,636         (6,119,580 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     (33,600,336 )       (11,768,457 )       4,119,788         (1,344,905 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (22,728,390 )       (27,361,461 )       (1,894,365 )       (2,395,852 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     293,870,441         199,826,851         42,312,799         21,913,241   

Value of shares repurchased

     (212,273,153 )       (47,601,251 )       (6,832,131 )       (10,913,823 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     81,597,288         152,225,600         35,480,668         10,999,418   
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     25,268,562         113,095,682         37,706,091         7,258,661   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     762,267,436         649,171,754         105,914,570         98,655,909   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 787,535,998       $ 762,267,436       $ 143,620,661       $ 105,914,570   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income (loss) at end of year

   $ 3,524,101       $ 2,257,033       $ (53,616 )     $ (292,145 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     7,200,000         4,600,000         1,650,000         800,000   

Shares repurchased

     (5,300,000 )       (1,200,000 )       (250,000 )       (400,000 ) 

Shares outstanding, beginning of year

     18,500,000         15,100,000         4,000,000         3,600,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     20,400,000         18,500,000         5,400,000         4,000,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   102  

 

 

 

PowerShares FTSE RAFI
Emerging Markets Portfolio (PXH)		      PowerShares Global Agriculture
Portfolio (PAGG)		      PowerShares Global Clean
Energy Portfolio (PBD)		      PowerShares Global Gold and
Precious Metals Portfolio
(PSAU)		  
2015      2014      2015      2014      2015      2014      2015      2014  
                    
$ 10,907,508       $ 10,785,075       $ 1,067,505       $ 1,770,194       $ 747,926       $ 767,860       $ 121,891       $ 58,047   
  (50,147,939 )       (13,258,817 )       (1,473,440 )       2,236,134         139,356         10,052,345         (8,464,016 )       (4,867,234 ) 
  (54,090,317 )       (7,326,982 )       (4,361,616 )       (2,471,744 )       (6,858,965 )       (6,536,315 )       871,806         (2,732,678 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (93,330,748 )       (9,800,724 )       (4,767,551 )       1,534,584         (5,971,683 )       4,283,890         (7,470,319 )       (7,541,865 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  (9,357,675 )       (11,183,593 )       (1,114,870 )       (1,765,946 )       (700,178 )       (739,610 )       (138,487 )       (57,809 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  130,069,015         65,452,567         —         6,081,424         7,312,370         24,799,347         31,431,974         3,996,807   
  (121,183,360 )       (24,369,768 )       (22,211,750 )       (43,384,847 )       (11,166,396 )       (32,055,458 )       (24,650,928 )       (7,945,650 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  8,885,655         41,082,799         (22,211,750 )       (37,303,423 )       (3,854,026 )       (7,256,111 )       6,781,046         (3,948,843 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (93,802,768 )       20,098,482         (28,094,171 )       (37,534,785 )       (10,525,887 )       (3,711,831 )       (827,760 )       (11,548,517 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  387,200,413         367,101,931         55,698,197         93,232,982         77,287,960         80,999,791         18,298,995         29,847,512   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 293,397,645       $ 387,200,413       $ 27,604,026       $ 55,698,197       $ 66,762,073       $ 77,287,960       $ 17,471,235       $ 18,298,995   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 1,841,046       $ 721,152       $ 104,045       $ 142,244       $ 177,490       $ 145,226       $ 22,670       $ (20,267 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  6,950,000         3,100,000         —         200,000         600,000         1,925,000         1,700,000         200,000   
  (6,950,000 )       (1,250,000 )       (800,000 )       (1,450,000 )       (950,000 )       (2,475,000 )       (1,550,000 )       (400,000 ) 
  19,000,000         17,150,000         1,900,000         3,150,000         6,175,000         6,725,000         1,200,000         1,400,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  19,000,000         19,000,000         1,100,000         1,900,000         5,825,000         6,175,000         1,350,000         1,200,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   103  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

    PowerShares Global Water
Portfolio (PIO)		          
    
PowerShares International
BuyBack Achievers™
Portfolio (IPKW)		  
    2015      2014      2015      2014(a)  
Operations:           

Net investment income

   $ 3,408,468       $ 3,931,734       $ 569,472       $ 199,710   

Net realized gain (loss)

     2,198,876         3,309,732         336,383         (26,920 ) 

Net change in unrealized appreciation (depreciation)

     (20,237,082 )       11,516,481         (74,980 )       (435,742 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     (14,629,738 )       18,757,947         830,875         (262,952 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (3,532,866 )       (3,894,272 )       (349,993 )       (143,571 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     6,128,370         45,649,563         63,225,930         30,752,283   

Value of shares repurchased

     (34,501,225 )       —         (23,144,975 )       (12,808,916 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     (28,372,855 )       45,649,563         40,080,955         17,943,367   
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     (46,535,459 )       60,513,238         40,561,837         17,536,844   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     288,367,139         227,853,901         17,536,844         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 241,831,680       $ 288,367,139       $ 58,098,681       $ 17,536,844   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income at end of year

   $ 473,641       $ 555,193       $ 305,392       $ 32,149   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     250,000         1,950,000         2,300,000         1,200,001   

Shares repurchased

     (1,550,000 )       —         (850,000 )       (500,001 ) 

Shares outstanding, beginning of year

     12,350,000         10,400,000         700,000         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     11,050,000         12,350,000         2,150,000         700,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period February 24, 2014 (commencement of investment operations) through October 31, 2014.
(b)  For the period October 6, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   104  

 

 

 

PowerShares
Japan Currency
Hedged Low
Volatility
Portfolio (FXJP)		      PowerShares S&P International
Developed High Quality
Portfolio (IDHQ)		  
2015(b)      2015      2014  
     
$ 243       $ 291,587       $ 351,974   
  —         58,950         3,181,730   
  144,395         527,727         (3,142,382 ) 

 

 

     

 

 

     

 

 

  
  144,638         878,264         391,322   

 

 

     

 

 

     

 

 

  
     
  —         (270,592 )       (410,462 ) 

 

 

     

 

 

     

 

 

  
     
  2,542,510         2,067,429         7,221,935   
  —         —         (12,338,765 ) 

 

 

     

 

 

     

 

 

  
  2,542,510         2,067,429         (5,116,830 ) 

 

 

     

 

 

     

 

 

  
  2,687,148         2,675,101         (5,135,970 ) 

 

 

     

 

 

     

 

 

  
     
  —         16,505,285         21,641,255   

 

 

     

 

 

     

 

 

  
$ 2,687,148       $ 19,180,386       $ 16,505,285   

 

 

     

 

 

     

 

 

  
$ 243       $ 63,450       $ 47,602   

 

 

     

 

 

     

 

 

  
     
  100,001         100,000         350,000   
  —         —         (600,000 ) 
  —         850,000         1,100,000   

 

 

     

 

 

     

 

 

  
  100,001         950,000         850,000   

 

 

     

 

 

     

 

 

  

 

 

   105  

 

 

Financial Highlights

 

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP)

 

    For the Period
October 6, 2015(a)
Through
October 31, 2015		                     
                      
Per Share Operating Performance:             

Net asset value at beginning of period

   $ 25.66              

Net investment income(b)

     0.03              

Net realized and unrealized gain on investments

     0.87              

Total from investment operations

     0.90              

Net asset value at end of period

   $ 26.56             

Market price at end of period(c) 

   $ 26.52             
Net Asset Value Total Return(d)     3.51 %(e)            
Market Price Total Return(d)     3.35 %(e)            
Ratios/Supplemental Data:             

Net assets at end of period (000’s omitted)

   $ 2,656              

Ratio to average net assets of:

             

Expenses

     0.25 %(f)            

Net investment income

     2.05 %(f)            

Portfolio turnover rate(g)

     0 %(h)            

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (October 9, 2015, the first day of trading on the exchange) to October 31, 2015 was 2.47%. The market price total return from Fund Inception to October 31, 2015 was 2.20%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.
(h)  Amount represents less than 0.5%.

PowerShares DWA Developed Markets Momentum Portfolio (PIZ)

 

    Year Ended October 31,  
    2015     2014     2013      2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 24.49      $ 25.39      $ 19.33      $ 18.85      $ 20.85  

Net investment income(a)

     0.27        0.38        0.35         0.40         0.37   

Net realized and unrealized gain (loss) on investments

     (1.15 )      (0.43 )     6.00         0.56         (1.99 ) 

Total from investment operations

     (0.88 )      (0.05 )     6.35        0.96        (1.62 ) 

Distributions to shareholders from:

            

Net investment income

     (0.25 )      (0.85 )     (0.29 )      (0.48 )       (0.38 ) 

Net asset value at end of year

   $ 23.36      $ 24.49     $ 25.39       $ 19.33       $ 18.85   

Market price at end of year(b)

   $ 23.21      $ 24.55     $ 25.47      $ 19.44      $ 18.68  
Net Asset Value Total Return(c)     (3.63 )%      (0.35 )%      33.09 %       5.43 %       (7.81 )% 
Market Price Total Return(c)     (4.48 )%      (0.43 )%      32.75 %       6.99 %       (9.04 )% 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 263,996      $ 383,322      $ 507,811       $ 65,735       $ 64,075   

Ratio to average net assets of:

            

Expenses

     0.81 %      0.80 %      0.81 %       0.80 %       0.80 % 

Net investment income

     1.10 %      1.48 %      1.55 %       2.19 %       1.69 % 

Portfolio turnover rate(d)

     120 %      99 %      96 %       133 %       93 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   106  

 

 

Financial Highlights (continued)

 

PowerShares DWA Emerging Markets Momentum Portfolio (PIE)

 

    Year Ended October 31,  
    2015     2014      2013      2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 18.91      $ 18.78       $ 17.44      $ 16.33      $ 17.88  

Net investment income(a)

     0.12        0.13         0.24         0.19         0.20   

Net realized and unrealized gain (loss) on investments

     (2.94 )      0.08        1.24         1.12         (1.66 ) 

Total from investment operations

     (2.82 )      0.21        1.48        1.31        (1.46 ) 

Distributions to shareholders from:

             

Net investment income

     (0.10 )      (0.10 )      (0.16 )      (0.20 )       (0.09 ) 

Transaction fees(a)

     0.03        0.02        0.02          —        —  

Net asset value at end of year

   $ 16.02      $ 18.91      $ 18.78      $ 17.44      $ 16.33  

Market price at end of year(b)

   $ 15.97      $ 18.79      $ 18.76      $ 17.48      $ 16.26  
Net Asset Value Total Return(c)     (14.78 )%      1.27 %       8.66 %       8.12 %       (8.23 )% 
Market Price Total Return(c)     (14.50 )%      0.74 %       8.29 %       8.84 %       (9.18 )% 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 196,268      $ 402,684       $ 373,792       $ 182,842       $ 172,271   

Ratio to average net assets of:

             

Expenses

     0.90 %      0.90 %       0.91 %       0.90 %       0.90 % 

Net investment income

     0.68 %      0.69 %       1.26 %       1.12 %       1.12 % 

Portfolio turnover rate(d)

     176 %      147 %       142 %       181 %       147 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares Emerging Markets Infrastructure Portfolio (PXR)

 

    Year Ended October 31,  
    2015     2014     2013     2012      2011  
Per Share Operating Performance:           

Net asset value at beginning of year

   $ 36.81      $ 38.71      $ 40.15     $ 40.96      $ 49.91  

Net investment income(a)

     0.60        0.53        0.54        0.58         0.82   

Net realized and unrealized gain (loss) on investments

     (5.83 )      (1.74 )     (1.48 )      (0.57 )       (9.04 ) 

Total from investment operations

     (5.23 )      (1.21 )     (0.94 )     0.01        (8.22 ) 

Distributions to shareholders from:

           

Net investment income

     (0.61 )      (0.69 )     (0.50 )      (0.82 )       (0.73 ) 

Net asset value at end of year

   $ 30.97      $ 36.81     $ 38.71     $ 40.15      $ 40.96  

Market price at end of year(b) 

   $ 30.67      $ 36.62     $ 38.31     $ 39.90      $ 40.70  
Net Asset Value Total Return(c)     (14.36 )%      (3.16 )%      (2.35 )%      0.13 %       (16.67 )% 
Market Price Total Return(c)     (14.74 )%      (2.65 )%      (2.75 )%      0.15 %       (17.42 )% 
Ratios/Supplemental Data:           

Net assets at end of year (000’s omitted)

   $ 27,872      $ 36,811      $ 71,615      $ 94,351       $ 131,067   

Ratio to average net assets of:

           

Expenses

     0.77 %      0.76 %      0.76 %      0.75 %       0.75 % 

Net investment income

     1.69 %      1.42 %      1.35 %      1.46 %       1.62 % 

Portfolio turnover rate(d)

     34 %      20 %      30 %      20 %       34 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)

 

    For the Period
May 4, 2015(a)
Through
October 31, 2015		                     
                      
Per Share Operating Performance:             

Net asset value at beginning of period

   $ 25.14              

Net investment income(b)

     0.11              

Net realized and unrealized gain on investments

     0.17              

Total from investment operations

     0.28              

Distributions to shareholders from:

             

Net investment income

     (0.19 )            

Net asset value at end of period

   $ 25.23              

Market price at end of period(c) 

   $ 25.21              
Net Asset Value Total Return(d)     1.16 %(e)            
Market Price Total Return(d)     1.08 %(e)            
Ratios/Supplemental Data:             

Net assets at end of period (000’s omitted)

   $ 172,812              

Ratio to average net assets of:

             

Expenses

     0.25 %(f)            

Net investment income

     0.95 %(f)            

Portfolio turnover rate(g)

     26 %            

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (May 7, 2015, the first day of trading on the exchange) to October 31, 2015 was 3.68%. The market price total return from Fund Inception to October 31, 2015 was 3.25%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)

 

    Year Ended October 31,  
    2015     2014     2013      2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 55.46      $ 58.66      $ 54.04      $ 51.15      $ 51.72  

Net investment income(a)

     1.98 (b)      1.77        1.54         1.37         1.40   

Net realized and unrealized gain (loss) on investments

     (10.57 )      (3.17 )     5.07         2.99         (0.62 ) 

Total from investment operations

     (8.59 )      (1.40 )     6.61        4.36        0.78  

Distributions to shareholders from:

            

Net investment income

     (1.71 )      (1.80 )     (1.99 )      (1.47 )       (1.35 ) 

Net asset value at end of year

   $ 45.16      $ 55.46     $ 58.66      $ 54.04      $ 51.15  

Market price at end of year(c)

   $ 45.08      $ 55.40     $ 58.38      $ 53.84      $ 50.78  
Net Asset Value Total Return(d)     (15.78 )%      (2.38 )%      12.50 %       8.92 %       1.44 % 
Market Price Total Return(d)     (15.83 )%      (2.02 )%      12.38 %       9.33 %       0.16 % 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 22,578      $ 44,369      $ 49,861       $ 56,743       $ 63,934   

Ratio to average net assets of:

            

Expenses, after Waivers

     0.49 %      0.49 %      0.51 %       0.80 %       0.80 % 

Expenses, prior to Waivers

     0.49 %      0.49 %      0.53 %       0.80 %       0.80 % 

Net investment income, after Waivers

     3.93 %(b)      3.10 %      2.74 %       2.72 %       2.52 % 

Portfolio turnover rate(e)

     19 %      16 %      32 %       14 %       22 % 

 

(a)  Based on average shares outstanding.
(b)  Net investment income per share and the ratio of net investment income to average net assets include a significant dividend received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividend are $1.75 and 3.46%, respectively.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)

 

    Year Ended October 31,  
    2015     2014     2013      2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 41.20      $ 42.99      $ 34.18      $ 35.10      $ 39.00  

Net investment income(a)

     1.16        1.55 (b)      1.08         0.99         1.01   

Net realized and unrealized gain (loss) on investments

     (2.65 )      (1.79 )     8.75         (0.90 )       (3.71 ) 

Total from investment operations

     (1.49 )      (0.24 )     9.83         0.09        (2.70 ) 

Distributions to shareholders from:

            

Net investment income

     (1.11 )      (1.55 )     (1.02 )       (1.01 )       (1.20 ) 

Net asset value at end of year

   $ 38.60      $ 41.20     $ 42.99       $ 34.18      $ 35.10  

Market price at end of year(c)

   $ 38.34      $ 41.71     $ 43.23       $ 34.29      $ 34.59  
Net Asset Value Total Return(d)     (3.72 )%      (0.72 )%      29.20 %       0.53 %       (7.08 )% 
Market Price Total Return(d)     (5.55 )%      (0.07 )%      29.49 %       2.35 %       (9.45 )% 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 787,536      $ 762,267      $ 649,172       $ 283,715       $ 245,693   

Ratio to average net assets of:

            

Expenses, after Waivers

     0.46 %      0.45 %      0.48 %       0.75 %       0.75 % 

Expenses, prior to Waivers

     0.46 %      0.45 %      0.49 %       0.75 %       0.75 % 

Net investment income, after Waivers

     2.87 %      3.57 %(b)      2.82 %       2.99 %       2.59 % 

Portfolio turnover rate(e)

     12 %      16 %      17 %       17 %       17 % 

 

(a)  Based on average shares outstanding.
(b)  Net investment income per share and the ratio of net investment income to average net assets include a significant dividend received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividend are $1.31 and 3.00%, respectively.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)

 

    Year Ended October 31,  
    2015      2014     2013      2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 26.48       $ 27.40      $ 22.18      $ 22.40      $ 22.99  

Net investment income(a)

     0.46         0.48        0.44         0.40         0.45   

Net realized and unrealized gain (loss) on investments

     0.12         (0.79 )     5.36         (0.15 )       (0.40 ) 

Total from investment operations

     0.58         (0.31 )     5.80         0.25        0.05  

Distributions to shareholders from:

             

Net investment income

     (0.46 )       (0.61 )     (0.58 )       (0.47 )       (0.64 ) 

Net asset value at end of year

   $ 26.60       $ 26.48     $ 27.40       $ 22.18      $ 22.40  

Market price at end of year(b)

   $ 26.66       $ 27.11     $ 27.87       $ 22.30      $ 21.86  
Net Asset Value Total Return(c)     2.18 %       (1.21 )%      26.56 %       1.32 %       0.09 % 
Market Price Total Return(c)     0.01 %       (0.58 )%      28.00 %       4.40 %       (3.56 )% 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 143,621       $ 105,915      $ 98,656       $ 59,880       $ 64,965   

Ratio to average net assets of:

             

Expenses, after Waivers

     0.50 %       0.49 %      0.52 %       0.75 %       0.75 % 

Expenses, prior to Waivers

     0.50 %       0.49 %      0.54 %       0.75 %       0.75 % 

Net investment income, after Waivers

     1.73 %       1.73 %      1.78 %       1.84 %       1.82 % 

Portfolio turnover rate(d)

     24 %       24 %      27 %       28 %       75 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)

 

    Year Ended October 31,  
    2015     2014     2013      2012     2011  
Per Share Operating Performance:           

Net asset value at beginning of year

   $ 20.38      $ 21.41      $ 21.20      $ 21.75     $ 24.74  

Net investment income(a)

     0.53        0.60        0.56         0.50        0.53   

Net realized and unrealized gain (loss) on investments

     (5.02 )      (1.02 )     0.19         (0.44 )      (3.01 ) 

Total from investment operations

     (4.49 )      (0.42 )     0.75        0.06       (2.48 ) 

Distributions to shareholders from:

           

Net investment income

     (0.45 )      (0.61 )     (0.54 )      (0.61 )      (0.51 ) 

Net asset value at end of year

   $ 15.44      $ 20.38     $ 21.41      $ 21.20     $ 21.75  

Market price at end of year(b) 

   $ 15.37      $ 20.25     $ 21.21      $ 21.11     $ 21.80  
Net Asset Value Total Return(c)     (22.16 )%      (2.03 )%      3.67 %       0.37 %      (10.16 )% 
Market Price Total Return(c)     (22.00 )%      (1.73 )%      3.14 %       (0.29 )%      (10.93 )% 
Ratios/Supplemental Data:           

Net assets at end of year (000’s omitted)

   $ 293,398      $ 387,200      $ 367,102       $ 375,161      $ 444,796   

Ratio to average net assets of:

           

Expenses, after Waivers

     0.49 %      0.49 %      0.52 %       0.85 %      0.85 % 

Expenses, prior to Waivers

     0.49 %      0.49 %      0.54 %       0.85 %      0.85 % 

Net investment income, after Waivers

     2.88 %      2.91 %      2.66 %       2.34 %      2.16 % 

Portfolio turnover rate(d)

     34 %      22 %      24 %       33 %      20 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares Global Agriculture Portfolio (PAGG)

 

    Year Ended October 31,  
    2015     2014     2013      2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 29.31      $ 29.60      $ 29.82      $ 29.71      $ 30.58  

Net investment income(a)

     0.68        0.69 (b)      0.49         0.35         0.20   

Net realized and unrealized gain (loss) on investments

     (4.17 )      (0.29 )      (0.22 )       0.15 (c)       (0.79 ) 

Total from investment operations

     (3.49 )      0.40       0.27        0.50        (0.59 ) 

Distributions to shareholders from:

            

Net investment income

     (0.73 )      (0.69 )     (0.49 )      (0.39 )       (0.28 ) 

Net asset value at end of year

   $ 25.09      $ 29.31     $ 29.60      $ 29.82      $ 29.71  

Market price at end of year(d)

   $ 25.05      $ 29.25     $ 29.49      $ 29.66      $ 29.47  
Net Asset Value Total Return(e)     (12.10 )%      1.31 %      0.91 %       1.85 %       (1.93 )% 
Market Price Total Return(e)     (12.06 )%      1.49 %      1.07 %       2.13 %       (3.04 )% 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 27,604      $ 55,698      $ 93,233       $ 108,832       $ 123,314   

Ratio to average net assets of:

            

Expenses

     0.76 %      0.75 %      0.76 %       0.75 %       0.75 % 

Net investment income

     2.35 %      2.31 %(b)      1.63 %       1.22 %       0.64 % 

Portfolio turnover rate(f)

     32 %      22 %      17 %       30 %       16 % 

 

(a)  Based on average shares outstanding.
(b)  Net investment income per share and the ratio of net investment income to average net assets include a significant dividend received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividend are $0.53 and 1.77%, respectively.
(c)  Due to the timing of creations and redemptions of capital shares, the net realized and unrealized gain (loss) per share is not in accord with the Fund’s change in net realized and unrealized gain (loss) on investment securities and in-kind transactions for the period.
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   110  

 

 

Financial Highlights (continued)

 

PowerShares Global Clean Energy Portfolio (PBD)

 

    Year Ended October 31,  
    2015     2014      2013      2012     2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 12.52      $ 12.04       $ 7.40      $ 9.89     $ 13.95  

Net investment income(a)

     0.13        0.11         0.10         0.17        0.13   

Net realized and unrealized gain (loss) on investments

     (1.07 )      0.47 (b)       4.65         (2.47 )      (4.10 ) 

Total from investment operations

     (0.94 )      0.58        4.75        (2.30 )      (3.97 ) 

Distributions to shareholders from:

            

Net investment income

     (0.12 )      (0.10 )      (0.11 )       (0.19 )      (0.09 ) 

Net asset value at end of year

   $ 11.46      $ 12.52      $ 12.04      $ 7.40     $ 9.89  

Market price at end of year(c) 

   $ 11.46      $ 12.60      $ 12.03      $ 7.34     $ 9.77  
Net Asset Value Total Return(d)     (7.51 )%      4.79 %       64.73 %       (23.35 )%      (28.54 )% 
Market Price Total Return(d)     (8.10 )%      5.55 %       65.94 %       (23.03 )%      (29.20 )% 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 66,762      $ 77,288       $ 81,000       $ 56,456      $ 126,634   

Ratio to average net assets of:

            

Expenses

     0.77 %      0.76 %       0.82 %       0.75 %      0.75 % 

Net investment income

     1.11 %      0.83 %       1.10 %      2.05 %      1.00 % 

Portfolio turnover rate(e)

     51 %      53 %       48 %       54 %      66 % 

 

(a)  Based on average shares outstanding.
(b)  Includes settlement proceeds recorded during the period. Had these settlement proceeds not been recorded Net realized and unrealized gain (loss) on investments per share would have been $0.42 and total return would have been lower.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares Global Gold and Precious Metals Portfolio (PSAU)

 

    Year Ended October 31,  
    2015     2014     2013     2012     2011  
Per Share Operating Performance:          

Net asset value at beginning of year

   $ 15.25      $ 21.32      $ 40.49     $ 45.42     $ 46.70  

Net investment income(a)

     0.08        0.05        0.19        0.22        0.10   

Net realized and unrealized gain (loss) on investments

     (2.29 )      (6.07 )      (19.26 )      (4.54 )      0.19   

Total from investment operations

     (2.21 )      (6.02 )     (19.07 )     (4.32 )      0.29  

Distributions to shareholders from:

          

Net investment income

     (0.10 )      (0.05 )      (0.10 )      (0.61 )      (0.93 ) 

Net realized gains

     —        —        —        —        (0.64 ) 

Total distributions

     (0.10 )      (0.05 )     (0.10 )     (0.61 )      (1.57 ) 

Net asset value at end of year

   $ 12.94      $ 15.25     $ 21.32     $ 40.49     $ 45.42  

Market price at end of year(b)

   $ 12.89      $ 15.17     $ 21.19     $ 41.12     $ 45.08  
Net Asset Value Total Return(c)     (14.63 )%      (28.31 )%      (47.10 )%      (9.48 )%      0.41 % 
Market Price Total Return(c)     (14.51 )%      (28.25 )%      (48.22 )%      (7.37 )%      (0.54 )% 
Ratios/Supplemental Data:          

Net assets at end of year (000’s omitted)

   $ 17,471      $ 18,299      $ 29,848      $ 38,462      $ 54,500   

Ratio to average net assets of:

          

Expenses

     0.75 %      0.75 %      0.76 %      0.75 %      0.75 % 

Net investment income

     0.49 %      0.24 %      0.70 %      0.57 %      0.20 % 

Portfolio turnover rate(d)

     17 %      18 %      14 %      19 %      9 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares Global Water Portfolio (PIO)

 

    Year Ended October 31,  
    2015     2014      2013      2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 23.35      $ 21.91       $ 17.01      $ 17.17      $ 18.68  

Net investment income(a)

     0.29        0.34         0.36         0.32         0.27   

Net realized and unrealized gain (loss) on investments

     (1.45 )      1.44         4.86         (0.15 )       (1.49 ) 

Total from investment operations

     (1.16 )      1.78        5.22        0.17        (1.22 ) 

Distributions to shareholders from:

             

Net investment income

     (0.30 )      (0.34 )      (0.32 )      (0.33 )       (0.29 ) 

Net asset value at end of year

   $ 21.89      $ 23.35      $ 21.91      $ 17.01      $ 17.17  

Market price at end of year(b) 

   $ 21.77      $ 23.30      $ 21.96      $ 16.93      $ 16.95  
Net Asset Value Total Return(c)     (5.03 )%      8.08 %       30.91 %       1.11 %       (6.68 )% 
Market Price Total Return(c)     (5.35 )%      7.59 %       31.84 %       1.95 %       (7.92 )% 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 241,832      $ 288,367       $ 227,854       $ 206,712       $ 278,951   

Ratio to average net assets of:

             

Expenses

     0.76 %      0.76 %       0.83 %       0.75 %       0.75 % 

Net investment income

     1.27 %      1.46 %       1.86 %       1.90 %       1.38 % 

Portfolio turnover rate(d)

     78 %      28 %       52 %       104 %       26 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares International BuyBack AchieversTM Portfolio (IPKW)

 

    Year Ended
October 31, 2015		      For the Period
February 24,  2014(a)
Through
October 31, 2014		                     
                         
Per Share Operating Performance:                

Net asset value at beginning of period

   $ 25.05       $ 25.03              

Net investment income(b)

     0.44         0.33              

Net realized and unrealized gain (loss) on investments

     1.82         (0.09 )            

Total from investment operations

     2.26         0.24             

Distributions to shareholders from:

                

Net investment income

     (0.29 )       (0.22 )            

Net asset value at end of period

   $ 27.02       $ 25.05             

Market price at end of period(c) 

   $ 26.96       $ 25.35             
Net Asset Value Total Return(d)     9.04 %       0.91 %(e)            
Market Price Total Return(d)     7.51 %       2.11 %(e)            
Ratios/Supplemental Data:                

Net assets at end of period (000’s omitted)

   $ 58,099       $ 17,537              

Ratio to average net assets of:

                

Expenses

     0.55 %       0.55 %(f)            

Net investment income

     1.68 %       1.88 %(f)            

Portfolio turnover rate(g)

     162 %       130 %            

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (February 27, 2014, the first day of trading on the exchange) to October 31, 2014 was 1.23%. The market price total return from Fund Inception to October 31, 2014 was 1.87%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP)

 

    For the Period
October 6,  2015(a)
Through
October 31, 2015		                     
                      
Per Share Operating Performance:             

Net asset value at beginning of period

   $ 25.42              

Net investment income(b)

     0.00 (c)            

Net realized and unrealized gain on investments

     1.45              

Total from investment operations

     1.45              

Net asset value at end of period

   $ 26.87              

Market price at end of period(d) 

   $ 26.70              
Net Asset Value Total Return(e)     5.70 %(f)            
Market Price Total Return(e)     5.04 %(f)            
Ratios/Supplemental Data:             

Net assets at end of period (000’s omitted)

   $ 2,687              

Ratio to average net assets of:

             

Expenses

     0.25 %(g)            

Net investment income

     0.15 %(g)            

Portfolio turnover rate(h)

     — %            

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  Amount represents less than $0.005.
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (October 9, 2015, the first day of trading on the exchange) to October 31, 2015 was 2.95%. The market price total return from Fund Inception to October 31, 2015 was 2.42%.
(g)  Annualized.
(h)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P International Developed High Quality Portfolio (IDHQ)

 

    Year Ended October 31,  
    2015      2014      2013      2012      2011  
Per Share Operating Performance:              

Net asset value at beginning of year

   $ 19.42       $ 19.67       $ 16.65      $ 16.03      $ 17.09  

Net investment income(a)

     0.33         0.35         0.32         0.29         0.34   

Net realized and unrealized gain (loss) on investments

     0.75         (0.21 )       3.04         0.62         (0.89 ) 

Total from investment operations

     1.08         0.14        3.36        0.91        (0.55 ) 

Distributions to shareholders from:

              

Net investment income

     (0.31 )       (0.39 )      (0.34 )      (0.29 )       (0.51 ) 

Net asset value at end of year

   $ 20.19       $ 19.42      $ 19.67      $ 16.65      $ 16.03  

Market price at end of year(b)

  $ 20.14       $ 19.59      $ 19.68      $ 16.81      $ 15.65  
Net Asset Value Total Return(c)     5.60 %       0.66 %       20.44 %       5.87 %       (3.40 )% 
Market Price Total Return(c)     4.42 %       1.48 %       19.34 %       9.50 %       (5.35 )% 
Ratios/Supplemental Data:              

Net assets at end of year (000’s omitted)

   $ 19,180       $ 16,505       $ 21,641       $ 18,312       $ 20,033   

Ratio to average net assets of:

              

Expenses, after Waivers

     0.49 %       0.47 %       0.57 %       0.75 %       0.75 % 

Expenses, prior to Waivers

     0.49 %       0.47 %       0.59 %       0.75 %       0.75 % 

Net investment income, after Waivers

     1.66 %       1.73 %       1.79 %       1.82 %       1.89 % 

Portfolio turnover rate(d)

     78 %       57 %       28 %       115 %       83 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust II

October 31, 2015

 

Note 1. Organization

PowerShares Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust on October 10, 2006 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of October 31, 2015, the Trust offered sixty-six portfolios. This report includes the following portfolios:

 

Full Name

   

Short Name

PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP)*    “Developed EuroPacific Currency Hedged Low Volatility Portfolio”
PowerShares DWA Developed Markets Momentum Portfolio (PIZ)    “DWA Developed Markets Momentum Portfolio”
PowerShares DWA Emerging Markets Momentum Portfolio (PIE)    “DWA Emerging Markets Momentum Portfolio”
PowerShares Emerging Markets Infrastructure Portfolio (PXR)    “Emerging Markets Infrastructure Portfolio”
PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)**    “Europe Currency Hedged Low Volatility Portfolio”
PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)    “FTSE RAFI Asia Pacific ex-Japan Portfolio”
PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)    “FTSE RAFI Developed Markets ex-U.S. Portfolio”
PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)    “FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio”
PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)    “FTSE RAFI Emerging Markets Portfolio”
PowerShares Global Agriculture Portfolio (PAGG)    “Global Agriculture Portfolio”
PowerShares Global Clean Energy Portfolio (PBD)    “Global Clean Energy Portfolio”
PowerShares Global Gold and Precious Metals Portfolio (PSAU)    “Global Gold and Precious Metals Portfolio”
PowerShares Global Water Portfolio (PIO)    “Global Water Portfolio”
PowerShares International BuyBack AchieversTM Portfolio (IPKW)    “International BuyBack AchieversTM Portfolio”
PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP)*    “Japan Currency Hedged Low Volatility Portfolio”
PowerShares S&P International Developed High Quality Portfolio (IDHQ)    “S&P International Developed High Quality Portfolio”

 

* Commenced operations on October 6, 2015.

 

** Commenced operations on May 4, 2015.

Each portfolio (each, a “Fund”, and collectively, the “Funds”) represents a separate series of the Trust. The shares of the Funds are referred to herein as “Shares” or “Fund’s Shares.” Each Fund’s Shares are listed and traded on the following exchanges:

 

Fund

   

Exchange

Developed EuroPacific Currency Hedged Low Volatility Portfolio    NYSE Arca, Inc.
DWA Developed Markets Momentum Portfolio    NYSE Arca, Inc.
DWA Emerging Markets Momentum Portfolio    NYSE Arca, Inc.
Emerging Markets Infrastructure Portfolio    NYSE Arca, Inc.
Europe Currency Hedged Low Volatility Portfolio    NYSE Arca, Inc.
FTSE RAFI Asia Pacific ex-Japan Portfolio    NYSE Arca, Inc.
FTSE RAFI Developed Markets ex-U.S. Portfolio    NYSE Arca, Inc.
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio    NYSE Arca, Inc.
FTSE RAFI Emerging Markets Portfolio    NYSE Arca, Inc.
Global Agriculture Portfolio    The NASDAQ Stock Market LLC
Global Clean Energy Portfolio    NYSE Arca, Inc.
Global Gold and Precious Metals Portfolio    The NASDAQ Stock Market LLC
Global Water Portfolio    NYSE Arca, Inc.
International BuyBack AchieversTM Portfolio    The NASDAQ Stock Market LLC
Japan Currency Hedged Low Volatility Portfolio    NYSE Arca, Inc.
S&P International Developed High Quality Portfolio    NYSE Arca, Inc.

 

 

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The market price of each Share may differ to some degree from the Fund’s net asset value (“NAV”). Unlike conventional mutual funds, each Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units are issued and redeemed principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”). Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Funds.

The investment objective of each Fund is to seek investment results that generally correspond (before fees and expenses) to the price and yield of its respective index listed below (each, an “Underlying Index”):

 

Fund

   

Underlying Index

Developed EuroPacific Currency Hedged Low Volatility Portfolio    S&P EPAC Ex-Korea Low Volatility USD Hedged Index
DWA Developed Markets Momentum Portfolio    Dorsey Wright® Developed Markets Technical Leaders Index
DWA Emerging Markets Momentum Portfolio    Dorsey Wright® Emerging Markets Technical Leaders Index
Emerging Markets Infrastructure Portfolio    S-Network Emerging Infrastructure Builders IndexSM
Europe Currency Hedged Low Volatility Portfolio    S&P Eurozone Low Volatility USD Hedged Index
FTSE RAFI Asia Pacific ex-Japan Portfolio    FTSE RAFI Developed Asia Pacific ex Japan Index
FTSE RAFI Developed Markets ex-U.S. Portfolio    FTSE RAFI Developed ex U.S. 1000 Index
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio    FTSE RAFI Developed ex U.S. Mid-Small 1500 Index
FTSE RAFI Emerging Markets Portfolio    FTSE RAFI Emerging Markets Index
Global Agriculture Portfolio    NASDAQ OMX Global Agriculture IndexSM
Global Clean Energy Portfolio    WilderHill New Energy Global Innovation Index
Global Gold and Precious Metals Portfolio    NASDAQ OMX Global Gold and Precious Metals IndexSM
Global Water Portfolio    NASDAQ OMX Global Water IndexSM
International BuyBack AchieversTM Portfolio    NASDAQ International BuyBack AchieversTM Index
Japan Currency Hedged Low Volatility Portfolio    S&P Japan 500 Low Volatility USD Hedged Index
S&P International Developed High Quality Portfolio    S&P International Developed High Quality Rankings 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 (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. In addition, the Funds monitor for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. The following is a summary of the significant accounting policies followed by the Funds in preparation of the financial statements.

A. Security Valuation

Securities, including restricted securities, are valued according to the following policies:

Securities, including restricted securities in a fund that are held as investments (the “Underlying Fund”) of a Fund, are valued in accordance with the Underlying Fund’s valuation policy. The policies of Underlying Funds affiliated with the Funds as a result of having the same investment adviser are set forth below.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

 

 

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Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco PowerShares Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

Each Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Other Risks

Index Risk. Unlike many investment companies, the Funds do not utilize investing strategies that seek returns in excess of their Underlying Indexes. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its respective Underlying Index, even if that security generally is underperforming.

Equity Risk. Equity risk is the risk that the value of the securities that each Fund holds will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities that a Fund holds participate or factors relating to specific companies in which the Fund invests. For example, an adverse event, such as an unfavorable earnings report, may depress the value of securities a Fund holds; the price of securities may be particularly sensitive to general movements in the stock market; or a drop in the stock market may depress the price of most or all of the securities a Fund holds. In addition, securities of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition.

Industry Concentration Risk. In following its methodology, each Fund’s Underlying Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or a sector. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry or sector, each Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or sector, a Fund may face more risks than if it were diversified broadly over

 

 

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numerous industries or sectors. In addition, at times, an industry or sector may be out of favor and underperform other industries or the market as a whole. Any factors detrimental to the performance of such industry or sector will disproportionately impact a Fund’s NAV.

Non-Diversified Fund Risk. Developed EuroPacific Currency Hedged Low Volatility Portfolio, Europe Currency Hedged Low Volatility Portfolio, Global Agriculture Portfolio, Global Gold and Precious Metals Portfolio, Global Water Portfolio, International BuyBack AchieversTM Portfolio and Japan Currency Hedged Low Volatility Portfolio are non-diversified and can invest a greater portion of their assets in securities of individual issuers than diversified funds. As a result, changes in the market value of a single investment could cause greater fluctuations in Share price than would occur in a diversified fund. This may increase a Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on a Fund’s performance.

Non-Correlation Risk. Each Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, each Fund incurs operating expenses not applicable to its Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. In addition, the performance of each Fund and its Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.

Sampling Risk. FTSE RAFI Emerging Markets Portfolio’s use of a representative sampling approach will result in the Fund holding a smaller number of securities than are in its Underlying Index. As a result, an adverse development to an issuer of securities held by the Fund could result in a greater decline in NAV than would be the case if the Fund held all of the securities in its Underlying Index. To the extent the assets in the Fund are smaller, these risks will be greater.

Foreign Investment Risk. Investments in the securities of non-U.S. issuers involve risks beyond those associated with investments in U.S. securities. Foreign securities may have relatively low market liquidity, greater market volatility, decreased publicly available information and less reliable financial information about issuers, and inconsistent and potentially less stringent accounting, auditing and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Foreign securities also are subject to the risks of expropriation, nationalization, political instability or other adverse political or economic developments and the difficulty of enforcing obligations in other countries. As the Funds may invest in securities denominated in foreign currencies, fluctuations in the value of the U.S. dollar relative to the values of other currencies may adversely affect investments in foreign securities and may negatively impact the Funds’ returns. Such risks may be exacerbated in emerging markets, where securities laws are relatively new and unsettled.

Currency Hedging Risk. While currency hedging can reduce or eliminate losses, it can also reduce or eliminate gains. There can be no assurance that the hedging strategy of Developed EuroPacific Currency Hedged Low Volatility Portfolio, Europe Currency Hedged Low Volatility Portfolio or Japan Currency Hedged Low Volatility Portfolio will effectively reduce the currency risk included in either Fund’s portfolio. Hedges are sometimes subject to imperfect matching between the derivative and its reference asset. Some foreign currency forward contracts are less liquid, which could result in a Fund being unable to structure its hedging transactions as intended. Increased volatility in exchange rates will generally reduce the effectiveness of those Funds’ currency hedging strategy. The effectiveness of the Funds’ currency hedging strategy will also in general be affected by interest rates. Significant differences between U.S. dollar interest rates and foreign currency interest rates may impact the effectiveness of a Fund’s currency hedging strategy.

C. Federal Income Taxes

Each Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

Each Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed each Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, and passive foreign investment company adjustments, if any.

The Funds file U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, a Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

D. Investment Transactions and Investment Income

Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Interest income is recorded on the accrual basis. Dividend income (net of withholding tax,

 

 

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if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by a Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

Corporate actions (including cash dividends) are recorded net of non-reclaimable foreign tax withholdings on the ex-date.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statements of Operations and the Statements of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of each Fund’s net asset value and, accordingly, they reduce each Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statements of Operations and the Statements of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between each Fund and the Adviser.

E. Country Determination

For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

F. Expenses

Each Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Expenses of the Trust that are excluded from a Fund’s unitary management fee and are directly identifiable to a specific Fund are applied to that Fund. Expenses of the Trust that are excluded from each Fund’s unitary management fee and that 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.

To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

G. Dividends and Distributions to Shareholders

Each Fund (except for Global Agriculture Portfolio and Global Gold and Precious Metals Portfolio) declares and pays dividends from net investment income, if any, to its shareholders quarterly and records such dividends on ex-dividend date. Global Agriculture Portfolio and Global Gold and Precious Metals Portfolio each declares and pays dividends from net investment income, if any, to its shareholders annually and records such dividends on ex-dividend date. Generally, each Fund distributes net realized taxable capital gains, if any, annually in cash and records them on ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in such Fund’s financial statements as a tax return of capital at fiscal year-end.

H. Foreign Currency Translations

Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Funds do not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statements of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period-end, resulting from changes in exchange rates.

 

 

 

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The Funds may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which each Fund invests.

I. Forward Foreign Currency Contracts

Developed EuroPacific Currency Hedged Low Volatility Portfolio, Europe Currency Hedged Low Volatility Portfolio and Japan Currency Hedged Low Volatility Portfolio engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis at the rate prevailing in the currency exchange market at the time or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Funds also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund also enters into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Funds set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statements of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statements of Assets and Liabilities.

J. Securities Lending

During the fiscal year ended October 31, 2015, Emerging Markets Infrastructure Portfolio, FTSE RAFI Developed Markets ex-U.S. Portfolio, FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio, Global Agriculture Portfolio, Global Clean Energy Portfolio, Global Gold and Precious Metals Portfolio and Global Water Portfolio participated in securities lending. Each Fund loaned portfolio securities having a market value up to one-third of each Fund’s total assets. Such loans are secured by cash collateral equal to no less than 102% (105% for international securities) of the market value of the loaned securities determined daily by the securities lending provider. Cash collateral received in connection with these loans is invested in an affiliated money market fund and is shown as such on the Schedules of Investments. Each Fund bears the risk of loss with respect to the investment of collateral. It is the policy of these Funds to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, each Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to each Fund if, and to the extent that, the market value of the securities loaned were to increase, and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or each Fund. Upon termination, the borrower will return to each Fund the securities loaned and each Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. Each Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to each Fund. Some of these losses may be indemnified by the lending agent. Each Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Securities lending income on the Statements of Operations. The aggregate value of securities out on loan, if any, is shown on the Statements of Assets and Liabilities.

Note 3. Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of each Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Funds’ investments, managing the Funds’ business affairs and providing certain clerical, bookkeeping and other administrative services.

As compensation for its services, each Fund has agreed to pay the Adviser an annual unitary management fee. Out of the unitary management fee, the Adviser has agreed to pay substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes,

 

 

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interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). The unitary management fee is paid by each Fund to the Adviser at the following annual rates:

 

     % of Average
Daily Net Assets		  
Developed EuroPacific Currency Hedged Low Volatility Portfolio      0.25 % 
DWA Developed Markets Momentum Portfolio      0.80 % 
DWA Emerging Markets Momentum Portfolio      0.90 % 
Emerging Markets Infrastructure Portfolio      0.75 % 
Europe Currency Hedged Low Volatility Portfolio      0.25 % 
FTSE RAFI Asia Pacific ex-Japan Portfolio      0.49 % 
FTSE RAFI Developed Markets ex-U.S. Portfolio      0.45 % 
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      0.49 % 
FTSE RAFI Emerging Markets Portfolio      0.49 % 
Global Agriculture Portfolio      0.75 % 
Global Clean Energy Portfolio      0.75 % 
Global Gold and Precious Metals Portfolio      0.75 % 
Global Water Portfolio      0.75 % 
International BuyBack AchieversTM Portfolio      0.55 % 
Japan Currency Hedged Low Volatility Portfolio      0.25 % 
S&P International Developed High Quality Portfolio      0.45 % 

Further, through August 31, 2017, the Adviser has contractually agreed to waive a portion of each Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

For the fiscal year ended October 31, 2015, the Adviser waived fees for each Fund in the following amounts:

 

Developed EuroPacific Currency Hedged Low Volatility Portfolio    $ —   
DWA Developed Markets Momentum Portfolio      597   
DWA Emerging Markets Momentum Portfolio      1,036   
Emerging Markets Infrastructure Portfolio      76   
Europe Currency Hedged Low Volatility Portfolio      88   
FTSE RAFI Asia Pacific ex-Japan Portfolio      121   
FTSE RAFI Developed Markets ex-U.S. Portfolio      640   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      78   
FTSE RAFI Emerging Markets Portfolio      16,195   
Global Agriculture Portfolio      44   
Global Clean Energy Portfolio      —   
Global Gold and Precious Metals Portfolio      12   
Global Water Portfolio      202   
International BuyBack AchieversTM Portfolio      47   
Japan Currency Hedged Low Volatility Portfolio      —   
S&P International Developed High Quality Portfolio      13   

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for each Fund. The Distributor does not maintain a secondary market in the Shares. The Funds are not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into a licensing agreement for each Fund with the following entities (each, a “Licensor”):

 

Fund

   

Licensor

Developed EuroPacific Currency Hedged Low Volatility Portfolio    S&P Dow Jones Indices LLC
DWA Developed Markets Momentum Portfolio    Dorsey Wright & Associates, LLC
DWA Emerging Markets Momentum Portfolio    Dorsey Wright & Associates, LLC
Emerging Markets Infrastructure Portfolio    S-Network Global Indexes, LLC

 

 

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Fund

   

Licensor

Europe Currency Hedged Low Volatility Portfolio    S&P Dow Jones Indices LLC
FTSE RAFI Asia Pacific ex-Japan Portfolio    FTSE International Ltd.
FTSE RAFI Developed Markets ex-U.S. Portfolio    FTSE International Ltd.
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio    FTSE International Ltd.
FTSE RAFI Emerging Markets Portfolio    FTSE International Ltd.
Global Agriculture Portfolio    The NASDAQ OMX Group, Inc.
Global Clean Energy Portfolio    WilderHill New Energy Finance, LLC
Global Gold and Precious Metals Portfolio    The NASDAQ OMX Group, Inc.
Global Water Portfolio    The NASDAQ OMX Group, Inc.
International BuyBack AchieversTM Portfolio    The NASDAQ OMX Group, Inc.
Japan Currency Hedged Low Volatility Portfolio    S&P Dow Jones Indices LLC
S&P International Developed High Quality Portfolio    S&P Dow Jones Indices LLC

Each Underlying Index name trademark is owned by its respective Licensor. These trademarks have been licensed to the Adviser for use by the Funds. Each Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. 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 the Funds.

The Trust has entered into service agreements whereby The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for each Fund.

Note 4. Investments in Affiliates

The Adviser also serves as the adviser for PowerShares India Portfolio, and therefore PowerShares India Portfolio is considered to be affiliated with the Funds. The table below shows FTSE RAFI Emerging Markets Portfolio’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended October 31, 2015.

FTSE RAFI Emerging Markets Portfolio

 

     Value
October 31, 2014		      Purchases
at Cost		      Proceeds
from Sales		      Change in
Unrealized
Appreciation
(Depreciation)		      Realized
Gain (Loss)		      Value
October 31, 2015		      Dividend
Income		  
PowerShares India Portfolio    $ —       $ 3,941,665       $ (846,841 )     $ (372,934 )     $ (47,370 )     $ 2,674,520       $ 17,315   

Note 5. Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

 

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.

 

  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect a Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

Except for the Funds listed below, as of October 31, 2015, all of the securities in each Fund were valued based on Level 1 inputs (see the Schedules of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

 

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During the fiscal year ended October 31, 2015, there were transfers in Emerging Markets Infrastructure Portfolio from Level 1 to Level 3 of $1,124,740, due to security low volume trading, and from Level 3 to Level 1 of $130,026, due to the security resuming active trading.

 

     Investments in Securities  
     Level 1      Level 2      Level 3      Total  
Developed EuroPacific Currency Hedged Low Volatility Portfolio            

Equity Securities

    $ 2,654,691       $ —       $ —       $ 2,654,691   

Forward Foreign Currency Contracts(a)

      —         (1,575 )       —         (1,575 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

      2,654,691         (1,575 )       —         2,653,116   
  

 

 

     

 

 

     

 

 

     

 

 

  
Emerging Markets Infrastructure Portfolio            

Equity Securities

      27,728,066         —         1,124,740         28,852,806   
  

 

 

     

 

 

     

 

 

     

 

 

  
Europe Currency Hedged Low Volatility Portfolio            

Equity Securities

      172,777,572         —         —         172,777,572   

Forward Foreign Currency Contracts(a)

      —         1,704,491         —         1,704,491   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

      172,777,572         1,704,491         —         174,482,063   
  

 

 

     

 

 

     

 

 

     

 

 

  
FTSE RAFI Asia Pacific ex-Japan Portfolio            

Equity Securities

      22,570,866         —         0         22,570,866   
  

 

 

     

 

 

     

 

 

     

 

 

  
FTSE RAFI Developed Markets ex-U.S. Portfolio            

Equity Securities

      797,820,540         10,314         0         797,830,854   
  

 

 

     

 

 

     

 

 

     

 

 

  
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio            

Equity Securities

      147,354,554         51,655         38,379         147,444,588   
  

 

 

     

 

 

     

 

 

     

 

 

  
FTSE RAFI Emerging Markets Portfolio            

Equity Securities

      292,991,819         —         351,545         293,343,364   
  

 

 

     

 

 

     

 

 

     

 

 

  
Japan Currency Hedged Low Volatility Portfolio            

Equity Securities

      2,676,579         —         —         2,676,579   

Forward Foreign Currency Contracts(a)

      —         10,352         —         10,352   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 2,676,579       $ 10,352       $ —       $ 2,686,931   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) Unrealized appreciation (depreciation).

A reconciliation of Level 3 investments is presented when a Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets.

The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for Emerging Markets Infrastructure Portfolio during the fiscal year ended October 31, 2015:

 

     Beginning
Balance, as of
October 31, 2014		      Purchases      Sales      Net
Realized
Gain		      Net Change in
Unrealized
Appreciation
(Depreciation)		      Transfers
into Level 3		      Transfers out
of Level 3		      Ending
Balance, as of
October 31, 2015		  
Equity Securities    $ 721,572       $ —       $ —       $ —       $ (591,546 )     $ 1,124,740       $ (130,026 )     $ 1,124,740   

Shares of common stocks determined to be Level 3 at the end of the reporting period halted trading during the period and the fair value measurement was determined using a recent transaction price. A change in information which affects the security’s trading activity or liquidity could result in a significant increase or decrease in fair value.

Note 6. Derivative Investments

Developed EuroPacific Currency Hedged Low Volatility Portfolio, Europe Currency Hedged Low Volatility Portfolio and Japan Currency Hedged Low Volatility Portfolio have implemented required disclosures about derivative investments and hedging activities in accordance with GAAP. These disclosures are intended to improve financial reporting about the effects of derivative investments and hedging activities by enabling investors to better understand an entity’s financial position and financial performance. The enhanced disclosure has no impact on the results of operations reported in the financial statements.

 

 

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Value of Derivative Investments at Fiscal Year-End

The table below summarizes the value of each Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2015:

 

     Value  
     Developed EuroPacific
Currency Hedged Low
Volatility Portfolio		      Europe Currency Hedged
Low Volatility Portfolio		      Japan Currency
Hedged Low
Volatility Portfolio		  

Risk Exposure/Derivative Type

    Assets      Liabilities      Assets      Liabilities      Assets      Liabilities  
Currency risk:                  

Forward foreign currency contracts(a)

    $ 15,337       $ (16,912 )     $ 1,726,423       $ (21,932 )     $ 10,616       $ (264 ) 

 

(a) Values are disclosed on the Statements of Assets and Liabilities under the caption Unrealized appreciation on forward foreign currency contracts outstanding and Unrealized depreciation on forward foreign currency contracts outstanding.

Effect of Derivative Investments for the Fiscal Period Ended October 31, 2015

The table below summarizes each Fund’s gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:

 

     Location of Gain (Loss) on Statements of Operations  
     Developed
EuroPacific
Currency Hedged
Low Volatility
Portfolio		      Europe Currency
Hedged Low
Volatility Portfolio		      Japan Currency
Hedged Low
Volatility
Portfolio		  
     Forward Foreign
Currency
Contracts		      Forward Foreign
Currency
Contracts		      Forward Foreign
Currency
Contracts		  
Realized Gain (Loss):         

Currency risk

    $ —       $ (2,136,039 )     $ —   
Change in Net Unrealized Appreciation (Depreciation):         

Currency risk

      (1,575 )       1,704,491         10,352   
  

 

 

     

 

 

     

 

 

  

Total

    $ (1,575 )     $ (431,548 )     $ 10,352   
  

 

 

     

 

 

     

 

 

  

The table below summarizes the average one-month notional value for Developed EuroPacific Currency Hedged Low Volatility Portfolio, the six-month average notional value for Europe Currency Hedged Low Volatility Portfolio and the one-month average notional value for Japan Currency Hedged Low Volatility Portfolio of forward foreign currency contracts outstanding during the period.

 

     Average Notional Value  
     Developed
EuroPacific
Currency Hedged
Low Volatility
Portfolio		      Europe Currency
Hedged Low
Volatility
Portfolio		      Japan Currency
Hedged Low
Volatility
Portfolio		  
Forward foreign currency contracts    $ 7,527,446       $ 240,154,065       $ 7,474,016   

Developed EuroPacific Currency Hedged Low Volatility Portfolio

 

Open Forward Foreign Currency Contracts

  
            Contract to                 Unrealized
Appreciation
(Depreciation)		  

Settlement Date

   

Counterparty

      Deliver        Receive        Notional Value       
11/3/2015    CIBC World Markets Corp.      AUD        493,000         USD        351,312         $ 351,677         $ (365 ) 
11/3/2015    CIBC World Markets Corp.      CHF        106,000         USD        109,539           107,542           1,997   
11/3/2015    CIBC World Markets Corp.      DKK        149,000         USD        22,502           22,072           430   
11/3/2015    CIBC World Markets Corp.      EUR        402,000         USD        452,933           444,086           8,847   
11/3/2015    CIBC World Markets Corp.      GBP        283,000         USD        430,420           437,057           (6,637 ) 
11/3/2015    CIBC World Markets Corp.      HKD        1,539,000         USD        198,579           198,580           (1 ) 
11/3/2015    CIBC World Markets Corp.      ILS        274,000         USD        70,824           70,943           (119 ) 
11/3/2015    CIBC World Markets Corp.      NOK        92,000         USD        11,088           10,872           216   
11/3/2015    CIBC World Markets Corp.      NZD        119,000         USD        77,474           80,498           (3,024 ) 

 

 

   123  

 

 

 

Open Forward Foreign Currency Contracts

  
          Contract to             Unrealized
Appreciation
(Depreciation)		  

Settlement Date

   

Counterparty

    Deliver      Receive      Notional Value     
11/3/2015    CIBC World Markets Corp.    SEK      717,000       USD      86,993       $ 84,448       $ 2,545   
11/3/2015    CIBC World Markets Corp.    SGD      543,000       USD      381,133         387,679         (6,546 ) 
11/3/2015    CIBC World Markets Corp.    USD      351,731       AUD      493,000         351,677         (54 ) 
11/3/2015    CIBC World Markets Corp.    USD      107,532       CHF      106,000         107,542         10   
11/3/2015    CIBC World Markets Corp.    USD      22,070       DKK      149,000         22,072         2   
11/3/2015    CIBC World Markets Corp.    USD      444,069       EUR      402,000         444,086         17   
11/3/2015    CIBC World Markets Corp.    USD      437,065       GBP      283,000         437,057         (8 ) 
11/3/2015    CIBC World Markets Corp.    USD      198,578       HKD      1,539,000         198,580         2   
11/3/2015    CIBC World Markets Corp.    USD      70,941       ILS      274,000         70,942         1   
11/3/2015    CIBC World Markets Corp.    USD      10,872       NOK      92,000         10,871         (1 ) 
11/3/2015    CIBC World Markets Corp.    USD      80,515       NZD      119,000         80,497         (18 ) 
11/3/2015    CIBC World Markets Corp.    USD      84,443       SEK      717,000         84,449         6   
11/3/2015    CIBC World Markets Corp.    USD      387,719       SGD      543,000         387,679         (40 ) 
11/4/2015    CIBC World Markets Corp.    JPY      32,535,000       USD      270,798         269,618         1,180   
11/4/2015    CIBC World Markets Corp.    USD      269,608       JPY      32,535,000         269,617         9   
12/2/2015    CIBC World Markets Corp.    AUD      518,000       USD      369,013         368,959         54   
12/2/2015    CIBC World Markets Corp.    CHF      116,000       USD      117,780         117,795         (15 ) 
12/2/2015    CIBC World Markets Corp.    DKK      157,000       USD      23,270         23,273         (3 ) 
12/2/2015    CIBC World Markets Corp.    EUR      428,000       USD      472,957         472,994         (37 ) 
12/2/2015    CIBC World Markets Corp.    GBP      299,000       USD      461,692         461,694         (2 ) 
12/2/2015    CIBC World Markets Corp.    HKD      1,637,000       USD      211,241         211,245         (4 ) 
12/2/2015    CIBC World Markets Corp.    ILS      275,000       USD      71,208         71,214         (6 ) 
12/2/2015    CIBC World Markets Corp.    JPY      34,107,000       USD      282,705         282,728         (23 ) 
12/2/2015    CIBC World Markets Corp.    NOK      109,000       USD      12,875         12,874         1   
12/2/2015    CIBC World Markets Corp.    NZD      126,000       USD      85,065         85,048         17   
12/2/2015    CIBC World Markets Corp.    SEK      746,000       USD      87,912         87,921         (9 ) 
12/2/2015    CIBC World Markets Corp.    SGD      563,000       USD      401,563         401,560         3   
                       

 

 

  

Total Forward Foreign Currency Contracts — Currency Risk

                $ (1,575 ) 
                       

 

 

  

Currency Abbreviations:

AUD—Australian Dollar

CHF—Swiss Franc

DKK—Danish Krone

EUR—Euro

GBP—Pound Sterling

HKD—Hong Kong Dollar

ILS—Israeli Shekel

JPY—Japanese Yen

NOK—Norwegian Krone

NZD—New Zealand Dollar

SEK—Swedish Krona

SGD—Singapore Dollar

USD—U.S. Dollar

 

 

Europe Currency Hedged Low Volatility Portfolio

 

Open Forward Foreign Currency Contracts

  
            Contract to                 Unrealized
Appreciation
(Depreciation)		  

Settlement Date

   

Counterparty

      Deliver        Receive        Notional Value       
11/3/2015    Goldman, Sachs & Co.      EUR        70,437,500         USD        78,673,405         $ 77,811,752         $ 861,653   
11/3/2015    Goldman, Sachs & Co.      USD        77,804,910         EUR        70,437,500           77,811,751           6,841   
11/3/2015    RBC Capital Markets LLC      USD        77,804,910         EUR        70,437,500           77,811,751           6,841   
11/3/2015    RBC Capital Markets LLC      EUR        70,437,500         USD        78,662,840           77,811,752           851,088   
12/2/2015    Goldman, Sachs & Co.      EUR        78,350,000         USD        86,575,575           86,586,580           (11,005 ) 
12/2/2015    RBC Capital Markets LLC      EUR        78,350,000         USD        86,575,653           86,586,580           (10,927 ) 
                                   

 

 

  

Total Forward Foreign Currency Contracts — Currency Risk

                          $ 1,704,491   
                                   

 

 

  

Currency Abbreviations:

EUR—Euro

USD—U.S. Dollar

 

 

   124  

 

 

 

Japan Currency Hedged Low Volatility Portfolio

 

Open Forward Foreign Currency Contracts

  
            Contract to                 Unrealized
Appreciation
(Depreciation)		  

Settlement Date

   

Counterparty

      Deliver        Receive        Notional Value       
11/4/2015    CIBC World Markets Corp.      JPY        290,400,000         USD        2,417,079         $ 2,406,548         $ 10,531   
11/4/2015    CIBC World Markets Corp.      USD        2,406,464         JPY        290,400,000           2,406,549           85   
12/2/2015    CIBC World Markets Corp.      JPY        321,000,000         USD        2,660,655           2,660,919           (264 ) 
                                   

 

 

  

Total Forward Foreign Currency Contracts — Currency Risk

                          $ 10,352   
                                   

 

 

  

Currency Abbreviations:

JPY—Japanese Yen

USD—U.S. Dollar

Offsetting Assets and Liabilities

Accounting Standards Update (“ASU”) No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which was subsequently clarified in Financial Accounting Standards Board ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” is intended to enhance disclosures about financial instruments and derivative investments that are subject to offsetting arrangements on the Statements of Assets and Liabilities and to enable investors to better understand the effect of those arrangements on each Fund’s financial position. In order for an arrangement to be eligible for netting, the Funds must have a basis to conclude that such netting arrangements are legally enforceable. The Funds enter into netting agreements and collateral agreements in an attempt to reduce the Funds’ counterparty credit risk by providing for a single net settlement with a counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.

The following tables present derivative investments that are either subject to an enforceable netting agreement or offset by collateral arrangements as of October 31, 2015.

Developed EuroPacific Currency Hedged Low Volatility Portfolio

 

Assets:

           Gross Amounts Not Offset in the
Statement of Assets and Liabilities		  
     Gross Amounts
of Recognized
Assets		             Collateral Received         

Counterparty

       Financial Instruments      Non-Cash      Cash      Net Amount  
CIBC World Markets Corp.    $ 15,337       $ (15,337 )     $ —       $ —       $ —   

 

Liabilities:

           Gross Amounts Not Offset in the
Statement of Assets and Liabilities		  
     Gross Amounts
of Recognized
Liabilities		             Collateral Received         

Counterparty

       Financial Instruments      Non-Cash      Cash      Net Amount  
CIBC World Markets Corp.    $ 16,912       $ (15,337 )     $ —       $ —       $ 1,575   

Europe Currency Hedged Low Volatility Portfolio

 

Assets:

           Gross Amounts Not Offset in the
Statement of Assets and Liabilities		  
     Gross Amounts
of Recognized
Assets		             Collateral Received         

Counterparty

       Financial Instruments      Non-Cash      Cash      Net Amount  
Goldman, Sachs & Co.    $ 868,494       $ (11,005 )     $ —       $ —       $ 857,489   
RBC Capital Markets LLC      857,929         (10,927 )       —         —         847,002   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
Total Assets    $ 1,726,423       $ (21,932 )     $ —       $ —       $ 1,704,491   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Liabilities:

           Gross Amounts Not Offset in the
Statement of Assets and Liabilities		  
     Gross Amounts
of Recognized
Liabilities		             Collateral Received         

Counterparty

       Financial Instruments      Non-Cash      Cash      Net Amount  
Goldman, Sachs & Co.    $ 11,005       $ (11,005 )     $ —       $ —       $ —   
RBC Capital Markets LLC      10,927         (10,927 )       —         —         —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
Total Liabilities    $ 21,932       $ (21,932 )     $ —       $ —       $ —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   125  

 

 

 

Japan Currency Hedged Low Volatility Portfolio

 

Assets:

           Gross Amounts Not Offset in the
Statement of Assets and Liabilities		  
     Gross Amounts
of Recognized
Assets		             Collateral Received         

Counterparty

       Financial Instruments      Non-Cash      Cash      Net Amount  
CIBC World Markets Corp.    $ 10,616       $ (264 )     $ —       $ —       $ 10,352   

 

Liabilities:

           Gross Amounts Not Offset in the
Statement of Assets and Liabilities		  
     Gross Amounts
of Recognized
Liabilities		             Collateral Received         

Counterparty

       Financial Instruments      Non-Cash      Cash      Net Amount  
CIBC World Markets Corp.    $ 264       $ (264 )     $ —       $ —       $ —   

Note 7. Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2015 and 2014:

 

     2015      2014  
     Ordinary
Income		      Ordinary
Income		  
Developed EuroPacific Currency Hedged Low Volatility Portfolio    $ —       $ —   
DWA Developed Markets Momentum Portfolio      4,075,936         19,746,499   
DWA Emerging Markets Momentum Portfolio      1,862,258         2,061,393   
Emerging Markets Infrastructure Portfolio      562,003         866,127   
Europe Currency Hedged Low Volatility Portfolio      19,178         —   
FTSE RAFI Asia Pacific ex-Japan Portfolio      1,354,446         1,506,901   
FTSE RAFI Developed Markets ex-U.S. Portfolio      22,728,390         27,361,461   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      1,894,365         2,395,852   
FTSE RAFI Emerging Markets Portfolio      9,357,675         11,183,593   
Global Agriculture Portfolio      1,114,870         1,765,946   
Global Clean Energy Portfolio      700,178         739,610   
Global Gold and Precious Metals Portfolio      138,487         57,809   
Global Water Portfolio      3,532,866         3,894,272   
International BuyBack AchieversTM Portfolio      349,993         143,571   
Japan Currency Hedged Low Volatility Portfolio      —         —   
S&P International Developed High Quality Portfolio      270,592         410,462   

Tax Components of Net Assets at Fiscal Year-End:

 

    Undistributed
Ordinary
Income		     Undistributed
Long-Term
Capital Gains		     Net Unrealized
Appreciation
(Depreciation)—
Investment
Securities		     Net Unrealized
Appreciation
(Depreciation)—
Other Investments		     Capital Loss
Carryforwards		     Shares of
Beneficial
Interest		     Total Net
Assets		  
Developed EuroPacific Currency Hedged Low Volatility Portfolio   $ 12,999      $ 3,043      $ 79,806      $ (6,647 )    $ —      $ 2,566,867      $ 2,656,068   
DWA Developed Markets Momentum Portfolio     838,335        —        13,277,457        (93,196 )      (114,639,257 )      364,613,039        263,996,378   
DWA Emerging Markets Momentum Portfolio     1,055,497        —        4,056,358        (28,439 )      (130,595,321 )      321,779,972        196,268,067   
Emerging Markets Infrastructure Portfolio     76,605        —        (7,766,667 )      10        (32,576,139 )      68,137,853        27,871,662   
Europe Currency Hedged Low Volatility Portfolio     1,779,219        —        2,701,145        (8,728 )      (1,404,406 )      169,744,737        172,811,967   
FTSE RAFI Asia Pacific ex-Japan Portfolio     182,579        —        (4,567,865 )      (17 )      (8,145,670 )      35,109,235        22,578,262   

 

 

   126  

 

 

 

    Undistributed
Ordinary
Income		     Undistributed
Long-Term
Capital Gains		     Net Unrealized
Appreciation
(Depreciation)—
Investment
Securities		     Net Unrealized
Appreciation
(Depreciation)—
Other Investments		     Capital Loss
Carryforwards		     Shares of
Beneficial
Interest		     Total Net
Assets		  
FTSE RAFI Developed Markets ex-U.S. Portfolio   $ 4,352,376      $ —      $ (76,081,801 )    $ (112,749 )    $ (27,045,849 )    $ 886,424,021      $ 787,535,998   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio     1,136,206        —        3,214,028        (10,346 )      (8,941,271 )      148,222,044        143,620,661   
FTSE RAFI Emerging Markets Portfolio     2,003,931        —        (115,432,392 )      (40,752 )      (72,597,107 )      479,463,965        293,397,645   
Global Agriculture Portfolio     104,045        —        (10,331,245 )      (20,259 )      (8,268,673 )      46,120,158        27,604,026   
Global Clean Energy Portfolio     301,197        —        494,648        (13,918 )      (216,708,925 )      282,689,071        66,762,073   
Global Gold and Precious Metals Portfolio     25,863        —        (19,151,268 )      (700 )      (12,120,419 )      48,717,759        17,471,235   
Global Water Portfolio     473,641        —        30,125,008        (25,083 )      (153,500,621 )      364,758,735        241,831,680   
International BuyBack AchieversTM Portfolio     334,307        —        (703,896 )      (1,937 )      (2,971,427 )      61,441,634        58,098,681   
Japan Currency Hedged Low Volatility Portfolio     8,993        6,319        129,506        (180 )      —        2,542,510        2,687,148   
S&P International Developed High Quality Portfolio     78,588        —        640,513        (6,150 )      (47,844,625 )      66,312,060        19,180,386   

Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Funds to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The following table presents available capital loss carryforwards and expiration dates for each Fund as of October 31, 2015.

 

                            Post-effective/no expiration        
    2016     2017     2018     2019     Short-Term     Long-Term     Total*     Expired  
Developed EuroPacific Currency Hedged Low Volatility Portfolio   $ —      $ —      $ —      $ —      $ —      $ —      $ —      $ —   
DWA Developed Markets Momentum Portfolio     17,174,329        6,761,697        1,071,796        11,083,378        77,530,378        1,017,679        114,639,257        —   
DWA Emerging Markets Momentum Portfolio     14,116,179        5,190,203        602,137        18,886,830        91,799,972        —        130,595,321        —   
Emerging Markets Infrastructure Portfolio     —        —        5,545        7,449,409        5,615,702        19,505,483        32,576,139        —   
Europe Currency Hedged Low Volatility Portfolio     —        —        —        —        1,139,250        265,156        1,404,406        —   
FTSE RAFI Asia Pacific ex-Japan Portfolio     317,335        4,187,699        923,451        —        671,288        2,045,897        8,145,670        —   
FTSE RAFI Developed Markets ex-U.S. Portfolio     2,040,934        8,801,477        5,210,563        1,248,239        459,732        9,284,904        27,045,849        54,729   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio     192,155        2,633,165        695,775        —        325,225        5,094,951        8,941,271        —   
FTSE RAFI Emerging Markets Portfolio     5,378,903        11,700,199        450,476        —        5,064,515        50,003,014        72,597,107        —   
Global Agriculture Portfolio     —        —        —        365,885        604,726        7,298,062        8,268,673        —   
Global Clean Energy Portfolio     34,356,421        65,130,758        22,796,787        31,202,293        10,841,469        52,381,197        216,708,925        155,633   
Global Gold and Precious Metals Portfolio     —        —        —        374,482        1,336,766        10,409,171        12,120,419        —   
Global Water Portfolio     64,839,461        41,990,185        1,909,380        4,235,497        25,624,203        14,901,895        153,500,621        589,102   
International BuyBack AchieversTM Portfolio     —        —        —        —        2,969,504        1,923        2,971,427        —   
Japan Currency Hedged Low Volatility Portfolio     —        —        —        —        —        —        —        —   
S&P International Developed High Quality Portfolio     23,676,544        19,713,557        980,146        2,056,117        1,418,261        —        47,844,625        47,847   

 

* Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

 

 

   127  

 

 

 

Note 8. Investment Transactions

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations, money market funds and in-kind transactions, if any) were as follows:

 

     Purchases      Sales  
Developed EuroPacific Currency Hedged Low Volatility Portfolio    $ 13,643       $ 75   
DWA Developed Markets Momentum Portfolio      414,490,752         416,400,892   
DWA Emerging Markets Momentum Portfolio      528,082,664         589,874,097   
Emerging Markets Infrastructure Portfolio      11,110,891         11,889,585   
Europe Currency Hedged Low Volatility Portfolio      29,780,274         29,001,161   
FTSE RAFI Asia Pacific ex-Japan Portfolio      6,973,943         10,848,761   
FTSE RAFI Developed Markets ex-U.S. Portfolio      105,178,928         99,498,200   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      31,450,978         28,469,099   
FTSE RAFI Emerging Markets Portfolio      131,659,938         127,343,570   
Global Agriculture Portfolio      14,444,020         16,625,006   
Global Clean Energy Portfolio      34,563,260         34,810,026   
Global Gold and Precious Metals Portfolio      4,232,019         4,272,321   
Global Water Portfolio      208,435,851         209,462,298   
International BuyBack AchieversTM Portfolio      58,467,763         56,023,951   
Japan Currency Hedged Low Volatility Portfolio      —         —   
S&P International Developed High Quality Portfolio      13,832,089         13,734,654   

For the fiscal year ended October 31, 2015, in-kind transactions associated with creations and redemptions were as follows:

 

     Cost of
Securities
Received		      Value of
Securities
Delivered		  
Developed EuroPacific Currency Hedged Low Volatility Portfolio    $ 2,553,216       $ —   
DWA Developed Markets Momentum Portfolio      134,985,820         227,572,944   
DWA Emerging Markets Momentum Portfolio      45,143,937         127,025,567   
Emerging Markets Infrastructure Portfolio      —         2,805,077   
Europe Currency Hedged Low Volatility Portfolio      169,532,028         —   
FTSE RAFI Asia Pacific ex-Japan Portfolio      —         9,205,047   
FTSE RAFI Developed Markets ex-U.S. Portfolio      281,914,088         206,247,468   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      39,115,356         6,628,863   
FTSE RAFI Emerging Markets Portfolio      84,475,964         78,567,519   
Global Agriculture Portfolio      —         20,090,810   
Global Clean Energy Portfolio      6,682,103         10,210,854   
Global Gold and Precious Metals Portfolio      31,430,895         24,629,216   
Global Water Portfolio      5,959,399         33,355,147   
International BuyBack AchieversTM Portfolio      61,019,467         23,276,056   
Japan Currency Hedged Low Volatility Portfolio      2,542,485         —   
S&P International Developed High Quality Portfolio      1,965,980         —   

Gains (losses) on in-kind transactions are generally not considered taxable gains (losses) for federal income tax purposes.

At October 31, 2015, the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes were as follows:

 

     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
Developed EuroPacific Currency Hedged Low Volatility Portfolio    $ 93,475       $ (13,669 )     $ 79,806       $ 2,574,885   
DWA Developed Markets Momentum Portfolio      20,041,816         (6,764,359 )       13,277,457         250,608,123   
DWA Emerging Markets Momentum Portfolio      12,235,395         (8,179,037 )       4,056,358         192,108,909   

 

 

   128  

 

 

 

     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
Emerging Markets Infrastructure Portfolio    $ 3,551,481       $ (11,318,148 )     $ (7,766,667 )     $ 36,619,473   
Europe Currency Hedged Low Volatility Portfolio      5,473,812         (2,772,667 )       2,701,145         170,076,427   
FTSE RAFI Asia Pacific ex-Japan Portfolio      2,154,009         (6,721,874 )       (4,567,865 )       27,138,731   
FTSE RAFI Developed Markets ex-U.S. Portfolio      57,302,943         (133,384,744 )       (76,081,801 )       873,912,655   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      18,610,152         (15,396,124 )       3,214,028         144,230,560   
FTSE RAFI Emerging Markets Portfolio      17,980,359         (133,412,751 )       (115,432,392 )       408,775,756   
Global Agriculture Portfolio      2,365,698         (12,696,943 )       (10,331,245 )       37,991,784   
Global Clean Energy Portfolio      11,025,829         (10,531,181 )       494,648         72,810,869   
Global Gold and Precious Metals Portfolio      39,517         (19,190,785 )       (19,151,268 )       36,704,400   
Global Water Portfolio      37,485,702         (7,360,694 )       30,125,008         211,951,242   
International BuyBack AchieversTM Portfolio      1,926,200         (2,630,096 )       (703,896 )       58,801,288   
Japan Currency Hedged Low Volatility Portfolio      137,034         (7,528 )       129,506         2,547,073   
S&P International Developed High Quality Portfolio      2,239,060         (1,598,547 )       640,513         18,511,533   

Note 9. Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of in-kind transactions, foreign currency transactions, passive foreign investment company and expired capital loss carryforwards on October 31, 2015, amounts were reclassified between undistributed net investment income (loss), undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended October 31, 2015, the reclassifications were as follows:

 

     Undistributed
Net Investment
Income (Loss)		      Undistributed
Net Realized
Gain (Loss)		      Shares of
Beneficial
Interest		  
Developed EuroPacific Currency Hedged Low Volatility Portfolio    $ (156 )     $ 156       $ —   
DWA Developed Markets Momentum Portfolio      257,859         (15,457,721 )       15,199,862   
DWA Emerging Markets Momentum Portfolio      144,553         (4,915,515 )       4,770,962   
Emerging Markets Infrastructure Portfolio      (10,119 )       35,639         (25,520 ) 
Europe Currency Hedged Low Volatility Portfolio      685,161         (685,161 )       —   
FTSE RAFI Asia Pacific ex-Japan Portfolio      86,330         513,795         (600,125 ) 
FTSE RAFI Developed Markets ex-U.S. Portfolio      179,005         (40,370,597 )       40,191,592   
FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio      111,292         (2,639,038 )       2,527,746   
FTSE RAFI Emerging Markets Portfolio      (429,939 )       (1,187,714 )       1,617,653   
Global Agriculture Portfolio      9,166         656,401         (665,567 ) 
Global Clean Energy Portfolio      (15,484 )       (2,134,471 )       2,149,955   
Global Gold and Precious Metals Portfolio      59,533         4,088,603         (4,148,136 ) 
Global Water Portfolio      42,846         (9,447,382 )       9,404,536   
International BuyBack AchieversTM Portfolio      53,764         (2,658,673 )       2,604,909   
Japan Currency Hedged Low Volatility Portfolio      —         —         —   
S&P International Developed High Quality Portfolio      (5,147 )       52,994         (47,847 ) 

Note 10. Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Funds to pay remuneration to each Trustee who is not an “interested person” as defined in the 1940 Act (an “Independent Trustee”) and an Officer of the Trust. The Adviser, as a result of each Fund’s unitary management fee, pays for such compensation. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, an Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of his compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select PowerShares Funds. The Deferral Fees payable to the Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Funds.

 

 

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Note 11. Capital

Shares are created and redeemed by each Fund only in Creation Units of 50,000 Shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Funds. Such transactions are principally permitted in exchange for Deposit Securities, with a balancing cash component to equate the transaction to the NAV per Share of a Fund of the Trust on the transaction date. However, for all Funds, cash in an amount equivalent to the value of certain securities may be substituted, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances.

To the extent that the Funds permit transactions in exchange for Deposit Securities, each Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

DWA Emerging Markets Momentum Portfolio charges certain transaction fees for creations and redemptions, which are treated as increases in capital, which are shown in the Statements of Changes in Net Assets as Transaction fees.

Transactions in each Fund’s Shares are disclosed in detail in the Statements of Changes in Net Assets.

Note 12. 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. Each Independent Trustee is also indemnified against certain liabilities arising out of the performance of his duties to the Trust pursuant to an Indemnification Agreement between the Independent Trustee and 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 13. Subsequent Event

At a meeting held on December 17, 2015, the Board of Trustees of the Trust approved changes to the name, investment objective, principal investment strategy and underlying index for the Fund listed below. These changes will go into effect as of the close of markets on March 18, 2016.

 

Current Fund Name    New Fund Name    Current Underlying Index    New Underlying Index
PowerShares S&P International Developed High Quality Portfolio    PowerShares S&P International Developed Quality Portfolio    S&P International Developed High Quality Rankings Index    S&P Quality Developed ex-U.S. LargeMidCap Index

 

 

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Report of Independent Registered Public Accounting Firm

 

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

 

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio, PowerShares DWA Developed Markets Momentum Portfolio, PowerShares DWA Emerging Markets Momentum Portfolio, PowerShares Emerging Markets Infrastructure Portfolio, PowerShares Europe Currency Hedged Low Volatility Portfolio, PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio, PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio, PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio, PowerShares FTSE RAFI Emerging Markets Portfolio, PowerShares Global Agriculture Portfolio, PowerShares Global Clean Energy Portfolio, PowerShares Global Gold and Precious Metals Portfolio, PowerShares Global Water Portfolio, PowerShares International BuyBack AchieversTM Portfolio, PowerShares Japan Currency Hedged Low Volatility Portfolio, and PowerShares S&P International Developed High Quality Portfolio (each an individual portfolio of PowerShares Exchange-Traded Fund Trust II, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Chicago, IL

December 23, 2015

 

 

   131  

 

 

Fees and Expenses

 

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). 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 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, 2015.

Actual Expenses

The first line in the following table 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 table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s 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 table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges and brokerage commissions. 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, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP)(2)        

Actual

   $ 1,000.00      $ 1,035.10        0.25 %    $ 0.18   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares DWA Developed Markets Momentum Portfolio (PIZ)        

Actual

     1,000.00        916.60        0.80        3.86   

Hypothetical (5% return before expenses)

     1,000.00        1,021.17        0.80        4.08   
PowerShares DWA Emerging Markets Momentum Portfolio (PIE)        

Actual

     1,000.00        840.83        0.90        4.18   

Hypothetical (5% return before expenses)

     1,000.00        1,020.67        0.90        4.58   
PowerShares Emerging Markets Infrastructure Portfolio (PXR)        

Actual

     1,000.00        771.49        0.75        3.35   

Hypothetical (5% return before expenses)

     1,000.00        1,021.42        0.75        3.82   
PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)(3)        

Actual

     1,000.00        1,011.60        0.25        1.25   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)        

Actual

     1,000.00        835.69        0.49        2.27   

Hypothetical (5% return before expenses)

     1,000.00        1,022.74        0.49        2.50   
PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)        

Actual

     1,000.00        912.50        0.45        2.17   

Hypothetical (5% return before expenses)

     1,000.00        1,022.94        0.45        2.29   

 

 

   132  

 

 

Fees and Expenses (continued)

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)        

Actual

   $ 1,000.00      $ 939.01        0.49 %    $ 2.39   

Hypothetical (5% return before expenses)

     1,000.00        1,022.74        0.49        2.50   
PowerShares FTSE RAFI Emerging Markets Portfolio (PXH)        

Actual

     1,000.00        756.13        0.48        2.12   

Hypothetical (5% return before expenses)

     1,000.00        1,022.79        0.48        2.45   
PowerShares Global Agriculture Portfolio (PAGG)        

Actual

     1,000.00        875.57        0.75        3.55   

Hypothetical (5% return before expenses)

     1,000.00        1,021.42        0.75        3.82   
PowerShares Global Clean Energy Portfolio (PBD)        

Actual

     1,000.00        869.64        0.78        3.68   

Hypothetical (5% return before expenses)

     1,000.00        1,021.27        0.78        3.97   
PowerShares Global Gold and Precious Metals Portfolio (PSAU)        

Actual

     1,000.00        753.95        0.75        3.32   

Hypothetical (5% return before expenses)

     1,000.00        1,021.42        0.75        3.82   
PowerShares Global Water Portfolio (PIO)        

Actual

     1,000.00        905.04        0.76        3.65   

Hypothetical (5% return before expenses)

     1,000.00        1,021.37        0.76        3.87   
PowerShares International BuyBack AchieversTM Portfolio (IPKW)        

Actual

     1,000.00        976.02        0.55        2.74   

Hypothetical (5% return before expenses)

     1,000.00        1,022.43        0.55        2.80   
PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP)(2)        

Actual

     1,000.00        1,057.00        0.25        0.18   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P International Developed High Quality Portfolio (IDHQ)        

Actual

     1,000.00        976.85        0.49        2.44   

Hypothetical (5% return before expenses)

     1,000.00        1,022.74        0.49        2.50   

 

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expenses ratios based on annualized data in the Financial Highlights.

 

(2)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period October 6, 2015 (commencement of investment operations) through October 31, 2015. Actual expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 26/365. Hypothetical expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365.

 

(3)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period May 4, 2015 (commencement of investment operations) through October 31, 2015. Actual expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 181/365. Hypothetical expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365.

 

 

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Tax Information

 

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

Each Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2015:

 

     Qualified Dividend
Income*		   Corporate
Dividends Received
Deduction*
PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio        0 %       0 %
PowerShares DWA Developed Markets Momentum Portfolio        92 %       0 %
PowerShares DWA Emerging Markets Momentum Portfolio        100 %       0 %
PowerShares Emerging Markets Infrastructure Portfolio        91 %       0 %
PowerShares Europe Currency Hedged Low Volatility Portfolio        32 %       0 %
PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio        100 %       0 %
PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio        100 %       0 %
PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio        100 %       0 %
PowerShares FTSE RAFI Emerging Markets Portfolio        65 %       0 %
PowerShares Global Agriculture Portfolio        100 %       19 %
PowerShares Global Clean Energy Portfolio        100 %       18 %
PowerShares Global Gold and Precious Metals Portfolio        100 %       32 %
PowerShares Global Water Portfolio        100 %       17 %
PowerShares International BuyBack AchieversTM Portfolio        100 %       0 %
PowerShares Japan Currency Hedged Low Volatility Portfolio        0 %       0 %
PowerShares S&P International Developed High Quality Portfolio        100 %       0 %

 

* The above percentages are based on ordinary income dividends paid to shareholders during the fiscal year.

The Funds intend to elect to pass through to shareholders the credit for taxes paid to foreign countries. The gross foreign source income and foreign taxes paid are as follows:

 

     Gross Foreign
Income		    Foreign Taxes
Paid
PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio      $ —        $ —  
PowerShares DWA Developed Markets Momentum Portfolio        7,209,068          556,541  
PowerShares DWA Emerging Markets Momentum Portfolio        5,554,472          793,386  
PowerShares Emerging Markets Infrastructure Portfolio        801,211          83,595  
PowerShares Europe Currency Hedged Low Volatility Portfolio        —          —  
PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio        1,717,169          48,004  
PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio        23,924,152          1,770,553  
PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio        2,889,958          319,593  
PowerShares FTSE RAFI Emerging Markets Portfolio        14,217,170          1,486,837  
PowerShares Global Agriculture Portfolio        931,209          88,627  
PowerShares Global Clean Energy Portfolio        —          —  
PowerShares Global Gold and Precious Metals Portfolio        —          —  
PowerShares Global Water Portfolio        —          —  
PowerShares International BuyBack AchieversTM Portfolio        848,434          88,274  
PowerShares Japan Currency Hedged Low Volatility Portfolio        —          —  
PowerShares S&P International Developed High Quality Portfolio        417,086          39,029  

 

 

   134  

 

 

Trustees and Officers

 

The Independent Trustees, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below.

The Trustees and officers information is current as of October 31, 2015.

 

Name, Address and Year of Birth
of Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		    Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years

Ronn R. Bagge - 1958

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Nominating and Governance Committee and Trustee    Chairman of the Nominating and Governance Committee and Trustee since 2007    Founder and Principal, YQA Capital Management LLC (1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).    125    None

Todd J. Barre - 1957

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since
2010		    Assistant Professor of Business, Trinity Christian College (2010-Present); formerly Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.    125    None

Marc M. Kole - 1960

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Audit Committee and Trustee    Chairman of the Audit Committee since 2008; Trustee since 2007    Senior Director of Finance, By The Hand Club for Kids (2015-Present); Formerly: Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Senior Vice President of Finance, United Healthcare (2004-2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).    125    None

Yung Bong Lim - 1964

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Investment Oversight Committee and Trustee    Chairman of the Investment Oversight Committee since 2014; Trustee since 2013    Managing Partner, Residential Dynamics Group LLC (2008-Present); formerly, Managing Director, Citadel Investment Group, L.L.C. (1999-2007).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

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Trustees and Officers (continued)

 

Name, Address and Year of Birth
of Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		    Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years

Philip M. Nussbaum - 1961

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since
2007		    Chairman, Performance Trust Capital Partners (2004-Present).    125    None

Gary R. Wicker - 1961

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since
2013		    Senior Vice President of Global Finance and Chief Financial Officer at RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (A division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005-2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider).    125    None

Donald H. Wilson - 1959

c/o Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Board and Trustee    Chairman since 2012; Trustee since 2007    Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank – Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   136  

 

 

Trustees and Officers (continued)

 

The Trustee who is an “interested person” (the “Non-Independent Trustee”) and the 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 the Non-Independent Trustee and the other directorships, if any, held by the Non-Independent Trustee are shown below.

 

Name, Address and Year of Birth
of Non-Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Non-Independent
Trustee		    Other
Directorships
Held by
Non-Independent
Trustee During
the Past 5 Years

Kevin M. Carome - 1956

Invesco Ltd.

Two Peachtree Pointe, 1555 Peachtree St., N.E., Suite 1800 Atlanta, GA 30309

    Trustee    Since
2010		    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2006-Present); Director, Invesco Advisers, Inc. (2009-Present); Director, Invesco Finance PLC, INVESCO Funds Group, Inc., and Invesco Holding Company Limited; Director and Executive Vice President, Invesco Finance, Inc., Invesco Group Services, Inc., Invesco Investments (Bermuda) Ltd., Invesco North American Holdings, Inc., and IVZ, Inc. and Invesco Asset Management (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary, IVZ Bahamas Private Limited; formerly, Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2005); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    125    None

 

* This is the date the Non-Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   137  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Andrew Schlossberg - 1974

Invesco Management

Group, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046

    President    Since 2009    President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director – U.S. Strategy and Marketing (2010-Present) and Principal Executive Officer (2015-Present), Invesco PowerShares Capital Management LLC; Managing Director, Head of U.S. Retail Distribution (2012-Present) and Global ETFs (2010-Present) for Invesco Ltd.; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present); formerly, Mr. Schlossberg served in multiple roles within Invesco, including head of corporate development, as well as global leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions (2002-2007), Managing Director, U.S. head of business strategy and chief marketing officer for Invesco Ltd. in the United States (2008-2012) and Director, Invesco Distributors, Inc. (2012-2015).

Peter Hubbard - 1981

Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Vice President and Director of Portfolio Management—Invesco PowerShares Capital Management LLC (2008-Present); formerly, Portfolio Manager, Invesco PowerShares Capital Management LLC (2007-2008); Research Analyst, Invesco PowerShares Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

David Warren - 1957

Invesco Canada Ltd.

5140 Yonge Street, Suite 800

Toronto, Ontario M2N 6X7

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director – Chief Administrative Officer, Americas, Invesco PowerShares Capital Management LLC; Senior Vice President, Invesco Advisers, Inc. (2009–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Inc. (2009–Present); Senior Vice President, Invesco Management Group, Inc. (2007–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) and Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Canada Holdings Inc. (2002–Present), Invesco Corporate Class Inc., and Invesco Canada Fund Inc.; Director, Invesco Financial Services Ltd. and Trimark Investments Ltd. (2014-Present); formerly, Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2006).

Sheri Morris - 1964

Invesco Management Group, Inc. 11 Greenway Plaza, Suite 1000

Houston, TX 77046

    Vice President    Since 2012    Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   138  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Rudolf E. Reitmann - 1971

Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President    Since 2013    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global Exchange Traded Funds Operations, Invesco PowerShares Capital Management LLC (2013-Present).

Daniel E. Draper - 1968

Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President    Since 2013    Senior Vice President, Invesco Distributors, Inc. (2014-Present); Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director, Invesco PowerShares Capital Management LLC (2013-Present); formerly, Managing Director, Credit Suisse Asset Management (2010–2013) and Lyxor Asset Management/Societe Generale (2007–2010).

Steven M. Hill - 1964

Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President and Treasurer    Since 2013    Vice President and Treasurer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global ETF Administration, Invesco PowerShares Capital Management LLC (2011-Present); Principal Financial and Accounting Officer – Investment Pools, Invesco PowerShares Capital Management LLC (2015-Present); formerly, Senior Managing Director and Chief Financial Officer, Destra Capital Management LLC and its subsidiaries (2010-2011); Chief Financial Officer, Destra Investment Trust and Destra Investment Trust II (2010-2011); Senior Managing Director, Claymore Securities, Inc. (2003-2010); and Chief Financial Officer, Claymore sponsored mutual funds (2003-2010).

Christopher Joe - 1969

Invesco PowerShares Capital Management LLC

11 Greenway Plaza, Suite 1000

Houston, TX 77046

    Chief Compliance Officer    Since 2012    Chief Compliance Officer of Invesco PowerShares Capital Management LLC (2015-Present); Chief Compliance Officer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Chief Compliance Officer, Invesco Investment Advisers, LLC (registered investment adviser) (2010–2013), U.S. Compliance Director, Invesco, Ltd. (2006-2014) and Deputy Chief Compliance Officer of Invesco Advisers, Inc. (2014-2015).

Anna Paglia - 1974

Invesco PowerShares Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Secretary    Since 2011    Secretary, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2011-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco PowerShares Capital Management LLC; formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   139  

 

 

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio, PowerShares Europe Currency Hedged Low Volatility Portfolio and PowerShares Japan Currency Hedged Low Volatility Portfolio

 

At a meeting held on March 12, 2015, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust II (the “Trust”), including the Independent Trustees, approved the Investment Advisory Agreement (the “Agreement”) between Invesco PowerShares Capital Management LLC (the “Adviser”) and the Trust for PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio, PowerShares Europe Currency Hedged Low Volatility Portfolio and PowerShares Japan Currency Hedged Low Volatility Portfolio (each a “Fund” and together, the “Funds”).

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

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser’s services, the Trustees reviewed information concerning the functions to be performed by the Adviser for each Fund, information describing the Adviser’s current organization and staffing, including operational support that would be provided by the Adviser’s parent organization, Invesco Ltd., the background and experience of the persons who will be responsible for the day-to-day management of the Funds, and considered the quality of services provided by the Adviser to other exchange-traded funds (“ETFs”). The Trustees also reviewed information related to the Adviser’s portfolio transaction policies and procedures, as well as reports on the correlation and tracking error between the underlying indexes and the performance of other ETFs for which the Adviser serves as investment adviser.

The Trustees also considered the services to be provided by the Adviser in its oversight of the Funds’ administrator, custodian and transfer agent. They noted the significant amount of time, effort and resources that had been devoted to this oversight function for the other ETFs and that was expected to be provided for each Fund.

Based on their review, the Trustees concluded that the nature, extent and quality of the services to be provided by the Adviser to each Fund under the Agreement were expected to be appropriate and reasonable.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund’s proposed advisory fee, as compared to information compiled from Lipper Inc. (“Lipper”) databases on the average and median net expense ratios of ETF and non-ETF peers. The Trustees noted that the proposed annual advisory fee to be charged to each Fund was a unitary fee, and that the Adviser has agreed to pay all other expenses of each Fund except brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses. The Trustees noted that each Fund’s proposed unitary advisory fee was lower than the average and median net expense ratios of the ETF peer group and a peer group of open-end funds. The Trustees considered each Fund’s proposed advisory fee in light of the administrative, operational and management oversight costs for the Adviser. The Trustees noted that each Fund’s proposed licensing fee will be payable out of the proposed unitary fee to be charged to each Fund. The Board concluded that the unitary advisory fee to be charged to each Fund is reasonable and appropriate in light of the services expected to be provided by the Adviser.

In conjunction with their review of the unitary advisory fee, the Trustees also considered information provided by the Adviser on the proposed costs of services for each Fund and the estimated fees to be paid by the Adviser. The Trustees considered information provided by the Adviser on its profitability, as well as any profits or losses realized by the Adviser from its relationship with other ETFs for which it serves as investment adviser. The Trustees concluded that the estimated profits to be realized by the Adviser with respect to each Fund appeared to be reasonable in comparison with the proposed cost of providing investment advisory services to each Fund.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale may be realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees noted that any reduction in fixed costs associated with the management of each Fund would be enjoyed by the Adviser, but that a unitary fee provides a level of certainty in expenses for each Fund. The Trustees considered whether the proposed advisory fee rate for each Fund is reasonable in relation to the projected asset size of each Fund, and concluded that the flat advisory fee was reasonable and appropriate.

The Trustees noted that the Adviser had not identified any further benefits that it would derive from its relationships with each Fund, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the Agreement for each Fund.

 

 

   140  

 

 

 

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(This Page Intentionally Left Blank)

Proxy Voting Policies and Procedures

A description of the Trust’s 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) 983-0903. This information is also available on the Securities and Exchange Commission’s (“Commission”) website at www.sec.gov.

Information regarding how each 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) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Trust files its complete schedule of portfolio holdings for the Funds with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Trust’s 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.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of each Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net asset value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invescopowershares.com.

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©2015 Invesco PowerShares Capital Management LLC    P-PS-AR-8
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   
invescopowershares.com    800.983.0903   LOGO   @PowerShares   

LOGO

 

     October 31, 2015

2015 Annual Report to Shareholders

 

PLW    PowerShares 1-30 Laddered Treasury Portfolio
BAB    PowerShares Build America Bond Portfolio
PWZ    PowerShares California AMT-Free Municipal Bond Portfolio
PCEF    PowerShares CEF Income Composite Portfolio
DSUM    PowerShares Chinese Yuan Dim Sum Bond Portfolio
PCY    PowerShares Emerging Markets Sovereign Debt Portfolio
PFEM    PowerShares Fundamental Emerging Markets Local Debt Portfolio
PHB    PowerShares Fundamental High Yield® Corporate Bond Portfolio
PFIG    PowerShares Fundamental Investment Grade Corporate Bond Portfolio
PGHY    PowerShares Global Short Term High Yield Bond Portfolio
PICB    PowerShares International Corporate Bond Portfolio
LDRI    PowerShares LadderRite 0-5 Year Corporate Bond Portfolio
PZA    PowerShares National AMT-Free Municipal Bond Portfolio
PZT    PowerShares New York AMT-Free Municipal Bond Portfolio
PGX    PowerShares Preferred Portfolio
VRP    PowerShares Variable Rate Preferred Portfolio
PVI    PowerShares VRDO Tax-Free Weekly Portfolio

 

LOGO

 

Table of Contents

 

The Market Environment      3   
Manager’s Analysis      4   
Fixed Income Portfolios   
Schedules of Investments   

PowerShares 1-30 Laddered Treasury Portfolio (PLW)

      46   

PowerShares Build America Bond Portfolio (BAB)

      47   

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ)

      53   

PowerShares CEF Income Composite Portfolio (PCEF)

      56   

PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM)

      58   

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)

      61   

PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)

      65   

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB)

     68   

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG)

      76   

PowerShares Global Short Term High Yield Bond Portfolio (PGHY)

      84   

PowerShares International Corporate Bond Portfolio (PICB)

      90   

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI)

      98   

PowerShares National AMT-Free Municipal Bond Portfolio (PZA)

      101   

PowerShares New York AMT-Free Municipal Bond Portfolio (PZT)

      107   

PowerShares Preferred Portfolio (PGX)

      109   

PowerShares Variable Rate Preferred Portfolio (VRP)

      113   

PowerShares VRDO Tax-Free Weekly Portfolio (PVI)

      116   
Statements of Assets and Liabilities      118   
Statements of Operations      122   
Statements of Changes in Net Assets      126   
Financial Highlights      132   
Notes to Financial Statements      142   
Report of Independent Registered Public Accounting Firm      157   
Fees and Expenses      158   
Tax Information      160   
Trustees and Officers      161   

 

 

   2  

 

 

The Market Environment

 

 

 

Global Fixed Income

Global divergence with respect to growth, inflation and economic policy dominated global bond markets during the fiscal year ended October 31, 2015. Moderate growth in the US and UK led to the beginnings of tighter monetary policy, starting with the end of the US Federal Reserve’s quantitative easing program, in addition to speculation on whether both regions’ central banks would lift short-term interest rates for the first time since before the onset of the 2007-2011 financial crisis. In the rest of the world, particularly in the eurozone and Asia, slowing growth and deflationary trends kept economic policies accommodative in an effort to foster growth. Tepid global growth, together with deflationary concerns, weighed on long-term interest rates and supported government bond prices. Even in the US and UK, a bias toward central bank tightening had the effect of only flattening yield curves, with short-term government yields rising, while long-dated yields declined, weighed down by slower growth and strong investor demand for high quality yields that both countries offered.

Within global credit markets, the investment-grade corporate credit, high yield and emerging market (EM) debt sectors were weighed down by slower global growth, increased risk aversion stemming from broader financial market volatility, and credit markets’ fundamental relationship to oil—the price of which declined significantly during the reporting period. Credit spreads across these sectors widened relative to their respective government counterparts over the reporting period, while valuations weakened. Falling oil prices brought into question the credit quality and even the long-term solvency of many high yield issuers, while bonds of oil-producing emerging market countries also experienced market stress. As the reporting period drew to a close, global equity market volatility stemming from concerns over China’s economic slowdown sent credit market spreads and yields to their highest levels since 2012, creating investing opportunities in some segments of the credit markets.

US Equity

The US economy improved slowly, but steadily, during the fiscal year ended October 31, 2015—although the health of individual economic sectors varied dramatically. The headline story was the continued slowdown in energy markets, as oil prices plummeted when too much supply overwhelmed slowing global demand. However, the more subtle story, which drove the economy forward during the fiscal year, was the improved position of the US consumer.

As the reporting period began in late 2014, economic growth appeared to be stronger in the US than in the rest of the world. US equity markets were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and

most currencies underperformed those of the US. The continued strengthening of the US consumer led US equity markets higher through the spring. Continued low interest rates, the increasing availability of credit from lenders and an improving employment picture all contributed to higher consumer confidence. This strength also helped the markets overcome fears that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. In the summer of 2015, however, US equity markets moved sharply lower. A significant downturn in China’s financial markets and weak global economic growth led the US Federal Reserve to delay raising interest rates, which, in turn, increased investor uncertainty and market volatility. In October, however, US markets rallied, recovering from their earlier decline and finishing higher for the fiscal year.

Global Equity

International markets experienced increased volatility during the fiscal year ended October 31, 2015, driven largely by the continued slowdown in energy markets and the economic downturn in China. Developed markets were generally able to withstand these headwinds, even as more fragile emerging markets began to falter.

As the reporting period began in late 2014, international equity markets moved higher, although economic growth appeared to be somewhat stronger in the US than in the rest of the world. Equity markets globally were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US.

Global markets were rattled again amid growing concerns that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. However, those fears subsided when a bailout was ultimately approved. The eurozone also benefited from generally positive economic data, which helped markets weather subsequent economic volatility.

In the summer of 2015, fears of a potential economic slowdown in China dominated headlines. The combination of a slowing Chinese economy, a sharp sell-off in domestic Chinese equities and the devaluation of China’s currency, the renminbi, contributed to a strong correction in global equity markets. Emerging markets, in particular, were hard hit by events in China and by continued weak commodity prices—as well as by the US Federal Reserve’s decision to delay raising interest rates, which increased investor uncertainty and market volatility.

 

 

 

   3  

 

 

 

PLW    Manager’s Analysis
   PowerShares 1-30 Laddered Treasury Portfolio (PLW)

 

As an index fund, the PowerShares 1-30 Laddered Treasury Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index (the “Index”). The Fund generally will invest at least 80% of its total assets in U.S. Treasury securities that comprise the Index. The Index measures potential returns of a theoretical portfolio of U.S. Treasury securities with a yield curve based upon 30 distinct annual maturities. The Index seeks to maintain a continuous maturity laddered portfolio of securities, meaning that securities holdings are scheduled to mature in a proportional, annual sequential pattern. The NASDAQ OMX Group, Inc. (the “Index Provider”) allows a six-month maturity deviation if securities with a desired maturity date are not available.

Strictly in accordance with its guidelines and mandated procedures, the Index Provider selects securities for inclusion in the Index that are U.S. Treasury-auctioned issues with fixed coupon rates that are non-callable. The Index Provider does not include Treasury inflation-protected securities, bills or zero-coupon securities in the Index. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 4.18%. On a net asset value (“NAV”) basis, the Fund returned 4.21%. During the same time period, the Index returned 4.45%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Barclays U.S. Treasury Index (the “Benchmark Index”) returned 2.39%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 250 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the roughly 5-year average duration U.S. Treasury market.

Relative to the Benchmark Index, the Fund was most overweight in bonds with maturities between 10 and 20 years and most underweight in bonds with maturities between 1 and 3 years during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed in part due to the Fund’s relative overweight position in bonds with maturities between 10 and 20 years.

For the fiscal year ended October 31, 2015, the bonds with maturities between 10 and 20 years duration contributed most significantly to the Fund’s return, followed by the bonds with maturities less than 1 year and bonds with maturities between 7

and 10 years durations, respectively. The bonds with maturities greater than 20 years duration detracted most significantly from the Fund’s return, followed by the bonds with maturities between 5 and 7 years duration.

Positions that contributed most significantly to the Fund’s return included United States Treasury Bonds, 4.375% coupon, due 2/15/2038 (portfolio average weight of 3.37%), and United States Treasury Bonds, 4.75% coupon, due 2/15/2037 (portfolio average weight of 3.36%). Positions that detracted most significantly from the Fund’s return included United States Treasury Bonds, 4.75% coupon, due 2/15/2041 (portfolio average weight of 3.36%), and United States Treasury Bonds, 2.50% coupon, due 2/15/2045 (portfolio average weight of 2.34%).

 

Duration Breakdown
(% of the Fund’s Net Assets)

as of October 31, 2015

  

Maturing in 0-5 Years

      19.8   

Maturing in 6-10 Years

      16.7   

Maturing in 11-15 Years

      23.4   

Maturing in 16-20 Years

      9.8   

Maturing in 21-25 Years

      16.4   

Maturing in 26-30 Years

      12.9   

Money Market Fund Plus Other Assets Less Liabilities

      1.0   

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)

as of October 31, 2015

  
Security   

United States Treasury Bonds, 5.375%, 02/15/31

      10.0   

United States Treasury Bonds, 4.500%, 02/15/36

      9.9   

United States Treasury Notes, 2.000%, 02/15/22

      3.4   

United States Treasury Notes, 3.500%, 02/15/18

      3.4   

United States Treasury Bonds, 6.125%, 11/15/27

      3.4   

United States Treasury Bonds, 6.250%, 05/15/30

      3.4   

United States Treasury Bonds, 5.250%, 02/15/29

      3.3   

United States Treasury Bonds, 6.000%, 02/15/26

      3.3   

United States Treasury Bonds, 6.625%, 02/15/27

      3.3   

United States Treasury Bonds, 6.250%, 08/15/23

      3.3   

Total

     46.7   

 

* Excluding money market fund holdings.
 

 

 

   4  

 

 

PowerShares 1-30 Laddered Treasury Portfolio (PLW) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index     4.45 %      2.22 %      6.79 %      5.07 %      28.04 %        6.65 %      67.98 % 
Barclays U.S. Treasury Index     2.39        1.22        3.71        2.51        13.17          4.33        40.66   
Fund                
NAV Return     4.21        1.97        6.01        4.80        26.39          6.34        64.09   
Market Price Return     4.18        2.00        6.13        4.80        26.44          6.31        63.71   

 

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   5  

 

 

 

BAB    Manager’s Analysis
   PowerShares Build America Bond Portfolio (BAB)

 

As an index fund, the PowerShares Build America Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of The BofA Merrill Lynch Build America Bond Index (the “Index”). The Fund generally will invest at least 80% of its total assets in taxable municipal securities eligible to participate in the Build America Bond program (the “BAB program”) created under the American Recovery and Reinvestment Act of 2009 or other legislation providing for the issuance of taxable municipal securities on which the issuer receives federal support of the interest paid (“Build America Bonds”) and that comprise the Index.

The Index is designed to track the performance of U.S. dollar-denominated investment grade taxable municipal debt publicly issued under the BAB program by U.S. states and territories, and their political subdivisions, in the U.S. market. Qualifying securities must have a minimum amount outstanding of $1 million, at least 18 months remaining term to final maturity at the time of issuance and at least one year remaining term to final maturity, a fixed coupon schedule and an investment grade rating (based on an average of Moody’s Investors Service, Inc., Standard & Poor’s, a division of The McGraw-Hill Company, Inc., and Fitch Ratings, Inc.). Because Congress did not extend the BAB program, issuance of Build America Bonds ceased on December 31, 2010. Outstanding Build America Bonds remain eligible for the federal interest rate subsidy, which continues for the life of the Build America Bonds; however, no bonds issued following expiration of the BAB program are eligible for the federal tax subsidy. The Index does not include bonds that, under the BAB program, are eligible for tax credits.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 2.65%. On a net asset value (“NAV”) basis, the Fund returned 2.40%. During the same time period, the Index returned 3.04%. During the fiscal year, the Fund employed a “sampling” methodology to attempt to track the Index, rather than a full replication methodology. During the fiscal year, the Fund’s duration was slightly shorter than that of the Index because of a limited supply of Build America Bonds. The Fund’s performance for the period differed from the return of the Index primarily due to the impact from the Fund’s sampling methodology, this duration difference and the fees and operating expenses that the Fund incurred.

During this same time period, The BofA Merrill Lynch U.S. Corporate Master Index returned 0.96% and Barclays U.S. Aggregate Index returned 1.96% (both are “Benchmark Indices”). The Benchmark Indices are unmanaged indices weighted by market capitalization and based on the average performance of approximately 6,450 securities and 9,620 securities, respectively. The adviser provided these Benchmark Indices to help investors better understand how the investment results of the Fund compare to the performance of a benchmark of investment grade

corporate debt with at least one year to maturity and a benchmark representative of the U.S investment-grade, fixed-rate bond market, respectively.

The majority of the Fund’s outperformance relative to the Benchmark Indices during the period can be attributed to the continuing low interest rate environment and limited supply of Build America Bonds, thus resulting in the Build America Bond market outperforming other markets within the fixed-income universe.

For the fiscal year ended October 31, 2015, specific state exposure that contributed most significantly to the Fund’s return included North Carolina, Florida, and Louisiana, respectively. Specific state exposure that detracted most significantly from the Fund’s return included Florida, New Jersey, and Georgia, respectively.

Positions that contributed most significantly to the Fund’s return included American Municipal Power, Inc. Ohio Ser. 10, 5.94% coupon, due 2/15/2047 (no longer held at fiscal year-end), and North Texas Tollway Authority, 8.91% coupon, due 2/1/2030 (portfolio average weight of 1.63%). Positions that detracted most significantly from the Fund’s return included San Francisco City & County Public Utilities Commission Ser. 10, 6.95% coupon, due 11/1/2050 (portfolio average weight of 0.84%), and Chicago Board of Education Ser. 09E, 6.138% coupon, due 12/1/2039 (portfolio average weight of 1.47%).

 

State Breakdown
(% of the Fund’s Net Assets) as of
October 31, 2015		  
California      26.4   
Florida      4.0   
Illinois      9.8   
Missouri      3.8   
Nevada      3.0   
New Jersey      5.0   
New York      11.0   
Texas      8.4   
Washington      4.6   
Other States Less Than 3% Each      21.0   
Money Market Fund Plus Other Assets Less Liabilities      3.0   
 

 

 

   6  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

 

Top Ten Fund Holdings
* (% of the Fund’s Net Assets)

as of October 31, 2015

  

  

Security   

California State Ser. 09, 7.500%, 04/01/34

      3.7   

Metropolitan Transportation Auth. New York Rev. Ser. 10E, 6.814%, 11/15/40

      2.3   

Illinois State Ser. 10-1, 5.563%, 02/01/21

      2.3   

California State Highway Safety Air Quality Remarketed Ser. 09B, 6.509%, 04/01/39

      1.9   

Missouri Joint Municipal Electric Utility Commission Power Project Rev. Ser. 09A, 6.890%, 01/01/42

      1.8   

California State Ser. 10, 7.600%, 11/01/40

      1.8   

Texas State Transportation Commission Rev. (First Tier) Ser. 10B, 5.178%, 04/01/30

      1.7   

American Municipal Power, Inc. Ohio (Combined Hydroelectric Projects) Rev. Ser.10, 8.084%, 02/15/50

      1.6   

University of Texas System Ser. 10C, 4.644%, 08/15/30

      1.6   
Municipal Electric Auth. of Georgia (Plant Vogtle Units 3&4 Project P) Ser. 10, 7.055%, 04/01/57      1.6   
Total      20.3   

 

* Excluding money market fund holdings.

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
The BofA Merrill Lynch Build America Bond Index     3.04 %      4.08 %      12.74 %      7.98 %      46.77 %        8.13 %      59.25 % 
The BofA Merrill Lynch U.S. Corporate Master Index     0.96        2.07        6.33        4.40        24.03          5.52        37.68   
Barclays U.S. Aggregate Index     1.96        1.65        5.02        3.03        16.07          3.75        24.51   
Fund                
NAV Return     2.40        3.64        11.31        7.44        43.16          7.98        57.96   
Market Price Return     2.65        3.74        11.64        7.46        43.27          7.95        57.68   

 

 

   7  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

 

 

Fund Inception: November 17, 2009

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   8  

 

 

 

PWZ    Manager’s Analysis
   PowerShares California AMT-Free Municipal Bond Portfolio (PWZ)

 

As an index fund, the PowerShares California AMT-Free Municipal Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of The BofA Merrill Lynch California Long-Term Core Plus Municipal Securities Index (the “Index”).The Fund generally will invest at least 80% of its total assets in municipal securities that comprise the Index and that are also exempt from the federal alternative minimum tax.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is the Index provider (the “Index Provider”) for the Index. The Index is designed to track the performance of U.S. dollar-denominated, investment grade, tax-exempt debt publicly issued in California or any U.S. territory, including Puerto Rico, or their political subdivisions, in the U.S. domestic market with a term of at least 15 years remaining to final maturity. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 2.87%. On a net asset value (“NAV”) basis, the Fund returned 3.25%. During the same time period, the Index returned 3.61%. During the fiscal year, the Fund’s performance differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period and transaction costs the Fund incurred related to monthly index rebalances.

During this same time period, the Barclays Municipal Bond 20-Year Index (the “Benchmark Index”) returned 3.33%. The Benchmark Index is an unmanaged index weighted by market capitalization. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of municipal securities with maturities of 17 to 22 years.

Relative to the Benchmark Index, the Fund was most overweight in the U.S. territory of Guam and most underweight in the state of California during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to fees and operating expenses that the Fund incurred during the period.

For the fiscal year ended October 31, 2015, the U.S. territory of Guam contributed most significantly to the Fund’s return, followed by the state of California and the territory of Puerto Rico, respectively. There were no detracting states.

Positions that contributed most significantly to the Fund’s return included University of California Regents Medical Center Pooled Rev. Ser. 07A, 4.75% coupon, due 5/15/2031 (portfolio average weight of 1.05%), and California State Various Purpose Ser. 09, 6.0% coupon, due 4/1/2038 (portfolio average weight of 0.93%). Positions that detracted most significantly from the Fund’s return

included Santa Cruz County California Redevelopment Successor Agency Tax Allocation Ref. Ser. 15A, 5.0% coupon, due 9/1/2035 (portfolio average weight of 1.64%), and California State University Rev. Systemwide Ser. 14A, 5.0% coupon, due 11/1/2039 (portfolio average weight of 2.50%).

 

Revenue Type Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Ad Valorem Property Tax

      23.1   

College Revenue

      11.9   

Lease Revenue

      11.4   

Electric Power Revenue

      7.6   

Health, Hospital, Nursing Home Revenue

      6.4   

Port, Airport & Marina Revenue

      6.2   

Miscellaneous Revenue

      5.8   

Water Revenue

      5.6   

Highway Tolls Revenue

      4.5   

General Fund

      3.7   

Tax Increment Revenue

      3.6   

Special Tax

      2.7   

Sewer Revenue

      1.8   

Special Assessment

      1.5   

Sales Tax Revenue

      1.3   

Recreational Revenue

      1.0   

Other Assets Less Liabilities

      1.9   
 

 

 

   9  

 

 

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ) (continued)

 

Top Ten Fund Holdings
(% of the Fund’s Net Assets)

as of October 31, 2015

  
Security   

Bay Area California Auth. Toll Bridge Rev. Ser. 14S-6, 5.000%, 10/01/54

      4.5   

California State Educational Facilities Auth. Rev. (California Institute of Technology) Ser. 09, 5.000%, 11/01/39

      4.0   

Irvine California Unified School District Special Tax Ref. Ser. 15 BAM, 5.000%, 09/01/38

      2.7   

Santa Cruz County California Redevelopment Successor Agency Tax Allocation Ref. Ser. 15A AGM, 5.000%, 09/01/35

      2.6   

California State University Rev. Ref. Ser. 15A, 5.000%, 11/01/38

      2.2   

Guam Power Auth. Rev. Ser. 12A AGM, 5.000%, 10/01/30

      2.1   

Pittsburg Unified School District Financing Auth. Rev. (District Bond Program) Ser. 11 AGM, 5.500%, 09/01/46

      2.1   

Los Angeles California Department of Water & Power Rev. Ser. 12B, 5.000%, 07/01/43

      2.1   

California State University Rev. Systemwide Ser. 14A, 5.000%, 11/01/39

      2.1   

Los Angeles California Department of Airports Ref. Rev. Sub.-Ser. 15C, 5.000%, 05/15/38

      2.1   

Total

      26.5   

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Blended—The BofA Merrill Lynch California Long-Term Core Plus Municipal Securities Index††     3.61 %      4.06 %      12.68 %      5.63 %      31.53 %        5.19 %      50.26 % 
Barclays Municipal Bond 20-Year Index     3.33        3.61        11.22        5.44        30.30          5.59        54.97   
The BofA Merrill Lynch California Long-Term Core Plus Municipal Securities Index††     3.61        N/A        N/A        N/A        N/A          N/A        N/A   
Fund                
NAV Return     3.25        3.88        12.09        5.03        27.83          4.55        43.15   
Market Price Return     2.87        3.96        12.36        5.08        28.14          4.49        42.48   

 

 

   10  

 

 

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ) (continued)

 

 

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities.

Index, Blended-Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

+  Fund, Index, Blended-Index and Benchmark Index returns are based on the inception date of the Fund.

 

++”3 Years”, “5 Years” and “Fund Inception” performance for the Index is not available because the Index did not commence until February 12, 2013. The Blended-BofA Merrill Lynch California Long-Term Core Plus Municipal Securities Index is comprised of the performance of the BofA Merrill Lynch California Insured Long-Term Core Municipal Securities Index the Fund’s underlying index, from Fund inception through the conversion date, May 29, 2009, followed by the performance of the BofA Merrill Lynch California Insured Long-Term Core Plus Municipal Securities Index, the Fund’s underlying index for the period May 29, 2009 through July 8, 2014, followed by the performance of the Index for the period July 8, 2014 through October 31, 2015.
 

 

 

   11  

 

 

 

PCEF    Manager’s Analysis
   PowerShares CEF Income Composite Portfolio (PCEF)

 

As an index fund, the PowerShares CEF Income Composite Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S-Network Composite Closed-End Fund IndexSM (the “Index”). The Fund generally will invest at least 90% of its total assets in securities of U.S.-listed closed-end funds that comprise the Index. The Fund is a “fund of funds,” as it invests its assets in the common shares of funds included in the Index rather than in individual securities.

S-Network Global Indexes, LLC (the “Index Provider”), compiles, maintains and calculates the Index, which tracks the overall performance of a global universe of U.S.-listed closed-end funds that are organized under the laws of the United States, which may be invested in taxable investment grade fixed-income securities, taxable high yield fixed-income securities and taxable equity options. The Index may include closed-end funds that are advised by an affiliate of Invesco PowerShares Capital Management LLC, the adviser. The number of constituents comprising the Index varies based on the number of closed-end funds that meet the Index’s eligibility criteria at each quarterly rebalancing. The Index Provider selects constituents of the Index from a universe of approximately 350 closed-end funds that: (i) are organized under the laws of the United States and are in compliance with all applicable laws and regulations applicable to closed-end funds; (ii) have a stated investment objective of concentrating in the taxable fixed-income, high yield fixed-income or option income sector; (iii) trade on a recognized North American stock exchange that provides a “last closing price;” (iv) have a minimum capitalization value greater than $100 million; and (v) have an average daily turnover of more than $500,000 per day for the three months prior to the rebalancing date. The Index Provider weights Index constituents based on their net assets, adjusted for their average share price discount and modified to ensure compliance with the diversification requirements of Subchapter M of the Internal Revenue Code of 1986, as amended. The Fund generally invests in all of the securities in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (2.62)%. On a net asset value (“NAV”) basis, the Fund returned (2.31)%. During the same time period, the Index returned (1.88)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred, as well as trading costs around quarterly rebalances.

For the fiscal year ended October 31, 2015, the specialty asset class was the only contributing asset class. The mixed allocation asset class detracted most significantly from the Fund’s return, followed by the domestic equity and bonds asset classes, respectively.

Positions that contributed most significantly to the Fund’s return included Aberdeen Asia-Pacific Income Fund, Inc., a closed-end fixed income fund (portfolio average weight of 2.45%), and Nuveen Quality Preferred Income Fund II, a closed-end fixed income fund (portfolio average weight of 1.32%). Positions that detracted most significantly from the Fund’s return included AllianzGI NFJ Dividend, Interest & Premium Strategy Fund, a closed-end mixed allocation fund company (portfolio average weight of 1.43%), and BlackRock Resources & Commodities Strategy Trust, a closed-end equity fund (portfolio average weight of 1.04%).

 

Asset Class Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Bonds

      48.4   

Bonds/High Yield

      27.9   

Option Income

      22.4   

Domestic Equity

      1.3   
Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

PIMCO Dynamic Credit Income Fund

      3.8   

Eaton Vance Tax-Managed Global Diversified Equity Income Fund

      2.7   

DoubleLine Income Solutions Fund

      2.5   

Eaton Vance Limited Duration Income Fund

      2.4   

Aberdeen Asia-Pacific Income Fund, Inc.

      2.3   

BlackRock Credit Allocation Income Trust

      2.2   

BlackRock Corporate High Yield Fund, Inc.

      2.1   

BlackRock Enhanced Equity Dividend Trust

      2.1   

AllianzGI NFJ Dividend, Interest & Premium Strategy Fund

      1.8   

AllianceBernstein Income Fund, Inc.

      1.7   

Total

      23.6   
 

 

 

   12  

 

 

PowerShares CEF Income Composite Portfolio (PCEF) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S-Network Composite Closed-End Fund IndexSM     (1.88 )%      3.59 %      11.15 %      5.19 %      28.80 %        6.34 %      41.89 % 
Fund                
NAV Return     (2.31 )      3.09        9.57        4.68        25.72          5.83        38.07   
Market Price Return     (2.62 )      2.93        9.05        4.62        25.34          5.76        37.56   

 

Fund Inception: February 19, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 1.88% includes the unitary management fee of 0.50% and acquired fund fees and expenses of 1.38%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in their respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.
 

 

 

   13  

 

 

 

DSUM    Manager’s Analysis
   PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM)

 

As an index fund, the PowerShares Chinese Yuan Dim Sum Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Citigroup Custom Dim Sum (Offshore CNY) Bond Index (the “Index”). The Fund generally will invest at least 80% of its total assets in Chinese Renminbi (“RMB”)-denominated bonds that comprise the Index.

The Index is designed to provide exposure to RMB-denominated “Dim Sum” bonds that are issued and settled outside of mainland China. Dim Sum bonds generally are issued in Hong Kong by a variety of entities ranging from governments to corporations. The Index, strictly in accordance with its guidelines and mandated procedures, includes securities with a minimum maturity of one month and an outstanding principal amount of at least RMB 1 billion. The Index is composed of RMB-denominated bonds issued by governments, agencies, supranationals and credit securities, but excludes synthetic bonds, retail bonds and CDs. There is no minimum rating requirement for inclusion in the Index. Citigroup Index LLC, the Index provider, rebalances the Index monthly. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (0.56)%. On a net asset value (“NAV”) basis, the Fund returned (0.71)%. During the same time period, the Index returned 0.13%. The Fund’s performance during the period differed from the return of the Index primarily due to fees and operating expenses and trading costs that the Fund incurred, as well as the impact of the Fund’s sampling methodology.

Positions that contributed most significantly to the Fund’s return included Gemdale International Holding, 9.15% coupon, due 7/26/2015 (no longer held at fiscal year-end), and China Government Bond, 3.09% coupon, due 6/29/2020 (portfolio average weight of 1.89%). Positions that detracted most significantly from the Fund’s return included Kaisa Group Holdings Ltd., 6.875% coupon, due 4/22/2016 (no longer held at fiscal year-end), and Lafarge Shui On Cement Ltd., 9% coupon, due 11/14/2014 (no longer held at fiscal year-end).

Industry Breakdown
(% of the Fund’s Net Assets)

as of October 31, 2015

  
Sovereign      29.5   
Banks      22.3   
Real Estate      7.8   
Diversified Financial Services      5.3   
Multi-National      3.8   
Electric      3.3   
Telecommunications      3.0   
Airlines      2.9   
Auto Manufacturers      2.5   
Private Equity      1.9   
Machinery-Construction & Mining      1.9   
Mining      1.9   
Insurance      1.7   
Oil & Gas      1.7   
Food      1.7   
Investment Companies      1.3   
Computers      1.1   
Lodging      1.0   
Internet      1.0   
Holding Companies-Diversified      0.9   
Retail      0.9   
Gas      0.4   
Money Market Fund Plus Other Assets Less Liabilities      2.2   
 

 

 

   14  

 

 

PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM) (continued)

 

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)

as of October 31, 2015

  
Security   
Banco BTG Pactual SA, GMTN, 4.100%, 03/26/16      4.6   
China Government Bond, 2.600%, 11/22/16      2.9   
Standard Chartered PLC, 2.625%, 05/31/16      2.9   
Russian Agricultural Bank OJSC Via RSHB Capital SA, MTN, 3.600%, 02/04/16      2.9   
Bank of Tokyo-Mitsubishi UFJ China Ltd., 3.050%, 05/26/17      2.8   
China Government Bond, 1.400%, 08/18/16      2.6   
Caisse d’Amortissement de la Dette Sociale, 3.800%, 02/06/17      1.9   
Agricultural Bank of China Ltd., 3.200%, 11/28/15      1.9   
Bank of Communications Co. Ltd., 3.300%, 03/20/16      1.9   
Export-Import Bank of China (The), 3.000%, 05/14/16      1.9   
Total      26.3   

 

* Excluding money market fund holdings.

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

         Fund Inception†  
Index             Average
Annualized		     Cumulative  
Citigroup Custom Dim Sum (Offshore CNY) Bond Index     0.13 %      3.32 %      10.29 %        4.19 %      18.33 % 
Fund            
NAV Return     (0.71 )      2.79        8.61          3.44        14.87   
Market Price Return     (0.56 )      2.42        7.44          2.35        9.99   

 

Fund Inception: September 23, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.45% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in its respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.
 

 

 

   15  

 

 

 

PCY    Manager’s Analysis
   PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)

 

As an index fund, the PowerShares Emerging Markets Sovereign Debt Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the DB Emerging Market USD Liquid Balanced Index (the “Index”). The Index measures potential returns of a theoretical portfolio of liquid U.S. dollar-denominated government bonds from emerging market countries. The Fund generally will invest at least 80% of its total assets in U.S. dollar-denominated government bonds, from emerging market countries that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Deutsche Bank Securities Inc. (“DB”) selects one to three securities from each of the emerging market countries set forth below that (i) are denominated in U.S. dollars, (ii) are sovereign bonds, (iii) have at least three years to maturity, and (iv) have an outstanding float of at least $500 million. Historically, the Index has included bonds issued by the governments of Bulgaria, Brazil, Colombia, Croatia, El Salvador, Hungary, Indonesia, Lithuania, Mexico, Panama, Peru, the Philippines, Pakistan, Poland, Qatar, Russia, Romania, South Africa, South Korea, Turkey, Ukraine, Uruguay, Vietnam and Venezuela; however, this universe of countries may change in accordance with DB’s determination of eligible emerging market countries and there is no assurance that a particular country will be represented in the Index at any given time. The Fund employs a “sampling” methodology to attempt to track the Index, rather than full replication methodology.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 1.49%. On a net asset value (“NAV”) basis, the Fund returned 1.87%. During the same time period, the Index returned 2.24%. During the fiscal year, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the JP Morgan Emerging Market Bond Global Index (the “Benchmark Index”) returned (0.50)%. The Benchmark Index is an unmanaged index weighted by country, which limits weights of countries with higher debt outstanding, reallocating this excess to countries with lower debt outstanding, based on the average performance of approximately 500 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the U.S. dollar-denominated bond market in emerging market countries. Relative to the Benchmark Index, the Fund was most overweight in the country of Lithuania and most underweight in the Latin America Bloc during the fiscal year ended October 31, 2015.The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s relative underweighting in Ukraine and Latin America.

For the fiscal year ended October 31, 2015, the country of Ukraine contributed most significantly to the Fund’s return, followed by the countries of Hungary and Qatar, respectively. The country of Brazil detracted most significantly from the Fund’s return, followed by the countries of Venezuela and El Salvador, respectively.

Positions that contributed most significantly to the Fund’s return included Ukraine Government, 7.75% coupon, due 9/23/2020 (portfolio average weight of 1.34%), and Ukraine Government, 7.95% coupon, due 2/23/2021 (portfolio average weight of 1.42%). Positions that detracted most significantly from the Fund’s return included Brazilian Government International Bond, 5.625% coupon, due 1/7/2041, (portfolio average weight of 1.26%), and Venezuela Government International Bond, 7.75% coupon, due 10/13/2019, (portfolio average weight of 0.81%).

 

 

 

   16  

 

 

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) (continued)

 

Country Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Ukraine      6.0   
Russia      4.1   
Qatar      3.7   
Pakistan      3.6   
Latvia      3.6   
Lithuania      3.6   
Poland      3.6   
Romania      3.6   
Philippines      3.5   
Venezuela      3.5   
Croatia      3.5   
Panama      3.4   
Serbia      3.4   
Hungary      3.4   
Slovenia      3.4   
Sri Lanka      3.4   
South Korea      3.4   
Morocco      3.3   
Turkey      3.3   
Uruguay      3.3   
Dominican Republic      3.3   
South Africa      3.3   
Indonesia      3.3   
Peru      3.3   
Mexico      3.2   
Colombia      3.1   
El Salvador      3.1   
Brazil      3.0   
Money Market Funds Plus Other Assets Less Liabilities      1.8   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Ukraine Government International Bond, 7.950%, 02/23/21      2.0   
Ukraine Government International Bond, 7.500%, 04/17/23      2.0   
Ukraine Government International Bond, 7.750%, 09/23/20      2.0   
Republic of Latvia, 2.750%, 01/12/20      1.8   
Republic of Latvia, 5.250%, 06/16/21      1.8   
Romanian Government International Bond, MTN, 6.750%, 02/07/22      1.8   
Romanian Government International Bond, MTN, 4.375%, 08/22/23      1.8   
Morocco Government International Bond, 4.250%, 12/11/22      1.7   
Morocco Government International Bond, 5.500%, 12/11/42      1.6   
Russian Foreign Bond—Eurobond, 5.625%, 04/04/42      1.4   
Total      17.9   

 

* Excluding money market fund holdings.
 

 

 

   17  

 

 

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
DB Emerging Markets USD Liquid Balanced Index     2.24 %      2.11 %      6.47 %      5.89 %      33.14 %        8.06 %      86.73 % 
JP Morgan Emerging Market Bond Global Index     (0.50 )      1.29        3.91        4.69        25.77          6.77        69.49   
Fund                
NAV Return     1.87        1.42        4.32        4.96        27.39          6.91        71.36   
Market Price Return     1.49        1.23        3.75        4.89        26.99          6.80        69.82   

 

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   18  

 

 

 

PFEM    Manager’s Analysis
   PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)

 

As an index fund, the PowerShares Fundamental Emerging Markets Local Debt Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Citi RAFI Bonds Sovereign Emerging Markets Extended Local Currency Index (the “Index”). The Fund generally will invest at least 80% of its total assets in the bonds issued by the national governments of emerging market countries that comprise the Index.

Research Affiliates LLC (“RA”) and Citigroup Index LLC (“Citigroup” and with RA, the “Index Provider”) jointly select the emerging market countries from a set of existing indices that Citigroup has produced that measure government bond markets. To be included in the Index, countries must have a minimum domestic sovereign debt rating of CC by Standard & Poor’s and Ca by Moody’s Investors Service, Inc, and must meet a minimum outstanding amount requirement. Strictly in accordance with its existing guidelines and mandated procedures, Citigroup selects bonds from the eligible emerging market countries for inclusion in the Index that have at least one year to maturity. Using RA’s proprietary weighting methodology, the Index Provider annually weights the bonds of each selected country in the Index based on that country’s economic strength: gross domestic product, population, land area, and energy consumption. The Fund employs a “sampling” methodology to attempt to track the Index, rather than full replication methodology, due to the large number of constituent securities in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (13.18)%. On a net asset value (“NAV”) basis, the Fund returned (12.48)%. During the same time period, the Index returned (12.24)%. The Fund’s performance differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, The BofA Merrill Lynch Local Debt Markets Plus Index (the “Benchmark Index”) returned (14.87)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 390 securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a local currency emerging market bond benchmark. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to constituency differences in countries and weightings.

For the fiscal year ended October 31, 2015, bonds from the country of Israel contributed most significantly to the Fund’s return, followed by the countries of the Philippines and South Korea, respectively. The country of Brazil detracted most significantly from the Fund’s return, followed by the countries of Colombia and Malaysia, respectively.

Positions that contributed most significantly to the Fund’s return included Russia Govt Bond—OFZ, 6.8% coupon, due 12/11/2019, a Russian bond (portfolio average weight of 4.77%), and Russia Govt Bond—OFZ, 7.6% coupon, due 7/20/2022, a Russian bond (portfolio average weight of 4.6%). Positions that detracted most significantly from the Fund’s return included Nota Do Tesouro Nacional, 10% coupon, due 1/1/2023, a Brazilian bond (portfolio average weight of 2.74%), and Nota Do Tesouro Nacional, 10% coupon, due 1/1/2021, a Brazilian bond (portfolio average weight of 4.26%).

Country Breakdown
(% of the Fund’s Net Assets)

as of October 31, 2015

  
Russia      10.9   
Brazil      8.3   
South Korea      8.2   
Mexico      8.0   
Indonesia      7.7   
Philippines      4.7   
Israel      4.4   
Malaysia      4.4   
Czech Republic      4.2   
Thailand      4.1   
Chile      4.0   
Poland      4.0   
Hungary      4.0   
Turkey      3.9   
Colombia      3.7   
Peru      3.7   
South Africa      3.7   
China      3.6   
Money Market Fund Plus Other Assets Less Liabilities      4.5   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Korea Treasury Bond, Series 2106, 4.250%, 06/10/21      6.9   
Russian Federal Bond—OFZ, Series 6209, 7.600%, 07/20/22      4.5   
Russian Federal Bond—OFZ, Series 6210, 6.800%, 12/11/19      4.3   
Brazil Notas do Tesouro Nacional, Series NTNF, 10.000%, 01/01/21      4.2   
Chile Government International Bond, 6.000%, 01/01/20      4.0   
Indonesia Treasury Bond, Series FR40, 11.000%, 09/15/25      3.8   
Israel Government Bond, Series 0122, 5.500%, 01/31/22      3.8   
Mexican Bonos, Series M 20, 8.500%, 05/31/29      3.7   
China Government Bond, 2.560%, 06/29/17      3.6   
Mexican Bonos, Series M, 5.000%, 06/15/17      2.9   
Total      41.7   

 

* Excluding money market fund holdings.
 

 

 

   19  

 

 

PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

         Fund Inception†  
Index         Average
Annualized		     Cumulative  
Citi RAFI Bonds Sovereign Emerging Markets Extended Local Currency Index     (12.24 )%        (9.22 )%      (21.29 )% 
The BofA Merrill Lynch Local Debt Markets Plus Index     (14.87 )        (9.76 )      (22.45 ) 
Fund        
NAV Return     (12.48 )        (9.89 )      (22.75 ) 
Market Price Return     (13.18 )        (10.21 )      (23.43 ) 

 

Fund Inception: May 9, 2013

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   20  

 

 

 

PHB    Manager’s Analysis
   PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB)

 

As an index fund, the PowerShares Fundamental High Yield® Corporate Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the RAFI® Bonds US High Yield 1-10 Index (the “Index”). The Fund generally will invest at least 80% of its total assets in high-yield corporate bonds that comprise the Index.

The Index is comprised of U.S. dollar-denominated bonds that are registered with the SEC or that are Rule 144A securities that provide for registration rights (issued after July 31, 2013) and whose issuers are public companies listed on a major U.S. stock exchange. Only investible, non-convertible, non-exchangeable, non-zero, fixed coupon high-yield corporate bonds qualify for inclusion in the Index. Bonds of foreign agencies, governments or supra-nationals, as well as those issuers that are not domiciled in the United States, are excluded from the Index. Ryan ALM, Inc. compiles and calculates the Index, which measures potential returns based on the Fundamental Index® methodology developed by Research Affiliates, LLC (the “Index Provider”). The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (0.75)%. On a net asset value (“NAV”) basis, the Fund returned (0.90)%. During the same time period, the Index returned 0.11%. The Fund’s performance differed from the return of the Index primarily due to due to fees, operating expenses and trading costs that the Fund incurred during the period, as well as the impact from security selection within the energy industry.

During this same time period, the Barclays U.S. Corporate High Yield Index (the “Benchmark Index”) returned (1.94)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 2,190 securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compares to the performance of a broad-based U.S. high yield corporate bond benchmark.

Relative to the Benchmark Index, the Fund was most overweight in the retail industry and most underweight in the telecommunication services industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s overweight position in the retail industry and underweight position in the telecommunications services industry.

For the fiscal year ended October 31, 2015, the pharmaceuticals industry contributed most significantly to the Fund’s return,

followed by the transportation and retail industries, respectively. The oil & gas services industry detracted most significantly from the Fund’s return, followed by the energy and materials industries, respectively.

Positions that contributed most significantly to the Fund’s return included California Resources Corp., 6% coupon, due 11/15/2024 (portfolio average weight of 0.28%), and Chemours Co., 6.625% coupon, due 5/15/2023 (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Cliffs Natural Resources, Inc., 4.875% coupon, due 4/1/2021 (no longer held at fiscal year-end), and EP Energy LLC, 6.375% coupon, due 6/15/2023 (portfolio average weight of 0.01%).

 

 

 

   21  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Oil & Gas      9.6   
Retail      7.3   
Healthcare-Services      7.2   
Telecommunications      6.0   
Media      5.3   
Electric      3.9   
Commercial Services      3.8   
Diversified Financial Services      3.6   
Chemicals      3.5   
Auto Parts & Equipment      2.8   
REITs      2.8   
Entertainment      2.7   
Packaging & Containers      2.5   
Pipelines      2.3   
Home Builders      2.1   
Food      2.1   
Building Materials      2.0   
Auto Manufacturers      2.0   
Iron/Steel      1.8   
Banks      1.8   
Insurance      1.7   
Electronics      1.5   
Internet      1.5   
Lodging      1.3   
Computers      1.2   
Semiconductors      1.1   
Mining      1.1   
Miscellaneous Manufacturing      1.1   
Apparel      0.9   
Airlines      0.9   
Electrical Components & Equipment      0.9   
Engineering & Construction      0.8   
Advertising      0.7   
Cosmetics/Personal Care      0.7   
Distribution/Wholesale      0.7   
Leisure Time      0.6   
Beverages      0.6   
Holding Companies-Diversified      0.6   
Machinery-Diversified      0.6   
Aerospace/Defense      0.6   
Household Products/Wares      0.5   
Oil & Gas Services      0.5   
Office/Business Equipment      0.5   
Housewares      0.4   
Coal      0.4   
Environmental Control      0.4   
Machinery-Construction & Mining      0.4   
Healthcare-Products      0.4   
Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Home Furnishings      0.3   
Pharmaceuticals      0.2   
Software      0.2   
Transportation      0.2   
Real Estate      0.1   
Money Market Fund Plus Other Assets Less Liabilities      1.3   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Ally Financial, Inc., 8.000%, 03/15/20      1.3   
General Motors Co., 3.500%, 10/02/18      1.0   
General Motors Co., 4.875%, 10/02/23      1.0   
Flextronics International Ltd., 5.000%, 02/15/23      0.9   
US Airways Group, Inc., 6.125%, 06/01/18      0.9   
Hertz Corp. (The), 6.750%, 04/15/19      0.9   
HCA, Inc., 6.500%, 02/15/20      0.9   
T-Mobile USA, Inc., 6.250%, 04/01/21      0.9   
Williams Cos., Inc. (The), 4.550%, 06/24/24      0.8   
CVS Health Corp., 4.750%, 12/01/22      0.8   
Total      9.4   

 

*   Excluding money market fund holdings.

 

Credit Quality Rating Breakdown*

(% of the Fund’s Net Assets)
as of October 31, 2015

  
AA      0.2   
BBB+      0.8   
BBB      0.9   
BBB-      13.9   
BB+      21.1   
BB      15.7   
BB-      20.2   
B+      11.5   
B      9.6   
B-      4.7   
CCC+      0.1   
Money Market Fund Plus Other Assets Less Liabilities      1.3   

 

* Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to C (lowest); ratings are subject to change without notice. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Ratings Resources on the homepage.

 

 

 

 

 

   22  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		    

5 Years
Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Blended—RAFI® Bonds U.S. High Yield 1-10 Index††     0.11 %      3.71 %      11.55 %      6.00 %      33.80 %        4.94 %      46.74 % 
Barclays U.S. Corporate High Yield Index     (1.94 )      4.15        12.97        6.18        34.98          7.69        80.35   
RAFI® Bonds U.S. High Yield 1-10 Index     0.11        3.71        11.55        6.00        33.80          N/A        N/A   
Fund                
NAV Return     (0.90 )      2.87        8.85        4.85        26.69          2.79        24.47   
Market Price Return     (0.75 )      2.85        8.81        4.80        26.43          2.47        21.41   

 

Fund Inception: November 15, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent

securities. Index, Blended-Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index, Blended-Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  The Blended-RAFI® Bonds US High Yield 1-10 Index is comprised of performance of the original underlying index from Fund inception through the conversion date, August 2, 2010, followed by the performance of the Index starting at the conversion date and through October 31, 2015.
 

 

 

   23  

 

 

 

PFIG    Manager’s Analysis
   PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG)

 

As an index fund, the PowerShares Fundamental Investment Grade Corporate Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the RAFI® Bonds US Investment Grade 1-10 Index (the “Index”). The Fund generally will invest at least 80% of its total assets in corporate bonds that comprise the Index.

The Index is comprised of U.S. dollar-denominated bonds that are registered with the U.S. Securities and Exchange Commission or that are Rule 144A securities that provide for registration rights (issued after July 31, 2013) and whose issuers are public companies listed on a major U.S. stock exchange. Only investible, non-convertible, non-exchangeable, non-zero, fixed coupon investment grade corporate bonds qualify for inclusion in the Index. Bonds of foreign agencies, governments or supra-nationals, as well as those issuers that are not domiciled in the United States are excluded from the Index. In determining each individual security’s relative weight within the Index, Research Affiliates, LLC utilizes four fundamental corporate accounting variables: book value of assets, gross sales, gross dividends and cash flow. A composite fundamental weight is calculated for each security by comparing its four fundamental variables against those of the other issuers in the Index universe.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 1.72%. On a net asset value (“NAV”) basis, the Fund returned 1.69%. During the same time period, the Index returned 2.18%. During the fiscal year, the Fund employed a “sampling” methodology to attempt to track the return of the Index, rather than a full replication methodology. The Fund’s performance differed from the return of the Index primarily due to due to fees and operating expenses that the Fund incurred during the period as well as the impact of the Fund’s sampling methodology.

During this same time period, the Barclays U.S. Corporate Index (the “Benchmark Index”) returned 1.05%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 5,630 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the broad- based U.S. corporate bond market.

Relative to the Benchmark Index, the Fund was most overweight in the software and services industry and most underweight in the banking industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s underweight position in the banking industry.

For the fiscal year ended October 31, 2015, the office REIT industry contributed most significantly to the Fund’s return,

followed by the consumer cyclical services and apartment REIT industries, respectively. The metals and mining industry detracted most significantly from the Fund’s return, followed by the construction machinery and midstream industries, respectively.

Positions that contributed most significantly to the Fund’s return included Safeway Inc, 3.95% coupon, due 8/15/2020 (no longer held), and Bunge Ltd. Finance Corp., 8.5% coupon, due 6/15/2019 (portfolio average weight of 0.23%). Positions that detracted most significantly from the Fund’s return included Freeport-McMoRan, Inc., 3.55% coupon, due 3/1/2022 (portfolio average weight of 0.27%), and Joy Global, Inc., 5.125% coupon, due 10/15/2021 (portfolio average weight of 0.25%).

 

 

 

 

   24  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      9.7   
Oil & Gas      7.2   
Retail      6.6   
Insurance      6.5   
Pharmaceuticals      5.8   
Electric      4.6   
Diversified Financial Services      3.4   
Aerospace/Defense      3.3   
REITs      3.3   
Media      3.1   
Chemicals      3.0   
Semiconductors      3.0   
Telecommunications      2.9   
Computers      2.6   
Agriculture      2.4   
Food      2.3   
Healthcare-Services      2.2   
Transportation      2.0   
Software      1.9   
Healthcare-Products      1.6   
Beverages      1.6   
Miscellaneous Manufacturing      1.5   
Internet      1.5   
Oil & Gas Services      1.5   
Pipelines      1.3   
Cosmetics/Personal Care      1.1   
Auto Manufacturers      0.9   
Biotechnology      0.9   
Commercial Services      0.9   
Electronics      0.8   
Machinery-Diversified      0.8   
Forest Products & Paper      0.7   
Household Products/Wares      0.6   
Office/Business Equipment      0.6   
Auto Parts & Equipment      0.6   
Machinery-Construction & Mining      0.6   
Mining      0.5   
Apparel      0.4   
Electrical Components & Equipment      0.3   
Environmental Control      0.3   
Water      0.3   
Iron/Steel      0.3   
Real Estate      0.3   
Housewares      0.3   
Gas      0.3   
Lodging      0.3   
Textiles      0.3   
Leisure Time      0.3   
Distribution/Wholesale      0.3   
Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Toys/Games/Hobbies      0.3   
Metal Fabricate/Hardware      0.3   
Hand/Machine Tools      0.3   
Engineering & Construction      0.2   
Advertising      0.1   
Money Market Fund Plus Other Assets Less Liabilities      1.3   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Wal-Mart Stores, Inc., 3.250%, 10/25/20      1.0   
Mondelez International, Inc., 4.125%, 02/09/16      0.9   
Citigroup, Inc., 6.125%, 11/21/17      0.8   
Jefferies Group LLC, 6.875%, 04/15/21      0.7   
Verizon Communications, Inc., 5.150%, 09/15/23      0.7   
Hartford Financial Services Group, Inc. (The), 5.125%, 04/15/22      0.7   
Marsh & McLennan Cos., Inc., 4.800%, 07/15/21      0.6   
Marathon Petroleum Corp., 5.125%, 03/01/21      0.6   
Kimberly-Clark Corp., 6.125%, 08/01/17      0.6   
Amgen, Inc., 3.875%, 11/15/21      0.6   
Total      7.2   

 

*   Excluding money market fund holdings.

 

Credit Quality Rating Breakdown*

(% of the Fund’s Net Assets)
as of October 31, 2015

  
AAA      1.2   
AA+      1.7   
AA      3.4   
AA-      4.7   
A+      6.9   
A      15.8   
A-      17.8   
BBB+      17.6   
BBB      18.5   
BBB-      11.1   
Money Market Fund Plus Other Assets Less Liabilities      1.3   

 

* Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to C (lowest); ratings are subject to change without notice. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Ratings Resources on the homepage.
 

 

 

   25  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

         Fund Inception†  
Index             Average
Annualized		     Cumulative  
RAFI® Bonds U.S. Investment Grade 1-10 Index     2.18 %      1.98 %      6.06 %        3.49 %      15.19 % 
Barclays U.S. Corporate Index     1.05        1.93        5.91          4.31        19.01   
Fund            
NAV Return     1.69        1.61        4.92          2.91        12.56   
Market Price Return     1.72        1.63        4.96          2.98        12.87   

 

Fund Inception: September 15, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.22% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   26  

 

 

 

PGHY    Manager’s Analysis
   PowerShares Global Short Term High Yield Bond Portfolio (PGHY)

 

As an index fund, the PowerShares Global Short Term High Yield Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the DB Global Short Maturity High Yield Bond Index (the “Index”). The Fund generally invests at least 80% of its total assets in U.S. and foreign short-term, non- investment grade bonds included in the Index, all of which are denominated in U.S. dollars.

Strictly in accordance with its guidelines and mandated procedures, Deutsche Bank Securities Inc. (“DB” or the “Index Provider”) selects such bonds issued by corporations, as well as sovereign, sub-sovereign, or quasi-government entities, from a universe of eligible securities for inclusion in the Index that (i) are denominated in U.S. dollars; (ii) are rated below “investment grade” (i.e., have a “composite rating” from DB of no greater than “BB+,” but no less than “C”); (iii) have three years or less to maturity; and (iv) have a fixed coupon.

Eligible bonds must be rated by at least one of Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., Moody’s Investors Service, Inc. or Fitch Ratings Inc. DB converts all available ratings for each bond into a numerical score, and then calculates an average score for each bond from those available ratings that corresponds to DB’s “composite rating” system. Eligible bonds include either “short-term” bonds (i.e., bonds that have three years or less until maturity from the date they were issued) or “long-term seasoned” bonds (i.e., bonds that had a maturity longer than three years at the date they were issued, but currently have three years or less until maturity). To be eligible for inclusion in the Index, a “short-term” bond (excluding Eurodollar bonds) must have a minimum amount outstanding of at least $100 million, and a “long-term seasoned” bond (excluding Eurodollar bonds) must have a minimum amount outstanding of at least $250 million. Short-term Eurodollar bonds must have more than $200 million outstanding and long-term seasoned Eurodollar bonds must have more than $350 million outstanding. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 1.61%. On a net asset value (“NAV”) basis, the Fund returned 1.84%. During the same time period, the Index returned 2.09%. The Fund employed a “sampling” methodology to attempt to track the Index, rather than a full replication methodology, due to relative illiquidity of the constituent securities of the Index. The Fund’s performance differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, The BofA Merrill Lynch 0-5 Year US High Yield Constrained Index (the “Benchmark Index”) returned

(2.27)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 970 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the U.S. Dollar-denominated short-term high yield corporate bond market.

Relative to the Benchmark Index, the Fund was most overweight in the banks industry and most underweight in the media industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s relative overweight position in the banks industry.

For the fiscal year ended October 31, 2015, the banks industry contributed most significantly to the Fund’s return, followed by the sovereign and telecommunications industries, respectively. The oil & gas industry detracted most significantly from the Fund’s return, followed by the forest products & paper and software industries, respectively.

Positions that contributed most significantly to the Fund’s return included Ukraine Government, 6.58% coupon, due 11/21/2016, a sovereign bond (portfolio average weight of 0.54%), and Argentina Bonar Bonds, Series X, 7% coupon, due 4/17/2017, a sovereign bond (portfolio average weight of 0.49%). Positions that detracted most significantly from the Fund’s return included Sabine Oil & Gas Corp., 9.75% coupon, due 2/15/2017, an oil & gas company (no longer held at fiscal year-end), and Swift Energy Co., 7.125% coupon, due 6/1/2017, an oil & gas company (portfolio average weight of 0.23%).

 

 

 

   27  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      13.0   
Sovereign      12.7   
Diversified Financial Services      10.1   
Oil & Gas      8.7   
Telecommunications      7.0   
Home Builders      4.2   
Iron/Steel      3.4   
Electric      3.1   
Lodging      2.7   
Building Materials      2.1   
Machinery-Diversified      2.0   
Packaging & Containers      1.9   
Healthcare-Services      1.7   
Media      1.7   
REITs      1.7   
Transportation      1.5   
Retail      1.5   
Real Estate      1.5   
Food      1.4   
Commercial Services      1.3   
Mining      1.3   
Pipelines      1.3   
Beverages      1.2   
Leisure Time      1.1   
Coal      1.1   
Chemicals      1.0   
Forest Products & Paper      0.8   
Miscellaneous Manufacturing      0.8   
Electrical Components & Equipment      0.7   
Investment Companies      0.7   
Software      0.6   
Engineering & Construction      0.6   
Pharmaceuticals      0.4   
Insurance      0.4   
Semiconductors      0.4   
Electronics      0.3   
Auto Parts & Equipment      0.2   
Money Market Fund Plus Other Assets Less Liabilities      3.9   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Lebanon Government International Bond, 11.625%, 05/11/16      1.7   
Vimpel Communications Via VIP Finance Ireland Ltd. OJSC, 6.493%, 02/02/16      1.7   
VimpelCom Holdings BV, 6.255%, 03/01/17      1.2   
Jordan Government International Bond, 3.875%, 11/12/15      1.1   
Navient Corp., MTN, 6.000%, 01/25/17      1.0   
First Tennessee Bank NA, Series BKNT, 5.650%, 04/01/16      0.9   
Sprint Communications, Inc., 6.000%, 12/01/16      0.9   
KB Home, 9.100%, 09/15/17      0.8   
MGM Resorts International, 10.000%, 11/01/16      0.8   
MGM Resorts International, 7.625%, 01/15/17      0.8   
Total      10.9   

 

* Excluding money market fund holdings.
 

 

 

   28  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

              Fund Inception†  
Index   1 Year         Average
Annualized		     Cumulative  
DB Global Short Maturity High Yield Bond Index     2.09 %        3.57 %      8.64 % 
The BofA Merrill Lynch 0-5 Year US High Yield Constrained Index     (2.27 )        2.48        5.97   
Fund        
NAV Return     1.84          2.53        6.09   
Market Price Return     1.61          2.39        5.74   

 

Fund Inception: June 20, 2013

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   29  

 

 

 

PICB    Manager’s Analysis
   PowerShares International Corporate Bond Portfolio (PICB)

 

As an index fund, the PowerShares International Corporate Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P International Corporate Bond Index® (Net) (the “Index”). The Fund generally will invest at least 80% of its total assets in investment grade corporate bonds that comprise the Index.

The Index measures the performance of investment grade corporate bonds issued in the following currencies of Group of Ten countries, excluding the U.S. Dollar (USD): Australia Dollar (AUD), British Pound (GBP), Canadian Dollar (CAD), Euro (EUR), Japanese Yen (JPY), New Zealand Dollar (NZD), Norwegian Krone (NOK), Swedish Krona (SEK) and Swiss Franc (SFR). Standard & Poor’s (the “Index Provider”) constructs the Index from investment grade corporate bonds denominated in the currencies noted above. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (7.94)%. On a net asset value (“NAV”) basis, the Fund returned (7.73)%. During the same time period, the Index returned (7.83)%. The Fund’s performance differed from the return of the Index primarily as a result of the sampling methodology employed.

Positions that contributed most significantly to the Fund’s return included BNP Paribas, 2.50% coupon, due 8/23/2019 (portfolio average weight of 0.31%), and ADIF Alta Velocidad, 3.50% coupon, due 5/27/2024 (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Toronto-Dominion Bank, 3.226% coupon, due 7/24/2024 (portfolio average weight of 0.03%), and Bank of Nova Scotia, 2.13% coupon, due 6/15/2020 (average portfolio weight of 0.03%).

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      46.0   
Electric      14.5   
Telecommunications      7.6   
Oil & Gas      5.5   
Pharmaceuticals      2.9   
Insurance      2.2   
Mining      2.2   
Gas      1.8   
Auto Manufacturers      1.8   
Agriculture      1.7   
Engineering & Construction      1.6   
Water      1.3   
Beverages      1.3   
Diversified Financial Services      1.2   
Commercial Services      1.0   
Media      0.9   
Food      0.9   
Miscellaneous Manufacturing      0.7   
Transportation      0.5   
Sovereign      0.5   
Home Furnishings      0.5   
Healthcare-Services      0.4   
Real Estate      0.3   
Savings & Loans      0.3   
Holding Companies-Diversified      0.2   
Pipelines      0.2   
Chemicals      0.2   
Computers      0.1   
Money Market Fund Plus Other Assets Less Liabilities      1.7   
 

 

 

   30  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

 

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Lloyds Bank PLC, EMTN, 7.625%, 04/22/25      1.3   
Barclays Bank PLC, EMTN, 10.000%, 05/21/21      1.0   
Enel Finance International NV, EMTN, 5.625%, 08/14/24      1.0   
Engie SA, EMTN, 2.375%, 05/19/26      0.9   
Electricite de France SA, EMTN, 5.500%, 10/17/41      0.9   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		    
HSBC Holdings PLC, EMTN, 5.750%, 12/20/27      0.9   
Electricite de France SA, EMTN, 6.125%, 06/02/34      0.8   
Heathrow Funding Ltd., EMTN, 6.750%, 12/03/26      0.8   
E.ON International Finance BV, EMTN, 5.875%, 10/30/37      0.8   
Enel SpA, EMTN, 5.750%, 06/22/37      0.8   
Total      9.2   

 

* Excluding money market fund holdings.
 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		    

5 Years
Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P International Corporate Bond Index (Net)®††     (7.83 )%      (1.27 )%      (3.76 )%      1.08 %      5.51 %        3.77 %      22.13 % 
Fund                
NAV Return     (7.73 )      (1.05 )      (3.13 )      1.26        6.47          3.90        23.00   
Market Price Return     (7.94 )      (1.28 )      (3.80 )      1.11        5.69          3.72        21.83   

 

Fund Inception: June 3, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index performance results are based upon a hypothetical investment in their respective 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. 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.

 

†  Fund and Index returns are based on the inception date of the Fund.

 

†† Reflects invested dividends net of withholding taxes.
 

 

 

   31  

 

 

 

LDRI    Manager’s Analysis
   PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI)

 

As an index fund, the PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the NASDAQ LadderRite® 0-5 Year USD Corporate Bond Index (the “Index”). The Fund generally will invest at least 80% of its total assets in U.S. and foreign investment grade corporate bonds that comprise the Index. The Index measures potential returns of a theoretical portfolio of fixed income securities with a yield curve based upon remaining effective terms to maturity of five years or less.

NASDAQ OMX Group, Inc., the Index provider, selects such bonds issued by companies domiciled in the U.S. and other developed countries for inclusion in the Index that: (i) are denominated in U.S. dollars; (ii) pay fixed amounts of taxable interest; (iii) are rated as “investment grade” by at least one of Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”) or Fitch Ratings Inc. (“Fitch”) (i.e., have a grade of BBB- or higher from Fitch or S&P or of Baa3 or higher from Moody’s); (iv) have an outstanding face value of at least $500 million; and (v) have five years or less to maturity. Bonds must have an initial term to maturity of at least one year to be eligible for inclusion in the Index. The Index may include bonds from companies domiciled in the U.S., Canada, Japan, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 1.76%. On a net asset value (“NAV”) basis, the Fund returned 1.48%. During the same time period, the Index returned 1.46%. The Fund employed a “sampling” methodology to attempt to track the Index, rather than a full replication methodology; therefore, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to this sampling.

During this same time period, The BofA Merrill Lynch 0-5 US Corporate Index (the “Benchmark Index”) returned 1.43%. The Benchmark Index is an unmanaged index weighted by capitalization and based on current amount outstanding times the market price plus accrued interest based on the average performance of approximately 3,200 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the short-term investment grade U.S. corporate bond market. Relative to the Benchmark Index, the Fund was most overweight in the mining industry and most underweight in the capital goods industry

during the fiscal year ended October 31, 2015. A part of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s relative overweight in the mining industry and relative underweight in the software industry.

Positions that contributed most significantly to the Fund’s return included Amgen, Inc., 5.7% coupon, due 2/1/2019 (portfolio average weight of 0.38%), and HP INC, 5.5% coupon, due 3/1/2018 (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included BNP Paribas SA (France), 2.45% coupon, due 3/17/2019 (portfolio average weight of 0.35%), and Comcast Corp., 5.7% coupon, due 7/1/2019 (portfolio average weight of 0.39%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      29.6   
Media      8.2   
Diversified Financial Services      8.0   
Telecommunications      6.0   
Oil & Gas      5.3   
Electric      3.9   
Mining      3.8   
Pharmaceuticals      3.4   
Chemicals      3.2   
Oil & Gas Services      2.8   
Beverages      2.2   
Food      2.1   
Semiconductors      1.9   
Auto Manufacturers      1.9   
Healthcare-Products      1.8   
Biotechnology      1.8   
Retail      1.8   
Machinery-Diversified      1.7   
Pipelines      1.7   
REITs      1.7   
Insurance      1.6   
Healthcare-Services      1.6   
Aerospace/Defense      1.6   
Money Market Fund Plus Other Assets Less Liabilities      2.4   
 

 

 

   32  

 

 

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI) (continued)

 

Credit Quality Rating Breakdown*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
AAA      1.6   
AA+      1.7   
AA      1.6   
AA-      3.4   
A+      7.2   
A      18.1   
A-      23.2   
BBB+      12.7   
BBB      13.4   
BBB-      12.8   
Not Rated      1.9   
Money Market Fund Plus Other Assets Less Liabilities      2.4   

 

* Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to C (lowest); ratings are subject to change without notice. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Ratings Resources on the homepage.
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Citigroup, Inc., 8.500%, 05/22/19      2.3   
Anheuser-Busch InBev Worldwide, Inc., 7.750%, 01/15/19      2.2   
Entergy Texas, Inc., 7.125%, 02/01/19      2.2   
JPMorgan Chase & Co., 6.300%, 04/23/19      2.2   
Orange SA, 5.375%, 07/08/19      2.1   
Comcast Corp., 6.300%, 11/15/17      2.1   
Mondelez International, Inc., 6.125%, 02/01/18      2.1   
AT&T, Inc., 5.500%, 02/01/18      2.1   
Bank of America Corp., 6.000%, 09/01/17      2.1   
Air Lease Corp., 5.625%, 04/01/17      2.0   
Total      21.4   

 

* Excluding money market fund holdings.
 

 

 

   33  

 

 

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

              Fund Inception†  
Index   1 Year         Average
Annualized		     Cumulative  
NASDAQ LadderRite® 0-5 Year USD Corporate Bond Index     1.46 %        1.55 %      1.76 % 
The BofA Merrill Lynch 0-5 US Corporate Index     1.43          1.55        1.76   
Fund        
NAV Return     1.48          1.49        1.70   
Market Price Return     1.76          1.77        2.02   

 

Fund Inception: September 10, 2014

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.22% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. See invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   34  

 

 

 

PZA    Manager’s Analysis
   PowerShares National AMT-Free Municipal Bond Portfolio (PZA)

 

As an index fund, the PowerShares National AMT-Free Municipal Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of The BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in municipal securities that comprise the Index and that are also exempt from the federal alternative minimum tax.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is the Index provider for the Index. The Index is designed to track the performance of U.S. dollar-denominated, investment grade, tax- exempt debt publicly issued by U.S. states or territories, or their political subdivisions, in the U.S. domestic market with a term of at least 15 years remaining to final maturity. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 3.32%. On a net asset value (“NAV”) basis, the Fund returned 3.41%. During the same time period, the Index returned 3.69%. The Fund’s performance differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Barclays Municipal Bond 20 Year Index (the “Benchmark Index”) returned 3.33%. The Benchmark Index is an unmanaged index weighted by market capitalization. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of insured municipal securities with maturities of 17 to 22 years.

Relative to the Benchmark Index, the Fund was most overweight in the state of Pennsylvania and most underweight in the state of Massachusetts during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to security selection.

For the fiscal year ended October 31, 2015, the state of Georgia contributed most significantly to the Fund’s return, followed by Puerto Rico and the state of Arizona, respectively. The state of New York detracted most significantly from the Fund’s return, followed by the states of California and Pennsylvania, respectively.

Positions that contributed most significantly to the Fund’s return included Georgia State Higher Education Facilities Auth. Rev. (USG Real Estate III), 5% coupon, due 6/15/2038 (portfolio average weight of 0.33%), and California State Various Purpose Ser. 10, 5.5% coupon, due 3/1/2040 (portfolio average weight of 1.19%). Positions that detracted most significantly from the Fund’s return included New York State Dormitory Authority State

Personal Income Tax Rev. Ref. Ser. 15A, 5% coupon, due 3/15/2035 (portfolio average weight of 0.84%), and Chicago Illinois Wastewater Transmission Rev. (Second Lien) Ser. 12, 5% coupon, due 1/1/2037 (portfolio average weight of 3.12%).

 

State and Territory Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Alabama      4.2   
California      19.0   
Florida      6.1   
Illinois      4.7   
New Jersey      3.3   
New York      19.3   
Pennsylvania      7.8   
Georgia      3.1   
Texas      6.2   
Other States Less Than 3% Each      23.5   
Other Assets Less Liabilities      2.8   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Sales Tax Asset Receivables Corp. Ref. (Fiscal 2015) Ser. 14A, 4.000%, 10/15/32      3.2   
Chicago Illinois Wastewater Transmission Rev. (Second Lien) Ser. 12 AGM, 5.000%, 01/01/37      2.9   
Miami-Dade County Florida Water & Sewer System Rev. Ser. 10 AGC, 5.000%, 10/01/29      2.5   
City of Jasper Alabama Ser. 14 BAM, 5.000%, 03/01/44      2.5   
Inland Valley California Development Successor Agency Tax Allocation Ref. Ser.14A AGM, 5.000%, 09/01/44      2.1   
North Texas Tollway Auth. Rev. Ref. System (First Tier) Ser. 08K-1 AGC, 5.750%, 01/01/38      2.0   
Pennsylvania State Turnpike Commission Rev. Ser. 14B, 5.250%, 12/01/39      1.9   
New Jersey State Transportation Trust Fund Auth. (Transit System) Ser. 08A AGC, 5.500%, 12/15/38      1.8   
Metropolitan Transportation Auth. New York Rev. Ser.13A-1, 5.000%, 11/15/40      1.6   
California State Various Purpose Ser. 10, 5.500%, 03/01/40      1.5   
Total      22.0   
 

 

 

   35  

 

 

PowerShares National AMT-Free Municipal Bond Portfolio (PZA) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index               Average
Annualized		     Cumulative  
Blended—The BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index††     3.69 %      4.04 %      12.60 %      5.47 %      30.53 %        5.22 %      50.60 % 
Barclays Municipal Bond 20-Year Index     3.33        3.61        11.22        5.44        30.30          5.59        54.97   
The BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index††     3.69        N/A        N/A        N/A        N/A          N/A        N/A   
Fund                
NAV Return     3.41        3.16        9.77        4.97        27.43          4.57        43.31   
Market Price Return     3.32        3.16        9.78        5.00        27.62          4.48        42.30   

 

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities.

Index, Blended-Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

+  Fund, Index, Blended-Index and Benchmark Index returns are based on the inception date of the Fund.

 

++”3 Years”, “5 Years” and “Fund Inception” performance for the Index is not available because the Index did not commence until March 4, 2013. The Blended-BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index is comprised of the performance of the BofA Merrill Lynch National Insured Long-Term Core Municipal Securities Index the Fund’s underlying index, from Fund inception through the conversion date, May 29, 2009, followed by the performance of the BofA Merrill Lynch National Insured Long-Term Core Plus Municipal Securities Index, the Fund’s underlying index for the period May 29, 2009 through July 8, 2014, followed by the performance of the Index for the period July 8, 2014 through October 31, 2015.
 

 

 

   36  

 

 

 

PZT    Manager’s Analysis
   PowerShares New York AMT-Free Municipal Bond Portfolio (PZT)

 

As an index fund, the PowerShares New York AMT-Free Municipal Bond Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of The BofA Merrill Lynch New York Long-Term Core Plus Municipal Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in municipal securities that comprise the Index and that are also exempt from federal alternative minimum tax.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is the Index provider for the Index. The Index is designed to track the performance of U.S. dollar-denominated, investment grade, tax- exempt debt publicly issued by New York or any U.S. territory or their political subdivisions in the U.S. domestic market with a term of at least 15 years remaining to final maturity. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 2.77%. On a net asset value (“NAV”) basis, the Fund returned 2.64%. During the same time period, the Index returned 3.75%. The Fund’s performance differed from the return of the Index primarily due to the Fund having a shorter duration compared to the Index, fees, operating expenses, and transaction costs the Fund incurred related to monthly index rebalances, and it’s “sampling” methodology.

During this same time period, the Barclays Municipal Bond 20- Year Index (the “Benchmark Index”) returned 3.33%. The Benchmark Index is an unmanaged index weighted by market capitalization. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of municipal securities with maturities of 17 to 22 years.

Relative to the Benchmark Index, the Fund was most overweight in the U.S. territory of Puerto Rico and most underweight in the state of New York during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to fees and operating expenses and transaction costs incurred by the Fund.

For the fiscal year ended October 31, 2015, the U.S. territory of Guam revenue type contributed most significantly to the Fund’s return, followed by the state of New York and the U.S. territory of Puerto Rico revenue types, respectively. There were no detracting revenue types.

Positions that contributed most significantly to the Fund’s return included Puerto Rico Commonwealth Public Improvement Ref. Ser. 07A-4, 5% coupon, due 7/1/2031 (portfolio average weight of 1.56%), and Puerto Rico Sales Tax Financing Corp. Sales Tax Rev. (First Sub.-Ser.) 10C, 5.125% coupon, due 8/1/2042

(portfolio average weight of 2.69%). Positions that detracted most significantly from the Fund’s return included New York State Dormitory Auth. Rev. Non State Supported Debt Ref. (NYU Hospitals Center) Ser. 15, 5.0% coupon, due 7/1/2034 (portfolio average weight of 2.78%), and New York State Dormitory Auth. Rev. (New York University) Ser. 01, 5.5% coupon, due 7/1/2040 (portfolio average weight of 3.95%).

 

Revenue Type Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
College Revenue      17.6   
Electric Power Revenue      17.3   
Miscellaneous Revenue      11.2   
Sales Tax Revenue      9.2   
Income Tax Revenue      7.0   
Port, Airport & Marina Revenue      6.5   
Ad Valorem Property Tax      5.5   
Health, Hospital, Nursing Home Revenue      5.5   
Recreational Revenue      4.6   
Transit Revenue      4.6   
Hotel Occupancy Tax      4.2   
Sewer Revenue      4.2   
Highway Tolls Revenue      1.3   
Other Assets Less Liabilities      1.3   
 

 

 

   37  

 

 

PowerShares New York AMT-Free Municipal Bond Portfolio (PZT) (continued)

 

Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Long Island Power Auth. New York Electric Systems Rev. General Ser. 08A BHAC, 5.500%, 05/01/33      11.3   
New York State Dormitory Auth. Rev. (The New School) Ser. 10 AGM, 5.500%, 07/01/43      5.7   
New York City Industrial Development Agency Rev. Queens Baseball Stadium (Pilot) Ser. 09 AGC, 6.500%, 01/01/46      5.6   
New York City Industrial Development Agency Rev. Yankee Stadium (Pilot) Ser. 09 AGC, 7.000%, 03/01/49      4.6   
New York State Dormitory Auth. Rev. Non-State Supported Debt Ref. (Icahn School of Medicine at Mount Sinai) Ser. 15A, 5.000%, 07/01/35      4.3   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Sales Tax Asset Receivables Corp. Ref. (Fiscal 2015) Ser. 14A, 4.000%, 10/15/32      4.3   
New York State Convention Center Development Corp. Rev. Ref. (Hotel Unit Fee Secured) Ser. 15, 5.000%, 11/15/40      4.2   
New York City Municipal Finance Auth. Water & Sewer System Rev. Ser. 07AA NATL, 4.750%, 06/15/33      4.2   
New York State Ref. (Fiscal 2015) Ser. 14A, 5.000%, 08/01/32      4.0   
New York State Dormitory Auth. Rev. (New York University) Ser. 01 AMBAC, 5.500%, 07/01/40      3.9   
Total      52.1   
 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years

Average
Annualized

    

3 Years

Cumulative

    

5 Years

Average
Annualized

    

5 Years

Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Blended—The BofA Merrill Lynch New York Long-Term Core Plus Municipal Securities Index††     3.75 %      3.75 %      11.66 %      4.90 %      27.03 %        4.76 %      45.48 % 
Barclays Municipal Bond 20-Year Index     3.33        3.61        11.22        5.44        30.30          5.59        54.97   
The BofA Merrill Lynch New York Long-Term Core Plus Municipal Securities Index††     3.75        N/A        N/A        N/A        N/A          N/A        N/A   
Fund                
NAV Return     2.64        2.87        8.85        4.33        23.63          3.94        36.52   
Market Price Return     2.77        2.69        8.30        4.26        23.20          3.77        34.72   

 

 

   38  

 

 

PowerShares New York AMT-Free Municipal Bond Portfolio (PZT) (continued)

 

 

Fund Inception: October 11, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities.

Index, Blended-Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

+  Fund, Index, Blended-Index and Benchmark Index returns are based on the inception date of the Fund.

 

++”3 Years”, “5 Years” and “Fund Inception” performance for the Index is not available because the Index did not commence until February 12, 2013.The Blended-BofA Merrill Lynch New York Long-Term Core Plus Municipal Securities Index is comprised of the performance of the BofA Merrill Lynch New York Insured Long-Term Core Municipal Securities Index the Fund’s underlying index, from Fund inception through the conversion date, May 29, 2009, followed by the performance of the BofA Merrill Lynch New York Insured Long-Term Core Plus Municipal Securities Index, the Fund’s underlying index for the period May 29, 2009 through July 8, 2014, followed by the performance of the Index for the period July 8, 2014 through October 31, 2015.
 

 

 

   39  

 

 

 

PGX    Manager’s Analysis
   PowerShares Preferred Portfolio (PGX)

 

As an index fund, the PowerShares Preferred Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index (the “Index”). The Fund generally will invest at least 80% of its total assets in fixed-rate U.S. dollar-denominated preferred securities that comprise the Index.

The Index is a market capitalization-weighted index designed to reflect the total return performance of the fixed-rate U.S. dollar- denominated preferred securities market. The Index includes both traditional and other preferred securities, including preferred securities issued by foreign companies in the form of American Depositary Receipts, as well as senior and subordinated debt securities. Unlisted preferred securities are excluded from the Index, but unlisted senior or subordinated debt-like securities are eligible for inclusion. The Index may include Rule 144A securities. Strictly in accordance with its guidelines and mandated procedures, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofA Merrill Lynch” or the “Index Provider”) selects securities for the Index using a rules-based methodology. Qualifying securities must be rated at least B3 (based on an average of Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”), and Fitch Ratings, Inc. (“Fitch”)) and must have an investment grade country risk profile (based on an average of Moody’s, S&P and Fitch foreign currency long-term sovereign debt ratings). The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 7.43%. On a net asset value (“NAV”) basis, the Fund returned 7.66%. During the same time period, the Index returned 8.33%. During the fiscal year, the Fund employed a “sampling” methodology to attempt to track the Index, rather than a full replication methodology, due to relative illiquidity of the constituent securities of the Index. The Fund’s performance differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period as well as the use of such “sampling” methodology.

During this same time period, the S&P U.S. Preferred Stock Index (the “Benchmark Index”) returned 5.53%. The Benchmark Index is an unmanaged index weighted by modified market capitalization based on the average performance of approximately 285 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the preferred stock market, which includes convertible preferred stocks. The Fund’s performance differed from the return of the Benchmark Index primarily due to the Fund larger allocation to the banks and insurance industries. Positions that contributed most significantly

to the Fund’s return included Barclays Bank PLC, 8.125% coupon, due 12/31/2049, a banks company (portfolio average weight of 3.87%), and HSBC Holdings PLC, 8.125% coupon, due 12/31/2049, a banks company (portfolio average weight of 2.64%). Positions that detracted most significantly from the Fund’s return included JPMorgan Chase & Co., 6.7% coupon, due 4/2/2040, a banks company (no longer held at fiscal year-end), and Navient Corp., 6.0% coupon, due 12/15/2043, a consumer finance company (portfolio average weight of 0.22%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      45.7   
Capital Markets      15.8   
Insurance      11.0   
Real Estate Investment Trusts      9.3   
Electric Utilities      5.3   
Consumer Finance      4.4   
Diversified Telecommunication Services      3.1   
Industrial Conglomerates      1.6   
Wireless Telecommunication Services      1.1   
Commercial Services & Supplies      0.7   
Multi-Utilities      0.7   
Machinery      0.6   
Media      0.2   
Chemicals      0.1   
Thrifts & Mortgage Finance      0.1   
Oil, Gas & Consumable Fuels      0.0   
Money Market Funds Plus Other Assets Less Liabilities      0.3   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Barclays Bank PLC, 8.13%, Series 5      3.9   
HSBC Holdings PLC, 8.00%, Series 2      2.9   
Wells Fargo & Co., 8.00%, Series J      2.8   
HSBC Holdings PLC, 8.13%      2.7   
Deutsche Bank Contingent Capital Trust V, 8.05%      2.5   
Morgan Stanley, 6.38%, Series I      1.8   
BB&T Corp., 5.63%, Series E      1.7   
GMAC Capital Trust I, 8.13%, Series 2      1.6   
Citigroup, Inc., 6.88%, Series K      1.6   
Public Storage, 6.50%, Series Q      1.5   
Total      23.0   

 

* Excluding money market fund holdings.
 

 

 

   40  

 

 

PowerShares Preferred Portfolio (PGX) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years
Average
Annualized

    

3 Years
Cumulative

    

5 Years
Average
Annualized

    

5 Years
Cumulative

         Fund Inception†  

Index

                 Average
Annualized		     Cumulative  
Blended—The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index††     8.33 %      6.86 %      22.02 %      7.75 %      45.24 %        3.92 %      34.71 % 
S&P U.S. Preferred Stock Index     5.53        6.18        19.71        6.96        40.00          5.85        55.32   
The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index     8.33        6.86        22.02        N/A        N/A          N/A        N/A   
Fund                
NAV Return     7.66        6.28        20.06        7.31        42.27          3.08        26.52   
Market Price Return     7.43        6.28        20.05        7.32        42.34          2.88        24.64   

 

Fund Inception: January 31, 2008

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent

securities. Index, Blended-Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index, Blended-Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  The Blended-The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index is comprised of The BofA Merrill Lynch Core Fixed Rate Preferred Securities Index, the original underlying index from Fund inception until the date of the change to the Index, April 1, 2012, followed by the performance of the Index starting at conversation date and through October 31, 2015.
 

 

 

   41  

 

 

 

VRP    Manager’s Analysis
   PowerShares Variable Rate Preferred Portfolio (VRP)

 

As an index fund, the PowerShares Variable Rate Preferred Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Wells Fargo® Hybrid and Preferred Securities Floating and Variable Rate Index (the “Index”). The Fund generally will invest at least 90% of its total assets in the securities that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Wells Fargo Securities, LLC (together with Wells Fargo & Company, the “Index Provider”), employs a proprietary methodology to select for the Index issues of preferred stock and “hybrid securities” that, in the Index Provider’s judgment, are functionally equivalent to preferred stock, including certain convertible securities, depositary preferred stock, trust preferred securities, perpetual subordinated debt listed on the New York Stock Exchange, NYSE Arca or NASDAQ and other types of hybrid securities that receive preferred treatment within an issuer’s capital structure similar to that of traditional preferred stock. To be eligible for inclusion in the Index, the preferred stock or hybrid security must: (i) maintain a minimum par value of $100 million outstanding or a minimum of 10 million shares outstanding; (ii) have floating or variable dividends or coupons; and (iii) be U.S. dollar-denominated and U.S. registered (or otherwise exempt from registration in the United States). The Fund considers the traditional preferred stocks and functionally equivalent hybrid securities included in the Index, collectively, to be “Preferred Securities.” The Fund purchases all of the Preferred Securities in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 2.85%. On a net asset value (“NAV”) basis, the Fund returned 2.99%. During the same time period, the Index returned 3.48%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance, on a NAV basis, differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P U.S. Preferred Stock Index (the “Benchmark Index”) returned 5.53%. The Benchmark Index is an unmanaged index weighted by modified market capitalization and based on the average performance of approximately 285 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the primarily fixed rate preferred stock market. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s portfolio including only variable rate Preferred Securities, rather than both fixed- and variable rate securities.

For the fiscal year ended October 31, 2015, the banks industry contributed most significantly to the Fund’s return while the oil, gas & consumable fuels industry detracted most significantly from the Fund’s return.

Positions that contributed most significantly to the Fund’s return included Wachovia Cap Trust III, 5.57% coupon, due 12/31/2049 (no longer held at fiscal year-end), and PNC Financial Services, 6.125% coupon, due 12/31/2049 (portfolio average weight of 2.78%). Positions that detracted most significantly from the Fund’s return included Trans-Canada Pipelines, 6.35% coupon, due 5/15/2067 (portfolio average weight of 1.56%), and Genworth Holdings INC, 6.15% coupon, due 11/15/2066 (portfolio average weight of 0.59%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      43.7   
Insurance      21.2   
Capital Markets      11.8   
Diversified Financial Services      6.1   
Pipelines      4.5   
Consumer Finance      4.5   
Electric      2.2   
Food Products      1.7   
Electric Utilities      1.1   
Commercial Services & Supplies      0.7   
Hand/Machine Tools      0.7   
Multi-Utilities      0.6   
Oil, Gas & Consumable Fuels      0.3   
Real Estate Investment Trusts      0.1   
Other Assets Less Liabilities      0.8   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Wachovia Capital Trust III, 5.570%, 03/29/49      3.7   
GMAC Capital Trust I, 8.13%, Series 2      3.6   
Citigroup Capital XIII, 6.69%      3.5   
General Electric Capital Corp., GMTN, 6.375%, 11/15/67      2.9   
PNC Financial Services Group, Inc. (The), 6.13%, Series P      2.8   
Wells Fargo & Co., 5.850%      2.8   
Citigroup, Inc., 6.88%, Series K      2.5   
Prudential Financial, Inc., 5.625%, 06/15/43      2.5   
U.S. Bancorp, 6.50%, Series F      2.0   
Goldman Sachs Capital II, 4.000%, 12/29/49      2.0   
Total      28.3   
 

 

 

   42  

 

 

PowerShares Variable Rate Preferred Portfolio (VRP) (continued)

 

Growth of a $10,000 Investment Since Inception

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

         Fund Inception†  
Index         Average
Annualized		     Cumulative  
Wells Fargo® Hybrid & Preferred Securities Floating and Variable Rate Index     3.48 %        3.79 %      5.73 % 
S&P U.S. Preferred Stock Index     5.53          6.05        9.19   
Fund        
NAV Return     2.99          3.29        4.98   
Market Price Return     2.85          3.25        4.92   

 

Fund Inception: May 1, 2014

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.50% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

+  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   43  

 

 

 

PVI    Manager’s Analysis
   PowerShares VRDO Tax-Free Weekly Portfolio (PVI)

 

As an index fund, the PowerShares VRDO Tax-Free Weekly Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Bloomberg US Municipal AMT-Free Weekly VRDO Index (the “Index”). The Fund generally will invest at least 80% of its total assets in variable rate demand obligation (“VRDO”) bonds that are exempt from federal income tax with interest rates that reset weekly, which comprise the Index.

Bloomberg Finance L.P. (“Bloomberg” or the “Index Provider”) or its affiliates compiles and calculates the Index, which is comprised of municipal securities issued in the primary market as VRDOs. Bonds in the Index must be rated in a “top” category (as defined by the Index Provider) by a nationally recognized statistical rating organization. Bonds in the “top” category include those rated by Moody’s Investors Service, Inc. as A-3 for long-term bonds or Prime-2 for short-term bonds; by Standard & Poor’s, a division of The McGraw-Hill Company, Inc., as A- for long-term bonds or A-2 for short-term bonds; and by Fitch Ratings, Inc. as A- for long- term bonds or F-2 for short-term bonds. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (0.16)%. On a net asset value (“NAV”) basis, the Fund returned (0.12)%. During the same time period, the Index returned 0.04%. The Fund’s performance differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Barclays Municipal 1-Year Index (the “Benchmark Index”) returned 0.76%. The Benchmark Index is an unmanaged index weighted by market capitalization. The adviser provided this additional comparative benchmark to help investors understand how investment results of the Fund compare to the performance of a 1-year duration municipal benchmark. The majority of the Fund’s underperformance relative to the Benchmark Index during the period was due to fees and operating expenses incurred by the Fund, as well as the Benchmark’s 1-year duration compared to the Index’s weekly reset.

For the fiscal year ended October 31, 2015, the state of Pennsylvania contributed most significantly to the Fund’s return, followed by the states of Florida and Tennessee, respectively. The state of Kentucky detracted most significantly from the Fund’s return, followed by the states of Indiana and Ohio, respectively.

Positions that contributed most significantly to the Fund’s return included Luzerne County, adjustable coupon, due 11/15/2026, a Pennsylvania state municipal bond (no longer held at fiscal year-end), and Colorado Springs Utilities, 0.12% coupon, due 11/1/2036, a Colorado state municipal bond (no longer held at fiscal year-end). There were no detracting positions.

State Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
California      12.6   
Colorado      4.4   
Florida      18.3   
Illinois      4.0   
Indiana      4.3   
Maryland      5.9   
Missouri      3.1   
New York      12.3   
North Carolina      6.8   
Ohio      4.3   
Tennessee      9.5   
Texas      9.4   
Other States Less Than 3% Each      4.2   
Other Assets Less Liabilities      0.9   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Sevier County Tennessee Public Building Auth. (Local Government Improvement Program) Ser. 10V-D-1, 0.010%, 06/01/26      6.2   
Maryland State Health & Higher Educational Facilities Auth. Rev. (University of Maryland Medical Systems) Ser. 07A, 0.010%, 07/01/34      5.9   
WACO Texas Educational Finance Corp. Rev. Ref. (Baylor University) Ser. 08A, 0.010%, 02/01/32      5.7   
ABAG Finance Auth. For Nonprofit Corporations (Sharp HealthCare) Ser. 09A, 0.010%, 08/01/24      5.6   
Orange County Florida School Board COP Ser. 08C, 0.020%, 08/01/25      5.4   
Florida State Department of Environmental Protection Preservation Rev. (Everglades Restoration) Ser. 07A AGC, 0.030%, 07/01/27      5.4   
New York State Local Government Assistance Corp. Various Sub. Lien (Remarketed 08/03/09) Ser. 03-8V, 0.010%, 04/01/19      4.9   
New York City Transitional Finance Auth. Rev. (Future Tax Secured) Sub.-Ser. 99-B3, 0.010%, 11/01/28      4.9   
Bay Area California Auth. Toll Bridge Rev. Ser. 07, 0.010%, 04/01/47      4.7   
Jacksonville Florida Transit Rev. Ser. 08A, 0.010%, 10/01/32      4.4   
Total      53.1   
 

 

 

   44  

 

 

PowerShares VRDO Tax-Free Weekly Portfolio (PVI) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

    

3 Years
Average
Annualized

    

3 Years
Cumulative

    

5 Years
Average
Annualized

    

5 Years
Cumulative

         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
Blended—Bloomberg US Municipal AMT-Free Weekly VRDO Index††     0.04 %      0.08 %      0.23 %      0.14 %      0.71 %        0.62 %      5.04 % 
Barclays Municipal 1-Year Index     0.76        0.74        2.23        0.88        4.47          1.83        15.53   
Bloomberg US Municipal AMT-Free Weekly VRDO Index     0.04        0.08        0.23        0.14        0.71          N/A        N/A   
Fund                
NAV Return     (0.12 )      (0.08 )      (0.24 )      0.11        0.53          0.72        5.84   
Market Price Return     (0.16 )      (0.07 )      (0.20 )      0.11        0.53          0.71        5.83   

 

Fund Inception: November 15, 2007

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent

securities. Index, Blended-Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index, Blended-Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  The Blended-Bloomberg US Municipal AMT-Free Weekly VRDO Index is comprised of the performance of the Thompson Municipal Market Data VRDO Index, the Fund’s original underlying index, from inception through the conversion date, August 5, 2010, followed by the performance of the Index starting at the conversion date, and through October 31, 2015.
 

 

 

   45  

 

 

Schedule of Investments

PowerShares 1-30 Laddered Treasury Portfolio (PLW)

October 31, 2015

 

Principal
Amount		           Value  
   Long-Term Investments—95.7%   
   United States Government Obligations—95.7%   
   United States Treasury Notes—10.1%   
$ 8,424,000       4.625%, 02/15/17    $ 8,863,463   
  8,516,000       3.500%, 02/15/18      9,025,078   
  9,077,000       2.000%, 02/15/22      9,189,101   
     

 

 

  
        27,077,642  
     

 

 

  
   United States Treasury Bonds—85.6%   
  6,919,000       8.875%, 02/15/19      8,661,135   
  6,721,000       8.500%, 02/15/20      8,710,087   
  6,649,000       7.875%, 02/15/21      8,761,574   
  6,501,000       7.125%, 02/15/23      8,827,051   
  6,765,000       6.250%, 08/15/23      8,871,134   
  5,991,000       7.625%, 02/15/25      8,800,138   
  6,556,000       6.000%, 02/15/26      8,881,505   
  6,166,000       6.625%, 02/15/27      8,873,904   
  6,404,000       6.125%, 11/15/27      8,997,287   
  6,721,000       5.250%, 02/15/29      8,916,878   
  6,109,000       6.250%, 05/15/30      8,973,070   
  19,460,000       5.375%, 02/15/31      26,739,772   
  20,250,000       4.500%, 02/15/36      26,330,670   
  6,534,000       4.750%, 02/15/37      8,789,589   
  6,885,000       4.375%, 02/15/38      8,810,197   
  7,822,000       3.500%, 02/15/39      8,783,864   
  6,617,000       4.625%, 02/15/40      8,740,428   
  6,434,000       4.750%, 02/15/41      8,664,456   
  8,305,000       3.125%, 02/15/42      8,694,787   
  8,330,000       3.125%, 02/15/43      8,663,741   
  7,588,000       3.625%, 02/15/44      8,664,153   
  9,517,000       2.500%, 02/15/45      8,670,263   
     

 

 

  
        228,825,683  
     

 

 

  
   Total Long-Term Investments
(Cost $252,943,760)		      255,903,325  
     

 

 

  
     
   Short-Term Investments—3.4%   
   United States Government Obligations—3.3%   
   United States Treasury Notes—3.3%   
  8,713,000       4.500%, 02/15/16   
   (Cost $8,804,981)      8,822,026  
     

 

 

  
     
Number
of Shares		              
   Money Market Funds—0.1%   
  173,549       Invesco Premier Portfolio—
Institutional Class, 0.12%(a)
(Cost $173,549)		      173,549  
     

 

 

  
   Total Short-Term Investments
(Cost $8,978,530)		      8,995,575  
     

 

 

  
   Total Investments
(Cost $261,922,290)—99.1%		      264,898,900   
   Other assets less liabilities—0.9%      2,379,500   
     

 

 

  
   Net Assets—100.0%    $ 267,278,400  
     

 

 

  

Notes to Schedule of Investments:

(a)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   46  

 

 

Schedule of Investments

PowerShares Build America Bond Portfolio (BAB)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds—97.0%        
   Ad Valorem Property Tax—23.4%        
$ 3,000,000       Anchorage Alaska Ser. 10A-2      5.910 %      04/01/30       $ 3,392,280   
  1,500,000       Bexar County Texas Ser. 10      5.755        06/15/40         1,632,960   
  11,000,000       California State Highway Safety Air Quality Remarketed Ser. 09B      6.509        04/01/39         12,812,360   
  3,505,000       California State Ser. 09      7.350        11/01/39         4,975,313   
  4,500,000       California State Ser. 10      7.625        03/01/40         6,625,035   
  1,010,000       Carson City Nevada (Water Improvement) Ser. 10A      6.662        11/01/39         1,094,365   
  2,000,000       Channelview Texas Independent School District Ser. 10 PSF-GTD      5.926        08/15/35         2,157,940   
  2,000,000       Chicago Illinois (Recovery Zone Economic Development) Ser. 10D      6.257        01/01/40         1,709,660   
  2,000,000       Chicago Illinois (Taxable Project) Ser. 10B      7.517        01/01/40         2,043,720   
  6,205,000       Chicago Illinois Ser. 10C      6.207        01/01/36         5,341,388   
  1,500,000       Clark County Nevada Las Vegas Convention and Visitors Auth. Ser. 10A      6.554        07/01/30         1,871,700   
  1,620,000       Clark County Nevada Las Vegas Convention and Visitors Auth. Ser. 10A      6.754        07/01/38         2,101,156   
  4,955,000       Commonwealth of Pennsylvania First Ser. 10B      4.650        02/15/26         5,353,283   
  1,600,000       Cook County Illinois Community Consolidated (School District No. 65) Ser. 09      4.400        12/01/20         1,667,296   
  700,000       Corpus Christi Texas Independent School District (School Building) Ser. 10B PSF-GTD      6.124        08/15/32         805,938   
  1,500,000       Dallas Texas Independent School District Ser. 10C PSF-GTD      6.450        02/15/35         1,760,505   
  200,000       Delaware State Ser. 09D      5.200        10/01/26         220,100   
  500,000       Denver Colorado City & County School District No. 1 Ser. 09C      5.664        12/01/33         602,805   
  1,000,000       Douglas County Nevada School District Ser. 10A PSF-GTD      6.110        04/01/30         1,082,990   
  605,000       Hallettsville Texas Independent School Ser. 10 PSF-GTD      6.265        08/15/30         658,143   
  1,000,000       Hallettsville Texas Independent School Ser. 10 PSF-GTD      6.465        08/15/35         1,110,810   
  1,000,000       Hawaii State Ser. 10DX      5.530        02/01/30         1,193,130   
  2,000,000       Hayward California Unified School District Ser. 10 AGM      7.350        08/01/43         2,368,140   
  1,000,000       Hillsborough County Florida Ser. 09B      6.350        07/01/39         1,101,960   
  9,300,000       Illinois State Ser. 10      6.900        03/01/35         9,500,973   
  5,000,000       Illinois State Ser. 10-1      5.363        02/01/19         5,254,800   
  14,795,000       Illinois State Ser. 10-1      5.563        02/01/21         15,740,992   
  2,500,000       Illinois State Ser. 10-2      5.650        03/01/20         2,664,325   
  200,000       Itasca Illinois Ser. 09A      6.100        02/01/34         209,634   
  320,000       Itasca Illinois Ser. 09A      6.200        02/01/39         338,704   
  2,000,000       Kiski Pennsylvania Area School District Ser. 10 AGM      6.526        09/01/31         2,314,960   
  1,000,000       Lancaster Texas Ser. 10      6.528        02/15/40         1,130,840   
  5,140,000       Los Angeles California Community College District Ser. 10      6.600        08/01/42         7,111,447   
  500,000       Los Angeles California Unified School District Qualified School Construction Bonds (Election of 2005) Ser. 10J-1      5.981        05/01/27         605,350   
  860,000       Los Angeles California University School District Ser. 09KRY      5.750        07/01/34         1,030,573   
  200,000       Louisville & Jefferson County Kentucky Metro Government (Recovery Zone Economic Development) Ser. 09E      5.450        11/15/27         236,834   
  4,300,000       Massachusetts State Ser. 10      4.480        05/01/24         4,860,978   
  1,000,000       Montgomery County Pennsylvania Ser. 10      6.030        09/01/39         1,116,700   
  3,000,000       Napa Valley California University School District Ser. 10B      6.507        08/01/43         3,783,870   
  1,000,000       New Orleans Louisiana Ser. 10A      8.800        12/01/39         1,189,980   
  2,710,000       New York City New York Ser. 10      5.817        10/01/31         3,006,311   
  4,700,000       New York City New York Ser. 10      5.968        03/01/36         5,760,743   
  1,000,000       New York City Ser. 09D-1      6.385        12/01/29         1,135,070   
  960,000       North Las Vegas Nevada Ser. 10      5.372        06/01/19         944,429   
  1,000,000       NYE County Nevada Ser. 10B AGM      6.300        08/01/35         1,113,990   
  1,000,000       NYE County Nevada Ser. 10B AGM      6.400        08/01/40         1,093,930   
  1,450,000       Peoria County Illinois Community Unit School District No. 323 Ser. 10      6.020        04/01/28         1,589,635   
  1,000,000       Philadelphia Pennsylvania School District Ser. 10      6.615        06/01/30         1,060,290   
  1,000,000       Quaker Valley Pennsylvania School District Ser. 10 AGM      5.959        10/01/30         1,102,870   
  2,000,000       Round Rock Texas Independent School District Ser. 10 PSF-GTD      5.774        08/01/30         2,272,760   
  1,000,000       Round Rock Texas Independent School District Ser. 10B      6.054        08/01/35         1,094,910   
  2,000,000       San Antonio Texas Independent School District Ser. 10 PSF-GTD      6.397        08/15/40         2,287,820   
  1,500,000       San Francisco California City & County Ser. 10      6.260        06/15/30         1,867,590   
  3,850,000       San Francisco California City & County Ser. 10D      6.260        06/15/30         4,793,481   
  1,000,000       San Mateo California Union High School District Ser. 10B      6.733        09/01/34         1,170,390   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   47  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Ad Valorem Property Tax (continued)        
$ 1,000,000       Snohomish County Washington Public Hospital District No. 3 (Cascade Valley Hospital) Ser. 10B      6.329 %       12/01/35       $ 1,029,630   
  200,000       Southwestern Community College District California Ser. 09B      7.130        08/01/31         229,704   
  5,000,000       Utah State Ser. 10B      3.369        07/01/21         5,335,700   
  675,000       Wilson County Tennessee Tenth Special School District Ser. 10      6.130        04/01/35         741,920   
          

 

 

  
             158,405,110   
          

 

 

  
   College Revenue—8.4%        
  4,000,000       California Infrastructure & Economic Development Bank Rev. (California Infrastructure Economic Development) Ser. 10      6.486        05/15/49         4,781,440   
  1,000,000       Colorado State Board Governors University Enterprise System Rev. Ser. 10      5.957        03/01/33         1,177,660   
  2,000,000       Indiana University Rev. Ser. 10      5.536        06/01/30         2,193,740   
  1,500,000       Indiana University Rev. Ser. 10      5.636        06/01/35         1,630,155   
  5,000,000       Massachusetts State College Building Auth. Ser. 09C      5.832        05/01/30         5,730,750   
  1,215,000       Mesa State College Colorado (Auxiliary Facilities Enterprise) Rev. Ser. 09B      5.800        05/15/40         1,355,223   
  3,000,000       New Jersey State Educational Facilities Auth. Rev. Ser. 10      6.190        07/01/40         3,209,430   
  1,000,000       New Mexico State University Regents Improvement Rev. Ser. 10B      6.124        04/01/30         1,081,870   
  1,000,000       North Carolina State University at Raleigh Rev. Ser. 10B      5.927        10/01/30         1,137,530   
  3,000,000       Northern Arizona University Rev. (Arizona Board of Regents) Ser. 10A      6.593        08/01/30         3,368,520   
  500,000       Northern Arizona University System Rev. Ser. 09A      6.687        06/01/39         558,120   
  1,000,000       Pennsylvania State Higher Educational Facilities Auth. Rev. (Temple University) Ser. 10      6.141        04/01/30         1,213,580   
  905,000       Rutgers The State University of New Jersey      5.545        05/01/29         1,012,034   
  4,655,000       University of California Rev. Ser. 10      5.946        05/15/45         5,653,218   
  3,000,000       University of Hawaii Rev. Ser. 10      5.834        10/01/30         3,381,600   
  5,000,000       University of Hawaii Rev. Ser. 10      6.034        10/01/40         5,625,100   
  250,000       University of Michigan University Rev. Ser. 10A      5.513        04/01/30         292,505   
  500,000       University of North Carolina University Ser. 09B      5.757        12/01/39         547,110   
  10,000,000       University of Texas System Ser. 10C      4.644        08/15/30         10,943,100   
  1,435,000       Washington State Biomedical Research Facilities No. 3 Ser. 10B      6.416        07/01/30         1,768,853   
  250,000       Wayne State University Ser. 09B      6.536        11/15/39         274,083   
          

 

 

  
             56,935,621   
          

 

 

  
   Electric Power Revenue—11.9%        
  7,665,000       American Municipal Power, Inc. Ohio (Combined Hydroelectric Projects) Rev. Ser.10      8.084        02/15/50         11,003,797   
  2,090,000       American Municipal Power, Inc. Ohio (Meldahl Hydroelectric-Remarketed) Ser. 10E      6.270        02/15/50         2,393,761   
  2,200,000       American Municipal Power, Inc. Ohio Ser. 10      7.499        02/15/50         2,927,738   
  750,000       Benton County Washington Public Utility District No. 1 Electric Rev. Ser. 10      6.546        11/01/30         927,682   
  6,500,000       Cowlitz County Washington Public Utility District No. 1 Electric Ser. 10      6.884        09/01/32         7,605,390   
  2,000,000       Douglas County Washington Public Utility District No. 1 Wells Hydroelectric Ser. 10B      5.245        09/01/30         2,179,920   
  2,500,000       Grant County Washington Public Utility District No. 2 (Priest Rapids Hydroelectric) Ref. Ser. 10L      5.730        01/01/30         2,927,000   
  2,750,000       Grant County Washington Public Utility District No. 2 (Priest Rapids Hydroelectric) Ref. Ser. 10L      5.830        01/01/40         3,239,308   
  500,000       JEA Florida Electric Systems Rev. Ser. 09F      6.406        10/01/34         614,435   
  2,000,000       Los Angeles California Department of Water & Power Rev. Ser. 10      6.166        07/01/40         2,243,800   
  1,500,000       Los Angeles California Department of Water & Power Rev. Ser. 10      7.000        07/01/41         1,758,210   
  500,000       Missouri Joint Municipal Electric Utility Commission Power Project Rev. Ser. 09A      6.790        01/01/29         534,005   
  10,000,000       Missouri Joint Municipal Electric Utility Commission Power Project Rev. Ser. 09A      6.890        01/01/42         12,205,200   
  1,000,000       Missouri Joint Municipal Electric Utility Commission Power Project Rev. Ser. 10      7.597        01/01/32         1,232,360   
  9,909,000       Municipal Electric Auth. of Georgia (Plant Vogtle Units 3&4 Project P) Ser. 10      7.055        04/01/57         10,709,746   
  1,000,000       Northern California Power Agency Rev. (Lodi Energy Center) Ser. 10B      7.311        06/01/40         1,233,250   
  250,000       Northern Illinois Municipal Power Agency Power Project Rev. Ser. 10      7.620        01/01/30         306,605   
  2,115,000       South Carolina State Public Service Auth. Rev. Ser. 10C      6.454        01/01/50         2,643,116   
  1,900,000       Southern California Public Power Auth. (Power Project) Rev. Ser. 10      5.843        07/01/30         2,209,035   
  2,000,000       Southern California Public Power Auth. Rev. Ser. 10      5.921        07/01/35         2,324,900   
  2,570,000       Tacoma Washington Electric System Rev. Ser. 10 AGM      5.791        01/01/32         3,058,454   
  5,795,000       Virgin Islands Water & Power Auth. (Electric System) Rev. Ser. 10C AGM      6.850        07/01/35         6,156,898   
          

 

 

  
             80,434,610   
          

 

 

  
   Fuel Sales Tax Revenue—2.8%        
  6,000,000       Missouri Highways & Transportation Commission (Taxable Third Lien State Road) Ser. 09C      5.063        05/01/24         6,957,420   
  2,250,000       Missouri State Highway & Transportation Commission (State Road Rev.) Ser. 09      4.963        05/01/23         2,590,132   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   48  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Fuel Sales Tax Revenue (continued)        
$ 2,000,000       Washington State Ser. 10      5.090 %       08/01/33       $ 2,285,680   
  1,400,000       Washoe County Nevada Highway Rev. Ser. 10      7.063        02/01/30         1,577,002   
  5,000,000       Washoe County Nevada Highway Rev. Ser. 10      7.213        02/01/39         5,633,500   
          

 

 

  
             19,043,734   
          

 

 

  
   General Fund—9.3%        
  17,590,000       California State Ser. 09      7.500        04/01/34         24,922,567   
  3,500,000       California State Ser. 09      7.300        10/01/39         4,970,735   
  4,500,000       California State Ser. 10      7.950        03/01/36         5,381,775   
  7,905,000       California State Ser. 10      7.600        11/01/40         11,844,378   
  5,030,000       California State Various Purpose Ser. 09      7.550        04/01/39         7,429,209   
  5,000,000       California State Various Purpose Ser. 10      5.700        11/01/21         5,796,850   
  2,000,000       Kauai County Hawaii Ser. 10      5.763        08/01/33         2,390,900   
          

 

 

  
             62,736,414   
          

 

 

  
   Government Fund/Grant Revenue—1.3%        
  10,700,000       Chicago Board of Education Ser. 09E      6.138        12/01/39         8,587,178   
          

 

 

  
   Health, Hospital, Nursing Home Revenue—1.5%        
  1,000,000       Cuyahoga County Ohio Hospital Rev. Ser. 10      8.223        02/15/40         1,218,730   
  2,000,000       King County Washington Public Hospital District No. 1 Hospital Facilities Rev. Ser. 10      7.900        06/15/30         2,347,220   
  2,500,000       Lee Memorial Health System Florida Hospital Rev. Ser. 10A      7.281        04/01/27         2,927,575   
  1,000,000       Oak Valley California Hospital District (Health Facility) Rev. Ser. 10B      9.000        11/01/39         1,020,270   
  1,500,000       Tangipahoa Parish Louisiana Hospital Service District No. 1 (North Oaks Health System) Ser. 09A AGC      7.200        02/01/42         1,591,995   
  500,000       University California Regents Medical Center Pooled Rev. Ser. 09F      6.458        05/15/29         601,125   
          

 

 

  
             9,706,915   
          

 

 

  
   Highway Tolls Revenue—5.8%        
  2,375,000       Bay Area California Auth. Toll Bridge Rev. (San Francisco Bay Area) Ser. 10S3      6.907        10/01/50         3,207,604   
  3,085,000       Bay Area California Auth. Toll Bridge Rev. Sub. Lien Ser. 10S1      7.043        04/01/50         4,261,526   
  595,000       Idaho Housing & Financing Association Ser. 10A-2      6.348        07/15/28         697,382   
  200,000       Illinois State Toll Highway Auth. Toll Highway Rev. Ser. 09A      5.293        01/01/24         214,300   
  250,000       New Hampshire State Turnpike System Rev. Ser. 09B      6.259        11/01/29         277,740   
  250,000       New Hampshire State Turnpike System Rev. Ser. 09B      6.009        11/01/39         306,037   
  5,000,000       North Texas Tollway Auth. Rev. Sub.-Lien Ser. 10B-2      8.410        02/01/30         6,181,100   
  1,443,000       Pennsylvania Turnpike Commission Rev. Ser. 09      6.105        12/01/39         1,803,649   
  2,000,000       Texas State Transportation Commission Rev. (First Tier) Ser. 10B      5.028        04/01/26         2,320,440   
  9,455,000       Texas State Transportation Commission Rev. (First Tier) Ser. 10B      5.178        04/01/30         11,165,693   
  5,000,000       Triborough Bridge & Tunnel Auth. Ser. 09B      5.420        11/15/36         5,745,400   
  2,715,000       Triborough Bridge & Tunnel Auth. Ser. 09B      5.500        11/15/39         3,224,144   
          

 

 

  
             39,405,015   
          

 

 

  
   Hotel Occupancy Tax—0.5%        
  2,780,000       Dallas Texas Convention Center Hotel Development Corp. Ser. 09      7.088        01/01/42         3,540,330   
          

 

 

  
   Income Tax Revenue—1.7%        
  3,785,000       New York City Transitional Finance Auth. (Building Aid) Rev. Sub.-Ser. 10S-1B      6.828        07/15/40         5,050,590   
  200,000       New York State Dormitory Auth. State Personal Income Tax Rev. Ser. 09F      5.292        03/15/25         232,982   
  1,800,000       New York State Dormitory Auth. State Personal Income Tax Rev. Ser. 10      5.389        03/15/40         2,161,818   
  1,400,000       New York State Dormitory Auth. State Personal Income Tax Rev. Ser. 10C      4.904        02/15/23         1,599,472   
  2,000,000       New York State Urban Development Corp. Rev. State Personal Income Tax Ser. 10C      5.838        03/15/40         2,447,080   
          

 

 

  
             11,491,942   
          

 

 

  
   Lease Revenue—4.1%        
  300,000       Beverly Hills California Public Financing Auth. Lease Rev. (Various Projects) Ser. 10C      6.674        06/01/30         345,465   
  1,000,000       Beverly Hills California Public Financing Auth. Lease Rev. (Various Projects) Ser. 10C      6.774        06/01/40         1,146,550   
  2,000,000       Brighton Colorado COP Ser. 10B AGM      6.550        12/01/30         2,199,800   
  800,000       California State Public Works Board Lease Rev. (California State University Projects) Ser. 10B-2      7.804        03/01/35         1,052,536   
  1,000,000       Columbus Indiana Multi-High School Building Corp. Ser. 10      6.446        01/15/30         1,074,190   
  145,000       Escondido California Union High School District COP (Qualified School Construction Bonds) Ser. 10 AGM      5.000        06/01/17         150,443   
  1,000,000       Franklin County Ohio Convention Facilities Auth. Ser. 10      6.390        12/01/30         1,165,790   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   49  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Lease Revenue (continued)        
$ 1,070,000       Franklin County Ohio Convention Facilities Auth. Ser. 10      6.540 %       12/01/36       $ 1,278,618   
  500,000       Los Angeles California Municipal Improvement Corp. Lease Rev. (Recovery Zone Economic Development) Ser. 09D      7.757        09/01/39         578,130   
  2,000,000       Miami-Dade County Florida School Board COP Ser. 10      6.935        06/15/32         2,179,020   
  1,000,000       New Jersey State Educational Facilities Auth. Rev. Ser. 10B      7.225        07/01/30         1,133,050   
  2,000,000       New York City Educational Construction Fund Rev. Ser. 10      6.000        04/01/35         2,251,880   
  1,000,000       Passaic County New Jersey Ser. 10      6.540        08/01/31         1,081,940   
  500,000       Peoria Illinois Public Building Commission (School District Facilities) Rev. Ser. 09C AGC      6.580        12/01/29         556,990   
  3,000,000       Regional Transportation District Colorado COP Ser. 10      7.672        06/01/40         3,911,370   
  500,000       Salt Lake County Utah Municipal Building Auth. (Lease Rev.) Ser. 09B      5.820        12/01/29         596,720   
  3,000,000       San Francisco California City and County COP Ser. 09D      6.487        11/01/41         3,613,200   
  1,000,000       St. Charles Missouri COP Ser. 10B      5.650        02/01/30         1,017,790   
  2,250,000       Williamsburg County South Carolina Public Facilities Corp. (Installment Purchase Rev.) Ser. 10      6.526        12/01/30         2,454,683   
          

 

 

  
             27,788,165   
          

 

 

  
   Miscellaneous Revenue—5.8%        
  500,000       Battery Park City Auth. Rev. Ser. 09A      6.375        11/01/39         565,955   
  500,000       Camden County New Jersey Improvement Auth. Rev. Ser. 09A      6.180        01/15/27         583,290   
  2,000,000       Commonwealth Financing Auth. Pennsylvania Rev. Ser. 10      5.587        06/01/30         2,268,860   
  1,000,000       Indianapolis Indiana Local Public Improvement Bond Bank Ser. 10      5.854        01/15/30         1,173,410   
  3,500,000       Indianapolis Indiana Local Public Improvement Bond Bank Ser. 10B-2      5.966        01/15/30         4,187,750   
  500,000       Kansas State Development Finance Auth. Rev. (Kansas State Projects) Ser. 10E-2      6.120        11/01/29         559,275   
  2,000,000       Kansas State Development Finance Auth. Rev. Ser. 10      5.945        03/01/30         2,219,580   
  7,000,000       Miami-Dade County Florida Special Obligation Ser. 10B      6.743        04/01/40         7,864,850   
  1,000,000       Mississippi State Ser. 10      5.245        11/01/34         1,123,430   
  3,000,000       New Jersey Economic Development Auth. Rev. Ser. 10CC-1      6.425        12/15/35         3,173,490   
  4,220,000       New Jersey State Turnpike Auth. Rev. Ser. 09F      7.414        01/01/40         5,906,565   
  1,000,000       Port St. Lucie Florida Stormwater Utility Rev. Ser. 10A AGC      7.376        05/01/39         1,183,110   
  2,000,000       St. Cloud Florida Capital Improvement Rev. Ser. 10B AGM      5.849        09/01/30         2,212,880   
  5,000,000       Texas State Ser. 09      5.517        04/01/39         6,270,600   
          

 

 

  
             39,293,045   
          

 

 

  
   Port, Airport & Marina Revenue—2.4%        
  3,190,000       Chicago Illinois O’Hare International Airport Ser. 10      6.845        01/01/38         3,540,102   
  5,750,000       Chicago Illinois O’Hare International Airport Ser. 10      6.395        01/01/40         7,130,058   
  250,000       Long Beach California Senior Airport Rev. Ser. 09C      7.765        06/01/39         283,570   
  5,000,000       South Jersey Port Corp. New Jersey Rev. (Marine Terminal) Ser. 09-P-3      7.365        01/01/40         5,297,400   
          

 

 

  
             16,251,130   
          

 

 

  
   Sales Tax Revenue—2.5%        
  1,855,000       Central Puget Sound Washington Regional Transportation Auth. Sales & Use Ser. 09      5.491        11/01/39         2,308,548   
  200,000       Glendale Arizona Municipal Property Corp. (Excise Tax) Rev. Ser. 08B AGM      6.157        07/01/33         222,946   
  2,000,000       Massachusetts State Bay Transportation Auth. Sales Tax Rev. Ser. 10      5.869        07/01/40         2,442,720   
  250,000       Massachusetts State School Building Auth. Dedicated Sales Tax Rev. Ser. 09B      5.715        08/15/39         306,225   
  2,500,000       Miami-Dade County Florida Transit Sales Surtax Rev. Ser. 10B      5.534        07/01/32         2,781,025   
  1,000,000       Missouri State Highway & Transportation Commission State Road Rev. Ser. 10      5.020        05/01/25         1,115,440   
  1,025,000       Santa Clara Valley California Transportation Auth. Sales Tax Rev. Ser. 10      5.876        04/01/32         1,245,703   
  1,815,000       Utah Transit Auth. Sales Tax Rev. Ser. 09B      5.937        06/15/39         2,304,233   
  3,000,000       Washoe County Nevada Sales Tax Rev. Ser. 10      7.451        02/01/40         3,922,950   
          

 

 

  
             16,649,790   
          

 

 

  
   Sewer Revenue—1.4%        
  3,000,000       East Bay California Municipal Utility District Wastewater System Rev. Ser. 10      5.026        06/01/32         3,359,820   
  1,030,000       Jurupa California Community Services District COP Ser. 10B      6.347        09/01/25         1,210,085   
  1,070,000       Jurupa California Community Services District COP Ser. 10B      6.497        09/01/26         1,270,657   
  1,125,000       Jurupa California Community Services District COP Ser. 10B      6.597        09/01/27         1,337,130   
  1,170,000       Jurupa California Community Services District COP Ser. 10B      6.697        09/01/28         1,403,088   
  500,000       Knoxville Tennessee Waste Water System Rev. Ser. 10      6.300        04/01/45         556,970   
  200,000       Memphis Tennessee Sanitary Sewage System Rev. Ser. 09B AGC      6.300        10/01/29         223,420   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   50  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Sewer Revenue (continued)        
$ 200,000       Sarasota Florida Water & Sewer System Rev. Ser. 10B      5.425 %       10/01/30       $ 219,344   
          

 

 

  
             9,580,514   
          

 

 

  
   Special Assessment—0.2%        
  1,500,000       Macomb Interceptor Drainage District Michigan Ser. 10A      5.375        05/01/35         1,541,970   
          

 

 

  
   Tax Increment Revenue—0.3%        
  1,000,000       Temecula California Redevelopment Agency Tax Allocation Rev. (Temecula Redevelopment No. 1) Ser. 10B      7.930        08/01/30         1,103,370   
  1,000,000       Temecula California Redevelopment Agency Tax Allocation Rev. (Temecula Redevelopment No. 1) Ser. 10B      8.180        08/01/39         1,117,100   
          

 

 

  
             2,220,470   
          

 

 

  
   Transit Revenue—5.9%        
  1,200,000       Maryland State Transportation Auth. (Transportation Facilities Projects) Rev. Ser. 10B      5.604        07/01/30         1,423,308   
  2,500,000       Metropolitan Transportation Auth. New York Dedicated Tax Fund (Metro Transit Auth.) Ser. 10A-2      6.089        11/15/40         3,146,475   
  6,770,000       Metropolitan Transportation Auth. New York Rev. Ser. 10A      6.668        11/15/39         8,741,424   
  12,095,000       Metropolitan Transportation Auth. New York Rev. Ser. 10E      6.814        11/15/40         15,760,753   
  1,990,000       New Jersey State Transportation Trust Fund Auth. Ser. 10C      5.754        12/15/28         2,069,859   
  1,125,000       New Jersey State Transportation Trust Fund Auth. Ser. 10C      6.104        12/15/28         1,156,466   
  7,455,000       New Jersey State Transportation Trust Fund Auth. System Ser. 10B      6.561        12/15/40         7,825,066   
          

 

 

  
             40,123,351   
          

 

 

  
   Water Revenue—7.8%        
  1,500,000       Beaumont Texas Waterworks & Sewer System Ser. 10B      6.007        09/01/30         1,721,100   
  200,000       Davie Florida Water & Sewer Rev. Ser. 10B AGM      6.599        10/01/30         233,414   
  3,000,000       East Bay California Municipal Utility District Water System Rev. Ser. 10      5.874        06/01/40         3,807,990   
  2,000,000       Fresno California Water System Rev. Ser. 10A-2      6.500        06/01/30         2,242,480   
  1,250,000       JEA Florida Water & Sewer System Rev. Ser. 10A      6.210        10/01/33         1,480,912   
  2,000,000       Jurupa California Community Services District COP (Water Bonds) Ser. 10B      7.192        09/01/40         2,472,120   
  500,000       Los Angeles California Department of Water & Power Water System Rev. Ser. 09C      5.381        07/01/24         593,015   
  1,270,000       Los Angeles California Department of Water & Power Water System Rev. Ser. 09C      6.008        07/01/39         1,568,793   
  1,000,000       Metropolitan Water District of Southern California Ser. 10      6.947        07/01/40         1,170,400   
  1,000,000       New York City Municipal Water Finance Auth. Water & Sewer Rev. Ser. 10      5.790        06/15/41         1,117,880   
  2,000,000       New York City Municipal Water Finance Auth. Water & Sewer Rev. Ser. 10      5.724        06/15/42         2,499,720   
  6,100,000       New York City Municipal Water Finance Auth. Water & Sewer Rev. Ser. 10      6.124        06/15/42         6,875,066   
  1,000,000       New York City Municipal Water Finance Auth. Water & Sewer Rev. Ser. 10DD      6.452        06/15/41         1,117,940   
  1,000,000       New York State Environmental Facilities Corp. (State Clean Water & Drinking) Ser. 10      5.707        06/15/30         1,194,940   
  500,000       Passaic Valley New Jersey Water Commission Water Supply Rev. Ser. 09B      7.570        12/15/29         603,025   
  500,000       Passaic Valley New Jersey Water Commission Water Supply Rev. Ser. 09B      7.820        12/15/39         642,020   
  500,000       Riverside California Water Rev. Ser. 09B      6.349        10/01/39         629,185   
  3,000,000       San Francisco California City & County Public Utilities Commission Water Rev. Ser. 10DE      5.700        11/01/27         3,627,090   
  4,600,000       San Francisco City & County Public Utilities Commission Ser. 10      6.950        11/01/50         6,299,976   
  2,000,000       Seminole County Florida Water & Sewer Rev. Ser. 10B      6.443        10/01/40         2,281,540   
  2,000,000       South Central Connecticut Regional Water Auth. Water System Rev. Ser. 10      6.243        08/01/30         2,337,640   
  1,645,000       South Central Connecticut Regional Water Auth. Water System Rev. Ser. 10      6.393        08/01/40         2,007,492   
  1,500,000       Sunrise Florida Utility System Rev. Ser. 10B      5.813        10/01/30         1,687,260   
  1,000,000       Tacoma Washington Water System Rev. Ser. 10B      5.371        12/01/30         1,119,920   
  1,275,000       Tucson Arizona Water Rev. Ser. 10      5.789        07/01/26         1,429,887   
  1,250,000       Upper Eagle Regional Water Auth. Colorado Rev. Ser. 10      6.518        12/01/39         1,405,113   
  500,000       Western Nassau County Water Auth. Water System Rev. Ser. 10      6.701        04/01/40         616,060   
          

 

 

  
             52,781,978   
          

 

 

  
   Total Municipal Bonds
(Cost $617,211,523)		           656,517,282   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   51  

 

 

PowerShares Build America Bond Portfolio (BAB) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Money Market Fund—1.3%   
  8,939,806       Invesco Premier Portfolio—Institutional Class , 0.12%(a)
(Cost $8,939,806)		    $ 8,939,806   
     

 

 

  
   Total Investments
(Cost $626,151,329)—98.3%		      665,457,088   
   Other assets less liabilities—1.7%      11,383,003   
     

 

 

  
   Net Assets—100.0%    $ 676,840,091   
     

 

 

  

Investment Abbreviations:

AGC—Assured Guaranty Corp.

AGM—Assured Guaranty Municipal Corp.

Auth.—Authority

COP—Certificate of Participation

PSF-GTD—Permanent School Fund Guaranteed

Ref.—Refunding Bonds

Rev.—Revenue

Ser.—Series

Sub.—Subordinated

Notes to Schedule of Investments:

(a)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   52  

 

 

Schedule of Investments

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds—98.1%        
   Ad Valorem Property Tax—23.1%        
$ 1,350,000       Antelope Valley California Community College District (Election 2004) Ser. 07B NATL(a)      5.250 %      08/01/17       $ 1,462,657   
  500,000       Arcadia California Unified School District (Election 2006) Ser. 07A AGM      5.000        08/01/37         524,795   
  1,500,000       California State Ser. 15      5.000        08/01/45         1,704,390   
  1,000,000       California State Various Purpose Ser. 09      5.500        11/01/39         1,156,520   
  800,000       Centinela Valley California Union High School District (Election 2010) Ser. 12B AGM      5.000        08/01/50         876,104   
  2,000,000       Chaffey California Joint Union High School District (Election 2012) Ser. 15B      5.000        08/01/44         2,248,740   
  1,000,000       Colton California Joint Unified School District (Election 2008) Ser. 09-A AGC      5.375        08/01/34         1,125,370   
  1,500,000       Corona-Norco California Unified School District (Election 2006) Ser. 09C AGM      5.500        08/01/39         1,716,495   
  500,000       Desert California Community College District Ser. 07C AGM      5.000        08/01/37         531,635   
  1,500,000       El Monte California Union High School District (Election 2008) Ser. 09A AGC      5.500        06/01/34         1,689,525   
  500,000       Los Angeles California Community College District (Election 2001) Ser. 07A NATL(a)      5.000        08/01/17         539,545   
  1,505,000       Los Angeles Unified School District (Election 2002) Ser. 07C AGM      5.000        07/01/32         1,600,267   
  1,500,000       Oakland California Unified School District (Alameda County) Ser. 15A      5.000        08/01/40         1,650,600   
  1,000,000       Peralta Community College District Ser. 06A NATL(a)      5.000        08/01/16         1,035,940   
  1,100,000       Puerto Rico Commonwealth Public Improvement Ref. Ser. 07A-4 AGM      5.000        07/01/31         1,080,937   
  500,000       Riverside Community College District (Election 2004) Ser. 07C NATL(a)      5.000        08/01/17         539,545   
  400,000       San Diego California Community College District (Election 2006) Ser. 07 AGM      5.000        08/01/32         427,328   
  1,000,000       San Diego California Community College District (Election of 2006) Ser. 13      5.000        08/01/43         1,122,670   
  2,000,000       West Contra Costa California Unified School District Ref. Ser. 12 AGM      5.000        08/01/32         2,253,200   
  1,740,000       Yosemite California Community College District (Election 2004) Ser. 08C AGM(a)      5.000        08/01/18         1,941,753   
          

 

 

  
             25,228,016  
          

 

 

  
   College Revenue—11.9%        
  3,875,000       California State Educational Facilities Auth. Rev. (California Institute of Technology) Ser. 09      5.000        11/01/39         4,370,147   
  2,100,000       California State University Rev. Ref. Ser. 15A      5.000        11/01/38         2,425,269   
  210,000       California State University Rev. Systemwide Ser. 07A AGM(a)      5.000        05/01/17         224,467   
  290,000       California State University Rev. Systemwide Ser. 07A AGM      5.000        11/01/37         306,144   
  2,000,000       California State University Rev. Systemwide Ser. 14A      5.000        11/01/39         2,279,660   
  1,500,000       University of California Rev. (Limited Project) Ser. 12G      5.000        05/15/37         1,712,430   
  1,500,000       University of California Rev. General Ser. 13AI      5.000        05/15/38         1,697,880   
          

 

 

  
             13,015,997  
          

 

 

  
   Electric Power Revenue—7.6%        
  2,000,000       Guam Power Auth. Rev. Ser. 10A AGM      5.000        10/01/37         2,250,520   
  2,000,000       Guam Power Auth. Rev. Ser. 12A AGM      5.000        10/01/30         2,323,740   
  1,000,000       Los Angeles California Department of Water & Power Rev. Ser. 14D      5.000        07/01/39         1,139,350   
  1,000,000       Los Angeles California Department of Water & Power Rev. Ser. 15E      5.000        07/01/44         1,133,670   
  400,000       Los Angeles California Water & Power Rev. (Power System) Sub.-Ser. 07A-1 AMBAC      5.000        07/01/39         426,560   
  1,000,000       Redding California Electric System Rev. COP Ser. 08A AGM      5.000        06/01/30         1,087,010   
          

 

 

  
             8,360,850  
          

 

 

  
   General Fund—3.7%        
  550,000       California State Ref. Ser. 07 NATL      4.250        08/01/33         571,769   
  1,020,000       California State Various Purpose Ser. 09      6.000        04/01/38         1,188,392   
  2,000,000       California State Various Purpose Ser.13      5.000        04/01/43         2,257,160   
          

 

 

  
             4,017,321  
          

 

 

  
   Health, Hospital, Nursing Home Revenue—6.4%        
  1,000,000       California State Health Facilities Auth. Rev. Ref. (Sutter Health) Ser. 15A      5.000        08/15/43         1,127,450   
  500,000       California Statewide Communities Development Auth. Rev. (Adventist Remarketed 05/23/08) Ser. 07B AGC      5.000        03/01/37         528,930   
  1,000,000       California Statewide Communities Development Auth. Rev. (Catholic Healthcare West) Ser. 07K AGC      5.500        07/01/41         1,057,320   
  1,000,000       California Statewide Communities Development Auth. Rev. (Kaiser Permanente) Ser. 12A      5.000        04/01/42         1,107,050   
  1,000,000       California Statewide Communities Development Auth. Rev. (St. Joseph Health System-Remarketed) Insured Ser. 07C FGIC      5.750        07/01/47         1,104,000   
  1,000,000       California Statewide Communities Development Auth. Rev. Ref. (Cottage Health System Obligated Group) Ser. 15      5.000        11/01/43         1,114,570   
  945,000       University of California Regents Medical Center Pooled Rev. Ser. 07A NATL      4.750        05/15/31         957,493   
          

 

 

  
             6,996,813   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   53  

 

 

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Highway Tolls Revenue—4.5%        
$ 4,500,000       Bay Area California Auth. Toll Bridge Rev. Ser. 14S-6      5.000 %       10/01/54       $ 4,961,790   
          

 

 

  
   Lease Revenue—11.4%        
  540,000       Anaheim California Public Financing Auth. Lease Rev. Ref. Ser. 14A      5.000        05/01/39         606,728   
  1,500,000       Kern County California COP (Capital Improvements Projects) Ser. 09A AGC      5.750        08/01/35         1,688,730   
  485,000       Los Angeles California Municipal Improvement Corp. Lease Rev. (Figueroa Plaza) Ser. 07B1 NATL      4.750        08/01/37         486,615   
  1,000,000       Los Angeles California Municipal Improvement Corp. Lease Rev. (Real Property) Ser. 09B AGC      5.500        04/01/39         1,125,800   
  400,000       Los Angeles California Municipal Improvement Corp. Lease Rev. Police Headquarters Facility Ser. 06A NATL      4.250        01/01/37         402,608   
  2,000,000       Los Angeles County California Public Works Financing Auth. Lease Rev. Ser. 15A      5.000        12/01/44         2,231,840   
  1,000,000       Richmond Joint Powers Financing Auth. Lease Rev. (Civic Center Project) Ser. 09 AGC      5.750        08/01/29         1,140,800   
  1,000,000       San Diego California Public Facilities Financing Auth. Lease Rev. (Capital improvement Projects) Ser. 15A      5.000        10/15/44         1,098,700   
  2,000,000       San Jose California Financing Auth. Ref. (Civic Center Project) Ser. 13A      5.000        06/01/39         2,246,460   
  400,000       Santa Clara Valley California Water District (COP Water Utility System Improvement) Ser. 07A NATL      5.000        06/01/37         422,864   
  1,000,000       Yuba California Levee Financing Auth. Rev. (Levee Financing Project) Ser. 08A AGC      5.000        09/01/38         1,064,070   
          

 

 

  
             12,515,215   
          

 

 

  
   Miscellaneous Revenue—5.8%        
  1,500,000       California State Various Purpose—Green Bonds Ser. 14      5.000        10/01/37         1,718,055   
  1,000,000       California State Various Purpose Ser. 14      5.000        10/01/44         1,130,400   
  1,000,000       California State Various Purpose Ser. 15      5.000        03/01/45         1,131,300   
  2,000,000       Pittsburg Unified School District Financing Auth. Rev. (District Bond Program) Ser. 11 AGM      5.500        09/01/46         2,310,000   
          

 

 

  
             6,289,755   
          

 

 

  
   Port, Airport & Marina Revenue—6.2%        
  500,000       Long Beach California Marina Rev. Ser. 15      5.000        05/15/40         543,050   
  500,000       Long Beach California Marina Rev. Ser. 15      5.000        05/15/45         540,565   
  2,000,000       Los Angeles California Department of Airports Ref. Rev. Sub.-Ser. 15C      5.000        05/15/38         2,274,580   
  1,000,000       Los Angeles California Department of Airports Senior Los Angeles International Airport Ser. 10A      5.000        05/15/40         1,131,930   
  2,000,000       San Francisco California City & County Airports Commission (San Francisco International Airport) Ser. 14B      5.000        05/01/44         2,258,200   
          

 

 

  
             6,748,325   
          

 

 

  
   Recreational Revenue—1.0%        
  1,000,000       California Infrastructure & Economic Development Bank Rev. Ref. (Academy of Motion Picture Arts & Projects) Ser. 15      5.000        11/01/41         1,124,700   
          

 

 

  
   Sales Tax Revenue—1.3%        
  1,500,000       Puerto Rico Sales Tax Financing Corp. Sales Tax Rev. (First Sub.-Ser.) 10C AGM      5.125        08/01/42         1,375,470   
          

 

 

  
   Sewer Revenue—1.8%        
  400,000       Bakersfield California Wastewater Rev. Ser. 07A AGM(a)      5.000        09/15/17         433,620   
  400,000       Clovis California Public Financing Auth. Wastewater Rev. Ser. 07 AMBAC      4.500        08/01/38         403,332   
  650,000       Fresno California Sewer Rev. Ser. 08A AGC      5.000        09/01/37         712,036   
  460,000       Hollister California Joint Powers Financing Auth. (Wastewater Rev. Refinancing & Improvement Project) Ser. 01 AGM      5.000        06/01/32         469,775   
          

 

 

  
             2,018,763   
          

 

 

  
   Special Assessment—1.5%        
  1,500,000       Sacramento California Area Flood Control Agency Consolidated Capital Assessment District Ser. 08 BHAC      5.625        10/01/37         1,658,040   
          

 

 

  
   Special Tax—2.7%        
  2,600,000       Irvine California Unified School District Special Tax Ref. Ser. 15 BAM      5.000        09/01/38         2,934,724   
          

 

 

  
   Tax Increment Revenue—3.6%        
  1,000,000       Inland Valley California Development Successor Agency Tax Allocation Ref. Ser. 14A AGM      5.000        09/01/44         1,097,740   
  2,500,000       Santa Cruz County California Redevelopment Successor Agency Tax Allocation Ref. Ser. 15A AGM      5.000        09/01/35         2,838,650   
          

 

 

  
             3,936,390   
          

 

 

  
   Water Revenue—5.6%        
  1,000,000       East Bay California Municipal Utility District Water System Rev. Ref. Ser. 07A NATL(a)      5.000        06/01/17         1,071,930   
  1,500,000       East Bay California Municipal Utility District Water System Rev. Ref. Ser. 15A      5.000        06/01/37         1,755,090   
  2,000,000       Los Angeles California Department of Water & Power Rev. Ser. 12B      5.000        07/01/43         2,284,280   
  500,000       Puerto Rico Commonwealth Aqueduct & Sewer Auth. Rev. (Senior Lien) Ser. 08A AGC      5.125        07/01/47         455,650   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   54  

 

 

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Water Revenue (continued)        
$ 500,000       San Francisco City & County Public Utilities Commission Water Rev. Ser. 06A AGM(a)      4.500 %       05/01/16       $ 510,870   
          

 

 

  
             6,077,820   
          

 

 

  
   Total Investments
(Cost $104,009,235)(b)—98.1%		           107,259,989   
   Other assets less liabilities—1.9%           2,108,736   
          

 

 

  
   Net Assets—100.0%         $ 109,368,725   
          

 

 

  

Investment Abbreviations:

AGC—Assured Guaranty Corp.

AGM—Assured Guaranty Municipal Corp.

AMBAC—American Municipal Bond Assurance Corp.

Auth.—Authority

BAM—Build America Mutual

BHAC—Berkshire Hathaway Assurance Corp.

COP—Certificate of Participation

FGIC—Financial Guaranty Insurance Co.

NATL—National Public Finance Guarantee Corp.

Ref.—Refunding Bonds

Rev.—Revenue

Ser.—Series

Sub.—Subordinated

Notes to Schedule of Investments:

(a)  Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral.
(b)  The following table provides a listing of those entities that have either guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the value of securities held in the portfolio, as of October 31, 2015. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the borrower’s obligations but may be called upon to satisfy the borrower’s obligations.

 

Entities

   Percentage of
Total Investments		  
Assured Guaranty Municipal Corp.     24.4 % 
Assured Guaranty Corp.     9.9   
National Public Finance Guarantee Corp.     7.0   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   55  

 

 

Schedule of Investments

PowerShares CEF Income Composite Portfolio (PCEF)

October 31, 2015

 

Number
of Shares		           Value  
   Closed-End Funds—100.0%   
   Bonds—48.4%   
  2,978,313       Aberdeen Asia-Pacific Income Fund, Inc.    $ 14,146,987   
  1,371,631       AllianceBernstein Income Fund, Inc.      10,931,899   
  187,116       Babson Capital Global Short Duration High Yield Fund      3,295,113   
  477,370       BlackRock Core Bond Trust      6,186,715   
  1,106,703       BlackRock Credit Allocation Income Trust      13,866,989   
  464,133       BlackRock Income Trust, Inc.      2,970,451   
  343,671       BlackRock Limited Duration Income Trust      5,086,331   
  396,267       BlackRock Multi-Sector Income Trust      6,463,115   
  406,328       BlackRock Taxable Municipal Bond Trust      8,321,597   
  456,103       Blackstone/GSO Strategic Credit Fund      6,631,738   
  230,522       Brookfield Mortgage Opportunity Income Fund, Inc.      3,427,862   
  129,939       Brookfield Total Return Fund, Inc.      2,852,161   
  205,722       Cohen & Steers Limited Duration Preferred and Income Fund, Inc.      4,700,748   
  89,121       Cohen & Steers Select Preferred and Income Fund, Inc.      2,146,925   
  73,815       Cutwater Select Income Fund      1,418,724   
  899,012       DoubleLine Income Solutions Fund      15,876,552   
  73,293       DoubleLine Opportunistic Credit Fund      1,846,984   
  197,262       Duff & Phelps Utility and Corporate Bond Trust, Inc.      1,852,290   
  1,101,993       Eaton Vance Limited Duration Income Fund      14,689,567   
  169,370       Eaton Vance Short Duration Diversified Income Fund      2,300,045   
  94,487       Eaton Vance Tax-Advantaged Bond and Options Strategies Fund      1,187,702   
  185,463       First Trust Aberdeen Global Opportunity Income Fund      1,915,833   
  424,225       First Trust Intermediate Duration Preferred & Income Fund      9,311,739   
  134,250       Flaherty & Crumrine Dynamic Preferred and Income Fund, Inc.      3,079,695   
  227,554       Flaherty & Crumrine Preferred Securities Income Fund, Inc.      4,464,609   
  62,300       Flaherty & Crumrine Total Return Fund, Inc.      1,187,438   
  277,374       Franklin Limited Duration Income Trust      3,114,910   
  105,783       Guggenheim Build America Bonds Managed Duration Trust      2,361,076   
  80,678       Invesco Bond Fund(a)      1,470,760   
  1,324,383       Invesco Senior Income Trust(a)      5,482,946   
  80,547       John Hancock Investors Trust      1,221,898   
  189,229       John Hancock Preferred Income Fund      3,767,549   
  155,292       John Hancock Preferred Income Fund II      3,056,147   
  231,703       John Hancock Preferred Income Fund III      3,978,340   
  370,806       John Hancock Premium Dividend Fund      5,072,626   
  222,358       Legg Mason BW Global Income Opportunities Fund, Inc.      2,792,816   
  502,889       MFS Charter Income Trust      4,153,863   
  230,544       MFS Government Markets Income Trust      1,242,632   
  855,999       MFS Intermediate Income Trust      3,903,355   
  704,742       MFS Multimarket Income Trust      4,186,167   
  184,956       Nuveen Build America Bond Fund      3,702,819   
  51,588       Nuveen Build America Bond Opportunity Fund      1,021,958   
Number
of Shares		           Value  
   Closed-End Funds (continued)   
   Bonds (continued)   
  1,261,914       Nuveen Credit Strategies Income Fund    $ 10,171,027   
  499,029       Nuveen Floating Rate Income Fund      5,040,193   
  245,704       Nuveen Global High Income Fund      3,722,416   
  162,477       Nuveen Preferred & Income Term Fund      3,800,337   
  867,109       Nuveen Preferred Income Opportunities Fund      8,064,114   
  458,927       Nuveen Quality Preferred Income Fund      3,809,094   
  728,285       Nuveen Quality Preferred Income Fund II      6,700,222   
  213,911       Nuveen Quality Preferred Income Fund III      1,843,913   
  244,660       PIMCO Corporate & Income Strategy Fund      3,366,522   
  104,222       PIMCO Income Opportunity Fund      2,453,386   
  181,656       PIMCO Income Strategy Fund      1,880,140   
  424,787       PIMCO Income Strategy Fund II      3,916,536   
  218,363       PIMCO Strategic Income Fund, Inc.      2,004,572   
  179,373       Pioneer Floating Rate Trust      1,967,722   
  308,788       Prudential Short Duration High Yield Fund, Inc.      4,616,381   
  511,821       Putnam Master Intermediate Income Trust      2,364,613   
  1,097,055       Putnam Premier Income Trust      5,540,128   
  117,977       Stone Harbor Emerging Markets Income Fund      1,599,768   
  186,419       Strategic Global Income Fund, Inc.      1,670,314   
  441,576       TCW Strategic Income Fund, Inc.      2,353,600   
  1,250,222       Templeton Global Income Fund      8,163,950   
  105,089       Virtus Global Multi-Sector Income Fund      1,562,673   
  140,919       Western Asset Global Corporate Defined Opportunity Fund, Inc.      2,419,579   
  162,687       Western Asset Global Partners Income Fund, Inc.      1,381,213   
  54,501       Western Asset Investment Grade Defined Opportunity Trust, Inc.      1,118,360   
  52,331       Western Asset Mortgage Defined Opportunity Fund, Inc.      1,268,503   
  85,486       Western Asset Premier Bond Fund      1,117,302   
  636,060       Western Asset/Claymore Inflation-Linked Opportunities & Income Fund      6,672,269   
  303,803       Western Asset/Claymore Inflation-Linked Securities & Income Fund      3,250,692   
     

 

 

  
        304,529,210   
     

 

 

  
   Bonds/High Yield—27.9%   
  858,959       AllianceBernstein Global High Income Fund, Inc.      9,878,028   
  1,286,956       BlackRock Corporate High Yield Fund, Inc.      13,371,473   
  1,919,447       BlackRock Debt Strategies Fund, Inc.      6,641,287   
  336,979       BlackRock Floating Rate Income Strategies Fund, Inc.      4,390,836   
  170,819       BlackRock Floating Rate Income Trust      2,181,359   
  235,585       Brookfield High Income Fund, Inc.      1,762,176   
  546,820       Credit Suisse Asset Management Income Fund, Inc.      1,602,183   
  902,251       Credit Suisse High Yield Bond Fund      2,165,402   
  107,943       Deutsche High Income Opportunities Fund, Inc.      1,472,342   
  254,763       Deutsche Multi-Market Income Trust      1,936,199   
  650,288       Dreyfus High Yield Strategies Fund      2,113,436   
  287,721       Eaton Vance Floating-Rate Income Trust      3,792,163   
  258,604       Eaton Vance Senior Floating-Rate Trust      3,351,508   
  380,058       First Trust High Income Long/Short Fund      5,685,668   
  193,512       First Trust Senior Floating Rate Income Fund II      2,422,770   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   56  

 

 

PowerShares CEF Income Composite Portfolio (PCEF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Closed-End Funds (continued)   
   Bonds/High Yield (continued)   
  214,207       Global High Income Fund, Inc.    $ 1,895,732   
  36,011       Guggenheim Credit Allocation Fund      731,383   
  171,096       Ivy High Income Opportunities Fund      2,397,055   
  143,122       KKR Income Opportunities Fund      2,121,068   
  257,930       Morgan Stanley Emerging Markets Debt Fund, Inc.      2,254,308   
  205,925       Neuberger Berman High Yield Strategies Fund, Inc.      2,201,338   
  241,752       New America High Income Fund, Inc. (The)      2,004,124   
  346,676       Nuveen Floating Rate Income Opportunity Fund      3,477,160   
  230,824       Nuveen NASDAQ 100 Dynamic Overwrite Fund      4,436,437   
  356,860       Nuveen Senior Income Fund      2,112,611   
  370,131       PIMCO Corporate & Income Opportunity Fund      5,207,743   
  1,267,410       PIMCO Dynamic Credit Income Fund      23,776,612   
  77,064       Pioneer Diversified High Income Trust      1,178,309   
  148,376       Pioneer High Income Trust      1,592,074   
  420,525       Prudential Global Short Duration High Yield Fund, Inc.      6,118,639   
  100,501       Stone Harbor Emerging Markets Total Income Fund      1,278,373   
  502,307       Templeton Emerging Markets Income Fund      5,153,670   
  1,076,395       Voya Prime Rate Trust      5,446,559   
  660,073       Wells Fargo Advantage Income Opportunities Fund      5,201,375   
  440,296       Wells Fargo Advantage Multi-Sector Income Fund      5,292,358   
  353,580       Western Asset Emerging Markets Debt Fund, Inc.      5,201,162   
  340,849       Western Asset Emerging Markets Income Fund, Inc.      3,463,026   
  322,030       Western Asset Global High Income Fund, Inc.      3,078,607   
  783,614       Western Asset High Income Fund II, Inc.      5,485,298   
  856,799       Western Asset High Income Opportunity Fund, Inc.      4,164,043   
  233,259       Western Asset High Yield Defined Opportunity Fund, Inc.      3,445,235   
  490,400       Western Asset Managed High Income Fund, Inc.      2,324,496   
  149,659       Western Asset Worldwide Income Fund, Inc.      1,544,481   
     

 

 

  
        175,350,106  
     

 

 

  
   Domestic Equity—1.3%   
  203,473       BlackRock Science & Technology Trust      3,485,493   
  145,656       Cohen & Steers Global Income Builder, Inc.      1,465,300   
  190,315       GAMCO Natural Resources Gold & Income Trust      1,181,856   
  124,842       John Hancock Hedged Equity & Income Fund      1,876,375   
     

 

 

  
        8,009,024  
     

 

 

  
   Option Income—22.4%   
  860,883       AllianzGI NFJ Dividend, Interest & Premium Strategy Fund      11,027,911   
  187,790       BlackRock Energy and Resources Trust      2,922,012   
  281,013       BlackRock Enhanced Capital and Income Fund, Inc.      4,038,157   
  1,735,476       BlackRock Enhanced Equity Dividend Trust      13,276,391   
Number
of Shares		           Value  
   Closed-End Funds (continued)   
   Option Income (continued)   
  631,952       BlackRock Global Opportunities Equity Trust    $ 8,183,779   
  38,149       BlackRock Health Sciences Trust      1,572,883   
  800,630       BlackRock International Growth and Income Trust      5,164,064   
  1,004,677       BlackRock Resources & Commodities Strategy Trust      7,655,639   
  78,594       Columbia Seligman Premium Technology Growth Fund, Inc.      1,373,037   
  289,105       Eaton Vance Enhanced Equity Income Fund      3,674,525   
  297,101       Eaton Vance Enhanced Equity Income Fund II      3,981,153   
  465,338       Eaton Vance Risk-Managed Diversified Equity Income Fund      4,723,181   
  121,625       Eaton Vance Tax-Managed Buy-Write Income Fund      1,960,595   
  322,560       Eaton Vance Tax-Managed Buy-Write Opportunities Fund      4,815,821   
  930,288       Eaton Vance Tax-Managed Diversified Equity Income Fund      10,521,557   
  556,185       Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund      6,529,612   
  1,878,293       Eaton Vance Tax-Managed Global Diversified Equity Income Fund      17,167,598   
  148,156       First Trust Enhanced Equity Income Fund      2,008,995   
  140,181       Guggenheim Enhanced Equity Income Fund      1,082,197   
  180,427       Madison Covered Call & Equity Strategy Fund      1,389,288   
  262,468       Nuveen Dow 30sm Dynamic Overwrite Fund      3,737,544   
  196,933       Nuveen Global Equity Income Fund      2,174,140   
  632,026       Nuveen S&P 500 Buy-Write Income Fund      7,856,083   
  113,705       Nuveen S&P 500 Dynamic Overwrite Fund      1,525,921   
  95,377       Voya Asia Pacific High Dividend Equity Income Fund      875,561   
  115,038       Voya Global Advantage and Premium Opportunity Fund      1,255,065   
  895,898       Voya Global Equity Dividend and Premium Opportunity Fund      6,781,948   
  186,016       Voya Infrastructure Industrials and Materials Fund      2,375,424   
  206,707       Voya Natural Resources Equity Income Fund      1,285,718   
     

 

 

  
        140,935,799  
     

 

 

  
   Total Investments
(Cost $671,440,491)—100.0%		      628,824,139   
   Other assets less liabilities—(0.0)%      (140,624 ) 
     

 

 

  
   Net Assets—100.0%    $ 628,683,515  
     

 

 

  

Notes to Schedule of Investments:

(a)  Affiliated company. The Fund’s Adviser and the adviser for Invesco Bond Fund and Invesco Senior Income Trust are wholly-owned subsidiaries of Invesco Ltd. and therefore, Invesco Bond Fund and Invesco Senior Income Trust are considered to be affiliated. See Note 4.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   57  

 

 

Schedule of Investments

PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds—68.3%        
      Brazil—4.6%        
  CNH         24,000,000       Banco BTG Pactual SA, GMTN      4.100 %      03/26/16       $ 3,734,381   
             

 

 

  
      China—31.9%        
  CNH         5,000,000       21Vianet Group, Inc.      7.875        03/22/16         785,337   
  CNH         7,850,000       Agile Property Holdings Ltd.      6.500        02/28/17         1,225,402   
  CNH         10,000,000       Agricultural Bank of China Ltd.      3.200        11/28/15         1,580,464   
  CNH         8,000,000       Bank of China Ltd., EMTN      3.600        06/30/17         1,257,291   
  CNH         10,000,000       Bank of Communications Co. Ltd.      3.300        03/20/16         1,577,581   
  CNH         10,000,000       Bestgain Real Estate Lyra Ltd., EMTN      4.050        12/16/16         1,567,770   
  CNH         10,000,000       Bestgain Real Estate Lyra Ltd., EMTN      4.500        12/04/18         1,564,759   
  CNH         8,000,000       CCBL Funding PLC      3.200        11/29/15         1,264,051   
  CNH         10,000,000       China City Construction International Co. Ltd.      5.350        07/03/17         1,561,824   
  CNH         6,000,000       China Development Bank Corp.      4.200        01/19/27         949,128   
  CNH         10,000,000       China Development Bank Corp., EMTN      3.600        11/13/18         1,571,593   
  CNH         5,500,000       China Electronics Corp. Holdings Co. Ltd.      4.700        01/16/17         857,930   
  CNH         3,000,000       China General Nuclear Power Corp.      3.750        11/01/15         474,437   
  CNH         5,000,000       China Minmetals Corp.      3.650        03/28/16         787,316   
  CNH         6,000,000       China Resources Power Holdings Co. Ltd.      3.750        11/12/15         948,623   
  CNH         10,000,000       China Unicom Hong Kong Ltd., EMTN      4.000        04/16/17         1,569,725   
  CNH         5,000,000       Eastern Air Overseas Hong Kong Corp. Ltd.      3.875        06/05/16         786,311   
  CNH         5,000,000       Fantasia Holdings Group Co. Ltd.      7.875        05/27/16         787,059   
  CNH         7,870,000       Huaneng Power International, Inc.      3.850        02/05/16         1,241,901   
  CNH         5,000,000       Industrial & Commercial Bank of China Ltd., EMTN      3.200        11/28/15         790,034   
  CNH         5,000,000       Jinchuan Group Co. Ltd.      4.750        07/17/17         760,186   
  CNH         5,000,000       Kunzhi Ltd.      5.875        01/15/17         778,953   
  CNH         1,000,000       Lenovo Group Ltd.      4.950        06/10/20         159,148   
     5,000,000       Rosy Capital Global Ltd.      5.250        07/30/18         780,898   
  CNH         3,000,000       Yanlord Land HK Co. Ltd.      5.375        05/23/16         473,547   
             

 

 

  
                26,101,268  
             

 

 

  
      France—0.8%        
  CNH         4,000,000       Total Capital SA, EMTN      3.750        09/24/18         623,137   
             

 

 

  
      Germany—1.1%        
  CNH         1,000,000       Volkswagen International Finance NV, EMTN      2.150        05/23/16         155,001   
  CNH         5,000,000       Volkswagen International Finance NV, EMTN      3.750        11/30/17         757,217   
             

 

 

  
                912,218  
             

 

 

  
      Hong Kong—9.9%        
  CNH         7,000,000       Beijing Capital Hong Kong Ltd.      4.700        06/20/17         1,104,345   
  CNH         4,000,000       China Construction Bank Asia Corp. Ltd., EMTN      3.250        03/13/16         631,035   
  CNH         5,000,000       Far East Consortium International Ltd.      5.875        03/04/16         791,739   
  CNH         10,000,000       Hainan Airlines Hong Kong Co. Ltd.      6.250        05/22/17         1,555,833   
  CNH         2,000,000       HKCG Finance Ltd., EMTN      1.400        04/11/16         312,761   
  CNH         5,000,000       I.T. Ltd.      6.250        05/15/18         730,541   
  CNH         4,000,000       ICBCIL Finance Co. Ltd.      3.900        06/18/18         620,770   
  CNH         1,000,000       Industrial & Commercial Bank of China Asia Ltd., EMTN      6.000        11/04/21         160,319   
  CNH         5,000,000       Noble Group Ltd., EMTN      4.000        01/30/16         755,576   
  CNH         5,000,000       Value Success International Ltd., EMTN      4.000        11/21/16         785,820   
  CNH         4,000,000       Value Success International Ltd., EMTN      4.750        11/04/18         629,463   
             

 

 

  
                8,078,202  
             

 

 

  
      Japan—2.8%        
  CNH         15,000,000       Bank of Tokyo-Mitsubishi UFJ China Ltd.      3.050        05/26/17         2,336,821   
             

 

 

  
      New Zealand—1.7%        
  CNH         9,000,000       Fonterra Co-operative Group Ltd., EMTN      4.000        06/22/20         1,357,693   
             

 

 

  
      Russia—4.7%        
  CNH         10,000,000       Gazprombank OJSC Via GPB Eurobond Finance PLC, EMTN      4.250        01/30/17         1,494,775   
  CNH         15,000,000       Russian Agricultural Bank OJSC Via RSHB Capital SA, MTN      3.600        02/04/16         2,340,076   
             

 

 

  
                3,834,851  
             

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   58  

 

 

PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds (continued)        
      Supranational—3.8%        
  CNH         10,000,000       Asian Development Bank, EMTN      2.850 %       10/21/20       $ 1,534,293   
  CNH         10,000,000       International Finance Corp., GMTN      2.000        06/26/17         1,542,090   
             

 

 

  
                3,076,383  
             

 

 

  
      Sweden—1.3%        
  CNH         7,000,000       Volvo Treasury AB, EMTN      3.800        11/22/15         1,106,468   
             

 

 

  
      United Kingdom—3.8%        
  CNH         5,000,000       BP Capital Markets PLC, EMTN      3.950        10/08/18         781,737   
  CNH         15,000,000       Standard Chartered PLC      2.625        05/31/16         2,355,924   
             

 

 

  
                3,137,661  
             

 

 

  
      United States—1.9%        
  CNH         10,000,000       Caterpillar Financial Services Corp., EMTN      3.550        06/23/18         1,548,962   
             

 

 

  
      Total Corporate Bonds
(Cost $58,242,743)		           55,848,045  
             

 

 

  
             
      Sovereign Debt Obligations—29.5%        
      Canada—1.9%        
  CNH         10,000,000       Province of British Columbia      2.850        11/13/16         1,569,747   
             

 

 

  
      China—23.8%        
  CNH         6,000,000       China Government Bond      1.800        12/01/15         947,768   
  CNH         5,000,000       China Government Bond      2.870        06/27/16         789,886   
  CNH         13,500,000       China Government Bond      1.400        08/18/16         2,107,817   
  CNH         15,000,000       China Government Bond      2.600        11/22/16         2,361,234   
  CNH         5,000,000       China Government Bond      2.560        06/29/17         784,350   
  CNH         9,500,000       China Government Bond      1.940        08/18/18         1,456,233   
  CNH         8,000,000       China Government Bond      3.090        11/22/18         1,263,754   
  CNH         5,000,000       China Government Bond      3.090        06/29/20         788,779   
  CNH         6,000,000       China Government Bond      2.480        12/01/20         918,683   
  CNH         10,000,000       China Government Bond      2.360        08/18/21         1,510,656   
  CNH         6,500,000       China Government Bond      3.100        06/29/22         1,012,665   
  CNH         9,000,000       China Government Bond      3.160        06/27/23         1,406,350   
  CNH         10,000,000       Export-Import Bank of China (The)      3.000        05/14/16         1,575,961   
  CNH         6,000,000       Export-Import Bank of China (The)      3.350        06/18/17         943,584   
  CNH         10,000,000       Export-Import Bank of China (The), Series B      3.250        01/21/17         1,572,653   
             

 

 

  
                19,440,373  
             

 

 

  
      France—1.9%        
  CNH         10,000,000       Caisse d’Amortissement de la Dette Sociale      3.800        02/06/17         1,587,411   
             

 

 

  
      South Korea—1.9%        
  CNH         10,000,000       Export-Import Bank of Korea, EMTN      3.600        06/10/18         1,566,777   
             

 

 

  
      Total Sovereign Debt Obligations
(Cost $24,994,080)		           24,164,308  
             

 

 

  
             
       Number
of Shares		                           
      Money Market Fund—1.1%        
     917,229       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $917,229)		           917,229  
             

 

 

  
      Total Investments
(Cost $84,154,052)—98.9%		           80,929,582   
      Other assets less liabilities—1.1%           934,934  
             

 

 

  
      Net Assets—100.0%         $ 81,864,516  
             

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   59  

 

 

PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM) (continued)

October 31, 2015

 

Investment Abbreviations:

CNH—Chinese Yuan

EMTN—Euro Medium-Term Note

GMTN—Global Medium-Term Note

MTN—Medium-Term Notes

Notes to Schedule of Investments:

(a)  Foreign denominated security. Principal amount denominated in currency indicated.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   60  

 

 

Schedule of Investments

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Sovereign Debt Obligations—98.2%        
   Brazil—3.0%        
$ 24,864,000       Brazilian Government International Bond      8.250 %      01/20/34       $ 26,604,480   
  27,075,000       Brazilian Government International Bond      7.125        01/20/37         26,465,812   
  31,674,000       Brazilian Government International Bond      5.625        01/07/41         26,051,865   
          

 

 

  
             79,122,157   
          

 

 

  
   Colombia—3.1%        
  23,143,000       Colombia Government International Bond      7.375        09/18/37         26,961,595   
  26,190,000       Colombia Government International Bond      6.125        01/18/41         27,041,175   
  28,182,000       Colombia Government International Bond      5.625        02/26/44         27,406,995   
          

 

 

  
             81,409,765   
          

 

 

  
   Croatia—3.5%        
  28,601,000       Croatia Government International Bond(a)      6.625        07/14/20         31,147,919   
  28,193,000       Croatia Government International Bond(a)      6.375        03/24/21         30,413,199   
  28,900,000       Croatia Government International Bond(a)      6.000        01/26/24         30,706,250   
          

 

 

  
             92,267,368   
          

 

 

  
   Dominican Republic—3.3%        
  28,509,000       Dominican Republic International Bond(a)      6.600        01/28/24         30,433,358   
  25,962,000       Dominican Republic International Bond(a)      7.450        04/30/44         27,519,720   
  29,491,000       Dominican Republic International Bond(a)      6.850        01/27/45         29,564,727   
          

 

 

  
             87,517,805   
          

 

 

  
   El Salvador—3.1%        
  27,096,000       El Salvador Government International Bond(a)      8.250        04/10/32         27,129,870   
  29,791,000       El Salvador Government International Bond(a)      7.650        06/15/35         27,147,049   
  29,860,000       El Salvador Government International Bond(a)      7.625        02/01/41         26,948,650   
          

 

 

  
             81,225,569   
          

 

 

  
   Hungary—3.4%        
  27,116,000       Hungary Government International Bond      5.750        11/22/23         30,607,185   
  27,987,000       Hungary Government International Bond      5.375        03/25/24         30,995,602   
  21,781,000       Hungary Government International Bond      7.625        03/29/41         29,783,122   
          

 

 

  
             91,385,909   
          

 

 

  
   Indonesia—3.3%        
  22,152,000       Indonesia Government International Bond(a)      8.500        10/12/35         29,076,715   
  25,825,000       Indonesia Government International Bond(a)      6.625        02/17/37         28,510,800   
  23,567,000       Indonesia Government International Bond(a)      7.750        01/17/38         29,211,297   
          

 

 

  
             86,798,812   
          

 

 

  
   Latvia—3.6%        
  47,383,000       Republic of Latvia(a)      2.750        01/12/20         48,301,993   
  41,711,000       Republic of Latvia(a)      5.250        06/16/21         47,602,679   
          

 

 

  
             95,904,672   
          

 

 

  
   Lithuania—3.6%        
  26,366,000       Lithuania Government International Bond(a)      7.375        02/11/20         31,727,526   
  26,563,000       Lithuania Government International Bond(a)      6.125        03/09/21         31,161,056   
  25,961,000       Lithuania Government International Bond(a)      6.625        02/01/22         31,602,351   
          

 

 

  
             94,490,933   
          

 

 

  
   Mexico—3.2%        
  25,372,000       Mexico Government International Bond, MTN      6.050        01/11/40         28,765,505   
  26,284,000       Mexico Government International Bond, MTN      5.550        01/21/45         27,959,605   
  30,276,000       Mexico Government International Bond      4.600        01/23/46         28,194,525   
          

 

 

  
             84,919,635   
          

 

 

  
   Morocco—3.3%        
  45,227,000       Morocco Government International Bond(a)      4.250        12/11/22         45,704,778   
  42,844,000       Morocco Government International Bond(a)      5.500        12/11/42         43,194,892   
          

 

 

  
             88,899,670   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   61  

 

 

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Sovereign Debt Obligations (continued)        
   Pakistan—3.6%        
$ 30,888,000       Pakistan Government International Bond(a)      7.250 %       04/15/19       $ 32,210,006   
  30,749,000       Pakistan Government International Bond(a)      6.750        12/03/19         31,962,755   
  29,947,000       Pakistan Government International Bond(a)      8.250        04/15/24         32,140,618   
          

 

 

  
             96,313,379   
          

 

 

  
   Panama—3.4%        
  24,436,000       Panama Government International Bond      7.125        01/29/26         31,155,900   
  21,348,000       Panama Government International Bond      8.875        09/30/27         30,260,790   
  24,214,000       Panama Government International Bond      6.700        01/26/36         30,085,895   
          

 

 

  
             91,502,585   
          

 

 

  
   Peru—3.3%        
  23,542,000       Peruvian Government International Bond      7.350        07/21/25         30,428,035   
  19,808,000       Peruvian Government International Bond      8.750        11/21/33         28,969,200   
  25,088,000       Peruvian Government International Bond      5.625        11/18/50         27,157,760   
          

 

 

  
             86,554,995   
          

 

 

  
   Philippines—3.5%        
  19,339,000       Philippine Government International Bond      9.500        02/02/30         31,264,974   
  21,112,000       Philippine Government International Bond      7.750        01/14/31         30,591,795   
  23,030,000       Philippine Government International Bond      6.375        10/23/34         30,979,887   
          

 

 

  
             92,836,656   
          

 

 

  
   Poland—3.6%        
  27,851,000       Poland Government International Bond      5.125        04/21/21         31,585,513   
  27,714,000       Poland Government International Bond      5.000        03/23/22         31,284,949   
  29,446,000       Poland Government International Bond      4.000        01/22/24         31,423,770   
          

 

 

  
             94,294,232   
          

 

 

  
   Qatar—3.7%        
  19,986,000       Qatar Government International Bond(a)      9.750        06/15/30         32,882,966   
  24,231,000       Qatar Government International Bond(a)      6.400        01/20/40         32,355,291   
  25,437,000       Qatar Government International Bond(a)      5.750        01/20/42         31,732,657   
          

 

 

  
             96,970,914   
          

 

 

  
   Romania—3.6%        
  39,553,000       Romanian Government International Bond, MTN(a)      6.750        02/07/22         47,246,058   
  44,564,000       Romanian Government International Bond, MTN(a)      4.375        08/22/23         46,983,068   
          

 

 

  
             94,229,126   
          

 

 

  
   Russia—4.1%        
  35,000,000       Russian Foreign Bond—Eurobond(a)      4.875        09/16/23         36,246,000   
  36,800,000       Russian Foreign Bond—Eurobond(a)      5.625        04/04/42         36,797,792   
  35,400,000       Russian Foreign Bond—Eurobond(a)      5.875        09/16/43         36,417,750   
          

 

 

  
             109,461,542   
          

 

 

  
   Serbia—3.4%        
  28,542,000       Republic of Serbia(a)      5.875        12/03/18         30,376,537   
  29,606,000       Republic of Serbia(a)      4.875        02/25/20         30,631,818   
  26,581,000       Republic of Serbia(a)      7.250        09/28/21         30,479,104   
          

 

 

  
             91,487,459   
          

 

 

  
   Slovenia—3.4%        
  26,926,000       Slovenia Government International Bond(a)      5.500        10/26/22         30,571,996   
  26,416,000       Slovenia Government International Bond(a)      5.850        05/10/23         30,609,540   
  26,860,000       Slovenia Government International Bond(a)      5.250        02/18/24         30,150,350   
          

 

 

  
             91,331,886   
          

 

 

  
   South Africa—3.3%        
  27,932,000       South Africa Government International Bond      5.875        05/30/22         30,760,115   
  24,680,000       South Africa Government International Bond      6.250        03/08/41         27,549,050   
  29,290,000       South Africa Government International Bond(b)      5.375        07/24/44         28,838,495   
          

 

 

  
             87,147,660   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   62  

 

 

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Sovereign Debt Obligations (continued)        
   South Korea—3.4%        
$ 25,626,000       Republic of Korea      7.125 %      04/16/19       $ 30,152,320   
  28,097,000       Republic of Korea      3.875        09/11/23         30,612,244   
  25,004,000       Republic of Korea      4.125        06/10/44         28,679,588   
          

 

 

  
             89,444,152   
          

 

 

  
   Sri Lanka—3.4%        
  30,113,000       Sri Lanka Government International Bond(a)      6.250        10/04/20         30,384,017   
  30,699,000       Sri Lanka Government International Bond(a)      6.250        07/27/21         30,607,609   
  30,933,000       Sri Lanka Government International Bond(a)      5.875        07/25/22         29,864,265   
          

 

 

  
             90,855,891  
          

 

 

  
   Turkey—3.3%        
  23,554,000       Turkey Government International Bond      8.000        02/14/34         30,212,716   
  25,410,000       Turkey Government International Bond      6.875        03/17/36         29,299,890   
  24,220,000       Turkey Government International Bond      7.250        03/05/38         29,187,522   
          

 

 

  
             88,700,128  
          

 

 

  
   Ukraine—6.0%        
  65,086,000       Ukraine Government International Bond(a)      7.750        09/23/20         51,417,940   
  68,238,000       Ukraine Government International Bond(a)      7.950        02/23/21         54,078,615   
  67,760,000       Ukraine Government International Bond(a)      7.500        04/17/23         54,038,600   
          

 

 

  
             159,535,155  
          

 

 

  
   Uruguay—3.3%        
  23,865,000       Uruguay Government International Bond      8.000        11/18/22         30,099,730   
  22,830,000       Uruguay Government International Bond      7.875        01/15/33         29,222,400   
  22,459,000       Uruguay Government International Bond      7.625        03/21/36         28,522,930   
          

 

 

  
             87,845,060  
          

 

 

  
   Venezuela—3.5%        
  71,058,000       Venezuela Government International Bond(a)(b)      7.000        12/01/18         31,265,520   
  77,379,000       Venezuela Government International Bond(a)      7.750        10/13/19         30,951,600   
  79,700,000       Venezuela Government International Bond(a)(b)      6.000        12/09/20         30,485,250   
          

 

 

  
             92,702,370  
          

 

 

  
   Total Sovereign Debt Obligations
(Cost $2,680,509,129)		           2,605,155,485  
          

 

 

  
          
Number
of Shares		                           
   Money Market Fund—0.2%        
  6,255,278       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $6,255,278)		           6,255,278  
          

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $2,686,764,407)—98.4%		           2,611,410,763  
          

 

 

  
          
   Investments Purchased with Cash Collateral from Securities on Loan        
          
   Money Market Fund—0.4%        
  11,021,700       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(c)(d)
(Cost $11,021,700)		           11,021,700  
          

 

 

  
   Total Investments
(Cost $2,697,786,107)—98.8%		           2,622,432,463   
   Other assets less liabilities—1.2%           30,952,734  
          

 

 

  
   Net Assets—100.0%         $ 2,653,385,197  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   63  

 

 

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) (continued)

October 31, 2015

 

Investment Abbreviations:

MTN—Medium-Term Notes

Notes to Schedule of Investments:

(a)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $1,549,992,551, which represented 58.42% of the Fund’s Net Assets.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(d) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2I.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   64  

 

 

Schedule of Investments

PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Sovereign Debt Obligations—95.5%        
      Brazil—8.3%        
  BRL         400,000       Brazil Notas do Tesouro Nacional, Series NTNF      10.000 %      01/01/17       $ 98,926   
  BRL         850,000       Brazil Notas do Tesouro Nacional, Series NTNF      10.000       01/01/21         179,597   
  BRL         400,000       Brazil Notas do Tesouro Nacional, Series NTNF      10.000       01/01/23         80,036   
             

 

 

  
                358,559  
             

 

 

  
      Chile—4.0%        
  CLP         110,000,000       Chile Government International Bond(b)      6.000        01/01/20         173,492   
             

 

 

  
      China—3.6%        
  CNH         1,000,000       China Government Bond      2.560        06/29/17         156,870   
             

 

 

  
      Colombia—3.7%        
  COP         50,000,000       Colombian TES, Series B      7.250        06/15/16         17,509   
  COP         300,000,000       Colombian TES, Series B      7.000        05/04/22         101,970   
  COP         100,000,000       Colombian TES, Series B      10.000        07/24/24         39,380   
             

 

 

  
                158,859  
             

 

 

  
      Czech Republic—4.2%        
  CZK         800,000       Czech Republic Government Bond, Series 51      4.000        04/11/17         34,727   
  CZK         700,000       Czech Republic Government Bond, Series 58      5.700        05/25/24         41,737   
  CZK         2,100,000       Czech Republic Government Bond, Series 61      3.850        09/29/21         105,300   
             

 

 

  
                181,764  
             

 

 

  
      Hungary—4.0%        
  HUF         23,000,000       Hungary Government Bond, Series 17/A      6.750        11/24/17         91,051   
  HUF         20,000,000       Hungary Government Bond, Series 19/A      6.500        06/24/19         81,416   
             

 

 

  
                172,467  
             

 

 

  
      Indonesia—7.7%        
  IDR         2,000,000,000       Indonesia Treasury Bond, Series FR40      11.000        09/15/25         164,340   
  IDR         1,000,000,000       Indonesia Treasury Bond, Series FR58      8.250        06/15/32         66,785   
  IDR         1,500,000,000       Indonesia Treasury Bond, Series FR61      7.000        05/15/22         99,362   
             

 

 

  
                330,487  
             

 

 

  
      Israel—4.4%        
  ILS         500,000       Israel Government Bond, Series 0122      5.500        01/31/22         163,199   
  ILS         100,000       Israel Government Bond, Series 0816      4.250        08/31/16         26,829   
             

 

 

  
                190,028  
             

 

 

  
      Malaysia—4.4%        
  MYR         300,000       Malaysia Government Bond, Series 0311      4.392        04/15/26         70,618   
  MYR         500,000       Malaysia Government Bond, Series 0512      3.314        10/31/17         117,135   
             

 

 

  
                187,753  
             

 

 

  
      Mexico—8.0%        
  MXN         2,000,000       Mexican Bonos, Series M      5.000        06/15/17         123,332   
  MXN         1,000,000       Mexican Bonos, Series M      6.500        06/09/22         63,445   
  MXN         2,200,000       Mexican Bonos, Series M 20      8.500        05/31/29         159,053   
             

 

 

  
                345,830  
             

 

 

  
      Peru—3.7%        
  PEN         150,000       Peru Government Bond      7.840        08/12/20         49,174   
  PEN         180,000       Peru Government Bond      8.200        08/12/26         59,272   
  PEN         175,000       Peru Government Bond      6.900        08/12/37         50,055   
             

 

 

  
                158,501  
             

 

 

  
      Philippines—4.7%        
  PHP         2,500,000       Philippine Government Bond, Series 1059      4.125        08/20/24         54,971   
  PHP         2,600,000       Philippine Government Bond, Series 2017      8.000        07/19/31         80,311   
  PHP         3,000,000       Philippine Government Bond, Series 7-51      5.000        08/18/18         67,190   
             

 

 

  
                202,472  
             

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   65  

 

 

PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Sovereign Debt Obligations (continued)        
      Poland—4.0%        
  PLN         125,000       Poland Government Bond, Series 0719      3.250 %       07/25/19       $ 34,053   
  PLN         250,000       Poland Government Bond, Series 0922      5.750        09/23/22         78,566   
  PLN         225,000       Poland Government Bond, Series 1016      4.750        10/25/16         60,228   
             

 

 

  
                172,847  
             

 

 

  
      Russia—10.9%        
  RUB         6,000,000       Russian Federal Bond—OFZ, Series 5080      7.400        04/19/17         90,876   
  RUB         14,000,000       Russian Federal Bond—OFZ, Series 6209      7.600        07/20/22         195,598   
  RUB         13,000,000       Russian Federal Bond—OFZ, Series 6210      6.800        12/11/19         183,801   
             

 

 

  
                470,275  
             

 

 

  
      South Africa—3.7%        
  ZAR         1,400,000       South Africa Government Bond, Series R186      10.500        12/21/26         117,132   
  ZAR         650,000       South Africa Government Bond, Series R213      7.000        02/28/31         40,034   
             

 

 

  
                157,166  
             

 

 

  
      South Korea—8.2%        
  KRW         300,000,000       Korea Treasury Bond, Series 2106      4.250        06/10/21         296,652   
  KRW         60,000,000       Korea Treasury Bond, Series 2409      3.000        09/10/24         56,570   
             

 

 

  
                353,222  
             

 

 

  
      Thailand—4.1%        
  THB         2,250,000       Thailand Government Bond      3.250        06/16/17         65,035   
  THB         1,500,000       Thailand Government Bond      3.875        06/13/19         45,080   
  THB         2,250,000       Thailand Government Bond      3.580        12/17/27         68,189   
             

 

 

  
                178,304  
             

 

 

  
      Turkey—3.9%        
  TRY         150,000       Turkey Government Bond      8.300        06/20/18         49,746   
  TRY         330,000       Turkey Government Bond      10.500        01/15/20         116,796   
             

 

 

  
                166,542  
             

 

 

  
      Total Sovereign Debt Obligations
(Cost $5,401,633)		           4,115,438  
             

 

 

  
             
       Number
of Shares		                           
      Money Market Fund—2.3%        
     99,488       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $99,488)		           99,488  
             

 

 

  
      Total Investments
(Cost $5,501,121)—97.8%		           4,214,926   
      Other assets less liabilities—2.2%           93,285  
             

 

 

  
      Net Assets—100.0%         $ 4,308,211  
             

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   66  

 

 

PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM) (continued)

October 31, 2015

 

Investment Abbreviations:

BRL—Brazilian Real

CLP—Chilean Peso

CNH—Chinese Yuan

COP—Colombian Peso

CZK—Czech Koruna

HUF—Hungarian Forint

IDR—Indonesian Rupiah

ILS—Israeli New Sheqel

KRW—South Korean Won

MXN—Mexican Peso

MYR—Malaysian Ringgit

PEN—Peruvian Nuevo Sol

PHP—Philippine Peso

PLN—Polish Zloty

RUB—Russian Ruble

THB—Thai Baht

TRY—Turkish Lira

ZAR—South African Rand

Notes to Schedule of Investments:

(a)  Foreign denominated security. Principal amount denominated in currency indicated.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $173,492, which represented 4.03% of the Fund’s Net Assets.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   67  

 

 

Schedule of Investments

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds—98.7%        
   Advertising—0.7%        
$ 2,180,000       Lamar Media Corp.      5.875 %      02/01/22       $ 2,321,700   
  2,058,000       Outfront Media Capital LLC/Outfront Media Capital Corp.      5.875        03/15/25         2,142,893   
          

 

 

  
             4,464,593  
          

 

 

  
   Aerospace/Defense—0.6%        
  1,300,000       Aerojet Rocketdyne Holdings, Inc.      7.125        03/15/21         1,373,125   
  2,600,000       Triumph Group, Inc.      4.875        04/01/21         2,333,500   
          

 

 

  
             3,706,625  
          

 

 

  
   Airlines—0.9%        
  5,818,000       US Airways Group, Inc.      6.125        06/01/18         6,057,993   
          

 

 

  
   Apparel—0.9%        
  2,400,000       Hanesbrands, Inc.      6.375        12/15/20         2,496,000   
  1,744,000       William Carter Co. (The)      5.250        08/15/21         1,820,300   
  1,695,000       Wolverine World Wide, Inc.      6.125        10/15/20         1,788,225   
          

 

 

  
             6,104,525  
          

 

 

  
   Auto Manufacturers—2.0%        
  6,616,000       General Motors Co.      3.500        10/02/18         6,742,432   
  6,261,000       General Motors Co.      4.875        10/02/23         6,599,751   
          

 

 

  
             13,342,183  
          

 

 

  
   Auto Parts & Equipment—2.8%        
  1,999,000       American Axle & Manufacturing, Inc.      6.625        10/15/22         2,133,932   
  2,800,000       Dana Holding Corp.      5.375        09/15/21         2,866,500   
  4,790,000       Goodyear Tire & Rubber Co. (The)      8.250        08/15/20         5,028,303   
  4,100,000       Lear Corp.      5.250        01/15/25         4,202,500   
  3,189,000       Tenneco, Inc.      6.875        12/15/20         3,312,574   
  1,600,000       Titan International, Inc.      6.875        10/01/20         1,360,000   
          

 

 

  
             18,903,809  
          

 

 

  
   Banks—1.8%        
  2,550,000       CIT Group, Inc.      4.250        08/15/17         2,613,750   
  2,500,000       CIT Group, Inc.      5.000        08/15/22         2,640,625   
  3,000,000       Discover Bank      7.000        04/15/20         3,457,794   
  2,937,000       Synovus Financial Corp.      5.125        06/15/17         3,072,836   
          

 

 

  
             11,785,005  
          

 

 

  
   Beverages—0.6%        
  1,800,000       Constellation Brands, Inc.      7.250        05/15/17         1,953,000   
  1,900,000       Constellation Brands, Inc.      4.250        05/01/23         1,949,875   
          

 

 

  
             3,902,875  
          

 

 

  
   Building Materials—2.0%        
  1,500,000       Griffon Corp.      5.250        03/01/22         1,479,375   
  2,400,000       Martin Marietta Materials, Inc.      4.250        07/02/24         2,379,250   
  1,691,000       Masco Corp.      6.125        10/03/16         1,764,981   
  1,800,000       Masco Corp.      4.450        04/01/25         1,809,000   
  3,270,000       Owens Corning      4.200        12/15/22         3,311,254   
  2,300,000       Vulcan Materials Co.      7.500        06/15/21         2,737,000   
          

 

 

  
             13,480,860  
          

 

 

  
   Chemicals—3.5%        
  1,500,000       A Schulman, Inc.(a)      6.875        06/01/23         1,496,250   
  3,550,000       Ashland, Inc.      3.875        04/15/18         3,683,125   
  2,000,000       Blue Cube Spinco, Inc.(a)      9.750        10/15/23         2,165,000   
  3,500,000       Celanese US Holdings LLC      4.625        11/15/22         3,530,625   
  2,210,000       Chemtura Corp.      5.750        07/15/21         2,254,200   
  2,400,000       Eagle Spinco, Inc.      4.625        02/15/21         2,346,000   
  4,400,000       Huntsman International LLC      4.875        11/15/20         4,160,860   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   68  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Chemicals (continued)        
$ 1,400,000       Kraton Polymers LLC/Kraton Polymers Capital Corp.      6.750 %       03/01/19       $ 1,425,375   
  1,921,000       PolyOne Corp.      5.250        03/15/23         1,935,408   
          

 

 

  
             22,996,843  
          

 

 

  
   Coal—0.4%        
  4,100,000       CONSOL Energy, Inc.      5.875        04/15/22         2,613,750   
          

 

 

  
   Commercial Services—3.8%        
  1,800,000       ADT Corp. (The)      2.250        07/15/17         1,795,500   
  2,100,000       ADT Corp. (The)      3.500        07/15/22         1,979,250   
  4,900,000       Avis Budget Car Rental LLC/Avis Budget Finance, Inc.      5.500        04/01/23         5,096,000   
  5,806,000       Hertz Corp. (The)      6.750        04/15/19         5,972,922   
  3,920,000       R.R. Donnelley & Sons Co.      7.875        03/15/21         4,104,240   
  2,712,000       Service Corp. International      5.375        05/15/24         2,905,230   
  3,416,000       United Rentals North America, Inc.      7.625        04/15/22         3,723,816   
          

 

 

  
             25,576,958  
          

 

 

  
   Computers—1.2%        
  2,050,000       IHS, Inc.      5.000        11/01/22         2,078,187   
  3,125,000       Leidos Holdings, Inc.      4.450        12/01/20         3,076,247   
  3,000,000       NCR Corp.      6.375        12/15/23         3,101,250   
          

 

 

  
             8,255,684  
          

 

 

  
   Cosmetics/Personal Care—0.7%        
  2,600,000       Avon Products, Inc.      6.500        03/01/19         2,327,000   
  2,900,000       Avon Products, Inc.      6.750        03/15/23         2,113,375   
          

 

 

  
             4,440,375  
          

 

 

  
   Distribution/Wholesale—0.7%        
  1,650,000       H&E Equipment Services, Inc.      7.000        09/01/22         1,683,000   
  2,680,000       LKQ Corp.      4.750        05/15/23         2,646,500   
          

 

 

  
             4,329,500  
          

 

 

  
   Diversified Financial Services—3.6%        
  1,100,000       Aircastle Ltd.      6.250        12/01/19         1,204,500   
  1,000,000       Aircastle Ltd.      5.125        03/15/21         1,057,500   
  7,350,000       Ally Financial, Inc.      8.000        03/15/20         8,709,750   
  2,400,000       CoreLogic, Inc.      7.250        06/01/21         2,538,000   
  3,400,000       Discover Financial Services      3.750        03/04/25         3,315,228   
  3,900,000       E*TRADE Financial Corp.      5.375        11/15/22         4,179,622   
  1,100,000       Enova International, Inc.      9.750        06/01/21         937,750   
  2,600,000       Walter Investment Management Corp.      7.875        12/15/21         2,115,750   
          

 

 

  
             24,058,100  
          

 

 

  
   Electric—3.9%        
  2,875,000       AES Corp.      7.375        07/01/21         3,076,250   
  4,400,000       Calpine Corp.      5.750        01/15/25         4,185,500   
  900,000       Dynegy, Inc.      6.750        11/01/19         902,250   
  1,095,000       Dynegy, Inc.      5.875        06/01/23         1,029,300   
  4,025,000       FirstEnergy Corp., Series A      2.750        03/15/18         4,035,606   
  3,950,000       FirstEnergy Corp., Series B      4.250        03/15/23         3,998,652   
  3,192,000       IPALCO Enterprises, Inc.      5.000        05/01/18         3,383,520   
  2,400,000       NRG Energy, Inc.      7.625        01/15/18         2,520,000   
  2,800,000       NRG Energy, Inc.      6.250        07/15/22         2,590,000   
          

 

 

  
             25,721,078  
          

 

 

  
   Electrical Components & Equipment—0.9%        
  1,370,000       Anixter, Inc.      5.625        05/01/19         1,453,912   
  1,400,000       Anixter, Inc.      5.125        10/01/21         1,438,500   
  3,100,000       WESCO Distribution, Inc.      5.375        12/15/21         3,014,750   
          

 

 

  
             5,907,162  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   69  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Electronics—1.5%        
$ 5,910,000       Flextronics International Ltd.      5.000 %       02/15/23       $ 6,065,138   
  1,800,000       Jabil Circuit, Inc.      8.250        03/15/18         2,027,250   
  2,200,000       Jabil Circuit, Inc.      4.700        09/15/22         2,222,550   
          

 

 

  
             10,314,938  
          

 

 

  
   Engineering & Construction—0.8%        
  3,200,000       AECOM(a)      5.875        10/15/24         3,316,000   
  2,600,000       MasTec, Inc.      4.875        03/15/23         2,190,500   
          

 

 

  
             5,506,500  
          

 

 

  
   Entertainment—2.7%        
  2,300,000       AMC Entertainment, Inc.      5.750        06/15/25         2,323,000   
  2,965,000       Cinemark USA, Inc.      4.875        06/01/23         2,935,350   
  700,000       GLP Capital LP/GLP Financing II, Inc.      4.375        11/01/18         728,000   
  550,000       GLP Capital LP/GLP Financing II, Inc.      4.875        11/01/20         569,250   
  2,700,000       International Game Technology      7.500        06/15/19         2,909,250   
  1,500,000       International Game Technology      5.350        10/15/23         1,380,000   
  1,625,000       National CineMedia LLC      6.000        04/15/22         1,700,075   
  1,900,000       Pinnacle Entertainment, Inc.      7.500        04/15/21         2,011,625   
  3,380,000       Regal Entertainment Group      5.750        03/15/22         3,502,525   
          

 

 

  
             18,059,075  
          

 

 

  
   Environmental Control—0.4%        
  2,465,000       Covanta Holding Corp.      7.250        12/01/20         2,572,844   
          

 

 

  
   Food—2.1%        
  1,600,000       B&G Foods, Inc.      4.625        06/01/21         1,600,000   
  2,055,000       Darling Ingredients, Inc.      5.375        01/15/22         2,047,294   
  1,650,000       Post Holdings, Inc.      7.375        02/15/22         1,744,627   
  5,000,000       SUPERVALU, Inc.      6.750        06/01/21         4,862,500   
  2,000,000       TreeHouse Foods, Inc.      4.875        03/15/22         1,940,000   
  1,800,000       WhiteWave Foods Co. (The)      5.375        10/01/22         1,935,000   
          

 

 

  
             14,129,421  
          

 

 

  
   Healthcare-Products—0.4%        
  2,370,000       Alere, Inc.      7.250        07/01/18         2,479,612   
          

 

 

  
   Healthcare-Services—7.2%        
  900,000       Acadia Healthcare Co., Inc.      5.625        02/15/23         905,625   
  1,900,000       Amsurg Corp.      5.625        07/15/22         1,873,875   
  1,308,000       Centene Corp.      5.750        06/01/17         1,368,495   
  1,600,000       Centene Corp.      4.750        05/15/22         1,600,000   
  4,300,000       CHS/Community Health Systems, Inc.      6.875        02/01/22         4,353,750   
  4,500,000       DaVita Healthcare Partners, Inc.      5.125        07/15/24         4,575,937   
  5,084,000       HCA, Inc.      6.500        02/15/20         5,700,435   
  5,200,000       HCA, Inc.      5.000        03/15/24         5,369,000   
  3,750,000       Health Net, Inc.      6.375        06/01/17         3,942,188   
  2,100,000       HealthSouth Corp.      5.750        11/01/24         2,110,500   
  1,200,000       Kindred Healthcare, Inc.(a)      8.000        01/15/20         1,257,000   
  1,100,000       Kindred Healthcare, Inc.      6.375        04/15/22         1,043,625   
  2,800,000       LifePoint Health, Inc.      5.500        12/01/21         2,849,000   
  2,000,000       Tenet Healthcare Corp.      6.250        11/01/18         2,140,000   
  2,200,000       Tenet Healthcare Corp.      6.000        10/01/20         2,387,000   
  3,181,000       Universal Health Services, Inc.      7.125        06/30/16         3,276,430   
  3,000,000       WellCare Health Plans, Inc.      5.750        11/15/20         3,146,250   
          

 

 

  
             47,899,110  
          

 

 

  
   Holding Companies-Diversified—0.6%        
  3,800,000       Leucadia National Corp.      5.500        10/18/23         3,802,459   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   70  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Home Builders—2.1%        
$ 645,000       CalAtlantic Group, Inc.      8.375 %       05/15/18       $ 744,975   
  700,000       CalAtlantic Group, Inc.      8.375        01/15/21         833,910   
  2,100,000       Centex LLC      6.500        05/01/16         2,152,500   
  1,500,000       D.R. Horton, Inc.      3.750        03/01/19         1,545,000   
  1,270,000       D.R. Horton, Inc.      4.375        09/15/22         1,301,750   
  900,000       KB Home      4.750        05/15/19         889,555   
  900,000       KB Home      7.000        12/15/21         915,750   
  1,200,000       Lennar Corp.      4.500        11/15/19         1,248,000   
  1,300,000       Lennar Corp.      4.750        05/30/25         1,293,500   
  750,000       Toll Brothers Finance Corp.      8.910        10/15/17         847,500   
  1,055,000       Toll Brothers Finance Corp.      5.875        02/15/22         1,140,719   
  300,000       TRI Pointe Holdings, Inc.      4.375        06/15/19         299,625   
  200,000       TRI Pointe Holdings, Inc.      5.875        06/15/24         201,000   
  740,000       William Lyon Homes, Inc.      8.500        11/15/20         799,200   
          

 

 

  
             14,212,984  
          

 

 

  
   Home Furnishings—0.3%        
  1,795,000       Tempur Sealy International, Inc.      6.875        12/15/20         1,929,625   
          

 

 

  
   Household Products/Wares—0.5%        
  3,200,000       Spectrum Brands, Inc.(a)      5.750        07/15/25         3,428,000   
          

 

 

  
   Housewares—0.4%        
  2,500,000       Scotts Miracle-GRO Co. (The)(a)      6.000        10/15/23         2,643,750   
          

 

 

  
   Insurance—1.7%        
  3,600,000       CNO Financial Group, Inc.      5.250        05/30/25         3,838,500   
  3,194,000       Genworth Holdings, Inc., MTN      6.515        05/22/18         3,293,812   
  3,291,000       Genworth Holdings, Inc.      7.625        09/24/21         3,078,122   
  1,300,000       Radian Group, Inc.      5.250        06/15/20         1,301,625   
          

 

 

  
             11,512,059  
          

 

 

  
   Internet—1.5%        
  1,270,000       Expedia, Inc.      5.950        08/15/20         1,409,044   
  1,400,000       Expedia, Inc.      4.500        08/15/24         1,399,240   
  2,100,000       IAC/InterActiveCorp      4.750        12/15/22         1,981,875   
  2,400,000       Netflix, Inc.(a)      5.875        02/15/25         2,550,000   
  2,650,000       VeriSign, Inc.      4.625        05/01/23         2,668,020   
          

 

 

  
             10,008,179  
          

 

 

  
   Iron/Steel—1.8%        
  1,200,000       Allegheny Technologies, Inc.      9.375        06/01/19         1,269,000   
  1,350,000       Allegheny Technologies, Inc.      7.125        08/15/23         1,154,250   
  2,855,000       Commercial Metals Co.      7.350        08/15/18         3,079,831   
  3,400,000       Steel Dynamics, Inc.      5.125        10/01/21         3,391,500   
  3,992,000       United States Steel Corp.      7.375        04/01/20         2,994,000   
          

 

 

  
             11,888,581  
          

 

 

  
   Leisure Time—0.6%        
  1,900,000       Royal Caribbean Cruises Ltd.      7.250        06/15/16         1,962,282   
  1,900,000       Royal Caribbean Cruises Ltd.      5.250        11/15/22         2,033,000   
          

 

 

  
             3,995,282  
          

 

 

  
   Lodging—1.3%        
  2,500,000       Choice Hotels International, Inc.      5.750        07/01/22         2,693,750   
  1,000,000       FelCor Lodging LP      6.000        06/01/25         1,040,000   
  2,200,000       MGM Resorts International      8.625        02/01/19         2,497,000   
  2,200,000       MGM Resorts International      6.625        12/15/21         2,359,500   
          

 

 

  
             8,590,250  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   71  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Machinery-Construction & Mining—0.4%        
$ 2,575,000       Terex Corp.      6.000 %       05/15/21       $ 2,562,640   
          

 

 

  
   Machinery-Diversified—0.6%        
  2,066,000       Manitowoc Co., Inc. (The)      8.500        11/01/20         2,156,429   
  1,500,000       Zebra Technologies Corp.      7.250        10/15/22         1,640,625   
          

 

 

  
             3,797,054  
          

 

 

  
   Media—5.3%        
  2,135,000       AMC Networks, Inc.      7.750        07/15/21         2,300,463   
  2,100,000       Cablevision Systems Corp.      8.625        09/15/17         2,236,500   
  2,800,000       CCO Holdings LLC / CCO Holdings Capital Corp.(a)      5.125        05/01/23         2,814,000   
  2,600,000       CCO Safari II LLC(a)      3.579        07/23/20         2,611,965   
  4,400,000       Clear Channel Worldwide Holdings, Inc., Series B      6.500        11/15/22         4,603,500   
  2,000,000       CSC Holdings LLC      6.750        11/15/21         1,946,000   
  3,143,000       DISH DBS Corp.      7.125        02/01/16         3,185,116   
  3,100,000       DISH DBS Corp.      6.750        06/01/21         3,208,500   
  1,100,000       LIN Television Corp.(a)      5.875        11/15/22         1,111,000   
  1,950,000       McClatchy Co. (The)      9.000        12/15/22         1,872,000   
  3,950,000       Nielsen Finance LLC/Nielsen Finance Co.      4.500        10/01/20         4,077,190   
  2,100,000       Sinclair Television Group, Inc.      6.125        10/01/22         2,168,250   
  2,800,000       Tribune Media Co.(a)      5.875        07/15/22         2,884,000   
          

 

 

  
             35,018,484  
          

 

 

  
   Mining—1.1%        
  2,950,000       Alcoa, Inc.      5.550        02/01/17         3,079,062   
  2,800,000       Alcoa, Inc.      5.400        04/15/21         2,908,500   
  1,400,000       Hecla Mining Co.      6.875        05/01/21         1,197,000   
          

 

 

  
             7,184,562  
          

 

 

  
   Miscellaneous Manufacturing—1.1%        
  2,350,000       Harsco Corp.      5.750        05/15/18         2,308,875   
  2,450,000       SPX FLOW, Inc.      6.875        09/01/17         2,609,250   
  2,800,000       Trinity Industries, Inc.      4.550        10/01/24         2,666,426   
          

 

 

  
             7,584,551  
          

 

 

  
   Office/Business Equipment—0.5%        
  3,000,000       CDW LLC/CDW Finance Corp.      6.000        08/15/22         3,230,970   
          

 

 

  
   Oil & Gas—9.6%        
  2,100,000       Atwood Oceanics, Inc.      6.500        02/01/20         1,627,500   
  948,000       Bill Barrett Corp.      7.625        10/01/19         732,330   
  2,400,000       California Resources Corp.      5.000        01/15/20         1,758,000   
  2,500,000       California Resources Corp.      6.000        11/15/24         1,709,375   
  1,400,000       Carrizo Oil & Gas, Inc.      6.250        04/15/23         1,338,750   
  2,707,000       Chesapeake Energy Corp.      6.625        08/15/20         1,847,527   
  2,850,000       Chesapeake Energy Corp.      5.750        03/15/23         1,809,750   
  2,900,000       Concho Resources, Inc.      5.500        04/01/23         2,929,000   
  3,731,000       Denbury Resources, Inc.      4.625        07/15/23         2,509,097   
  600,000       Diamondback Energy, Inc.      7.625        10/01/21         642,000   
  2,900,000       Energen Corp.      4.625        09/01/21         2,639,000   
  1,600,000       EP Energy LLC/EP Energy Finance, Inc.      9.375        05/01/20         1,400,000   
  1,700,000       EP Energy LLC/Everest Acquisition Finance, Inc.      6.375        06/15/23         1,296,250   
  1,100,000       Gulfport Energy Corp.      6.625        05/01/23         1,012,000   
  1,575,000       Laredo Petroleum, Inc.      5.625        01/15/22         1,488,375   
  4,300,000       Murphy Oil USA, Inc.      6.000        08/15/23         4,558,000   
  3,200,000       Newfield Exploration Co.      5.625        07/01/24         3,184,000   
  1,000,000       Oasis Petroleum, Inc.      7.250        02/01/19         960,000   
  900,000       Oasis Petroleum, Inc.      6.875        03/15/22         771,750   
  1,790,000       Parker Drilling Co.      6.750        07/15/22         1,387,250   
  1,200,000       PDC Energy, Inc.      7.750        10/15/22         1,212,000   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   72  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Oil & Gas (continued)        
$ 2,875,000       QEP Resources, Inc.      6.875 %       03/01/21       $ 2,803,125   
  2,675,000       Range Resources Corp.      5.000        03/15/23         2,387,438   
  900,000       Rice Energy, Inc.      6.250        05/01/22         819,000   
  700,000       RSP Permian, Inc.      6.625        10/01/22         696,500   
  900,000       Sanchez Energy Corp.      6.125        01/15/23         657,000   
  2,200,000       SM Energy Co.      6.125        11/15/22         2,145,000   
  2,285,000       Stone Energy Corp.      7.500        11/15/22         1,485,250   
  2,400,000       Tesoro Corp.      4.250        10/01/17         2,466,000   
  2,623,000       Tesoro Corp.      5.375        10/01/22         2,672,181   
  2,250,000       Unit Corp.      6.625        05/15/21         1,811,250   
  3,373,000       Western Refining, Inc.      6.250        04/01/21         3,373,000   
  1,600,000       Whiting Petroleum Corp.      5.000        03/15/19         1,528,000   
  1,750,000       Whiting Petroleum Corp.      5.750        03/15/21         1,634,063   
  1,500,000       WPX Energy, Inc.      5.250        01/15/17         1,515,000   
  1,600,000       WPX Energy, Inc.      6.000        01/15/22         1,416,000   
          

 

 

  
             64,220,761  
          

 

 

  
   Oil & Gas Services—0.5%        
  2,078,000       Bristow Group, Inc.      6.250        10/15/22         1,818,250   
  1,792,000       Forum Energy Technologies, Inc.      6.250        10/01/21         1,509,760   
          

 

 

  
             3,328,010  
          

 

 

  
   Packaging & Containers—2.5%        
  3,822,000       Ball Corp.      4.000        11/15/23         3,745,560   
  2,800,000       Berry Plastics Corp.      5.500        05/15/22         2,887,500   
  4,100,000       Crown Americas LLC/Crown Americas Capital Corp. IV      4.500        01/15/23         4,130,750   
  3,000,000       Graphic Packaging International, Inc.      4.750        04/15/21         3,090,000   
  2,550,000       Silgan Holdings, Inc.      5.000        04/01/20         2,613,750   
          

 

 

  
             16,467,560  
          

 

 

  
   Pharmaceuticals—0.2%        
  1,400,000       Pfizer, Inc.      6.050        03/30/17         1,499,103   
          

 

 

  
   Pipelines—2.3%        
  5,256,000       ONEOK, Inc.      4.250        02/01/22         4,520,160   
  3,000,000       PBF Logistics LP/PBF Logistics Finance Corp.(a)      6.875        05/15/23         2,805,000   
  1,600,000       Rose Rock Midstream LP/Rose Rock Finance Corp.      5.625        07/15/22         1,368,000   
  1,500,000       Sabine Pass Liquefaction LLC      5.750        05/15/24         1,455,000   
  6,546,000       Williams Cos., Inc. (The)      4.550        06/24/24         5,487,977   
          

 

 

  
             15,636,137  
          

 

 

  
   Real Estate—0.1%        
  780,000       Kennedy-Wilson, Inc.      5.875        04/01/24         775,125   
          

 

 

  
   REITs—2.8%        
  3,700,000       Crown Castle International Corp.      5.250        01/15/23         3,996,000   
  1,500,000       DuPont Fabros Technology LP      5.875        09/15/21         1,582,500   
  2,701,000       Equinix, Inc.      5.375        04/01/23         2,822,545   
  4,150,000       Iron Mountain, Inc.      5.750        08/15/24         4,186,313   
  1,300,000       iStar, Inc.      4.000        11/01/17         1,274,000   
  1,600,000       MPT Operating Partnership LP/MPT Finance Corp.      6.875        05/01/21         1,682,000   
  1,500,000       Sabra Health Care LP/Sabra Capital Corp.      5.500        02/01/21         1,570,800   
  800,000       Vereit Operating Partnership LP      2.000        02/06/17         790,560   
  800,000       Vereit Operating Partnership LP      4.600        02/06/24         779,000   
          

 

 

  
             18,683,718  
          

 

 

  
   Retail—7.3%        
  2,200,000       Asbury Automotive Group, Inc.      6.000        12/15/24         2,337,500   
  3,600,000       Best Buy Co., Inc.      5.000        08/01/18         3,852,000   
  3,604,000       Best Buy Co., Inc.      5.500        03/15/21         3,874,300   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   73  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Retail (continued)        
$ 5,000,000       CVS Health Corp.(a)      4.750 %       12/01/22       $ 5,457,855   
  3,700,000       Darden Restaurants, Inc.      6.450        10/15/17         4,015,406   
  3,600,000       Dollar Tree, Inc.(a)      5.750        03/01/23         3,811,500   
  2,600,000       Group 1 Automotive, Inc.      5.000        06/01/22         2,639,000   
  3,250,000       L Brands, Inc.      6.900        07/15/17         3,518,125   
  3,287,000       L Brands, Inc.      5.625        02/15/22         3,582,830   
  1,900,000       Men’s Wearhouse, Inc. (The)      7.000        07/01/22         1,985,500   
  3,160,000       Penske Automotive Group, Inc.      5.750        10/01/22         3,278,500   
  3,100,000       PVH Corp.      4.500        12/15/22         3,123,250   
  2,340,000       QVC, Inc.      3.125        04/01/19         2,325,132   
  2,435,000       QVC, Inc.      4.375        03/15/23         2,351,879   
  2,600,000       Sally Holdings LLC/Sally Capital, Inc.      5.750        06/01/22         2,756,000   
          

 

 

  
             48,908,777  
          

 

 

  
   Semiconductors—1.1%        
  2,720,000       Amkor Technology, Inc.      6.625        06/01/21         2,689,400   
  4,925,000       Micron Technology, Inc.      5.500        02/01/25         4,703,375   
          

 

 

  
             7,392,775  
          

 

 

  
   Software—0.2%        
  1,351,000       SS&C Technologies Holdings, Inc.(a)      5.875        07/15/23         1,421,928   
          

 

 

  
   Telecommunications—6.0%        
  4,300,000       CenturyLink, Inc., Series S      6.450        06/15/21         4,353,750   
  2,200,000       Cincinnati Bell, Inc.      8.375        10/15/20         2,299,000   
  900,000       CyrusOne LP/CyrusOne Finance Corp.      6.375        11/15/22         931,500   
  4,365,000       Embarq Corp.      7.082        06/01/16         4,492,894   
  2,551,000       Frontier Communications Corp.      8.500        04/15/20         2,633,908   
  2,700,000       Frontier Communications Corp.      7.125        01/15/23         2,423,250   
  1,216,000       Hughes Satellite Systems Corp.      6.500        06/15/19         1,343,072   
  1,200,000       Hughes Satellite Systems Corp.      7.625        06/15/21         1,312,500   
  3,600,000       Level 3 Financing, Inc.      5.375        08/15/22         3,676,500   
  2,100,000       SBA Telecommunications, Inc.      5.750        07/15/20         2,199,750   
  5,420,000       T-Mobile USA, Inc.      6.250        04/01/21         5,609,158   
  1,400,000       ViaSat, Inc.      6.875        06/15/20         1,468,250   
  5,688,000       Windstream Services LLC      7.750        10/15/20         5,140,530   
  2,200,000       Windstream Services LLC      6.375        08/01/23         1,751,750   
          

 

 

  
             39,635,812  
          

 

 

  
   Transportation—0.2%        
  1,750,000       Hornbeck Offshore Services, Inc.      5.875        04/01/20         1,417,500   
          

 

 

  
   Total Corporate Bonds
(Cost $673,935,542)		           657,386,054  
          

 

 

  
          
Number
of Shares		                           
   Money Market Fund—0.1%        
  737,695       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $737,695)		           737,695  
          

 

 

  
   Total Investments
(Cost $674,673,237)—98.8%		           658,123,749   
   Other assets less liabilities—1.2%           8,177,123  
          

 

 

  
   Net Assets—100.0%         $ 666,300,872  
          

 

 

  

Investment Abbreviations:

MTN—Medium-Term Note

REIT—Real Estate Investment Trust

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   74  

 

 

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB) (continued)

October 31, 2015

 

Notes to Schedule of Investments:

(a)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $39,773,248, which represented 5.97% of the Fund’s Net Assets.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   75  

 

 

Schedule of Investments

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds—98.7%        
   Advertising—0.1%        
$ 50,000       Omnicom Group, Inc.      3.625 %      05/01/22       $ 50,783   
          

 

 

  
   Aerospace/Defense—3.3%        
  50,000       Boeing Co. (The)      4.875        02/15/20         56,040   
  100,000       General Dynamics Corp.      1.000        11/15/17         99,851   
  100,000       General Dynamics Corp.      2.250        11/15/22         96,578   
  200,000       L-3 Communications Corp.      5.200        10/15/19         210,760   
  100,000       L-3 Communications Corp.      3.950        05/28/24         95,639   
  100,000       Lockheed Martin Corp.      4.250        11/15/19         108,120   
  100,000       Lockheed Martin Corp.      3.350        09/15/21         103,035   
  50,000       Northrop Grumman Corp.      3.250        08/01/23         50,604   
  100,000       Raytheon Co.      3.125        10/15/20         104,636   
  100,000       United Technologies Corp.      1.800        06/01/17         101,215   
  100,000       United Technologies Corp.      3.100        06/01/22         102,723   
          

 

 

  
             1,129,201  
          

 

 

  
   Agriculture—2.4%        
  100,000       Altria Group, Inc.      9.700        11/10/18         121,917   
  100,000       Altria Group, Inc.      2.850        08/09/22         99,001   
  100,000       Archer-Daniels-Midland Co.      4.479        03/01/21         109,677   
  100,000       Bunge Ltd. Finance Corp.      8.500        06/15/19         118,449   
  75,000       Philip Morris International, Inc.      5.650        05/16/18         82,739   
  100,000       Reynolds American, Inc.(a)      6.875        05/01/20         115,844   
  50,000       Reynolds American, Inc.      3.250        11/01/22         49,825   
  100,000       Reynolds American, Inc.      4.450        06/12/25         104,549   
          

 

 

  
             802,001  
          

 

 

  
   Apparel—0.4%        
  150,000       NIKE, Inc.      2.250        05/01/23         146,654   
          

 

 

  
   Auto Manufacturers—0.9%        
  100,000       Ford Motor Credit Co. LLC      5.000        05/15/18         106,266   
  100,000       Ford Motor Credit Co. LLC      5.875        08/02/21         114,129   
  100,000       PACCAR Financial Corp., MTN      1.150        08/16/16         100,404   
          

 

 

  
             320,799  
          

 

 

  
   Auto Parts & Equipment—0.6%        
  100,000       Johnson Controls, Inc.      5.500        01/15/16         100,854   
  100,000       Johnson Controls, Inc.      4.250        03/01/21         104,353   
          

 

 

  
             205,207  
          

 

 

  
   Banks—9.7%        
  150,000       Bank of America Corp., MTN      6.875        04/25/18         167,520   
  200,000       Bank of America Corp., MTN      3.300        01/11/23         199,738   
  150,000       Bank of New York Mellon Corp. (The)      3.550        09/23/21         157,778   
  100,000       BB&T Corp., MTN      2.450        01/15/20         100,770   
  50,000       Capital One Financial Corp.      4.750        07/15/21         54,910   
  250,000       Citigroup, Inc.      6.125        11/21/17         272,003   
  100,000       Citigroup, Inc.      4.500        01/14/22         108,289   
  50,000       Discover Bank      4.200        08/08/23         51,674   
  50,000       Fifth Third Bancorp      3.625        01/25/16         50,336   
  100,000       Fifth Third Bancorp      4.300        01/16/24         103,171   
  100,000       Goldman Sachs Group, Inc. (The)      6.150        04/01/18         110,118   
  50,000       Goldman Sachs Group, Inc. (The)      5.750        01/24/22         57,341   
  150,000       Huntington National Bank (The), Series BKNT      1.300        11/20/16         149,998   
  150,000       JPMorgan Chase & Co.      6.000        01/15/18         163,747   
  100,000       JPMorgan Chase & Co.      4.500        01/24/22         108,400   
  50,000       KeyCorp, MTN      5.100        03/24/21         55,729   
  100,000       Morgan Stanley, GMTN      6.625        04/01/18         111,124   
  100,000       Morgan Stanley, Series F, MTN      3.875        04/29/24         102,966   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   76  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Banks (continued)        
$ 100,000       PNC Funding Corp.      2.700 %       09/19/16       $ 101,470   
  100,000       Regions Financial Corp.      2.000        05/15/18         99,985   
  100,000       State Street Corp.      2.875        03/07/16         100,705   
  100,000       State Street Corp.      3.550        08/18/25         102,796   
  200,000       SunTrust Bank, Series BKNT      2.750        05/01/23         193,027   
  100,000       SunTrust Banks, Inc.      3.600        04/15/16         101,039   
  100,000       US Bancorp, MTN      2.950        07/15/22         100,022   
  100,000       US Bank NA, Series BKNT      2.125        10/28/19         100,605   
  100,000       Wells Fargo & Co.      5.625        12/11/17         108,579   
  150,000       Wells Fargo & Co., MTN      3.500        03/08/22         156,131   
          

 

 

  
             3,289,971  
          

 

 

  
   Beverages—1.6%        
  100,000       Coca-Cola Co. (The)      3.300        09/01/21         105,292   
  100,000       Dr Pepper Snapple Group, Inc.      6.820        05/01/18         111,717   
  100,000       Molson Coors Brewing Co.      3.500        05/01/22         99,299   
  100,000       PepsiCo, Inc.      7.900        11/01/18         118,163   
  100,000       PepsiCo, Inc.      2.750        03/01/23         99,994   
          

 

 

  
             534,465  
          

 

 

  
   Biotechnology—0.9%        
  200,000       Amgen, Inc.      3.875        11/15/21         211,488   
  100,000       Gilead Sciences, Inc.      3.650        03/01/26         101,228   
          

 

 

  
             312,716  
          

 

 

  
   Chemicals—3.0%        
  100,000       Dow Chemical Co. (The)      8.550        05/15/19         120,360   
  150,000       Dow Chemical Co. (The)      4.250        11/15/20         161,551   
  100,000       E.I. du Pont de Nemours & Co.      6.000        07/15/18         110,713   
  50,000       Eastman Chemical Co.      2.400        06/01/17         50,574   
  100,000       Ecolab, Inc.      3.000        12/08/16         102,088   
  150,000       LyondellBasell Industries NV      5.000        04/15/19         161,503   
  65,000       Monsanto Co.      3.375        07/15/24         63,666   
  148,000       Mosaic Co. (The)      4.250        11/15/23         150,420   
  100,000       Praxair, Inc.      4.500        08/15/19         108,695   
          

 

 

  
             1,029,570  
          

 

 

  
   Commercial Services—0.9%        
  50,000       Block Financial LLC      5.500        11/01/22         53,029   
  150,000       MasterCard, Inc.      3.375        04/01/24         154,326   
  100,000       Western Union Co. (The)      5.930        10/01/16         104,077   
          

 

 

  
             311,432  
          

 

 

  
   Computers—2.6%        
  100,000       Apple, Inc.      1.000        05/03/18         99,752   
  150,000       Apple, Inc.      2.400        05/03/23         146,902   
  100,000       Computer Sciences Corp.      6.500        03/15/18         109,558   
  200,000       EMC Corp.      1.875        06/01/18         191,267   
  100,000       HP, Inc.      3.750        12/01/20         101,953   
  50,000       International Business Machines Corp.      5.700        09/14/17         54,225   
  100,000       NetApp, Inc.      3.375        06/15/21         98,997   
  100,000       Seagate HDD Cayman      4.750        01/01/25         89,975   
          

 

 

  
             892,629  
          

 

 

  
   Cosmetics/Personal Care—1.1%        
  150,000       Colgate-Palmolive Co., MTN      2.300        05/03/22         148,666   
  100,000       Procter & Gamble Co. (The)      4.700        02/15/19         110,063   
  100,000       Procter & Gamble Co. (The)      3.100        08/15/23         103,593   
          

 

 

  
             362,322  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   77  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Distribution/Wholesale—0.3%        
$ 100,000       Ingram Micro, Inc.      4.950 %       12/15/24       $ 100,493   
          

 

 

  
   Diversified Financial Services—3.4%        
  100,000       American Express Co.      7.000        03/19/18         112,323   
  50,000       Ameriprise Financial, Inc.      5.300        03/15/20         56,175   
  100,000       BlackRock, Inc., Series 2      5.000        12/10/19         111,593   
  50,000       Charles Schwab Corp. (The)      4.450        07/22/20         54,842   
  150,000       General Electric Capital Corp., GMTN      5.625        05/01/18         164,882   
  150,000       General Electric Capital Corp., MTN      4.650        10/17/21         167,492   
  150,000       Jefferies Group LLC      5.125        04/13/18         157,900   
  200,000       Jefferies Group LLC      6.875        04/15/21         225,295   
  100,000       NASDAQ, Inc.      5.550        01/15/20         110,841   
          

 

 

  
             1,161,343  
          

 

 

  
   Electric—4.6%        
  18,000       American Electric Power Co., Inc.      1.650        12/15/17         17,957   
  100,000       Consolidated Edison Co. of New York, Inc.      7.125        12/01/18         115,668   
  100,000       Consumers Energy Co.      6.700        09/15/19         116,809   
  100,000       Duke Energy Corp.      3.050        08/15/22         99,394   
  50,000       Duke Energy Progress LLC      5.300        01/15/19         55,411   
  100,000       Entergy Texas, Inc.      7.125        02/01/19         114,836   
  100,000       Florida Power & Light Co.      3.250        06/01/24         103,193   
  100,000       Georgia Power Co.      4.250        12/01/19         108,498   
  150,000       NextEra Energy Capital Holdings, Inc.      6.000        03/01/19         166,264   
  50,000       NiSource Finance Corp.      6.400        03/15/18         55,305   
  30,000       Ohio Power Co., Series M      5.375        10/01/21         34,114   
  100,000       Pacific Gas & Electric Co.      3.500        10/01/20         104,944   
  100,000       Southern California Edison Co.      3.875        06/01/21         106,712   
  100,000       Virginia Electric & Power Co.      2.750        03/15/23         99,307   
  100,000       Virginia Electric & Power Co.      5.400        04/30/18         109,543   
  150,000       Xcel Energy, Inc.      4.700        05/15/20         163,025   
          

 

 

  
             1,570,980  
          

 

 

  
   Electrical Components & Equipment—0.3%        
  100,000       Emerson Electric Co.      4.875        10/15/19         110,802   
          

 

 

  
   Electronics—0.8%        
  50,000       Honeywell International, Inc.      5.000        02/15/19         55,097   
  100,000       Thermo Fisher Scientific, Inc.      3.200        03/01/16         100,736   
  100,000       Thermo Fisher Scientific, Inc.      4.500        03/01/21         107,774   
          

 

 

  
             263,607  
          

 

 

  
   Engineering & Construction—0.2%        
  50,000       Fluor Corp.      3.375        09/15/21         51,713   
          

 

 

  
   Environmental Control—0.3%        
  100,000       Waste Management, Inc.      4.750        06/30/20         109,848   
          

 

 

  
   Food—2.3%        
  100,000       Campbell Soup Co.      4.250        04/15/21         107,052   
  100,000       ConAgra Foods, Inc.      3.200        01/25/23         95,498   
  65,000       Kellogg Co.      4.450        05/30/16         66,220   
  100,000       Kellogg Co.      4.000        12/15/20         106,530   
  100,000       Kroger Co. (The)      6.150        01/15/20         114,407   
  300,000       Mondelez International, Inc.      4.125        02/09/16         302,598   
          

 

 

  
             792,305  
          

 

 

  
   Forest Products & Paper—0.7%        
  100,000       International Paper Co.      7.950        06/15/18         114,902   
  100,000       International Paper Co.      4.750        02/15/22         107,499   
          

 

 

  
             222,401  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   78  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Gas—0.3%        
$ 100,000       Sempra Energy      6.500 %       06/01/16       $ 103,143   
          

 

 

  
   Hand/Machine Tools—0.3%        
  100,000       Stanley Black & Decker, Inc.      2.900        11/01/22         98,453   
          

 

 

  
   Healthcare-Products—1.6%        
  100,000       Baxter International, Inc.      1.850        06/15/18         100,149   
  100,000       Becton Dickinson and Co.      3.734        12/15/24         102,508   
  100,000       Boston Scientific Corp.      3.850        05/15/25         99,600   
  150,000       St. Jude Medical, Inc.      3.250        04/15/23         148,479   
  100,000       Zimmer Biomet Holdings, Inc.      3.550        04/01/25         98,595   
          

 

 

  
             549,331  
          

 

 

  
   Healthcare-Services—2.2%        
  100,000       Aetna, Inc.      2.750        11/15/22         98,332   
  100,000       Anthem, Inc.      2.250        08/15/19         99,429   
  100,000       Anthem, Inc.      3.125        05/15/22         99,261   
  200,000       Humana, Inc.      3.150        12/01/22         198,037   
  100,000       Quest Diagnostics, Inc.      4.700        04/01/21         108,126   
  150,000       UnitedHealth Group, Inc.      2.875        03/15/22         152,184   
          

 

 

  
             755,369  
          

 

 

  
   Household Products/Wares—0.6%        
  200,000       Kimberly-Clark Corp.      6.125        08/01/17         216,962   
          

 

 

  
   Housewares—0.3%        
  100,000       Tupperware Brands Corp.      4.750        06/01/21         103,605   
          

 

 

  
   Insurance—6.5%        
  100,000       ACE INA Holdings, Inc.      5.900        06/15/19         112,933   
  100,000       Aflac, Inc.      3.625        06/15/23         102,250   
  200,000       Allstate Corp. (The)      3.150        06/15/23         200,986   
  100,000       American International Group, Inc.      4.875        06/01/22         111,367   
  100,000       Berkshire Hathaway Finance Corp.      5.400        05/15/18         109,910   
  100,000       Brown & Brown, Inc.      4.200        09/15/24         100,223   
  100,000       Chubb Corp. (The)      5.750        05/15/18         110,368   
  200,000       Hartford Financial Services Group, Inc. (The)      5.125        04/15/22         221,632   
  150,000       Lincoln National Corp.      8.750        07/01/19         183,505   
  150,000       Loews Corp.      2.625        05/15/23         143,554   
  200,000       Marsh & McLennan Cos., Inc.      4.800        07/15/21         220,403   
  100,000       MetLife, Inc.      6.750        06/01/16         103,509   
  150,000       Prudential Financial, Inc., MTN      3.500        05/15/24         152,693   
  100,000       Travelers Cos., Inc. (The)      5.800        05/15/18         110,560   
  100,000       Travelers Cos., Inc. (The)      3.900        11/01/20         107,348   
  100,000       Voya Financial, Inc.      5.500        07/15/22         113,385   
          

 

 

  
             2,204,626  
          

 

 

  
   Internet—1.5%        
  100,000       Amazon.com, Inc.      2.500        11/29/22         97,775   
  100,000       eBay, Inc.      2.600        07/15/22         93,653   
  55,000       Google, Inc.      2.125        05/19/16         55,540   
  100,000       Google, Inc.      3.625        05/19/21         107,609   
  150,000       Symantec Corp.      4.200        09/15/20         156,727   
          

 

 

  
             511,304  
          

 

 

  
   Iron/Steel—0.3%        
  100,000       Nucor Corp.      5.750        12/01/17         107,364   
          

 

 

  
   Leisure Time—0.3%        
  100,000       Carnival Corp.      1.875        12/15/17         100,599   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   79  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Lodging—0.3%        
$ 100,000       Marriott International, Inc.      3.000 %       03/01/19       $ 102,170   
          

 

 

  
   Machinery-Construction & Mining—0.6%        
  100,000       Caterpillar, Inc.      3.900        05/27/21         106,547   
  100,000       Joy Global, Inc.      5.125        10/15/21         89,452   
          

 

 

  
             195,999  
          

 

 

  
   Machinery-Diversified—0.8%        
  150,000       Cummins, Inc.      3.650        10/01/23         156,249   
  100,000       Deere & Co.      2.600        06/08/22         99,008   
          

 

 

  
             255,257  
          

 

 

  
   Media—3.1%        
  95,000       21st Century Fox America, Inc.      6.900        03/01/19         108,918   
  100,000       CBS Corp.      2.300        08/15/19         99,144   
  100,000       NBCUniversal Media LLC      5.150        04/30/20         113,011   
  5,000       Scripps Networks Interactive, Inc.      2.700        12/15/16         5,056   
  100,000       Scripps Networks Interactive, Inc.      3.900        11/15/24         97,357   
  100,000       Time Warner Cable, Inc.      8.250        04/01/19         116,656   
  100,000       Time Warner, Inc.      4.875        03/15/20         110,444   
  200,000       Viacom, Inc.      4.250        09/01/23         199,342   
  100,000       Walt Disney Co. (The), MTN      1.100        12/01/17         99,855   
  100,000       Walt Disney Co. (The), MTN      2.350        12/01/22         99,540   
          

 

 

  
             1,049,323  
          

 

 

  
   Metal Fabricate/Hardware—0.3%        
  100,000       Precision Castparts Corp.      1.250        01/15/18         99,566   
          

 

 

  
   Mining—0.5%        
  100,000       Freeport-McMoRan, Inc.      3.550        03/01/22         80,150   
  100,000       Newmont Mining Corp.      3.500        03/15/22         92,440   
          

 

 

  
             172,590  
          

 

 

  
   Miscellaneous Manufacturing—1.5%        
  200,000       3M Co., MTN      2.000        06/26/22         194,963   
  100,000       Eaton Corp.      1.500        11/02/17         100,145   
  100,000       Illinois Tool Works, Inc.      6.250        04/01/19         114,129   
  100,000       Ingersoll-Rand Global Holding Co. Ltd.      6.875        08/15/18         112,391   
          

 

 

  
             521,628  
          

 

 

  
   Office/Business Equipment—0.6%        
  100,000       Pitney Bowes, Inc., MTN      5.750        09/15/17         106,541   
  100,000       Xerox Corp.      6.350        05/15/18         108,717   
          

 

 

  
             215,258  
          

 

 

  
   Oil & Gas—7.2%        
  100,000       Anadarko Petroleum Corp.      5.950        09/15/16         103,701   
  115,000       Apache Corp.      3.250        04/15/22         113,453   
  200,000       Chevron Corp.      2.355        12/05/22         195,261   
  100,000       Cimarex Energy Co.      4.375        06/01/24         99,646   
  100,000       ConocoPhillips      5.750        02/01/19         111,937   
  150,000       ConocoPhillips Co.      2.400        12/15/22         143,501   
  150,000       DeVon Energy Corp.      3.250        05/15/22         144,563   
  150,000       EOG Resources, Inc.      5.625        06/01/19         167,813   
  100,000       EOG Resources, Inc.      2.625        03/15/23         97,796   
  100,000       Equities Corp.      4.875        11/15/21         100,713   
  100,000       Hess Corp.      8.125        02/15/19         116,234   
  100,000       Marathon Oil Corp.      5.900        03/15/18         108,689   
  100,000       Marathon Oil Corp.      2.800        11/01/22         89,544   
  200,000       Marathon Petroleum Corp.      5.125        03/01/21         218,445   
  100,000       Murphy Oil Corp.      3.700        12/01/22         81,943   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   80  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Oil & Gas (continued)        
$ 100,000       Noble Energy, Inc.      4.150 %       12/15/21       $ 101,272   
  36,000       Occidental Petroleum Corp.      1.750        02/15/17         36,289   
  100,000       Occidental Petroleum Corp., Series 1      4.100        02/01/21         107,413   
  100,000       Pioneer Natural Resources Co.      3.950        07/15/22         99,609   
  100,000       Southwestern Energy Co.      4.100        03/15/22         85,516   
  100,000       Valero Energy Corp.      6.125        02/01/20         113,276   
          

 

 

  
             2,436,614  
          

 

 

  
   Oil & Gas Services—1.5%        
  150,000       Baker Hughes, Inc.      3.200        08/15/21         149,719   
  150,000       FMC Technologies, Inc.      3.450        10/01/22         138,349   
  100,000       Halliburton Co.      6.150        09/15/19         113,343   
  100,000       National Oilwell Varco, Inc.      2.600        12/01/22         93,007   
          

 

 

  
             494,418  
          

 

 

  
   Pharmaceuticals—5.8%        
  150,000       Abbott Laboratories      5.125        04/01/19         166,814   
  50,000       AbbVie, Inc.      1.750        11/06/17         50,499   
  200,000       AbbVie, Inc.      2.900        11/06/22         193,847   
  100,000       AmerisourceBergen Corp.      1.150        05/15/17         99,541   
  100,000       AmerisourceBergen Corp.      3.500        11/15/21         103,053   
  100,000       Bristol-Myers Squibb Co.      2.000        08/01/22         97,484   
  100,000       Eli Lilly & Co.      5.200        03/15/17         105,846   
  150,000       Express Scripts Holding Co.      3.125        05/15/16         151,775   
  150,000       Johnson & Johnson      2.950        09/01/20         157,048   
  100,000       Johnson & Johnson      3.375        12/05/23         106,465   
  100,000       McKesson Corp.      3.250        03/01/16         100,766   
  100,000       McKesson Corp.      3.796        03/15/24         102,387   
  15,000       Mead Johnson Nutrition Co.      4.900        11/01/19         16,257   
  100,000       Mylan, Inc.      4.200        11/29/23         99,096   
  100,000       Pfizer, Inc.      6.200        03/15/19         113,896   
  100,000       Pfizer, Inc.      3.000        06/15/23         101,027   
  100,000       Zoetis, Inc.      1.875        02/01/18         99,586   
  100,000       Zoetis, Inc.      3.250        02/01/23         95,783   
          

 

 

  
             1,961,170  
          

 

 

  
   Pipelines—1.3%        
  100,000       Kinder Morgan, Inc.      4.300        06/01/25         90,626   
  100,000       Spectra Energy Capital LLC      6.200        04/15/18         107,349   
  100,000       Spectra Energy Partners LP      4.750        03/15/24         103,030   
  150,000       Williams Partners LP      5.250        03/15/20         157,847   
          

 

 

  
             458,852  
          

 

 

  
   Real Estate—0.3%        
  100,000       Prologis LP      4.250        08/15/23         104,437   
          

 

 

  
   REITs—3.3%        
  100,000       American Tower Corp.      4.500        01/15/18         105,038   
  150,000       Boston Properties LP      4.125        05/15/21         160,001   
  75,000       Brixmor Operating Partnership LP      3.850        02/01/25         73,087   
  150,000       ERP Operating LP      4.625        12/15/21         163,780   
  100,000       HCP, Inc.      5.375        02/01/21         110,238   
  150,000       Hospitality Properties Trust      5.000        08/15/22         155,103   
  100,000       Host Hotels & Resorts LP      6.000        11/01/20         102,966   
  125,000       Ventas Realty LP/Ventas Capital Corp.      4.750        06/01/21         134,298   
  100,000       Weyerhaeuser Co.      7.375        10/01/19         117,156   
          

 

 

  
             1,121,667  
          

 

 

  
   Retail—6.6%        
  100,000       Coach, Inc.      4.250        04/01/25         94,910   
  45,000       CVS Health Corp.      5.750        06/01/17         48,126   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   81  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Retail (continued)        
$ 100,000       Darden Restaurants, Inc.      6.450 %       10/15/17       $ 108,525   
  100,000       Dollar General Corp.      4.125        07/15/17         102,596   
  150,000       Dollar General Corp.      3.250        04/15/23         143,523   
  150,000       Gap, Inc. (The)      5.950        04/12/21         159,677   
  150,000       Home Depot, Inc. (The)      5.400        03/01/16         152,493   
  100,000       Lowe’s Cos., Inc.      5.400        10/15/16         104,452   
  100,000       Lowe’s Cos., Inc.      3.120        04/15/22         102,160   
  150,000       Macy’s Retail Holdings, Inc.      2.875        02/15/23         140,531   
  100,000       McDonald’s Corp., MTN      5.350        03/01/18         108,579   
  100,000       Nordstrom, Inc.      4.000        10/15/21         106,056   
  100,000       Staples, Inc.      4.375        01/12/23         97,621   
  100,000       Starbucks Corp.      3.850        10/01/23         106,790   
  125,000       Target Corp.      6.000        01/15/18         137,505   
  100,000       Target Corp.      2.900        01/15/22         102,445   
  100,000       Walgreens Boots Alliance, Inc.      3.800        11/18/24         99,439   
  325,000       Wal-Mart Stores, Inc.      3.250        10/25/20         344,329   
          

 

 

  
             2,259,757  
          

 

 

  
   Semiconductors—3.0%        
  100,000       Applied Materials, Inc.      4.300        06/15/21         107,527   
  100,000       Intel Corp.      1.350        12/15/17         100,466   
  200,000       Intel Corp.      3.300        10/01/21         209,819   
  200,000       Maxim Integrated Products, Inc.      3.375        03/15/23         199,370   
  100,000       QUALCOMM, Inc.      3.450        05/20/25         96,152   
  100,000       Texas Instruments, Inc.      2.375        05/16/16         101,020   
  100,000       Xilinx, Inc.      2.125        03/15/19         99,667   
  100,000       Xilinx, Inc.      3.000        03/15/21         101,153   
          

 

 

  
             1,015,174  
          

 

 

  
   Software—1.9%        
  200,000       Adobe Systems, Inc.      3.250        02/01/25         198,012   
  100,000       CA, Inc.      5.375        12/01/19         108,760   
  100,000       Fidelity National Information Services, Inc.      3.500        04/15/23         95,399   
  100,000       Microsoft Corp.      1.625        12/06/18         101,216   
  50,000       Microsoft Corp.      2.700        02/12/25         49,296   
  100,000       Oracle Corp.      5.750        04/15/18         110,444   
          

 

 

  
             663,127  
          

 

 

  
   Telecommunications—2.9%        
  100,000       AT&T, Inc.      5.500        02/01/18         108,252   
  15,000       CC Holdings GS V LLC/Crown Castle GS III Corp.      2.381        12/15/17         15,113   
  100,000       Cisco Systems, Inc.      5.500        02/22/16         101,573   
  100,000       Cisco Systems, Inc.      4.450        01/15/20         109,903   
  100,000       Cisco Systems, Inc.      3.625        03/04/24         105,666   
  100,000       Qwest Corp.      6.750        12/01/21         107,700   
  200,000       Verizon Communications, Inc.      3.650        09/14/18         211,084   
  200,000       Verizon Communications, Inc.      5.150        09/15/23         223,286   
          

 

 

  
             982,577  
          

 

 

  
   Textiles—0.3%        
  100,000       Mohawk Industries, Inc.      3.850        02/01/23         101,012   
          

 

 

  
   Toys/Games/Hobbies—0.3%        
  100,000       Mattel, Inc.      2.350        05/06/19         99,801   
          

 

 

  
   Transportation—2.0%        
  130,000       CSX Corp.      6.250        03/15/18         143,799   
  100,000       CSX Corp.      3.700        10/30/20         105,987   
  100,000       FedEx Corp.      8.000        01/15/19         118,522   
  100,000       Norfolk Southern Corp.      5.750        04/01/18         109,200   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   82  

 

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Transportation (continued)        
$ 100,000       Norfolk Southern Corp.      3.000 %       04/01/22       $ 99,342   
  100,000       United Parcel Service, Inc.      3.125        01/15/21         104,823   
          

 

 

  
             681,673  
          

 

 

  
   Water—0.3%        
  100,000       American Water Capital Corp.      6.085        10/15/17         108,810   
          

 

 

  
   Total Corporate Bonds
(Cost $33,602,537)		           33,622,878  
          

 

 

  
          
Number
of Shares		                           
   Money Market Fund—0.3%        
  97,795       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $97,795)		           97,795  
          

 

 

  
   Total Investments
(Cost $33,700,332)—99.0%		           33,720,673   
   Other assets less liabilities—1.0%           346,701  
          

 

 

  
   Net Assets—100.0%         $ 34,067,374  
          

 

 

  

Investment Abbreviations:

GMTN—Global Medium-Term Note

MTN—Medium-Term Notes

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $115,844, which represented 0.34% of the Fund’s Net Assets.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   83  

 

 

Schedule of Investments

PowerShares Global Short Term High Yield Bond Portfolio (PGHY)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds—83.4%        
   Azerbaijan—0.4%        
$ 100,000       State Oil Co. of the Azerbaijan Republic      5.450 %      02/09/17       $ 102,250   
          

 

 

  
   Brazil—2.7%        
  50,000       Banco Daycoval SA, MTN(a)      6.250        01/28/16         50,166   
  100,000       Banco Fibra SA, MTN(a)      4.500        04/19/16         94,250   
  200,000       Marfrig Holdings Europe BV(a)      8.375        05/09/18         196,500   
  100,000       Petrobras Global Finance BV      2.000        05/20/16         98,800   
  100,000       Petrobras Global Finance BV      3.500        02/06/17         96,900   
  100,000       Petrobras Global Finance BV      3.250        03/17/17         95,550   
  100,000       Petrobras Global Finance BV      5.875        03/01/18         94,720   
          

 

 

  
             726,886  
          

 

 

  
   Canada—0.4%        
  100,000       Bombardier, Inc.(a)      7.500        03/15/18         99,500   
          

 

 

  
   China—1.1%        
  200,000       Big Will Investments Ltd., EMTN      10.875        04/29/16         208,000   
  100,000       Yancoal International Resources Development Co. Ltd.(a)      4.461        05/16/17         100,000   
          

 

 

  
             308,000  
          

 

 

  
   Croatia—0.6%        
  150,000       Hrvatska Elektroprivreda(a)      6.000        11/09/17         159,615   
          

 

 

  
   Cyprus—0.4%        
  150,000       Drill Rigs Holdings, Inc.(a)      6.500        10/01/17         103,032   
          

 

 

  
   France—0.8%        
  200,000       Alcatel-Lucent USA, Inc.(a)      4.625        07/01/17         206,500   
          

 

 

  
   Georgia—0.8%        
  200,000       Bank of Georgia JSC, MTN(a)      7.750        07/05/17         208,716   
          

 

 

  
   Germany—0.6%        
  49,000       Hanson Ltd.      6.125        08/15/16         50,740   
  100,000       Hapag-Lloyd AG(a)      9.750        10/15/17         103,000   
          

 

 

  
             153,740  
          

 

 

  
   India—0.4%        
  100,000       Vedanta Resources PLC(a)      6.750        06/07/16         99,500   
          

 

 

  
   Indonesia—1.0%        
  100,000       Gajah Tunggal Tbk PT(a)      7.750        02/06/18         54,000   
  100,000       Majapahit Holding BV(a)      7.750        10/17/16         105,000   
  100,000       Majapahit Holding BV(a)      7.250        06/28/17         107,000   
          

 

 

  
             266,000  
          

 

 

  
   Italy—1.0%        
  100,000       Telecom Italia Capital SA      6.999        06/04/18         110,750   
  150,000       UniCredit Luxembourg Finance SA(a)      6.000        10/31/17         158,016   
          

 

 

  
             268,766  
          

 

 

  
   Kazakhstan—2.2%        
  100,000       ATF Bank JSC(a)      9.000        05/11/16         96,860   
  100,000       Halyk Savings Bank of Kazakhstan JSC(a)      7.250        05/03/17         102,532   
  100,000       Kazkommertsbank JSC, MTN(a)      8.000        11/03/15         100,000   
  100,000       Kazkommertsbank JSC, MTN(a)      7.500        11/29/16         96,350   
  200,000       Samruk-Energy JSC, EMTN      3.750        12/20/17         191,000   
          

 

 

  
             586,742  
          

 

 

  
   Luxembourg—0.9%        
  150,000       Aguila 3 SA(a)      7.875        01/31/18         153,937   
  100,000       ArcelorMittal      5.250        02/25/17         101,000   
          

 

 

  
             254,937  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   84  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Mexico—0.6%        
$ 150,000       Grupo Posadas SAB de CV(a)      7.875 %       11/30/17       $ 157,125   
          

 

 

  
   Netherlands—0.7%        
  100,000       AerCap Ireland Capital Ltd./AerCap Global Aviation Trust      2.750        05/15/17         99,875   
  100,000       NXP BV/NXP Funding LLC(a)      3.500        09/15/16         100,750   
          

 

 

  
             200,625  
          

 

 

  
   New Zealand—0.7%        
  100,000       Beverage Packaging Holdings Luxembourg II SA/Beverage Packaging Holdings II(a)      5.625        12/15/16         100,250   
  100,000       Reynolds Group Issuer, Inc. / Reynolds Group Issuer LLC / Reynolds Group Issuer Lu      8.500        05/15/18         101,000   
          

 

 

  
             201,250  
          

 

 

  
   Norway—1.1%        
  100,000       Eksportfinans ASA      5.500        05/25/16         102,061   
  100,000       Eksportfinans ASA      2.375        05/25/16         100,375   
  100,000       Eksportfinans ASA, MTN      5.500        06/26/17         105,157   
          

 

 

  
             307,593  
          

 

 

  
   Russia—14.4%        
  200,000       AK BARS Bank Via AK BARS Luxembourg SA, Series LPN, MTN      8.750        11/19/15         200,876   
  200,000       Gazprom OAO Via Gaz Capital SA(a)      4.300        11/12/15         200,123   
  200,000       Metalloinvest Finance Ltd.(a)      6.500        07/21/16         204,015   
  200,000       Phosagro OAO Via Phosagro Bond Funding Ltd.(a)      4.204        02/13/18         200,125   
  200,000       Raspadskaya OJSC Via Raspadskaya Securities Ltd.(a)      7.750        04/27/17         203,789   
  200,000       Renaissance Credit LLC Via Renaissance Consumer Funding Ltd.(a)      7.750        05/31/16         193,000   
  100,000       Rosneft Finance SA(a)      7.500        07/18/16         103,274   
  200,000       Rosneft Finance SA, MTN(a)      6.625        03/20/17         207,343   
  100,000       Russian Agricultural Bank OJSC Via RSHB Capital SA(a)      6.299        05/15/17         102,341   
  200,000       Russian Agricultural Bank OJSC Via RSHB Capital SA(a)      5.298        12/27/17         202,000   
  100,000       Russian Railways Via RZD Capital PLC, EMTN      5.739        04/03/17         103,000   
  200,000       Sberbank of Russia Via SB Capital SA(a)      4.950        02/07/17         203,699   
  200,000       SCF Capital Ltd.(a)      5.375        10/27/17         198,698   
  100,000       Severstal OAO Via Steel Capital SA(a)      6.700        10/25/17         105,725   
  200,000       Sibur Securities Ltd.(a)      3.914        01/31/18         194,200   
  450,000       Vimpel Communications Via VIP Finance Ireland Ltd. OJSC(a)      6.493        02/02/16         455,835   
  300,000       VimpelCom Holdings BV(a)      6.255        03/01/17         310,125   
  200,000       Vnesheconombank Via VEB Finance PLC(a)      5.375        02/13/17         203,000   
  100,000       Vnesheconombank Via VEB Finance PLC(a)      5.450        11/22/17         101,476   
  200,000       VTB Bank OJSC Via VTB Capital SA(a)      6.000        04/12/17         206,105   
          

 

 

  
             3,898,749  
          

 

 

  
   Saudi Arabia—0.7%        
  200,000       Dar Al-Arkan Sukuk Co. Ltd.(a)      5.750        11/25/16         201,794   
          

 

 

  
   South Africa—1.1%        
  100,000       Myriad International Holdings BV(a)      6.375        07/28/17         105,207   
  200,000       Sappi Papier Holding GmbH(a)      7.750        07/15/17         209,000   
          

 

 

  
             314,207  
          

 

 

  
   South Korea—0.5%        
  150,000       Harvest Operations Corp.      6.875        10/01/17         127,500   
          

 

 

  
   Sri Lanka—0.4%        
  100,000       Bank of Ceylon(a)      6.875        05/03/17         102,875   
          

 

 

  
   Turkey—0.7%        
  200,000       Finansbank AS(a)      5.500        05/11/16         202,785   
          

 

 

  
   Ukraine—0.5%        
  200,000       Metinvest BV, EMTN(a)      8.750        02/14/18         127,032   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   85  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   United Kingdom—0.8%        
$ 20,000       Case New Holland Industrial, Inc.      7.875 %       12/01/17       $ 21,725   
  100,000       CNH Industrial America LLC      7.250        01/15/16         101,187   
  100,000       Tesco PLC(a)      5.500        11/15/17         105,552   
          

 

 

  
             228,464  
          

 

 

  
   United States—46.3%        
  100,000       ADT Corp. (The)      2.250        07/15/17         99,750   
  200,000       AerCap Aviation Solutions BV      6.375        05/30/17         209,000   
  150,000       Alcoa, Inc.      5.550        02/01/17         156,562   
  100,000       Ally Financial, Inc.      3.125        01/15/16         100,250   
  200,000       Ally Financial, Inc.      3.500        07/18/16         201,750   
  100,000       Ally Financial, Inc.      2.750        01/30/17         100,750   
  100,000       Ally Financial, Inc.      5.500        02/15/17         104,000   
  100,000       Ally Financial, Inc.      3.250        09/29/17         100,875   
  100,000       Ally Financial, Inc.      6.250        12/01/17         107,000   
  100,000       Aspect Software, Inc.      10.625        05/15/17         87,000   
  100,000       Associated Materials LLC/AMH New Finance, Inc.      9.125        11/01/17         80,250   
  50,000       Avis Budget Car Rental LLC/Avis Budget Finance, Inc.      4.875        11/15/17         51,312   
  100,000       Best Buy Co., Inc.      3.750        03/15/16         100,750   
  100,000       BMC Software, Inc.      7.250        06/01/18         88,375   
  100,000       Cablevision Systems Corp.      7.750        04/15/18         105,250   
  140,000       CalAtlantic Group, Inc.      10.750        09/15/16         150,850   
  100,000       CalAtlantic Group, Inc.      8.375        05/15/18         115,500   
  100,000       Centene Corp.      5.750        06/01/17         104,625   
  100,000       Centex LLC      6.500        05/01/16         102,500   
  150,000       Chesapeake Energy Corp.      3.250        03/15/16         148,125   
  150,000       Chesapeake Energy Corp.      6.500        08/15/17         138,562   
  100,000       CIT Group, Inc.      5.000        05/15/17         103,300   
  100,000       CIT Group, Inc.      5.250        03/15/18         105,125   
  150,000       CNH Industrial Capital LLC      3.875        11/01/15         150,000   
  150,000       CNH Industrial Capital LLC      6.250        11/01/16         155,250   
  100,000       CNH Industrial Capital LLC      3.250        02/01/17         100,755   
  100,000       Commercial Metals Co.      6.500        07/15/17         104,250   
  100,000       Commercial Metals Co.      7.350        08/15/18         107,875   
  200,000       Constellation Brands, Inc.      7.250        09/01/16         209,000   
  100,000       Constellation Brands, Inc.      7.250        05/15/17         108,500   
  100,000       D.R. Horton, Inc.      4.750        05/15/17         104,000   
  100,000       DCP Midstream Operating LP      2.500        12/01/17         93,347   
  100,000       DISH DBS Corp.      4.250        04/01/18         100,125   
  150,000       DISH DBS Corp.      7.125        02/01/16         152,010   
  150,000       Embarq Corp.      7.082        06/01/16         154,395   
  250,000       First Tennessee Bank NA, Series BKNT      5.650        04/01/16         253,934   
  100,000       GenOn Energy, Inc.      7.875        06/15/17         93,250   
  100,000       Genworth Holdings, Inc., MTN      6.515        05/22/18         103,125   
  100,000       Greif, Inc.      6.750        02/01/17         104,748   
  150,000       HCA, Inc.      6.500        02/15/16         152,138   
  100,000       Hexion, Inc.      8.875        02/01/18         77,000   
  100,000       Icahn Enterprises LP/Icahn Enterprises Finance Corp.      3.500        03/15/17         101,420   
  100,000       Illinois Power Generating Co., Series H      7.000        04/15/18         85,500   
  150,000       International Lease Finance Corp.      5.750        05/15/16         152,907   
  100,000       International Lease Finance Corp.      8.750        03/15/17         108,125   
  100,000       International Lease Finance Corp.      8.875        09/01/17         111,250   
  100,000       International Wire Group Holdings, Inc.(a)      8.500        10/15/17         103,750   
  200,000       inVentiv Health, Inc.(a)      9.000        01/15/18         207,000   
  150,000       iStar, Inc.—REIT      3.875        07/01/16         149,625   
  100,000       iStar, Inc.—REIT      4.000        11/01/17         98,000   
  100,000       iStar, Inc., Series 1—REIT      5.875        03/15/16         101,125   
  100,000       Jarden Corp.      7.500        05/01/17         108,250   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   86  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   United States (continued)        
$ 100,000       JC Penney Corp., Inc.      5.750 %       02/15/18       $ 97,750   
  200,000       KB Home      9.100        09/15/17         222,000   
  100,000       KB Home      7.250        06/15/18         107,500   
  100,000       Kemet Corp.      10.500        05/01/18         90,750   
  100,000       L Brands, Inc.      6.900        07/15/17         108,250   
  200,000       Ladder Capital Finance Holdings LLLP/Ladder Capital Finance Corp.      7.375        10/01/17         201,750   
  100,000       Lennar Corp.      4.750        12/15/17         104,000   
  100,000       Lennar Corp.      6.950        06/01/18         109,375   
  100,000       Lennar Corp., Series B      12.250        06/01/17         115,125   
  100,000       Masco Corp.      6.125        10/03/16         104,375   
  100,000       Masco Corp.      5.850        03/15/17         105,750   
  150,000       MGM Resorts International      7.500        06/01/16         154,626   
  200,000       MGM Resorts International      10.000        11/01/16         215,602   
  200,000       MGM Resorts International      7.625        01/15/17         213,234   
  150,000       Navient Corp., MTN      6.250        01/25/16         151,500   
  250,000       Navient Corp., MTN      6.000        01/25/17         257,175   
  100,000       Navient Corp., MTN      4.625        09/25/17         101,370   
  100,000       Novelis, Inc.      8.375        12/15/17         100,875   
  100,000       Pactiv LLC      8.125        06/15/17         107,750   
  100,000       PetroQuest Energy, Inc.      10.000        09/01/17         87,500   
  100,000       Pfizer, Inc.      6.050        03/30/17         107,079   
  200,000       R.R. Donnelley & Sons Co.      6.125        01/15/17         207,446   
  200,000       Realogy Group LLC/Sunshine Group Florida Ltd. (The)(a)      3.375        05/01/16         201,000   
  100,000       Royal Caribbean Cruises Ltd.      7.250        06/15/16         103,278   
  100,000       Sabine Pass LNG LP      7.500        11/30/16         103,688   
  100,000       Sabre Holdings Corp.      8.350        03/15/16         102,700   
  150,000       Springleaf Finance Corp., MTN      5.750        09/15/16         152,625   
  100,000       Springleaf Finance Corp., MTN      6.900        12/15/17         105,500   
  250,000       Sprint Communications, Inc.      6.000        12/01/16         253,281   
  100,000       Sprint Communications, Inc.      9.125        03/01/17         104,250   
  100,000       Sprint Communications, Inc.      8.375        08/15/17         102,375   
  100,000       SPX FLOW, Inc.      6.875        09/01/17         106,500   
  100,000       SquareTwo Financial Corp.      11.625        04/01/17         65,000   
  64,000       SUPERVALU, Inc.      8.000        05/01/16         65,680   
  100,000       Swift Energy Co.      7.125        06/01/17         28,750   
  100,000       Synovus Financial Corp.      5.125        06/15/17         104,625   
  100,000       Talen Energy Supply LLC      6.200        05/15/16         101,109   
  150,000       Targa Resources Partners LP/Targa Resources Partners Finance Corp.(a)      5.000        01/15/18         148,500   
  100,000       Thompson Creek Metals Co., Inc.      9.750        12/01/17         95,000   
  100,000       Toys “R” US Property Co. II LLC      8.500        12/01/17         97,250   
  100,000       Transocean, Inc.      3.000        10/15/17         92,050   
  100,000       Transocean, Inc.      6.000        03/15/18         94,300   
  100,000       Trilogy International Partners LLC/Trilogy International Finance, Inc.(a)      10.250        08/15/16         98,875   
  100,000       United States Steel Corp.      6.050        06/01/17         93,500   
  100,000       United States Steel Corp.      7.000        02/01/18         88,000   
  100,000       USG Corp.      6.300        11/15/16         103,750   
  100,000       Vereit Operating Partnership LP—REIT      2.000        02/06/17         98,820   
  100,000       Vulcan Materials Co.      7.000        06/15/18         112,000   
  100,000       Windstream Services LLC      7.875        11/01/17         106,437   
  100,000       WireCo WorldGroup, Inc.      9.500        05/15/17         91,500   
  100,000       WPX Energy, Inc.      5.250        01/15/17         101,000   
          

 

 

  
             12,504,240  
          

 

 

  
   Venezuela— 0.8%        
  275,000       Petroleos de Venezuela SA      5.250        04/12/17         155,375   
  100,000       Petroleos de Venezuela SA, Series 2016      5.125        10/28/16         75,350   
          

 

 

  
             230,725  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   87  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Vietnam—0.8%        
$ 200,000       Vietnam Joint Stock Commercial Bank for Industry and Trade(a)      8.000 %       05/17/17       $ 208,000   
          

 

 

  
   Total Corporate Bonds
(Cost $22,991,616)		           22,557,148  
          

 

 

  
          
   Sovereign Debt Obligations—12.7%        
   Argentina—0.7%        
  100,000       Argentina Bonar Bonds, Series X      7.000        04/17/17         99,347   
  100,000       City of Buenos Aires Argentina(a)      9.950        03/01/17         104,500   
          

 

 

  
             203,847  
          

 

 

  
   Croatia—0.8%        
  200,000       Croatia Government International Bond(a)      6.250        04/27/17         209,646   
          

 

 

  
   Ecuador—0.5%        
  150,000       Ecuador Government International Bond(a)      9.375        12/15/15         148,125   
          

 

 

  
   Ghana—0.6%        
  150,000       Ghana Government International Bond(a)      8.500        10/04/17         151,698   
          

 

 

  
   Hungary—0.6%        
  150,000       Magyar Export-Import Bank Zrt(a)      5.500        02/12/18         159,569   
          

 

 

  
   Jamaica—0.4%        
  100,000       Jamaica Government International Bond      10.625        06/20/17         112,500   
          

 

 

  
   Jordan—1.1%        
  300,000       Jordan Government International Bond(a)      3.875        11/12/15         300,750   
          

 

 

  
   Lebanon—2.9%        
  200,000       Lebanon Government International Bond, GMTN      4.500        04/22/16         200,920   
  450,000       Lebanon Government International Bond(a)      11.625        05/11/16         467,977   
  100,000       Lebanon Government International Bond, EMTN      9.000        03/20/17         105,963   
          

 

 

  
             774,860  
          

 

 

  
   Mongolia—1.1%        
  200,000       Development Bank of Mongolia LLC, EMTN      5.750        03/21/17         195,007   
  100,000       Mongolia Government International Bond, MTN(a)      4.125        01/05/18         94,750   
          

 

 

  
             289,757  
          

 

 

  
   Pakistan—0.7%        
  100,000       Pakistan Government International Bond(a)      6.875        06/01/17         103,783   
  100,000       Pakistan Government International Bond(a)      7.125        03/31/16         101,249   
          

 

 

  
             205,032  
          

 

 

  
   Serbia—0.6%        
  150,000       Republic of Serbia(a)      5.250        11/21/17         156,680   
          

 

 

  
   Turkey—0.4%        
  100,000       Export Credit Bank of Turkey(a)      5.375        11/04/16         103,032   
          

 

 

  
   Ukraine—1.6%        
  200,000       City of Kiev Ukraine Via CS International(a)      8.000        11/06/15         148,000   
  100,000       Ukraine Government International Bond(a)      6.580        11/21/16         79,000   
  100,000       Ukraine Government International Bond(a)      9.250        07/24/17         79,250   
  150,000       Ukraine Government International Bond(a)      6.750        11/14/17         118,875   
          

 

 

  
             425,125  
          

 

 

  
   Venezuela—0.3%        
  100,000       Venezuela Government International Bond(a)      5.750        02/26/16         91,250   
          

 

 

  
   Vietnam—0.4%        
  100,000       Vietnam Government International Bond(a)      6.875        01/15/16         101,202   
          

 

 

  
   Total Sovereign Debt Obligations
(Cost $3,486,683)		           3,433,073  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   88  

 

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Money Market Fund—3.2%   
  862,975       Invesco Premier Portfolio—Institutional Class, 0.12%(b)
(Cost $862,975)		    $ 862,975  
     

 

 

  
   Total Investments
(Cost $27,341,274)—99.3%		      26,853,196   
   Other assets less liabilities—0.7%      176,139  
     

 

 

  
   Net Assets—100.0%    $ 27,029,335  
     

 

 

  

Investment Abbreviations:

EMTN—Euro Medium-Term Note

GMTN—Global Medium-Term Note

MTN—Medium-Term Notes

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $11,088,179, which represented 41.02% of the Fund’s Net Assets.
(b)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   89  

 

 

Schedule of Investments

PowerShares International Corporate Bond Portfolio (PICB)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds—97.8%        
      Australia—3.9%        
  GBP         300,000       APT Pipelines Ltd., EMTN      3.500 %      03/22/30       $ 429,654   
  GBP         350,000       BHP Billiton Finance Ltd., Series 11, EMTN      3.250        09/25/24         536,232   
  EUR         1,000,000       BHP Billiton Finance Ltd., Series 7, EMTN      2.125        11/29/18         1,152,300   
  EUR         500,000       BHP Billiton Finance Ltd., Series 9, EMTN      2.250        09/25/20         584,061   
  AUD         350,000       BHP Billiton Finance Ltd., MTN      3.750        10/18/17         252,835   
  EUR         200,000       Commonwealth Bank of Australia, EMTN      5.500        08/06/19         253,675   
  EUR         350,000       Commonwealth Bank of Australia, EMTN      4.375        02/25/20         446,618   
  EUR         500,000       National Australia Bank Ltd., EMTN      2.750        08/08/22         608,704   
  EUR         200,000       National Australia Bank Ltd., GMTN      4.625        02/10/20         249,550   
  EUR         250,000       National Australia Bank Ltd., GMTN      2.000        11/12/20         291,996   
  AUD         700,000       National Australia Bank Ltd., Series DIP      6.000        02/15/17         522,024   
  EUR         200,000       Telstra Corp. Ltd., EMTN      4.250        03/23/20         255,570   
  EUR         300,000       Telstra Corp. Ltd., EMTN      3.500        09/21/22         382,242   
  EUR         100,000       Telstra Corp. Ltd., EMTN      2.500        09/15/23         120,045   
  AUD         1,000,000       Westpac Banking Corp., MTN      7.250        11/18/16         749,352   
  AUD         800,000       Westpac Banking Corp., MTN      4.500        02/25/19         600,977   
             

 

 

  
                7,435,835  
             

 

 

  
      Belgium—0.9%        
  GBP         250,000       Anheuser-Busch InBev SA, EMTN      9.750        07/30/24         558,615   
  GBP         300,000       Anheuser-Busch InBev SA, EMTN      4.000        09/24/25         474,027   
  EUR         200,000       Anheuser-Busch InBev SA, EMTN      2.700        03/31/26         236,060   
  EUR         200,000       Anheuser-Busch InBev SA, EMTN      1.500        04/18/30         195,865   
  EUR         200,000       BNP Paribas Fortis SA, EMTN      5.757        10/04/17         242,439   
             

 

 

  
                1,707,006  
             

 

 

  
      Canada—13.6%        
  CAD         500,000       Bank of Montreal, Series DPNT      6.020        05/02/18         423,751   
  CAD         500,000       Bank of Montreal, Series DPNT      3.210        09/13/18         399,217   
  CAD         900,000       Bank of Montreal, Series DPNT      2.840        06/04/20         714,022   
  CAD         900,000       Bank of Montreal, Series DPNT      3.400        04/23/21         730,532   
  CAD         300,000       Bank of Montreal, Series DPNT      2.120        03/16/22         225,703   
  CAD         500,000       Bank of Nova Scotia (The)      1.800        05/09/16         383,735   
  CAD         900,000       Bank of Nova Scotia (The)      2.242        03/22/18         698,627   
  CAD         900,000       Bank of Nova Scotia (The), Series DPNT      2.462        03/14/19         702,975   
  CAD         1,100,000       Bank of Nova Scotia (The), Series DPNT      2.130        06/15/20         845,184   
  CAD         1,000,000       Bank of Nova Scotia (The), Series DPNT      2.090        09/09/20         764,360   
  CAD         500,000       Bank of Nova Scotia (The), Series DPNT      3.270        01/11/21         403,268   
  CAD         1,100,000       Bank of Nova Scotia (The), Series DPNT      2.873        06/04/21         867,380   
  CAD         550,000       Bell Canada      3.350        06/18/19         436,490   
  CAD         300,000       Bell Canada, MTN      4.400        03/16/18         242,238   
  CAD         450,000       Bell Canada, MTN      3.250        06/17/20         355,598   
  CAD         500,000       Bell Canada, Series M-26      3.350        03/22/23         385,042   
  CAD         600,000       Caisse Centrale Desjardins, MTN      2.795        11/19/18         471,823   
  CAD         750,000       Caisse Centrale Desjardins, MTN      1.748        03/02/20         566,700   
  CAD         750,000       Canadian Imperial Bank of Commerce/Canada, Series DPNT      2.350        06/24/19         584,385   
  CAD         250,000       Canadian Imperial Bank of Commerce/Canada, Series DPNT      1.850        07/14/20         190,110   
  CAD         500,000       Canadian Natural Resources Ltd., MTN      2.890        08/14/20         382,512   
  GBP         400,000       Glencore Canada Financial Corp., EMTN      7.375        05/27/20         585,167   
  CAD         800,000       HSBC Bank Canada, Series DPNT      3.558        10/04/17         634,356   
  CAD         500,000       HSBC Bank Canada, Series DPNT      2.491        05/13/19         387,779   
  CAD         200,000       HSBC Bank Canada, Series DPNT      2.938        01/14/20         157,346   
  CAD         850,000       HSBC Bank Canada, Series DPNT      2.908        09/29/21         661,211   
  CAD         600,000       National Bank of Canada, Series DPNT      2.404        10/28/19         466,591   
  CAD         200,000       National Bank of Canada, Series DPNT      1.742        03/03/20         150,695   
  CAD         600,000       Rogers Communications, Inc.      5.340        03/22/21         517,362   
  CAD         1,000,000       Royal Bank of Canada, Series DPNT, MTN      3.030        07/26/16         775,114   
  CAD         700,000       Royal Bank of Canada, Series DPNT      2.260        03/12/18         543,505   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   90  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds (continued)        
      Canada (continued)        
  CAD         1,000,000       Royal Bank of Canada, Series DPNT      2.820 %       07/12/18       $ 788,436   
  CAD         1,100,000       Royal Bank of Canada, Series DPNT      2.890        10/11/18         870,121   
  CAD         1,150,000       Royal Bank of Canada, Series DPNT      2.770        12/11/18         907,923   
  CAD         700,000       Royal Bank of Canada, Series DPNT      2.980        05/07/19         556,854   
  CAD         1,000,000       Royal Bank of Canada, Series DPNT      2.350        12/09/19         778,362   
  CAD         900,000       Royal Bank of Canada, Series DPNT      2.860        03/04/21         711,353   
  CAD         700,000       Royal Bank of Canada, Series DPNT      1.968        03/02/22         522,094   
  CAD         700,000       Shaw Communications, Inc.      5.650        10/01/19         597,446   
  CAD         600,000       Shaw Communications, Inc.      6.750        11/09/39         538,113   
  CAD         350,000       TELUS Corp., MTN      2.350        03/28/22         259,407   
  CAD         500,000       TELUS Corp., Series CG      5.050        12/04/19         422,460   
  CAD         500,000       TELUS Corp., Series CH      5.050        07/23/20         425,463   
  CAD         900,000       Toronto-Dominion Bank (The), Series DPNT      2.447        04/02/19         703,773   
  CAD         1,500,000       Toronto-Dominion Bank (The), Series DPNT      2.621        12/22/21         1,167,027   
  CAD         1,100,000       Toronto-Dominion Bank (The), Series DPNT      3.226        07/24/24         871,710   
             

 

 

  
                25,773,320  
             

 

 

  
      Denmark—1.0%        
  NOK         2,000,000       AP Moeller—Maersk A/S, EMTN      6.250        12/16/16         246,968   
  EUR         250,000       Carlsberg Breweries A/S, EMTN      3.375        10/13/17         292,318   
  GBP         150,000       DONG Energy A/S, EMTN      4.875        01/12/32         252,468   
  GBP         150,000       DONG Energy A/S, EMTN      5.750        04/09/40         277,380   
  NOK         5,000,000       Nykredit Bank A/S, EMTN      5.000        08/21/18         640,638   
  GBP         150,000       TDC A/S, EMTN(b)      5.625        02/23/23         252,837   
             

 

 

  
                1,962,609  
             

 

 

  
      Finland—0.3%        
  EUR         500,000       Fortum OYJ, EMTN      2.250        09/06/22         571,133   
             

 

 

  
      France—19.3%        
  EUR         300,000       Autoroutes du Sud de la France SA, EMTN      5.625        07/04/22         425,384   
  EUR         200,000       Banque Federative du Credit Mutuel SA, EMTN      2.000        09/19/19         233,167   
  EUR         250,000       Banque Federative du Credit Mutuel SA, EMTN      4.125        07/20/20         319,212   
  EUR         200,000       Banque Federative du Credit Mutuel SA, EMTN      4.000        10/22/20         248,340   
  EUR         300,000       Banque Federative du Credit Mutuel SA, EMTN      2.625        02/24/21         360,689   
  EUR         300,000       Banque Federative du Credit Mutuel SA, EMTN      3.250        08/23/22         379,851   
  EUR         300,000       Banque Federative du Credit Mutuel SA, EMTN      3.000        11/28/23         371,254   
  EUR         500,000       Banque Federative du Credit Mutuel SA, EMTN      2.625        03/18/24         601,455   
  EUR         500,000       Banque Federative du Credit Mutuel SA, EMTN      3.000        05/21/24         578,848   
  EUR         250,000       BNP Paribas SA, EMTN      5.431        09/07/17         301,075   
  EUR         300,000       BNP Paribas SA, EMTN      2.000        01/28/19         347,256   
  EUR         550,000       BNP Paribas SA, EMTN      2.500        08/23/19         651,351   
  EUR         400,000       BNP Paribas SA, EMTN      3.750        11/25/20         504,813   
  EUR         1,000,000       BNP Paribas SA, EMTN      2.250        01/13/21         1,175,594   
  EUR         300,000       BNP Paribas SA, EMTN      2.875        10/24/22         366,425   
  EUR         500,000       BNP Paribas SA, EMTN      2.875        09/26/23         614,057   
  EUR         200,000       Bouygues SA      3.641        10/29/19         246,145   
  EUR         100,000       Bouygues SA      4.250        07/22/20         127,577   
  EUR         600,000       BPCE SA      4.625        07/18/23         755,632   
  GBP         100,000       BPCE SA      5.250        04/16/29         160,042   
  EUR         200,000       BPCE SA, EMTN      0.750        01/22/20         221,077   
  EUR         300,000       BPCE SA, EMTN      2.125        03/17/21         350,409   
  EUR         500,000       BPCE SA, EMTN      4.500        02/10/22         665,073   
  EUR         200,000       Cap Gemini SA      2.500        07/01/23         230,633   
  EUR         400,000       Carrefour SA, EMTN      1.750        05/22/19         460,512   
  EUR         500,000       Carrefour SA, EMTN      4.000        04/09/20         630,102   
  EUR         300,000       Casino Guichard Perrachon SA, EMTN      3.311        01/25/23         352,354   
  EUR         200,000       Cie Financiere et Industrielle des Autoroutes SA(b)      5.000        05/24/21         268,055   
  EUR         350,000       Credit Agricole SA, EMTN      5.971        02/01/18         432,129   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   91  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds (continued)        
      France (continued)        
  EUR         150,000       Credit Agricole SA, EMTN      5.875 %       06/11/19       $ 193,400   
  EUR         700,000       Credit Agricole SA, EMTN      3.900        04/19/21         862,980   
  EUR         500,000       Credit Agricole SA/London, EMTN      3.875        02/13/19         613,191   
  EUR         1,000,000       Credit Agricole SA/London, EMTN      2.375        11/27/20         1,187,338   
  EUR         200,000       Credit Agricole SA/London, EMTN      5.125        04/18/23         282,114   
  EUR         300,000       Credit Agricole SA/London, EMTN      3.125        07/17/23         372,847   
  EUR         500,000       Credit Agricole SA/London, EMTN      2.375        05/20/24         587,036   
  EUR         200,000       Danone SA, EMTN      2.250        11/15/21         238,376   
  EUR         300,000       Electricite de France SA, EMTN      6.250        01/25/21         424,313   
  EUR         300,000       Electricite de France SA, EMTN      2.250        04/27/21         356,392   
  EUR         300,000       Electricite de France SA, EMTN      3.875        01/18/22         389,392   
  EUR         300,000       Electricite de France SA, EMTN      2.750        03/10/23         366,993   
  EUR         1,000,000       Electricite de France SA, EMTN      4.625        09/11/24         1,392,589   
  EUR         600,000       Electricite de France SA, EMTN      4.125        03/25/27         817,008   
  GBP         250,000       Electricite de France SA, EMTN      5.875        07/18/31         465,674   
  GBP         850,000       Electricite de France SA, EMTN      6.125        06/02/34         1,600,087   
  GBP         700,000       Electricite de France SA, EMTN      5.500        03/27/37         1,234,345   
  GBP         1,000,000       Electricite de France SA, EMTN      5.500        10/17/41         1,766,766   
  GBP         500,000       Electricite de France SA, EMTN      5.125        09/22/50         846,433   
  EUR         100,000       Engie SA, EMTN      1.375        05/19/20         114,569   
  EUR         1,500,000       Engie SA, EMTN      2.375        05/19/26         1,793,709   
  GBP         250,000       Engie SA, EMTN      5.000        10/01/60         462,375   
  EUR         300,000       GIE GDF SUEZ Alliance, EMTN      5.750        06/24/23         443,752   
  EUR         300,000       Holding d’Infrastructures de Transport SAS      4.875        10/27/21         396,323   
  EUR         200,000       HSBC France SA, EMTN      1.875        01/16/20         231,795   
  EUR         300,000       La Poste SA, EMTN      4.250        11/08/21         403,510   
  EUR         300,000       La Poste SA, EMTN      2.750        11/26/24         379,535   
  EUR         500,000       Orange SA, EMTN      3.875        04/09/20         628,149   
  EUR         150,000       Orange SA, EMTN      3.875        01/14/21         191,145   
  EUR         700,000       Orange SA, EMTN      3.000        06/15/22         870,383   
  GBP         600,000       Orange SA, EMTN      5.625        01/23/34         1,092,078   
  EUR         200,000       Sanofi, EMTN      1.875        09/04/20         235,140   
  EUR         200,000       Sanofi, EMTN      1.750        09/10/26         226,589   
  EUR         800,000       Societe Generale SA, EMTN      2.250        01/23/20         941,982   
  EUR         300,000       Societe Generale SA, EMTN      4.250        07/13/22         399,163   
  EUR         400,000       Total Capital Canada Ltd., EMTN      2.125        09/18/29         453,998   
  EUR         300,000       Total Capital International SA, EMTN      2.500        03/25/26         360,195   
  GBP         250,000       Veolia Environnement SA, EMTN      6.125        10/29/37         488,944   
             

 

 

  
                36,489,119  
             

 

 

  
      Germany—8.0%        
  EUR         300,000       Allianz Finance II BV, EMTN      3.500        02/14/22         383,001   
  GBP         300,000       Allianz Finance II BV, Series 62      4.500        03/13/43         510,557   
  EUR         300,000       BASF SE, Series 10Y      2.000        12/05/22         355,729   
  EUR         200,000       BMW Finance NV, EMTN      0.500        09/05/18         221,405   
  EUR         450,000       BMW Finance NV, EMTN      3.250        01/14/19         539,990   
  EUR         200,000       BMW US Capital LLC, EMTN      0.625        04/20/22         215,414   
  EUR         500,000       Commerzbank AG, EMTN      4.000        09/16/20         630,613   
  EUR         450,000       Daimler AG, EMTN      1.500        11/19/18         513,858   
  EUR         350,000       Deutsche Bank AG, EMTN      5.000        06/24/20         443,520   
  EUR         600,000       Deutsche Bank AG, EMTN      1.250        09/08/21         665,421   
  EUR         300,000       Deutsche Bank AG, EMTN      2.375        01/11/23         353,891   
  EUR         150,000       Deutsche Telekom International Finance BV, EMTN      2.125        01/18/21         177,684   
  EUR         300,000       Deutsche Telekom International Finance BV, EMTN      4.250        07/13/22         399,639   
  EUR         500,000       E.ON International Finance BV, EMTN      5.750        05/07/20         667,261   
  GBP         300,000       E.ON International Finance BV, EMTN      6.375        06/07/32         567,995   
  GBP         800,000       E.ON International Finance BV, EMTN      5.875        10/30/37         1,449,137   
  GBP         200,000       E.ON International Finance BV, EMTN      6.750        01/27/39         397,899   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   92  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds (continued)        
      Germany (continued)        
  EUR         300,000       Merck Financial Services GmbH, EMTN      4.500 %       03/24/20       $ 387,070   
  EUR         600,000       RWE Finance BV, EMTN      6.625        01/31/19         786,245   
  EUR         500,000       RWE Finance BV, EMTN      6.500        08/10/21         704,758   
  GBP         200,000       RWE Finance BV, EMTN      6.250        06/03/30         350,173   
  GBP         700,000       RWE Finance BV, EMTN      4.750        01/31/34         1,028,238   
  GBP         200,000       RWE Finance BV, EMTN      6.125        07/06/39         342,863   
  EUR         300,000       Siemens Financieringsmaatschappij NV, EMTN      1.750        03/12/21         351,342   
  EUR         100,000       Siemens Financieringsmaatschappij NV, EMTN      2.875        03/10/28         126,697   
  GBP         500,000       Siemens Financieringsmaatschappij NV, EMTN      3.750        09/10/42         764,166   
  EUR         200,000       Volkswagen International Finance NV, EMTN      1.875        05/15/17         223,312   
  EUR         450,000       Volkswagen International Finance NV, EMTN      3.250        01/21/19         523,300   
  EUR         400,000       Volkswagen International Finance NV, EMTN      2.000        03/26/21         446,510   
  EUR         600,000       Volkswagen Leasing GmbH, EMTN      2.375        09/06/22         672,565   
             

 

 

  
                15,200,253  
             

 

 

  
      Hong Kong—0.2%        
  EUR         400,000       Hutchison Whampoa Finance 14 Ltd.      1.375        10/31/21         439,926   
             

 

 

  
      Italy—8.4%        
  EUR         250,000       Assicurazioni Generali SpA, EMTN      2.875        01/14/20         297,780   
  EUR         300,000       Assicurazioni Generali SpA, EMTN      5.125        09/16/24         422,317   
  EUR         300,000       Assicurazioni Generali SpA, EMTN      4.125        05/04/26         350,308   
  EUR         250,000       Atlantia SpA      3.625        11/30/18         301,362   
  GBP         300,000       Atlantia SpA, EMTN      6.250        06/09/22         555,695   
  EUR         250,000       Enel Finance International NV, EMTN      5.000        09/14/22         345,797   
  EUR         500,000       Enel Finance International NV, EMTN      4.875        04/17/23         692,004   
  GBP         1,000,000       Enel Finance International NV, EMTN      5.625        08/14/24         1,802,081   
  EUR         200,000       Enel SpA      4.875        02/20/18         243,180   
  GBP         800,000       Enel SpA, EMTN      5.750        06/22/37         1,445,049   
  EUR         200,000       Eni SpA      4.125        09/16/19         250,731   
  EUR         200,000       Eni SpA, EMTN      4.250        02/03/20         254,276   
  EUR         150,000       Eni SpA, EMTN      4.000        06/29/20         190,382   
  EUR         300,000      

Eni SpA, EMTN

      3.250        07/10/23         378,366   
  EUR         300,000       Eni SpA, EMTN      3.750        09/12/25         394,271   
  EUR         250,000       Eni SpA, EMTN      1.500        02/02/26         271,553   
  EUR         200,000       Eni SpA, EMTN      3.625        01/29/29         261,417   
  EUR         300,000      

Intesa Sanpaolo SpA, EMTN

      5.000        02/28/17         351,628   
  EUR         300,000       Intesa Sanpaolo SpA, EMTN      4.000        11/09/17         354,747   
  EUR         900,000       Intesa Sanpaolo SpA, EMTN      3.000        01/28/19         1,063,303   
  EUR         400,000       Intesa Sanpaolo SpA, EMTN      4.375        10/15/19         500,154   
  EUR         300,000       Intesa Sanpaolo SpA, EMTN      2.000        06/18/21         342,551   
  EUR         250,000       Intesa Sanpaolo SpA, EMTN      4.000        10/30/23         323,022   
  EUR         500,000       Intesa Sanpaolo SpA, GMTN      4.000        11/08/18         605,919   
  EUR         300,000       Mediobanca SpA, EMTN      0.875        11/14/17         332,877   
  EUR         100,000       Snam SpA, EMTN      3.875        03/19/18         119,483   
  EUR         200,000       Snam SpA, EMTN      5.000        01/18/19         251,962   
  EUR         400,000       Snam SpA, EMTN      3.500        02/13/20         493,288   
  EUR         400,000       Snam SpA, EMTN      5.250        09/19/22         560,946   
  EUR         300,000       Terna Rete Elettrica Nazionale SpA, EMTN      4.750        03/15/21         396,872   
  EUR         300,000       UniCredit SpA, EMTN      4.875        03/07/17         351,123   
  EUR         300,000       UniCredit SpA, EMTN      3.375        01/11/18         351,412   
  EUR         700,000       UniCredit SpA, EMTN      3.625        01/24/19         840,562   
  EUR         150,000       Unione di Banche Italiane SCpA, EMTN      2.875        02/18/19         172,862   
             

 

 

  
                15,869,280  
             

 

 

  
      Japan—0.4%        
  JPY         100,000,000       Panasonic Corp., Series 12      0.387        03/19/20         830,429   
             

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   93  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds (continued)        
      Netherlands—6.4%        
  EUR         200,000       ABN AMRO Bank NV, EMTN      2.125 %       11/26/20       $ 235,130   
  EUR         300,000       ABN AMRO Bank NV, EMTN      6.375        04/27/21         401,210   
  EUR         450,000       ABN AMRO Bank NV, EMTN      4.125        03/28/22         589,877   
  EUR         200,000       ABN AMRO Bank NV, EMTN      7.125        07/06/22         278,968   
  EUR         300,000       ABN AMRO Bank NV, EMTN      2.500        11/29/23         360,970   
  EUR         600,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands      3.875        07/25/23         735,418   
  EUR         750,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, EMTN      4.125        01/12/21         966,012   
  EUR         500,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, EMTN      4.750        06/06/22         680,273   
  EUR         650,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, EMTN      4.125        09/14/22         805,921   
  GBP         800,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, EMTN      5.250        09/14/27         1,325,075   
  EUR         500,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, GMTN      4.125        01/14/20         631,746   
  EUR         1,100,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, GMTN      3.750        11/09/20         1,341,072   
  EUR         300,000       Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands, GMTN      4.000        01/11/22         390,394   
  EUR         250,000       Heineken NV, EMTN      2.125        08/04/20         293,078   
  EUR         400,000       ING Bank NV, EMTN      0.700        04/16/20         441,801   
  EUR         450,000       ING Bank NV, EMTN      4.500        02/21/22         600,946   
  GBP         300,000       Koninklijke KPN NV, GMTN      5.750        09/17/29         525,637   
  EUR         200,000       Shell International Finance BV, EMTN      1.625        03/24/21         230,459   
  EUR         400,000       Shell International Finance BV, EMTN      1.000        04/06/22         443,206   
  EUR         200,000       Shell International Finance BV, EMTN      1.875        09/15/25         228,793   
  EUR         150,000       Shell International Finance BV, EMTN      2.500        03/24/26         179,908   
  EUR         350,000       Shell International Finance BV, EMTN      1.625        01/20/27         383,340   
             

 

 

  
                12,069,234  
             

 

 

  
      Norway—1.5%        
  EUR         275,000       DNB Bank ASA, EMTN      3.875        06/29/20         348,649   
  EUR         250,000       DNB Bank ASA, EMTN(b)      4.375        02/24/21         326,044   
  EUR         250,000       DNB Bank ASA, EMTN      4.250        01/18/22         329,254   
  EUR         250,000       Statoil ASA, EMTN      5.625        03/11/21         347,307   
  EUR         500,000       Statoil ASA, EMTN      1.250        02/17/27         524,377   
  GBP         400,000       Statoil ASA, EMTN      6.875        03/11/31         863,727   
  SEK         1,000,000       Telenor ASA, EMTN      2.375        03/19/19         124,967   
             

 

 

  
                2,864,325  
             

 

 

  
      Spain—4.5%        
  EUR         200,000       BBVA Senior Finance SAU, GMTN      3.750        01/17/18         237,369   
  EUR         300,000       BBVA Senior Finance SAU, GMTN      2.375        01/22/19         350,671   
  EUR         300,000       CaixaBank SA, MTN      3.125        05/14/18         352,766   
  EUR         300,000       Iberdrola Finanzas SAU, EMTN      4.125        03/23/20         379,868   
  GBP         200,000       Iberdrola Finanzas SAU, EMTN      7.375        01/29/24         398,227   
  EUR         200,000       Iberdrola International BV, EMTN      3.500        02/01/21         249,743   
  EUR         100,000       Repsol International Finance BV, EMTN      4.875        02/19/19         124,103   
  EUR         500,000       Repsol International Finance BV, EMTN      2.625        05/28/20         579,308   
  EUR         200,000       Repsol International Finance BV, EMTN      3.625        10/07/21         242,915   
  EUR         300,000       Santander Consumer Finance SA(b)      0.900        02/18/20         327,292   
  EUR         200,000       Santander International Debt SAU, EMTN      1.375        03/25/17         223,977   
  EUR         500,000       Santander International Debt SAU, EMTN      4.000        03/27/17         579,803   
  EUR         100,000       Santander International Debt SAU, EMTN      4.125        10/04/17         118,234   
  EUR         200,000       Santander International Debt SAU, EMTN      4.000        01/24/20         250,192   
  EUR         400,000       Santander Issuances SAU, EMTN      2.500        03/18/25         421,608   
  EUR         350,000       Telefonica Emisiones SAU, EMTN      4.693        11/11/19         442,931   
  EUR         200,000       Telefonica Emisiones SAU, EMTN      4.710        01/20/20         253,827   
  GBP         500,000       Telefonica Emisiones SAU, EMTN      5.597        03/12/20         852,984   
  EUR         300,000       Telefonica Emisiones SAU, EMTN      2.242        05/27/22         341,205   
  GBP         500,000       Telefonica Emisiones SAU, EMTN      5.289        12/09/22         851,735   
  GBP         300,000       Telefonica Emisiones SAU, EMTN      5.375        02/02/26         513,873   
  EUR         300,000       Telefonica Emisiones SAU, GMTN      3.987        01/23/23         377,251   
             

 

 

  
                8,469,882  
             

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   94  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
      Corporate Bonds (continued)        
      Sweden—2.2%        
  EUR         350,000       Nordea Bank AB, EMTN      4.500 %       03/26/20       $ 440,448   
  EUR         500,000       Nordea Bank AB, EMTN      2.000        02/17/21         587,409   
  EUR         200,000       Nordea Bank AB, EMTN      3.250        07/05/22         253,372   
  SEK         1,000,000       SBAB Bank AB, EMTN      3.000        10/11/18         125,803   
  EUR         200,000       Skandinaviska Enskilda Banken AB, EMTN      2.000        02/19/21         233,996   
  EUR         200,000       Skandinaviska Enskilda Banken AB, GMTN      1.875        11/14/19         232,223   
  EUR         100,000       Svenska Handelsbanken AB, EMTN      2.250        08/27/20         118,641   
  EUR         400,000       Svenska Handelsbanken AB, EMTN      4.375        10/20/21         529,545   
  EUR         200,000       Svenska Handelsbanken AB, EMTN      2.625        08/23/22         243,234   
  SEK         2,000,000       TeliaSonera AB, EMTN      3.625        11/08/23         257,358   
  EUR         150,000       Vattenfall AB, EMTN      6.250        03/17/21         207,301   
  GBP         500,000       Vattenfall AB, EMTN      6.875        04/15/39         1,024,080   
             

 

 

  
                4,253,410  
             

 

 

  
      Switzerland—4.0%        
  EUR         200,000       ABB Finance BV, EMTN      2.625        03/26/19         236,948   
  EUR         500,000       Credit Suisse AG/London      1.375        01/31/22         563,353   
  EUR         250,000       Credit Suisse AG/London, EMTN      0.625        11/20/18         277,614   
  EUR         300,000       Credit Suisse AG/London, EMTN      4.750        08/05/19         382,365   
  EUR         800,000       Credit Suisse AG/London, EMTN      1.375        11/29/19         909,407   
  GBP         500,000       Credit Suisse Group Funding Guernsey Ltd.      3.000        05/27/22         760,972   
  EUR         400,000       Credit Suisse Group Funding Guernsey Ltd., EMTN      1.250        04/14/22         428,334   
  CHF         300,000       Credit Suisse Group Funding Guernsey Ltd., EMTN      1.000        04/14/23         305,033   
  GBP         500,000       Glencore Finance Europe SA, EMTN      6.500        02/27/19         731,431   
  EUR         200,000       Roche Finance Europe BV, EMTN      0.875        02/25/25         216,209   
  EUR         250,000       Roche Holdings, Inc., EMTN      6.500        03/04/21         362,597   
  CHF         700,000       Roche Kapitalmarkt AG      4.500        03/23/17         759,970   
  CHF         800,000       Swisscom AG      3.250        09/14/18         893,969   
  EUR         300,000       UBS AG/London, EMTN      1.125        06/30/20         338,022   
  EUR         300,000       UBS AG/London, EMTN      1.250        09/03/21         338,875   
             

 

 

  
                7,505,099  
             

 

 

  
      United Kingdom—23.2%        
  EUR         250,000       Abbey National Treasury Services PLC/U.K., EMTN      2.000        01/14/19         288,074   
  EUR         250,000       Abbey National Treasury Services PLC/U.K., EMTN      0.875        01/13/20         276,781   
  EUR         200,000       Abbey National Treasury Services PLC/U.K., EMTN      1.125        01/14/22         219,704   
  GBP         300,000       Abbey National Treasury Services PLC/U.K., EMTN      3.875        10/15/29         480,932   
  GBP         200,000       ABP Finance PLC, EMTN      6.250        12/14/26         379,593   
  GBP         200,000       Bank of Scotland PLC      9.375        05/15/21         390,589   
  EUR         900,000       Barclays, EMTN      6.000        01/14/21         1,193,232   
  EUR         300,000       Barclays, EMTN      2.125        02/24/21         353,139   
  EUR         700,000       Barclays, EMTN      2.250        06/10/24         817,765   
  GBP         1,000,000       Barclays Bank PLC, EMTN      10.000        05/21/21         1,984,564   
  GBP         250,000       BAT International Finance PLC, EMTN      7.250        03/12/24         500,998   
  GBP         500,000       BAT International Finance PLC, EMTN      4.000        09/04/26         823,057   
  GBP         100,000       BAT International Finance PLC, EMTN      6.000        11/24/34         198,556   
  GBP         500,000       BG Energy Capital PLC, EMTN      5.125        12/01/25         904,314   
  GBP         300,000       BG Energy Capital PLC, EMTN      5.000        11/04/36         541,944   
  EUR         500,000       BP Capital Markets PLC, EMTN      2.994        02/18/19         597,993   
  EUR         300,000       BP Capital Markets PLC, EMTN      2.177        09/28/21         352,083   
  EUR         250,000       BP Capital Markets PLC, EMTN      2.972        02/27/26         308,144   
  EUR         300,000       BP Capital Markets PLC, EMTN      1.573        02/16/27         320,141   
  GBP         250,000       British Telecommunications PLC      5.750        12/07/28         463,367   
  EUR         300,000       British Telecommunications PLC, EMTN      1.125        06/10/19         338,430   
  GBP         150,000       British Telecommunications PLC, EMTN      6.375        06/23/37         298,318   
  GBP         250,000       BUPA Finance PLC      5.000        04/25/23         394,155   
  GBP         500,000       Centrica PLC, EMTN      6.375        03/10/22         920,009   
  GBP         200,000       Centrica PLC, EMTN      4.375        03/13/29         326,107   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   95  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

Foreign
Currency(a)		      Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
  GBP         500,000       Centrica PLC, EMTN      4.250 %       09/12/44       $ 748,136   
  GBP         250,000       Friends Life Holdings PLC      8.250        04/21/22         459,648   
  EUR         350,000       GlaxoSmithKline Capital PLC, EMTN      1.375        12/02/24         390,529   
  GBP         400,000       GlaxoSmithKline Capital PLC, EMTN      3.375        12/20/27         627,964   
  GBP         500,000       GlaxoSmithKline Capital PLC, EMTN      6.375        03/09/39         1,072,121   
  GBP         600,000       GlaxoSmithKline Capital PLC, EMTN      5.250        04/10/42         1,140,478   
  GBP         250,000       GlaxoSmithKline Capital PLC, EMTN      4.250        12/18/45         411,802   
  GBP         500,000       Heathrow Funding Ltd., EMTN      7.125        02/14/24         952,151   
  GBP         750,000       Heathrow Funding Ltd., EMTN      6.750        12/03/26         1,508,697   
  EUR         800,000       HSBC Bank PLC, EMTN      4.000        01/15/21         1,025,791   
  GBP         600,000       HSBC Bank PLC, EMTN      5.375        08/22/33         984,011   
  GBP         600,000       HSBC Holdings PLC      6.750        09/11/28         1,102,217   
  EUR         250,000       HSBC Holdings PLC, EMTN      6.000        06/10/19         323,360   
  GBP         1,000,000       HSBC Holdings PLC, EMTN      5.750        12/20/27         1,691,987   
  GBP         200,000       HSBC Holdings PLC, EMTN      6.000        03/29/40         346,054   
  GBP         450,000       Imperial Tobacco Finance PLC, EMTN      9.000        02/17/22         921,344   
  GBP         450,000       Imperial Tobacco Finance PLC, EMTN      5.500        09/28/26         803,321   
  EUR         100,000       Lloyds Bank PLC, EMTN      5.375        09/03/19         130,714   
  EUR         300,000       Lloyds Bank PLC, EMTN      6.500        03/24/20         401,378   
  GBP         300,000       Lloyds Bank PLC, EMTN      7.500        04/15/24         608,409   
  EUR         350,000       Lloyds Bank PLC, EMTN      1.250        01/13/25         380,062   
  GBP         1,224,000       Lloyds Bank PLC, EMTN      7.625        04/22/25         2,381,178   
  GBP         250,000       National Grid Electricity Transmission PLC, EMTN      4.000        06/08/27         419,314   
  EUR         200,000       Nationwide Building Society, EMTN      1.125        06/03/22         219,994   
  EUR         300,000       Nationwide Building Society, EMTN      1.250        03/03/25         322,541   
  GBP         250,000       Rio Tinto Finance PLC, EMTN      4.000        12/11/29         379,092   
  EUR         250,000       Royal Bank of Scotland PLC (The), EMTN      5.375        09/30/19         324,809   
  EUR         300,000       Royal Bank of Scotland PLC (The), EMTN      5.500        03/23/20         397,653   
  GBP         700,000       Royal Bank of Scotland PLC (The), EMTN      7.500        04/29/24         1,398,257   
  EUR         300,000       SABMiller Holdings, Inc., EMTN      1.875        01/20/20         344,930   
  GBP         400,000       Scottish Widows PLC      5.500        06/16/23         639,931   
  GBP         400,000       Scottish Widows PLC      7.000        06/16/43         695,035   
  GBP         100,000       Severn Trent Utilities Finance PLC, EMTN      3.625        01/16/26         159,877   
  EUR         500,000       Sky PLC, EMTN      1.500        09/15/21         558,152   
  GBP         300,000       Society of Lloyd’s      4.750        10/30/24         469,565   
  GBP         200,000       SSE PLC, EMTN      8.375        11/20/28         455,600   
  EUR         400,000       Standard Chartered PLC, EMTN      1.625        11/20/18         452,842   
  EUR         300,000       Standard Chartered PLC, EMTN      4.125        01/18/19         364,941   
  EUR         400,000       Standard Chartered PLC, EMTN      1.625        06/13/21         445,898   
  GBP         300,000       Standard Chartered PLC, EMTN      5.125        06/06/34         416,492   
  GBP         300,000       Standard Chartered PLC, EMTN      4.375        01/18/38         445,524   
  GBP         200,000       Thames Water Utilities Cayman Finance Ltd., EMTN      5.500        02/11/41         382,183   
  GBP         200,000       Thames Water Utilities Cayman Finance Ltd., Series 16, EMTN      4.000        06/19/25         331,030   
  GBP         350,000       Thames Water Utilities Finance Ltd., EMTN      5.125        09/28/37         632,697   
  GBP         300,000       THFC Funding No. 3 PLC, EMTN      5.200        10/11/43         553,501   
  EUR         300,000       Vodafone Group PLC, EMTN      4.650        01/20/22         396,847   
  GBP         300,000       Wellcome Trust Finance PLC      4.625        07/25/36         570,879   
             

 

 

  
                43,860,925  
             

 

 

  
      Total Corporate Bonds
(Cost $202,591,403)		           185,301,785  
             

 

 

  
      Sovereign Debt Obligations—0.5%        
      Japan—0.5%        
  JPY         30,000,000       Development Bank of Japan, Inc.      1.050        06/20/23         265,000   
  JPY         60,000,000       Development Bank of Japan, Inc.      2.300        03/19/26         594,392  
             

 

 

  
      Total Sovereign Debt Obligations
(Cost $1,063,547)		           859,392  
             

 

 

  
             

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   96  

 

 

PowerShares International Corporate Bond Portfolio (PICB) (continued)

October 31, 2015

 

 

    Number
of Shares		          

 

   

 

    Value  
      Money Market Fund—0.0%         
     57,510       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $57,510)		          $ 57,510  
              

 

 

  
      Total Investments
(Cost $203,712,460)—98.3%		            186,218,687   
      Other assets less liabilities—1.7%            3,234,988  
              

 

 

  
      Net Assets—100.0%          $ 189,453,675  
              

 

 

  

Investment Abbreviations:

AUD—Australian Dollar

CAD—Canadian Dollar

CHF—Swiss Franc

DIP—Debt Issuance Program

DPNT—Deposit Note

EUR—Euro

EMTN—Euro Medium-Term Note

GBP—British Pound

GMTN—Global Medium-Term Note

JPY—Japanese Yen

MTN—Medium-Term Notes

NOK—Norwegian Krone

SEK—Swedish Krona

Notes to Schedule of Investments:

(a)  Foreign denominated security. Principal amount denominated in currency indicated.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $1,174,228, which represented 0.62% of the Fund’s Net Assets.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   97  

 

 

Schedule of Investments

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds—97.6%        
   Aerospace/Defense—1.6%        
$ 100,000       Boeing Capital Corp.      2.125 %      08/15/16       $ 100,951   
          

 

 

  
   Auto Manufacturers—1.9%        
  100,000       Ford Motor Credit Co. LLC      8.125        01/15/20         119,883   
          

 

 

  
   Banks—29.6%        
  120,000       Bank of America Corp., MTN      3.625        03/17/16         121,321   
  120,000       Bank of America Corp.      6.000        09/01/17         129,018   
  100,000       Bank of America Corp.      6.875        11/15/18         113,826   
  120,000       Bank of Montreal, MTN (Canada)      1.300        07/15/16         120,545   
  120,000       BB&T Corp.      5.200        12/23/15         120,770   
  100,000       BNP Paribas SA, MTN (France)      2.450        03/17/19         100,983   
  120,000       Capital One Financial Corp.      2.450        04/24/19         120,208   
  120,000       Citigroup, Inc.      1.300        11/15/16         120,282   
  120,000       Citigroup, Inc.      8.500        05/22/19         144,990   
  100,000       Credit Suisse AG/New York (Switzerland)      6.000        02/15/18         108,335   
  100,000       Deutsche Bank AG/London, Series 3FXD (Germany)      1.400        02/13/17         99,774   
  100,000       Goldman Sachs Group, Inc. (The), GMTN      5.375        03/15/20         111,760   
  120,000       JPMorgan Chase & Co.      6.300        04/23/19         136,488   
  100,000       Santander Holdings USA, Inc.      3.450        08/27/18         102,830   
  100,000       Toronto-Dominion Bank (The), Series BKNT, MTN (Canada)      2.125        07/02/19         100,380   
  100,000       Wells Fargo & Co.      5.125        09/15/16         103,605   
          

 

 

  
             1,855,115   
          

 

 

  
   Beverages—2.2%        
  120,000       Anheuser-Busch InBev Worldwide, Inc. (Belgium)      7.750        01/15/19         140,212   
          

 

 

  
   Biotechnology—1.8%        
  100,000       Amgen, Inc.      5.700        02/01/19         111,071   
          

 

 

  
   Chemicals—3.2%        
  100,000       Ecolab, Inc.      3.000        12/08/16         102,089   
  100,000       Sherwin-Williams Co. (The)      1.350        12/15/17         99,518   
          

 

 

  
             201,607   
          

 

 

  
   Diversified Financial Services—8.0%        
  120,000       Air Lease Corp.      5.625        04/01/17         125,816   
  100,000       American Express Credit Corp., MTN      1.125        06/05/17         99,698   
  105,000       General Electric Capital Corp.      1.000        12/11/15         105,072   
  60,000       Jefferies Group LLC      8.500        07/15/19         70,782   
  100,000       Synchrony Financial      2.700        02/03/20         98,707   
          

 

 

  
             500,075   
          

 

 

  
   Electric—3.9%        
  120,000       Entergy Texas, Inc.      7.125        02/01/19         137,803   
  100,000       Xcel Energy, Inc.      4.700        05/15/20         108,684   
          

 

 

  
             246,487   
          

 

 

  
   Food—2.1%        
  120,000       Mondelez International, Inc.      6.125        02/01/18         131,890   
          

 

 

  
   Healthcare-Products—1.8%        
  100,000       Life Technologies Corp.      6.000        03/01/20         113,186   
          

 

 

  
   Healthcare-Services—1.6%        
  100,000       Laboratory Corp. of America Holdings      2.200        08/23/17         101,042   
          

 

 

  
   Insurance—1.6%        
  100,000       Berkshire Hathaway, Inc.      1.900        01/31/17         101,334   
          

 

 

  
   Machinery-Diversified—1.7%        
  100,000       Deere & Co.      4.375        10/16/19         108,068   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   98  

 

 

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Media—8.2%        
$ 100,000       CBS Corp.      5.750 %       04/15/20       $ 112,879   
  120,000       Comcast Corp.      6.300        11/15/17         131,988   
  100,000       Comcast Corp.      5.700        07/01/19         113,399   
  100,000       Scripps Networks Interactive, Inc.      2.800        06/15/20         98,111   
  56,000       Viacom, Inc.      6.250        04/30/16         57,394   
          

 

 

  
             513,771   
          

 

 

  
   Mining—3.8%        
  120,000       Rio Tinto Finance USA Ltd. (United Kingdom)      1.875        11/02/15         120,000   
  120,000       Rio Tinto Finance USA PLC (United Kingdom)      1.375        06/17/16         120,217   
          

 

 

  
             240,217   
          

 

 

  
   Oil & Gas—5.3%        
  120,000       BP Capital Markets PLC (United Kingdom)      3.200        03/11/16         121,181   
  100,000       Occidental Petroleum Corp.      1.750        02/15/17         100,803   
  100,000       Petro-Canada (Canada)      6.050        05/15/18         109,526   
          

 

 

  
             331,510   
          

 

 

  
   Oil & Gas Services—2.8%        
  75,000       SESI LLC      6.375        05/01/19         74,438   
  100,000       Weatherford International Ltd./Bermuda      9.625        03/01/19         104,000   
          

 

 

  
             178,438   
          

 

 

  
   Pharmaceuticals—3.4%        
  100,000       AstraZeneca PLC (United Kingdom)      5.900        09/15/17         108,722   
  100,000       Johnson & Johnson      1.875        12/05/19         101,329   
          

 

 

  
             210,051   
          

 

 

  
   Pipelines—1.7%        
  100,000       Kinder Morgan Energy Partners LP      5.950        02/15/18         106,082   
          

 

 

  
   REITs—1.7%        
  100,000       American Tower Corp.      4.500        01/15/18         105,038   
          

 

 

  
   Retail—1.8%        
  100,000       Target Corp.      6.000        01/15/18         110,004   
          

 

 

  
   Semiconductors—1.9%        
  120,000       Intel Corp.      1.950        10/01/16         121,522   
          

 

 

  
   Telecommunications—6.0%        
  120,000       AT&T, Inc.      5.500        02/01/18         129,902   
  100,000       Cisco Systems, Inc.      4.450        01/15/20         109,903   
  120,000       Orange SA (France)      5.375        07/08/19         133,464   
          

 

 

  
             373,269   
          

 

 

  
   Total Corporate Bonds
(Cost $6,127,720)		           6,120,823   
          

 

 

  
          
Number
of Shares		                           
   Money Market Fund—1.4%        
  84,916       Invesco Premier Portfolio—Institutional Class, 0.12%(a)
(Cost $84,916)		           84,916   
          

 

 

  
   Total Investments
(Cost $6,212,636)—99.0%		           6,205,739   
   Other assets less liabilities—1.0%           64,363   
          

 

 

  
   Net Assets—100.0%         $ 6,270,102   
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   99  

 

 

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI) (continued)

October 31, 2015

 

Investment Abbreviations:

GMTN—Global Medium-Term Note

MTN—Medium-Term Notes

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   100  

 

 

Schedule of Investments

PowerShares National AMT-Free Municipal Bond Portfolio (PZA)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds—97.2%        
   Ad Valorem Property Tax—11.8%        
$ 1,500,000       Beaumont Texas Independent School District School Building Ser. 09 AGC      5.000 %      02/15/38       $ 1,561,710   
  150,000       Beaver County Pennsylvania Notes Ser. 09 AGM(a)      5.550        11/15/17         165,060   
  2,850,000       Beaver County Pennsylvania Notes Ser. 09 AGM      5.550        11/15/31         3,084,754   
  2,000,000       California State Various Purpose Ser. 05 NATL(a)      4.750        03/01/16         2,030,660   
  1,000,000       California State Various Purpose Ser. 05 NATL(a)      4.750        03/01/16         1,015,490   
  2,000,000       California State Various Purpose Ser. 09      5.500        11/01/39         2,313,040   
  4,380,000       California State Various Purpose Ser. 09      6.000        11/01/39         5,210,623   
  12,050,000       California State Various Purpose Ser. 10      5.500        03/01/40         13,895,940   
  600,000       Centinela Valley California Union High School District (Election 2010) Ser. 12B AGM      5.000        08/01/50         657,078   
  20,000,000       City of Jasper Alabama Ser. 14 BAM      5.000        03/01/44         22,060,600   
  3,340,000       City of New York Ser. 11A-1      5.000        08/01/32         3,868,655   
  2,500,000       City of Philadelphia Pennsylvania Ser. 09B AGC(a)      7.125        07/15/16         2,621,150   
  5,000,000       Corona-Norca California Unified School District (Election 2006) Ser. 09B AGC      5.375        02/01/34         5,543,950   
  500,000       Corona-Norco California Unified School District (Election 2006) Ser. 09C AGM      5.500        08/01/39         572,165   
  1,500,000       District of Columbia Ser. 08E BHAC      5.000        06/01/33         1,634,100   
  1,000,000       El Monte California Union High School District (Election 2008) Ser. 09A AGC      5.500        06/01/34         1,126,350   
  1,500,000       Honolulu City & County Hawaii Ser. 15A      5.000        10/01/39         1,732,035   
  2,000,000       Lackawanna County Pennsylvania Ser. 10B AGM      5.000        09/01/35         2,232,980   
  2,500,000       Los Angeles Unified School District (Election 2002) Ser. 07C AGM      5.000        07/01/32         2,658,250   
  500,000       Los Angeles Unified School District (Election 2004) Ser. 06G AMBAC(a)      5.000        07/01/16         516,030   
  4,000,000       Massachusetts State Ref. Ser. 15A      5.000        07/01/36         4,659,680   
  500,000       Puerto Rico Commonwealth Public Improvement Ref. Ser. 07A-4 AGM      5.000        07/01/31         491,335   
  9,150,000       Puerto Rico Commonwealth Public Improvement Ref. Ser. 12A AGM      5.000        07/01/35         8,598,347   
  890,000       Reading Pennsylvania School District (State Aid Withholding) Ser. 08 AGM      5.000        03/01/35         970,011   
  2,000,000       Riverside Community College District (Election 2004) Ser. 07C NATL(a)      5.000        08/01/17         2,158,180   
  2,500,000       San Jacinto Unified School District (Election 2006) Ser. 07 AGM(a)      5.250        08/01/17         2,708,625   
  2,000,000       State Center California Community College District (Election 2002) Ser. 07A AGM(a)      5.000        08/01/17         2,157,820   
  3,280,000       Texas State Ref. (Transportation Commission) Ser. 14A      5.000        10/01/44         3,737,626   
  2,500,000       Victor Valley California Union High School District (Election 2008) Ser. 09A AGC      5.000        08/01/34         2,774,825   
  2,535,000       Yosemite California Community College District (Election 2004) Ser. 08C AGM(a)      5.000        08/01/18         2,828,933   
          

 

 

  
             105,586,002   
          

 

 

  
   Auto Parking Revenue—0.5%        
  2,000,000       Miami Florida Special Obligation (Marlins Stadium Project) Ser. 10A AGM      5.250        07/01/35         2,167,400   
  2,500,000       Miami Florida Special Obligation (Marlins Stadium Project) Ser. 10A AGM      5.250        07/01/39         2,698,025   
          

 

 

  
             4,865,425   
          

 

 

  
   College Revenue—5.0%        
  4,510,000       California State University Rev. Systemwide Ser. 08A AGM      5.000        11/01/39         4,916,937   
  3,000,000       District of Columbia Rev. (Catholic University of America) Ser. 07 NATL      5.000        10/01/29         3,145,590   
  1,105,000       Georgia State Higher Education Facilities Auth. Rev. (USG Real Estate III) Ser. 10A AGC(a)      5.000        06/15/20         1,293,425   
  3,140,000       Georgia State Higher Education Facilities Auth. Rev. (USG Real Estate III) Ser. 10A AGC      5.000        06/15/38         3,519,186   
  1,000,000       Lafayette Louisiana Public Trust Financing Auth. Rev. Ragin’ Cajun Facilities (Housing & Parking Project) Ser. 10 AGM      5.500        10/01/41         1,138,280   
  2,000,000       Louisiana State Local Government Environmental Facilities & Community Development Auth. (LCTCS ACT 360 Project) Ser. 14      5.000        10/01/39         2,211,940   
  1,250,000       Massachusetts State Health & Educational Facilities Auth. Rev. (Massachusetts Institute of Technology) Ser. 09O(a)      6.000        07/01/18         1,421,850   
  3,060,000       New York State Dormitory Auth. Rev. Non State Supported Debt (Cornell University) Ser. 10A      5.000        07/01/35         3,491,460   
  3,500,000       New York State Dormitory Auth. Rev. Non State Supported Debt Ref. (New School) Ser. 15A      5.000        07/01/45         3,896,970   
  2,000,000       New York State Dormitory Auth. Rev. Non State Supported Debt Ref. (New York University) Ser. 15A      5.000        07/01/35         2,318,020   
  250,000       New York State Dormitory Auth. Rev. Non-Special Treatment Supported Debt (Fordham University) Ser. 08B AGC      5.000        07/01/38         272,638   
  3,000,000       New York State Dormitory Auth. Rev. Non-State Supported Debt Ref. (Icahn School medicine at Mount Sinai) Ser. 15A      5.000        07/01/35         3,326,040   
  3,235,000       New York State Dormitory Auth. Rev. Non-State Supported Debt Ref. (Icahn School medicine at Mount Sinai) Ser. 15A      5.000        07/01/40         3,569,952   
  3,000,000       North Carolina State Capital Facilities Financing Agency Rev. Ref. (Duke University) Ser. 15      5.000        10/01/55         3,388,740   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   101  

 

 

PowerShares National AMT-Free Municipal Bond Portfolio (PZA) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   College Revenue (continued)        
$ 6,100,000       Ohio State University Ser.14A      5.000 %       12/01/39       $ 6,964,797   
          

 

 

  
             44,875,825  
          

 

 

  
   Electric Power Revenue—3.7%        
  3,500,000       Grand River Oklahoma Dam Auth. Rev. Ser. 14A      5.000        06/01/39         3,936,065   
  1,150,000       Guam Power Auth. Rev. Ser. 10A AGM      5.000        10/01/37         1,294,049   
  9,835,000       Guam Power Auth. Rev. Ser. 12A AGM      5.000        10/01/30         11,426,991   
  200,000       Kentucky State Municipal Power Agency Power System Rev. (Prairie State Project) Ser. 07A NATL(a)      5.000        09/01/17         215,690   
  700,000       Kentucky State Municipal Power Agency Power System Rev. (Prairie State Project) Ser. 07A NATL      5.000        09/01/37         739,347   
  2,500,000       Long Island New York Power Auth. Ref. Ser. 14A      5.000        09/01/39         2,784,800   
  500,000       Long Island Power Auth. New York Electric Systems Rev. General Ser. 08A BHAC      5.500        05/01/33         572,430   
  4,200,000       Long Island Power Auth. New York Electric Systems Rev. General Ser. 11A AGM      5.000        05/01/36         4,634,406   
  2,500,000       Los Angeles California Department of Water & Power Rev. Ref. Ser. 15A      5.000        07/01/35         2,887,275   
  500,000       Lower Colorado River Taxes Auth. Transmission Contract Ref. Ser. 15      5.000        05/15/40         556,100   
  2,050,000       Municipal Energy Agency of Nebraska Ref. Ser. 09A BHAC      5.375        04/01/39         2,296,513   
  1,000,000       Redding California Electric System Rev. COP Ser. 08A AGM      5.000        06/01/30         1,087,010   
  1,000,000       Snohomish County Washington Public Utility District #1 (Electric Rev. System) Ser. 15      5.000        12/01/40         1,132,960   
          

 

 

  
             33,563,636  
          

 

 

  
   Fuel Sales Tax Revenue—0.4%        
  3,250,000       Connecticut State Special Tax Obligation Rev. (Transportation Infrastructure) Ser. 14A      5.000        09/01/34         3,726,677   
          

 

 

  
   General Fund—0.7%        
  500,000       California State Ref. Ser. 07 NATL      4.250        08/01/33         519,790   
  5,000,000       California State Various Purpose Ser. 09      6.000        04/01/38         5,825,450   
          

 

 

  
             6,345,240  
          

 

 

  
   Health, Hospital, Nursing Home Revenue—11.7%        
  2,500,000       Birmingham Alabama Special Care Facilities Financing Auth. Health Care Facilities Rev. (Children’s Hospital) Ser. 09 AGC(a)      6.000        06/01/19         2,932,775   
  650,000       Birmingham Alabama Special Care Facilities Financing Auth. Health Care Facilities Rev. (Children’s Hospital) Ser. 09 AGC(a)      6.000        06/01/19         762,522   
  500,000       California Health Facilities Financing Auth. Rev. (Childrens Hospital Los Angeles) Ser. 10A AGM      5.250        07/01/38         554,635   
  735,000       California Statewide Communities Development Auth. Rev. (Adventist Remarketed 05/23/08) Ser. 07B AGC      5.000        03/01/37         777,527   
  1,000,000       California Statewide Communities Development Auth. Rev. (Catholic Healthcare West) Ser. 07K AGC      5.500        07/01/41         1,057,320   
  5,000,000       Christian County Kentucky Hospital Rev. (Hospital-Jennie Stuart Medical Center) Ser. 06 AGC      5.500        02/01/36         5,357,100   
  2,500,000       Cobb County Georgia Kennestone Hospital Auth. Rev. Certificates Sub.-Ser. 05B AMBAC      5.500        04/01/37         2,813,025   
  10,085,000       Colorado Health Facilities Auth. Rev. (Catholic Health) Ser. 06C-1 AGM      5.100        10/01/41         10,620,715   
  300,000       Connecticut State Health & Educational Facility Auth. (Yale—New Haven Hospital) Ser. 06J-1 AMBAC(a)      5.000        07/01/16         309,390   
  1,570,000       District of Columbia Hospital Rev. (Children’s Hospital Obligation Group) Ser. 08 AGC(a)      5.250        07/15/18         1,746,499   
  3,000,000       Gwinnett County Georgia Hospital Auth. RAC (Gwinnett Hospital System) Ser. 07D AGM      5.500        07/01/41         3,314,670   
  2,000,000       Halifax Hospital Medical Center (Florida Hospital) Rev. Ser. 06B-1 AGM      5.500        06/01/38         2,160,280   
  4,400,000       Hamilton County Ohio Health Care Facilities Rev. (Christ Hospital Project) Ser. 12 AGM      5.000        06/01/42         4,743,508   
  3,800,000       Harris County Health Facilities Development Corp. Thermal Utility Rev. (TECO Project) Ser. 08 AGC      5.125        11/15/37         4,176,656   
  2,000,000       Hawaii State Department of Budget and Finance Special Purpose Rev. Ref. (Queens Health Systems) Ser. 15A      5.000        07/01/35         2,270,560   
  1,000,000       Illinois Finance Auth. Rev. (Carle Foundation) Ser. 11A AGM      6.000        08/15/41         1,176,960   
  1,000,000       Illinois Finance Auth. Rev. (Southern Illinois Healthcare) Ser. 05 AGM      5.250        03/01/30         1,110,140   
  1,700,000       Indiana Health & Educational Facilities Finance Auth. Rev. (St. Francis) Ref. Ser. 06E AGM      5.250        05/15/41         1,799,994   
  2,500,000       Iowa Finance Auth. Health Facilities Rev. (Remarketed) Ser. 08A AGC      5.625        08/15/37         2,818,800   
  6,000,000       Jefferson Parish Louisiana Hospital District No. 1 Hospital Rev. Ref. (West Jefferson Medical Center) Ser. 11A AGM(a)      6.000        01/01/21         7,353,120   
  1,960,000       Johnston North Carolina Memorial Hospital Auth. Ser. 08 AGM(a)      5.250        04/01/18         2,168,583   
  1,050,000       Lakeland Florida Hospital Systems Rev. (Lakeland Regional Health) Ser. 15      5.000        11/15/40         1,138,526   
  485,000       Maryland State Health & Higher Educational Facilities Auth. Rev. Ser. 06A NATL(a)      4.750        07/01/16         499,138   
  6,595,000       Medford Oregon Hospital Facilities Auth. Rev. Ref. (Asanthe Health System) Ser. 10 AGM      5.500        08/15/28         7,534,194   
  2,000,000       Medical Center Hospital Auth. Georgia RAC (Columbus Regional Healthcare) Ser. 10 AGM      5.000        08/01/41         2,152,440   
  1,200,000       Medical Center Hospital Auth. Georgia RAC (Columbus Regional Healthcare) Ser. 10 AGM      5.000        08/01/45         1,289,268   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   102  

 

 

PowerShares National AMT-Free Municipal Bond Portfolio (PZA) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Health, Hospital, Nursing Home Revenue (continued)        
$ 10,000,000       New Jersey Health Care Facilities Financing Auth. Rev. (Virtua Health) Ser. 09 AGC      5.500 %       07/01/38       $ 11,026,800   
  500,000       New Jersey Health Care Facilities Financing Auth. Rev. Ref. (Barnabas Health) Ser. 11A      5.625        07/01/37         571,580   
  2,500,000       New York State Dormitory Auth. Rev. Non State Supported Debt Ref. (NYU Hospitals Center) Ser. 15      5.000        07/01/34         2,797,050   
  1,000,000       Ohio State Higher Educational Facilities Community Rev. (Summa Health System 2010 Project) Ser. 10 AGM      5.250        11/15/35         1,110,100   
  2,500,000       Palm Beach County Florida Health Facilities Auth. Health Facilities Rev. (Bethesda Healthcare System, Inc. Project) Ser. 10A AGM      5.250        07/01/40         2,754,750   
  15,000       Roanoke Virginia Industrial Development Auth. Hospital Rev. (Carilion Health System-Remarketed) Ser. 05B AGM(a)      5.000        07/01/20         17,592   
  985,000       Roanoke Virginia Industrial Development Auth. Hospital Rev. Ref. (Carilion Health System-Remarketed) Ser. 05B AGM      5.000        07/01/38         1,074,684   
  1,000,000       South Carolina Jobs-Economic Development Auth. Hospital Rev. Ref. & Improvement (Anmed Health) Ser. 09B AGC      5.500        02/01/38         1,112,240   
  4,350,000       South Carolina Jobs-Economic Development Auth. Hospital Rev. Ref. (Palmetto Health) Ser. 11A AGM      6.500        08/01/39         5,204,601   
  1,000,000       South Fork Municipal Auth. Pennsylvania Hospital Rev. (Conemaugh Valley Memorial Hospital) Ser. 10B AGC(a)      5.375        07/01/20         1,187,780   
  450,000       University of California Regents Medical Center Pooled Rev. Ser. 07A NATL      4.750        05/15/31         455,949   
  2,050,000       Washington State Health Care Facilities Auth. Rev. (Multicare Health System Remarketed) Ser. 07B AGM      5.500        08/15/38         2,224,004   
  850,000       Washington State Health Care Facilities Auth. Rev. (Providence Health) Ser. 06E AGM      5.250        10/01/33         939,148   
  1,500,000       Wisconsin State Health & Educational Facilities Auth. Rev. Ref. (Prohealth Care Obligated Group) Ser. 15      5.000        08/15/39         1,650,450   
          

 

 

  
             104,765,073  
          

 

 

  
   Highway Tolls Revenue—9.6%        
  2,500,000       Bay Area California Auth. Toll Bridge Rev. Ser. 14S-6      5.000        10/01/54         2,756,550   
  7,500,000       Delaware River Port Auth. Pennsylvania & New Jersey Rev. Ser. 10D AGM      5.000        01/01/40         8,354,175   
  3,000,000       New York State Thruway Auth. Ref. Ser. 14      5.000        01/01/32         3,440,190   
  525,000       New York Triborough Bridge & Tunnel Rev. Ser. 15A      5.000        11/15/40         605,671   
  4,250,000       North Carolina Turnpike Auth. Triangle Expressway System Rev. Ser. 09A AGC      5.500        01/01/29         4,708,660   
  4,000,000       North Carolina Turnpike Auth. Triangle Expressway System Rev. Ser. 09A AGC      5.750        01/01/39         4,444,000   
  2,500,000       North Texas Tollway Auth. Rev. Ref. Ser. 15B      5.000        01/01/40         2,730,875   
  16,000,000       North Texas Tollway Auth. Rev. Ref. System (First Tier) Ser. 08K-1 AGC      5.750        01/01/38         17,932,800   
  15,000,000       Pennsylvania State Turnpike Commission Rev. Ser. 14B      5.250        12/01/39         16,804,350   
  8,000,000       Pennsylvania State Turnpike Commission Rev. Sub.-Ser. 08C AGC      6.250        06/01/38         8,924,800   
  3,000,000       Pennsylvania State Turnpike Commission Rev. Sub.-Ser. 11A      6.500        12/01/36         3,583,110   
  8,800,000       Pennsylvania State Turnpike Commission Rev. Sub.-Ser. 12B AGM      5.000        12/01/42         9,558,472   
  2,500,000       Texas State Transportation Commission Turnpike System Rev. Ref. Ser. 15C      5.000        08/15/42         2,697,075   
          

 

 

  
             86,540,728  
          

 

 

  
   Hotel Occupancy Tax—1.1%        
  3,950,000       Harris County Houston Texas Sports Auth. Rev. Ref. (Senior Lien) Ser. 14A      5.000        11/15/53         4,233,966   
  2,000,000       New York State Convention Center Development Corp. Rev. Ref. (Hotel Unit Fee Secured) Ser. 15      5.000        11/15/40         2,257,560   
  3,000,000       New York State Convention Center Development Corp. Rev. Ref. (Hotel Unit Fee Secured) Ser. 15      5.000        11/15/45         3,367,410   
          

 

 

  
             9,858,936  
          

 

 

  
   Income Tax Revenue—2.0%        
  2,000,000       New York City Transitional Finance Auth. Rev. Future Tax Secured Sub.-Ser.14A-1      5.000        08/01/35         2,291,740   
  4,500,000       New York State Dormitory Auth. Personal Income Tax Rev. Ser. 12B      5.000        03/15/42         5,000,625   
  1,905,000       New York State Dormitory Auth. State Personal Income Tax Rev. Ref. Ser. 14E      5.000        02/15/44         2,146,802   
  7,530,000       New York State Dormitory Auth. State Personal Income Tax Rev. Ref. Ser. 15A      5.000        03/15/35         8,695,945   
          

 

 

  
             18,135,112  
          

 

 

  
   Lease Revenue—3.2%        
  1,500,000       California State Public Works Board Lease Rev. Ser. 14B      5.000        10/01/39         1,700,565   
  500,000       Kern County California COP (Capital Improvements Projects) Ser. 09A AGC      5.750        08/01/35         562,910   
  7,000,000       Los Angeles California Municipal Improvement Corp. Lease Rev. (Real Property) Ser. 09B AGC      5.500        04/01/39         7,880,600   
  2,250,000       Los Angeles County California Public Works Financing Auth. Lease Rev. Ser. 15A      5.000        12/01/39         2,529,315   
  1,000,000       Los Angeles County California Public Works Financing Auth. Lease Rev. Ser. 15A      5.000        12/01/44         1,115,920   
  2,150,000       Miami-Dade County Florida School Board COP Ser. 08B AGC      5.000        05/01/33         2,321,312   
  500,000       Miami-Dade County Florida School Board COP Ser. 09A AGC      5.375        02/01/34         546,375   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   103  

 

 

PowerShares National AMT-Free Municipal Bond Portfolio (PZA) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Lease Revenue (continued)        
$ 4,000,000       Richmond Joint Powers Financing Auth. Lease Rev. (Civic Center Project) Ser. 09 AGC      5.750 %       08/01/29       $ 4,563,200   
  2,000,000       Sandy Spring Georgia Public Facilities Auth. Rev. (City Center Project) Ser. 15      5.000        05/01/41         2,315,100   
  5,000,000       State Public School Building Auth. Pennsylvania School Rev. (Harrisburg School District Project) Ser. 09A AGC      4.750        11/15/29         5,432,650   
          

 

 

  
             28,967,947  
          

 

 

  
   Local or GTD Housing—0.5%        
  1,250,000       New Hope Cultural Education Facilities Finance Corp. Texas Student Housing Rev. (A&M University Project) Ser. 14A AGM      5.000        04/01/46         1,336,613   
  2,440,000       New York State Dormitory Auth. Rev. Non State Supported Debt Ref. (North Shore Long Island Jewish Obligation Group) Ser. 15A      5.000        05/01/36         2,709,742   
          

 

 

  
             4,046,355  
          

 

 

  
   Lottery Revenue—0.9%        
  7,500,000       Arizona State Lottery Rev. Ser. 10A AGM      5.000        07/01/29         8,417,925   
          

 

 

  
   Miscellaneous Revenue—4.7%        
  3,500,000       California State Various Purpose—Green Bonds Ser.14      5.000        10/01/37         4,008,795   
  5,000,000       California State Various Purpose Ser.14      5.000        10/01/39         5,701,750   
  2,500,000       Dallas Texas Civic Center Rev. Ref. & Improvement Ser. 09 AGC      5.250        08/15/34         2,786,150   
  2,025,000       Indianapolis Indiana Local Public Improvement Bond Bank (Pilot Infrastructure Project) Ser. 10F AGM      5.000        01/01/35         2,267,676   
  535,000       Indianapolis Indiana Local Public Improvement Bond Bank (Pilot Infrastructure Project) Ser. 10F AGM      5.000        01/01/40         592,218   
  1,000,000       Kentucky Economic Development Financial Auth. (Louisville Arena Project) Rev. Sub.-Ser. 08A-1 AGC      6.000        12/01/33         1,091,730   
  5,545,000       Kentucky Economic Development Financial Auth. (Louisville Arena Project) Rev. Sub.-Ser. 08A-1 AGC      6.000        12/01/38         6,039,004   
  1,500,000       Kentucky Economic Development Financial Auth. (Louisville Arena Project) Rev. Sub.-Ser. 08A-1 AGC      6.000        12/01/42         1,633,635   
  500,000       New York City Industrial Development Agency Rev. Queens Baseball Stadium (Pilot) Ser. 09 AGC      6.500        01/01/46         571,735   
  3,000,000       New York City Transitional Finance Auth. Building Aid Rev. (Fiscal 2015) Ser. 15S-1      5.000        07/15/40         3,375,360   
  1,000,000       Newark New Jersey Housing Auth. Housing Rev. (South Ward Police Facility) Ser. 09 AGC      6.750        12/01/38         1,176,520   
  11,535,000       Pittsburg Unified School District Financing Auth. Rev. (District Bond Program) Ser. 11 AGM      5.500        09/01/46         13,322,925   
          

 

 

  
             42,567,498  
          

 

 

  
   Nuclear Revenue—0.3%        
  2,000,000       South Carolina State Public Service Auth. Rev. Ref. Obligations Ser. 14C      5.000        12/01/39         2,199,020   
          

 

 

  
   Port, Airport & Marina Revenue—4.3%        
  3,000,000       Birmingham Alabama Airport Auth. Airport Rev. Ser. 10 AGM      5.250        07/01/30         3,397,470   
  1,500,000       Birmingham Alabama Airport Auth. Airport Rev. Ser. 10 AGM      5.500        07/01/40         1,715,985   
  400,000       Chicago Illinois O’Hare International Airport Rev. (Ref-Third Indenture) Ser. 05A NATL      5.000        01/01/29         403,164   
  4,000,000       Chicago Illinois O’Hare International Airport Rev. Ref. Ser. 15B      5.000        01/01/33         4,476,960   
  1,250,000       Chicago Illinois O’Hare International Airport Rev. Ser. 15D      5.000        01/01/46         1,365,162   
  1,000,000       City of Cleveland Ohio Airport System Rev. Ref. Ser. 12A AGM      5.000        01/01/31         1,104,720   
  1,500,000       Manchester New Hampshire General Airport Rev. Ref. Remarketed Ser. 09A AGM      5.125        01/01/30         1,589,325   
  7,000,000       Miami-Dade County Florida Aviation Rev. Ser. 10B AGM      5.000        10/01/35         7,876,820   
  600,000       Philadelphia Pennsylvania Airport Rev. Ser. 10A AGM      5.000        06/15/35         669,396   
  6,000,000       Port Auth. of New York & New Jersey (Consolidated-One Hundred Eighty-Fourth Ref.) Ser. 14      5.000        09/01/39         6,810,480   
  3,500,000       Port Auth. of New York & New Jersey Ref. (Consolidated) Ser. 15-189      5.000        05/01/45         3,957,555   
  2,000,000       San Francisco California City & County Airports Commission (San Francisco International Airport) Ser. 14B      5.000        05/01/44         2,258,200   
  2,000,000       San Jose California Airport Rev. Ser. 07B AMBAC      5.000        03/01/37         2,084,360   
  500,000       Wayne County Michigan Airport Auth. Rev. Ser. 15D      5.000        12/01/40         546,360   
          

 

 

  
             38,255,957  
          

 

 

  
   Recreational Revenue—0.4%        
  3,000,000       New York City Industrial Development Agency Rev. Yankee Stadium (Pilot) Ser. 09 AGC      7.000        03/01/49         3,527,970   
          

 

 

  
   Sales Tax Revenue—5.1%        
  5,240,000       Bi-State Development Agency of Missouri-Illinois Metropolitan District Mass Transit Sales Tax (MetroLink Cross County Extension) Ser. 09 AGC      5.000        10/01/35         5,806,182   
  1,500,000       Central Puget Sound Regional Transportation Auth. Sales & Use Tax Rev. Ser. 07A AGM(a)      5.000        11/01/17         1,631,235   
  170,000       Dallas Texas Area Rapid Transit Sales Tax Rev. (Senior Lien) Ser. 07 AMBAC      5.000        12/01/32         177,529   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   104  

 

 

PowerShares National AMT-Free Municipal Bond Portfolio (PZA) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Sales Tax Revenue (continued)        
$ 230,000       Dallas Texas Area Rapid Transit Sales Tax Rev. Ref. (Senior Lien) Ser. 07 AMBAC(a)      5.000 %       12/01/16       $ 241,592   
  1,815,000       Illinois Regional Transportation Auth. Ser. 00 NATL      6.500        07/01/30         2,404,331   
  300,000       Illinois Regional Transportation Auth. Ser. 06A NATL      4.500        07/01/35         305,229   
  3,000,000       Pittsburgh & Allegheny County Pennsylvania Sports & Exhibition Auth. Sales Ref. (Regional Asset District) Ser. 10 AGM      5.000        02/01/31         3,384,360   
  2,500,000       Puerto Rico Sales Tax Financing Corp. Sales Tax Rev. (First Sub.-Ser.) 10A AGM      5.000        08/01/40         2,258,425   
  26,500,000       Sales Tax Asset Receivables Corp. Ref. (Fiscal 2015) Ser. 14A      4.000        10/15/32         28,872,280   
  1,000,000       Santa Clara Valley California Transportation Auth. Sales Tax Rev. (Ref-Measure A) Ser. 07A AMBAC(a)      5.000        04/01/17         1,065,640   
          

 

 

  
             46,146,803  
          

 

 

  
   Sewer Revenue—7.7%        
  24,375,000       Chicago Illinois Wastewater Transmission Rev. (Second Lien) Ser. 12 AGM      5.000        01/01/37         25,585,950   
  2,500,000       Chicago Illinois Wastewater Transmission Rev. Ser. 08A BHAC      5.500        01/01/38         2,678,725   
  2,000,000       Detroit Michigan Sewage Disposal Rev. (Second Lien-Remarketed) Ser. 06A BHAC      5.500        07/01/36         2,167,420   
  5,000,000       Detroit Michigan Water & Sewerage Department Sewerage Disposal System Rev. Ref. (Senior Lien-Remarketed) Ser. 12A AGM      5.000        07/01/39         5,393,050   
  11,285,000       District of Columbia Water & Sewer Auth. Public Utility Rev. Ser. 09A      5.500        10/01/39         12,563,591   
  500,000       Fresno California Sewer Rev. Ser. 08A AGC      5.000        09/01/37         547,720   
  5,000,000       Jefferson County Alabama Sewer Rev. (Senior Lien) Ser. 13A AGM      5.500        10/01/53         5,509,400   
  3,000,000       King County Washington Sewer Rev. Ser. 07 AGM(a)      5.000        07/01/17         3,222,300   
  1,000,000       Los Angeles California Wastewater System Rev. (Green Bonds) Ser. 15A      5.000        06/01/44         1,146,670   
  1,500,000       Los Angeles California Wastewater System Rev. (Green Bonds) Ser. 15C      5.000        06/01/45         1,718,670   
  6,500,000       Northeast Ohio Regional Sewer District Ref. Ser. 14      5.000        11/15/49         7,332,650   
  1,095,000       Sacramento County California Sanitation District Financing Auth. Rev. Ser.06 NATL      5.000        12/01/36         1,122,780   
          

 

 

  
             68,988,926  
          

 

 

  
   Special Assessment—0.5%        
  4,000,000       Sacramento California Area Flood Control Agency Consolidated Capital Assessment District Ser. 08 BHAC      5.625        10/01/37         4,421,440   
          

 

 

  
   Student Loan Revenue—0.3%        
  2,345,000       Maine Educational Loan Auth. Student Loan Rev. Ser. 09A-3 Class A AGC      5.875        12/01/39         2,559,192   
          

 

 

  
   Tax Increment Revenue—3.4%        
  17,000,000       Inland Valley California Development Successor Agency Tax Allocation Ref. Ser.14A AGM      5.000        09/01/44         18,661,580   
  1,000,000       Park Creek Metropolitan District Colorado Rev. (Senior Limited Property Tax) Ser. 11A AGM      6.125        12/01/41         1,176,010   
  3,930,000       Westminster California Redevelopment Agency Tax Allocation Rev. Sub. (Commercial Redevelopment Project No. 1) Ser. 09 AGC      6.250        11/01/39         4,599,947   
  5,000,000       Westminster California Redevelopment Agency Tax Allocation Rev. Sub. (Commercial Redevelopment Project No. 1) Ser. 09 AGC      5.750        11/01/45         5,741,650   
          

 

 

  
             30,179,187  
          

 

 

  
   Transit Revenue—6.2%        
  10,000,000       Metropolitan New York Transportation Auth. Rev. Sub.-Ser. 15A-1      5.000        11/15/45         11,156,200   
  6,500,000       Metropolitan Transportation Auth. New York Rev. Ser. 12E AGM      5.000        11/15/42         7,210,710   
  13,190,000       Metropolitan Transportation Auth. New York Rev. Ser.13A-1      5.000        11/15/40         14,694,715   
  5,000,000       Metropolitan Transportation Auth. Rev. Ref. Sub.-Ser. 15C-1      5.000        11/15/35         5,730,650   
  400,000       New Jersey State Transportation Trust Fund Auth. (Transit System) Ser. 07A AMBAC      5.000        12/15/32         415,916   
  15,000,000       New Jersey State Transportation Trust Fund Auth. (Transit System) Ser. 08A AGC      5.500        12/15/38         16,394,250   
          

 

 

  
             55,602,441  
          

 

 

  
   Water Revenue—13.2%        
  9,500,000       Atlanta Georgia Water & Wastewater Rev. Ser. 09-B AGM      5.250        11/01/34         10,660,520   
  1,000,000       Birmingham Alabama Waterworks & Sewer Board Rev. Ser. 09A AGC      5.250        01/01/39         1,104,170   
  2,160,000       Bucks County Pennsylvania Water & Sewer Auth. System Rev. Ser. 11 AGM      5.000        12/01/41         2,390,947   
  2,250,000       Chicago Illinois Waterworks Rev. Ref. (Second Lien) Ser. 08 AGM      5.250        11/01/33         2,355,435   
  200,000       City of Cape Coral Florida Water & Sewer Rev. Ref. Ser. 11 AGM      5.000        10/01/41         225,010   
  1,500,000       Detroit Water Supply System Rev. (Second Lien) Ref. Ser. 06C AGM      5.000        07/01/29         1,522,875   
  3,000,000       El Dorado California Irrigation District Rev. Ref. Ser. 14A AGM      5.000        03/01/34         3,392,250   
  3,500,000       El Dorado California Irrigation District Rev. Ref. Ser. 14A AGM      5.250        03/01/39         4,029,480   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   105  

 

 

PowerShares National AMT-Free Municipal Bond Portfolio (PZA) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Water Revenue (continued)        
$ 1,500,000       Florida Municipal Loan Council Ser. 11D AGM      5.500 %       10/01/41       $ 1,747,665   
  3,570,000       Houston Texas Utility System Rev. Ref. (Combined-First Lien) Ser. 09A AGC      6.000        11/15/35         4,173,901   
  6,535,000       Indianapolis Indiana Local Public Improvement (Waterworks Project) Ser. 09A AGC      5.500        01/01/38         7,390,955   
  8,000,000       Los Angeles California Department of Water & Power Rev. Ser. 12B      5.000        07/01/43         9,137,120   
  1,000,000       Miami-Dade County Florida Water & Sewer System Rev. Ser. 10 AGC      5.000        10/01/27         1,147,960   
  20,000,000       Miami-Dade County Florida Water & Sewer System Rev. Ser. 10 AGC      5.000        10/01/29         22,840,200   
  1,500,000       Miami-Dade County Florida Water & Sewer System Rev. Ser. 10 AGC      4.625        10/01/30         1,671,840   
  600,000       New York City Municipal Water Finance Auth. Rev. Ref. Ser. 14EE      5.000        06/15/36         684,462   
  9,640,000       New York City Municipal Water Finance Auth. Water & Sewer System Rev. (Second General Fiscal) Ser. 12BB      5.000        06/15/47         10,675,818   
  1,000,000       New York City Municipal Water Finance Auth. Water & Sewer System Rev. (Second General Resolution) Ser. 08DD      6.000        06/15/40         1,121,750   
  11,180,000       New York City Municipal Water Finance Auth. Water & Sewer System Rev. Ser. 14CC-1      5.000        06/15/47         12,529,314   
  5,000,000       North Fort Bend Texas Water Auth. (Water System) Rev. Ser. 09 AGC      5.250        12/15/34         5,635,250   
  2,500,000       North Fort Bend Texas Water Auth. (Water System) Rev. Ser. 11 AGM      5.000        12/15/36         2,746,950   
  2,000,000       North Sumter County Florida Utility Dependent District Utility Rev. Ser. 10 AGM      5.375        10/01/40         2,251,000   
  875,000       Philadelphia Pennsylvania Water & Wastewater Rev. Ser. 10C AGM      5.000        08/01/40         978,539   
  3,000,000       Port St. Lucie Florida Utility Rev. Ref. System Ser. 09 AGC      5.000        09/01/35         3,281,070   
  4,050,000       Puerto Rico Commonwealth Aqueduct & Sewer Auth. Rev. (Senior Lien) Ser. 08A AGC      5.125        07/01/47         3,690,765   
  1,000,000       San Jacinto Texas River Auth. Special Project Rev. (GRP Project) Ser. 11 AGM      5.000        10/01/37         1,104,000   
          

 

 

  
             118,489,246  
          

 

 

  
   Total Investments
(Cost $825,958,961)(b)—97.2%		           872,632,561   
   Other assets less liabilities—2.8%           24,762,328  
          

 

 

  
   Net Assets—100.0%         $ 897,394,889  
          

 

 

  

Investment Abbreviations:

AGC—Assured Guaranty Corp.

AGM—Assured Guaranty Municipal Corp.

AMBAC—American Municipal Bond Assurance Corp.

Auth.—Authority

BAM—Build America Mutual

BHAC—Berkshire Hathaway Assurance Corp.

COP—Certificate of Participation

NATL—National Public Finance Guarantee Corp.

RAC—Revenue Anticipation Certificates

Ref.—Refunding Bonds

Rev.—Revenue

Ser.—Series

Sub.—Subordinated

Notes to Schedule of Investments:

(a)  Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral.
(b) The following table provides a listing of those entities that have either guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the value of securities held in the portfolio, as of October 31, 2015. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the borrower’s obligations but may be called upon to satisfy the borrower’s obligations.

 

Entities

   Percentage of
Total Investments
Assured Guaranty Municipal Corp.   32.5%
Assured Guaranty Corp.   24.3

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   106  

 

 

Schedule of Investments

PowerShares New York AMT-Free Municipal Bond Portfolio (PZT)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds—98.7%        
   Ad Valorem Property Tax—5.5%        
$ 1,750,000       New York State Ref. (Fiscal 2015) Ser. 14A      5.000 %      08/01/32       $ 2,014,688   
  790,000       Puerto Rico Commonwealth Public Improvement Ref. Ser. 07A-4 AGM      5.000        07/01/31         776,309   
          

 

 

  
             2,790,997  
          

 

 

  
   College Revenue—17.6%        
  1,500,000       New York State Dormitory Auth. Rev. (New York University) Ser. 01 AMBAC      5.500        07/01/40         1,960,275   
  2,500,000       New York State Dormitory Auth. Rev. (The New School) Ser. 10 AGM      5.500        07/01/43         2,868,350   
  1,000,000       New York State Dormitory Auth. Rev. Non State Supported Debt (Trustees of Columbia University) Ser. 15      5.000        10/01/45         1,328,560   
  500,000       New York State Dormitory Auth. Rev. Non-Special Treatment Supported Debt (Fordham University) Ser. 08B AGC      5.000        07/01/38         545,275   
  2,000,000       New York State Dormitory Auth. Rev. Non-State Supported Debt Ref. (Icahn School of Medicine at Mount Sinai) Ser. 15A      5.000        07/01/35         2,217,360   
          

 

 

  
             8,919,820  
          

 

 

  
   Electric Power Revenue—17.3%        
  1,000,000       Guam Power Auth. Rev. Ser. 12A AGM      5.000        10/01/30         1,161,870   
  5,000,000       Long Island Power Auth. New York Electric Systems Rev. General Ser. 08A BHAC      5.500        05/01/33         5,724,300   
  185,000       New York State Power Auth. Rev. Ser. 07A NATL      4.500        11/15/47         188,813   
  1,500,000       Utility Debt Securitization Auth. New York (Restructuring) Ser. 13TE      5.000        12/15/41         1,711,365   
          

 

 

  
             8,786,348  
          

 

 

  
   Health, Hospital, Nursing Home Revenue—5.5%        
  1,500,000       New York State Dormitory Auth. Rev. Non State Supported Debt Ref. (NYU Hospitals Center) Ser. 15      5.000        07/01/34         1,678,230   
  1,000,000       New York State Dormitory Auth. Rev. State Supported Debt (Mental Health Services Facilities) Ser. 08A AGM      5.000        02/15/38         1,094,150   
          

 

 

  
             2,772,380  
          

 

 

  
   Highway Tolls Revenue—1.3%        
  600,000       New York State Thruway Auth. General Rev. Ser. 07H NATL      5.000        01/01/37         645,180   
          

 

 

  
   Hotel Occupancy Tax—4.2%        
  1,885,000       New York State Convention Center Development Corp. Rev. Ref. (Hotel Unit Fee Secured) Ser. 15      5.000        11/15/40         2,127,750   
          

 

 

  
   Income Tax Revenue—7.0%        
  1,200,000       New York State Dormitory Auth. Personal Income Tax Rev. Ser. 12B      5.000        03/15/42         1,333,500   
  1,500,000       New York State Dormitory Auth. State Personal Income Tax Rev. Ref. Ser. 14E      5.000        02/15/44         1,690,395   
  500,000       New York State Urban Development Corp. Rev. (State Personal Income Tax) Ser. 07C NATL      4.500        03/15/37         531,650   
          

 

 

  
             3,555,545  
          

 

 

  
   Miscellaneous Revenue—11.2%        
  2,500,000       New York City Industrial Development Agency Rev. Queens Baseball Stadium (Pilot) Ser. 09 AGC      6.500        01/01/46         2,858,675   
  1,000,000       New York City Transitional Finance Auth. Building Aid Rev. (Fiscal 2007) Ser. 06S-1 NATL      5.000        07/15/36         1,045,720   
  1,000,000       New York City Transitional Finance Auth. Building Aid Rev. (Fiscal 2015) Ser. 15S-2      5.000        07/15/35         1,146,900   
  600,000       New York City Transitional Finance Auth. Building Aid Rev. Ser. 07S-2 NATL      4.250        01/15/34         619,404   
          

 

 

  
             5,670,699  
          

 

 

  
   Port, Airport & Marina Revenue—6.5%        
  1,000,000       Port Auth. of New York & New Jersey (Consolidated-One Hundred Forty-Eighth) Ser. 07 AGM(a)      5.000        08/15/17         1,078,990   
  1,000,000       Port Auth. of New York & New Jersey (Consolidated-One Hundred Forty-Eighth) Ser. 07 AGM(a)      5.000        08/15/17         1,078,990   
  1,000,000       Port Auth. of New York & New Jersey Ref. Ser. 15-194      5.250        10/15/55         1,142,440   
          

 

 

  
             3,300,420  
          

 

 

  
   Recreational Revenue—4.6%        
  2,000,000       New York City Industrial Development Agency Rev. Yankee Stadium (Pilot) Ser. 09 AGC      7.000        03/01/49         2,351,980   
          

 

 

  
   Sales Tax Revenue—9.2%        
  1,000,000       New York State Dormitory Auth. Sales Tax Rev. (Supported Debt) Ser. 14A      5.000        03/15/34         1,157,130   
  1,435,000       Puerto Rico Sales Tax Financing Corp. Sales Tax Rev. (First Sub.-Ser.) 10C AGM      5.125        08/01/42         1,315,866   
  2,000,000       Sales Tax Asset Receivables Corp. Ref. (Fiscal 2015) Ser. 14A      4.000        10/15/32         2,179,040   
          

 

 

  
             4,652,036  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   107  

 

 

PowerShares New York AMT-Free Municipal Bond Portfolio (PZT) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Municipal Bonds (continued)        
   Sewer Revenue—4.2%        
$ 2,000,000       New York City Municipal Finance Auth. Water & Sewer System Rev. Ser. 07AA NATL      4.750 %      06/15/33       $ 2,112,180   
          

 

 

  
   Transit Revenue—4.6%        
  600,000       Metropolitan Transportation Auth. Rev. Ser. 07A NATL      4.750        11/15/37         636,348   
  1,500,000       Metropolitan Transportation Auth. Rev. Ser. 11A AGM      5.000        11/15/36         1,702,275   
          

 

 

  
             2,338,623  
          

 

 

  
   Total Investments
(Cost $47,772,537)(b)—98.7%		           50,023,958   
   Other assets less liabilities—1.3%           668,541  
          

 

 

  
   Net Assets—100.0%         $ 50,692,499  
          

 

 

  

Investment Abbreviations:

AGC—Assured Guaranty Corp.

AGM—Assured Guaranty Municipal Corp.

AMBAC—American Municipal Bond Assurance Corp.

Auth.—Authority

BHAC—Berkshire Hathaway Assurance Corp.

NATL—National Public Finance Guarantee Corp.

Ref.—Refunding Bonds

Rev.—Revenue

Ser.—Series

Sub.—Subordinated

Notes to Schedule of Investments:

(a)  Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral.
(b) The following table provides a listing of those entities that have either guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the value of securities held in the portfolio, as of October 31, 2015. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the borrower’s obligations but may be called upon to satisfy the borrower’s obligations.

 

Entities

   Percentage of
Total Investments		  
Assured Guaranty Municipal Corp.     22.1 % 
National Public Finance Guarantee Corp.     11.6   
Assured Guaranty Corp.     11.5   
Berkshire Hathaway Assurance Corp.     11.4   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   108  

 

 

Schedule of Investments(a)

PowerShares Preferred Portfolio (PGX)

October 31, 2015

 

Number
of Shares		           Value  
   Preferred Stocks and Other Equity Interests—99.7%   
   Banks—45.7%   
  670,263       BAC Capital Trust VIII, 6.00%    $ 17,353,109   
  482,253       Bank of America Corp., 6.20%, Series D(b)      12,379,434   
  1,614,602       Bank of America Corp., 6.38%, Series 3(b)      41,608,293   
  1,747,050       Bank of America Corp., 6.50%, Series Y(b)      45,982,356   
  763,579       Bank of America Corp., 6.63%, Series I(b)      19,921,776   
  1,248,311       Bank of America Corp., 6.63%, Series W      33,130,174   
  27,481       Bank of America Corp., 7.25%, Series L(b)      30,366,505   
  4,677,220       Barclays Bank PLC, 8.13%, Series 5 (United Kingdom)(b)      122,917,342   
  2,015,560       BB&T Corp., 5.63%, Series E      51,920,826   
  268,282       BB&T Corp., 5.85%(b)      7,031,671   
  1,096,128       Citigroup Capital XIII, 6.69%      27,841,651   
  1,795,961       Citigroup, Inc., 6.88%, Series K(b)      49,460,766   
  610,433       Citigroup, Inc., 6.88%, Series L(b)      16,353,500   
  146,411       City National Corp., 5.50%, Series C (Canada)(b)      3,619,280   
  92,550       City National Corp., 6.75%, Series D (Canada)(b)      2,688,577   
  141,628       Commerce Bancshares, Inc., 6.00%, Series B      3,737,563   
  1,796,774       Countrywide Capital V, 7.00%      46,141,156   
  132,639       Cullen/Frost Bankers, Inc., 5.38%(b)      3,365,051   
  409,389       Fifth Third Bancorp, 6.63%, Series I(b)      11,421,953   
  78,791       First Horizon National Corp., 6.20%, Series A      1,982,382   
  326,976       First Niagara Financial Group, Inc., 8.63%, Series B      9,004,919   
  175,264       First Republic Bank, 5.50%(b)      4,365,826   
  132,433       First Republic Bank, 5.70%, Series F      3,290,960   
  164,008       First Republic Bank, 6.20%, Series B      4,283,889   
  260,986       First Republic Bank, 6.70%, Series A      6,863,932   
  140,597       First Republic Bank, 7.00%(b)      3,852,358   
  74,757       FirstMerit Corp., 5.88%, Series A      1,880,886   
  134,955       Hancock Holding Co., 5.95%      3,314,495   
  3,458,594       HSBC Holdings PLC, 8.00%, Series 2 (United Kingdom)      89,923,444   
  3,165,442       HSBC Holdings PLC, 8.13% (United Kingdom)      83,725,941   
  78,632       ING Groep NV, 6.13% (Netherlands)      2,007,475   
  14,376       ING Groep NV, 6.20% (Netherlands)      367,451   
  302,219       ING Groep NV, 6.38% (Netherlands)      7,739,829   
  1,010,375       JPMorgan Chase & Co., 5.45%, Series P      25,006,781   
  698,965       JPMorgan Chase & Co., 5.50%, Series O(b)      17,257,446   
  1,117,528       JPMorgan Chase & Co., 6.10%, Series AA(b)      28,284,634   
  1,704,725       JPMorgan Chase & Co., 6.13%, Series Y(b)      43,214,779   
  1,222,167       JPMorgan Chase & Co., 6.15%, Series BB      30,810,830   
  606,557       JPMorgan Chase & Co., 6.30%, Series W(b)      15,800,810   
  689,317       JPMorgan Chase & Co., 6.70%, Series T(b)      18,611,559   
  1,598,489       PNC Financial Services Group, Inc. (The), 6.13%, Series P      44,517,919   
  610,593       RBS Capital Funding Trust VII, 6.08%, Series G (Netherlands)      15,203,766   
  463,346       Regions Financial Corp., 6.38%, Series A      12,046,996   
  432,402       Regions Financial Corp., 6.38%, Series B      11,450,005   
  1,355,201       Royal Bank of Scotland Group PLC, 5.75%, Series L (United Kingdom)      33,459,913   
Number
of Shares		           Value  
   Preferred Stocks and Other Equity Interests (continued)    
   Banks (continued)   
  1,190,404       Royal Bank of Scotland Group PLC, 6.60%, Series S (United Kingdom)    $ 30,224,358   
  1,146,145       Royal Bank of Scotland Group PLC, 7.25%, Series T (United Kingdom)      29,203,775   
  105,736       Santander Finance Preferred SAU, 6.50% (Spain)      2,738,562   
  409,146       SunTrust Banks, Inc., 5.88%, Series E(b)      10,404,583   
  95,255       TCF Financial Corp., 6.45%, Series B      2,419,477   
  151,408       TCF Financial Corp., 7.50%(b)      4,088,016   
  224,400       Texas Capital Bancshares, Inc., 6.50%, Series A(b)      5,737,908   
  1,739,848       U.S. Bancorp, 6.00%, Series G      46,627,926   
  569,065       U.S. Bancorp, 6.50%, Series F      16,491,504   
  113,030       Valley National Bancorp, 6.25%, Series A(b)      2,964,777   
  100,149       Webster Financial Corp., 6.40%, Series E      2,553,799   
  462,596       Wells Fargo & Co., 5.13%, Series O(b)      11,523,266   
  457,898       Wells Fargo & Co., 5.20%(b)      11,474,924   
  1,268,715       Wells Fargo & Co., 5.85%      32,973,903   
  647,977       Wells Fargo & Co., 6.00%, Series T(b)      16,821,483   
  726,800       Wells Fargo & Co., 6.00%, Series V(b)(c)      18,795,048   
  539,330       Wells Fargo & Co., 6.63%      15,176,746   
  3,067,167       Wells Fargo & Co., 8.00%, Series J(b)      86,034,034   
  113,325       Wintrust Financial Corp., 6.50%, Series D      2,924,918   
  286,683       Zions Bancorp, 5.75%, Series H(b)      7,043,801   
  135,268       Zions Bancorp, 7.90%, Series F      3,591,365   
     

 

 

  
        1,425,324,381  
     

 

 

  
   Capital Markets—15.8%   
  242,286       Affiliated Managers Group, Inc., 6.38%      6,316,396   
  271,327       Apollo Investment Corp., 6.88%      6,894,419   
  520,380       Bank of New York Mellon Corp. (The), 5.20%(b)      13,368,562   
  83,396       BGC Partners, Inc., 8.13%(b)      2,265,869   
  434,390       Charles Schwab Corp. (The), 6.00%, Series B(b)      11,298,484   
  545,968       Charles Schwab Corp. (The), 6.00%, Series C      14,146,031   
  729,829       Deutsche Bank Contingent Capital Trust III, 7.60% (Germany)      19,515,627   
  2,822,572       Deutsche Bank Contingent Capital Trust V, 8.05% (Germany)(b)      77,169,119   
  1,124,952       Goldman Sachs Group, Inc. (The), 5.50%, Series J      28,000,055   
  777,374       Goldman Sachs Group, Inc. (The), 5.95%(b)      19,885,227   
  913,452       Goldman Sachs Group, Inc. (The), 6.13%      22,818,031   
  574,485       Goldman Sachs Group, Inc. (The), 6.20%, Series B(b)      14,701,071   
  730,787       Goldman Sachs Group, Inc. (The), 6.38%, Series K(b)      19,607,015   
  475,705       Goldman Sachs Group, Inc. (The), 6.50%(b)      12,653,753   
  380,517       KKR Financial Holdings LLC, 7.38%, Series A(b)      10,072,285   
  300,174       KKR Financial Holdings LLC, 8.38%      8,209,759   
  2,129,668       Morgan Stanley, 6.38%, Series I      55,158,401   
  1,078,433       Morgan Stanley, 6.63%, Series G      28,858,867   
  915,314       Morgan Stanley, 6.88%, Series F      24,759,244   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   109  

 

 

PowerShares Preferred Portfolio (PGX) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Preferred Stocks and Other Equity Interests (continued)    
   Capital Markets (continued)   
  1,084,660       Morgan Stanley, 7.13%, Series E(b)    $ 30,207,781   
  361,645       Northern Trust Corp., 5.85%, Series C      9,500,414   
  309,534       Raymond James Financial, Inc., 6.90%(b)      8,335,751   
  89,836       Solar Capital Ltd., 6.75%      2,197,389   
  460,207       State Street Corp., 5.25%, Series C(b)      11,772,095   
  650,861       State Street Corp., 5.90%, Series D      17,325,920   
  688,542       State Street Corp., 6.00%      17,798,811   
     

 

 

  
        492,836,376  
     

 

 

  
   Chemicals—0.1%   
  40,568       E.I. du Pont de Nemours & Co., 4.50%, Series B      3,825,562   
     

 

 

  
   Commercial Services & Supplies—0.7%   
  359,010       NuStar Logistics LP, 7.63%      9,197,836   
  81,614       Pitney Bowes, Inc., 5.25%      2,068,099   
  387,555       Pitney Bowes, Inc., 6.70%      10,475,612   
     

 

 

  
        21,741,547  
     

 

 

  
   Consumer Finance—4.4%   
  471,316       Ally Financial, Inc., 8.50%, Series A      12,112,821   
  803,869       Capital One Financial Corp., 6.00%, Series B(b)      20,603,162   
  386,741       Capital One Financial Corp., 6.20%, Series F(b)(c)      9,997,255   
  412,253       Capital One Financial Corp., 6.25%, Series C      10,677,353   
  424,275       Capital One Financial Corp., 6.70%, Series D(b)      11,544,523   
  507,456       Discover Financial Services, 6.50%, Series B      13,544,001   
  1,989,745       GMAC Capital Trust I, 8.13%, Series 2      51,395,113   
  332,604       Navient Corp., 6.00%(b)      6,203,064   
     

 

 

  
        136,077,292  
     

 

 

  
   Diversified Telecommunication Services—3.1%   
  924,225       Qwest Corp., 6.13%      22,994,718   
  358,157       Qwest Corp., 6.63%(b)(c)      8,986,159   
  381,273       Qwest Corp., 6.88%(b)      9,836,844   
  322,741       Qwest Corp., 7.00%      8,523,590   
  384,426       Qwest Corp., 7.00%(b)      10,041,207   
  561,073       Qwest Corp., 7.38%      14,481,294   
  421,657       Qwest Corp., 7.50%      11,047,413   
  450,297       Verizon Communications, Inc., 5.90%      11,977,900   
     

 

 

  
        97,889,125  
     

 

 

  
   Electric Utilities—5.3%   
  210,241       BGE Capital Trust II, 6.20%      5,407,399   
  454,201       Duke Energy Corp., 5.13%(b)      11,482,201   
  43,336       Entergy Arkansas, Inc., 4.90%(b)      1,085,133   
  287,145       Entergy Arkansas, Inc., 5.75%      7,250,411   
  231,982       Entergy Louisiana LLC, 5.25%      5,917,861   
  218,427       Entergy Mississippi, Inc., 6.00%      5,591,731   
  418,555       Entergy Texas, Inc., 5.63%      10,970,327   
  182,434       Interstate Power & Light Co., 5.10%, Series D(b)      4,697,675   
  703,572       NextEra Energy Capital Holdings, Inc., 5.00%      16,766,121   
Number
of Shares		           Value  
   Preferred Stocks and Other Equity Interests (continued)    
   Electric Utilities (continued)   
  542,595       NextEra Energy Capital Holdings, Inc., 5.13%, Series I(b)    $ 13,266,448   
  261,865       NextEra Energy Capital Holdings, Inc., 5.63%, Series H      6,643,515   
  323,170       NextEra Energy Capital Holdings, Inc., 5.70%, Series G(b)      8,350,713   
  105,381       Pacific Gas & Electric Co., 6.00%, Series A(b)      3,081,340   
  399,485       PPL Capital Funding, Inc., 5.90%, Series B      10,122,950   
  859,919       SCE Trust I, 5.63%(b)      22,065,522   
  157,333       SCE Trust III, 5.75%(b)      4,381,724   
  243,959       SCE Trust IV, 5.38%, Series J(b)(c)      6,423,440   
  809,360       Southern Co. (The), 6.25%(c)      21,367,104   
     

 

 

  
        164,871,615  
     

 

 

  
   Industrial Conglomerates—1.6%   
  804,669       General Electric Capital Corp., 4.70%      20,438,593   
  628,593       General Electric Capital Corp., 4.88%(b)      16,110,838   
  530,803       General Electric Capital Corp., 4.88%      13,588,557   
     

 

 

  
        50,137,988  
     

 

 

  
   Insurance—11.0%   
  1,278,866       Aegon NV, 6.38% (Netherlands)      32,738,970   
  586,100       Aegon NV, 8.00% (Netherlands)      16,223,248   
  470,608       Aflac, Inc., 5.50%(b)      12,019,328   
  435,918       Allstate Corp. (The), 5.10%      11,216,170   
  291,199       Allstate Corp. (The), 5.63%(b)      7,568,262   
  220,316       Allstate Corp. (The), 6.25%, Series F      5,862,609   
  771,010       Allstate Corp. (The), 6.63%, Series E(b)      20,963,762   
  333,597       Allstate Corp. (The), 6.75%, Series C      9,093,854   
  268,310       American Financial Group, Inc., 6.25%(b)      7,188,025   
  260,462       American Financial Group, Inc., 6.38%      6,907,452   
  300,001       Arch Capital Group Ltd., 6.75%, Series C      8,058,027   
  115,403       Argo Group US, Inc., 6.50%      2,941,622   
  214,407       Aspen Insurance Holdings Ltd., 5.95% (Bermuda)      5,465,234   
  278,357       Aspen Insurance Holdings Ltd., 7.25% (Bermuda)      7,420,998   
  301,693       Assured Guaranty Municipal Holdings, Inc., 6.25%      7,741,442   
  367,309       Aviva PLC, 8.25% (United Kingdom)      9,921,016   
  186,569       Axis Capital Holdings Ltd., 5.50%, Series D      4,664,225   
  397,581       Axis Capital Holdings Ltd., 6.88%, Series C      10,750,590   
  147,181       Endurance Specialty Holdings Ltd., 7.50%, Series B      3,834,065   
  228,285       Endurance Specialty Holdings Ltd., 7.75%, Series A(b)      5,885,187   
  148,411       Hanover Insurance Group, Inc. (The), 6.35%      3,775,576   
  556,882       Hartford Financial Services Group, Inc. (The), 7.88%      17,151,966   
  137,303       Kemper Corp., 7.38%(b)      3,795,055   
  328,605       Maiden Holdings Ltd., 8.25%, Series A(b)      8,721,177   
  153,740       Maiden Holdings North America Ltd., 7.75%      4,169,429   
  380,382       PartnerRe Ltd., 5.88%, Series F (Bermuda)      9,969,812   
  330,256       PartnerRe Ltd., 7.25%, Series E (Bermuda)      9,438,716   
  456,244       Protective Life Corp., 6.25%(b)      11,898,844   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   110  

 

 

PowerShares Preferred Portfolio (PGX) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Preferred Stocks and Other Equity Interests (continued)    
   Insurance (continued)   
  654,466       Prudential Financial, Inc., 5.70%(b)    $ 16,983,393   
  484,622       Prudential Financial, Inc., 5.75%(b)      12,590,480   
  476,595       Prudential PLC, 6.50% (United Kingdom)      12,644,065   
  377,702       Reinsurance Group of America, Inc., 6.20%      10,945,804   
  358,579       RenaissanceRe Holdings Ltd., 5.38%, Series E (Bermuda)      8,907,102   
  169,875       Selective Insurance Group, Inc., 5.88%      4,379,377   
  93,288       Torchmark Corp., 5.88%(b)      2,388,173   
  320,879       WR Berkley Corp., 5.63%(b)      7,996,305   
     

 

 

  
        342,219,360  
     

 

 

  
   Machinery—0.6%   
  688,185       Stanley Black & Decker, Inc., 5.75%(b)      17,954,747   
     

 

 

  
   Media—0.2%   
  253,552       Comcast Corp., 5.00%(b)      6,683,631   
     

 

 

  
   Multi-Utilities—0.7%   
  446,226       DTE Energy Co., 6.50%      11,967,781   
  348,775       Integrys Holding, Inc., 6.00%      8,998,395   
     

 

 

  
        20,966,176  
     

 

 

  
   Oil, Gas & Consumable Fuels—0.0%   
  80,095       Targa Resources Partners LP, 9.00%, Series A(b)      1,989,560   
     

 

 

  
   Real Estate Investment Trusts—9.3%   
  122,669       Alexandria Real Estate Equities, Inc., 6.45%, Series E      3,148,913   
  136,542       Boston Properties, Inc., 5.25%(b)      3,515,956   
  313,862       DDR Corp., 6.50%, Series J(b)      8,198,075   
  269,432       Digital Realty Trust, Inc., 5.88%, Series G(b)      6,544,503   
  216,634       Digital Realty Trust, Inc., 6.35%, Series I(b)(c)      5,435,347   
  385,272       Digital Realty Trust, Inc., 6.63%, Series F      9,993,956   
  322,091       Digital Realty Trust, Inc., 7.38%, Series H(b)      8,841,398   
  109,493       EPR Properties, 6.63%, Series F(b)      2,778,932   
  398,040       Equity Commonwealth, 5.75%      9,413,646   
  256,480       Hospitality Properties Trust, 7.13%, Series D      6,758,248   
  73,465       Kilroy Realty Corp., 6.38%, Series H      1,826,340   
  65,896       Kilroy Realty Corp., 6.88%, Series G      1,692,209   
  789,100       Kimco Realty Corp., 6.00%, Series I      20,358,780   
  289,492       National Retail Properties, Inc., 5.70%, Series E      7,283,619   
  257,542       National Retail Properties, Inc., 6.63%, Series D(b)      6,814,561   
  173,403       PS Business Parks, Inc., 5.70%, Series V      4,263,980   
  367,638       PS Business Parks, Inc., 6.00%, Series T(b)      9,532,853   
  256,485       PS Business Parks, Inc., 6.45%, Series S      6,709,648   
  223,180       Public Storage, 5.20%, Series W(b)      5,514,778   
  252,809       Public Storage, 5.88%, Series A(b)      6,588,203   
  188,707       Public Storage, 6.00%, Series Z      4,961,107   
  506,503       Public Storage, 6.35%, Series R      13,128,558   
  260,266       Public Storage, 6.38%, Series Y      6,962,115   
  1,884,142       Public Storage, 6.50%, Series Q      48,215,194   
  363,558       Realty Income Corp., 6.63%, Series F(b)      9,645,194   
  213,737       Regency Centers Corp., 6.63%, Series 6      5,552,887   
  329,588       Senior Housing Properties Trust, 5.63%(b)      8,137,528   
Number
of Shares		           Value  
   Preferred Stocks and Other Equity Interests (continued)    
   Real Estate Investment Trusts (continued)   
  216,876       SL Green Realty Corp., 6.50%, Series I    $ 5,686,489   
  237,468       Ventas Realty LP/Ventas Capital Corp., 5.45%(b)      6,278,654   
  138,812       Vornado Realty Trust, 5.40%, Series L(b)      3,330,100   
  376,015       Vornado Realty Trust, 5.70%, Series K(b)      9,592,143   
  484,916       Vornado Realty Trust, 6.63%, Series I      12,268,375   
  83,545       Vornado Realty Trust, 6.88%, Series J      2,163,815   
  300,098       Wells Fargo Real Estate Investment Corp., 6.38%, Series A      7,916,585   
  256,054       Welltower, Inc., 6.50%, Series J      6,798,234   
  152,515       WP Glimcher, Inc., 6.88%, Series I      3,890,658   
     

 

 

  
        289,741,581  
     

 

 

  
   Thrifts & Mortgage Finance—0.1%   
  122,633       Astoria Financial Corp., 6.50%, Series C      3,159,026   
     

 

 

  
   Wireless Telecommunication Services—1.1%   
  266,356       Telephone & Data Systems, Inc., 5.88%(b)      6,578,993   
  499,524       Telephone & Data Systems, Inc., 6.63%(b)      12,677,919   
  322,807       United States Cellular Corp., 6.95%(b)      8,234,807   
  236,232       United States Cellular Corp., 7.25%      6,052,264   
     

 

 

  
        33,543,983  
     

 

 

  
   Total Preferred Stocks and Other Equity Interests
(Cost $3,047,325,096)		      3,108,961,950  
     

 

 

  
     
   Money Market Fund—0.2%   
  5,676,767       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $5,676,767)		      5,676,767   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $3,053,001,863)—99.9%		      3,114,638,717  
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—3.8%   
  119,779,600       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $119,779,600)		      119,779,600  
     

 

 

  
   Total Investments
(Cost $3,172,781,463)—103.7%		      3,234,418,317   
   Other assets less liabilities—(3.7)%      (117,326,919 ) 
     

 

 

  
   Net Assets—100.0%    $ 3,117,091,398  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   111  

 

 

PowerShares Preferred Portfolio (PGX) (continued)

October 31, 2015

 

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Non-income producing security.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2I.

The Fund has holdings greater than 10% of net assets in the following country:

United Kingdom     13.2 % 
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   112  

 

 

Schedule of Investments

PowerShares Variable Rate Preferred Portfolio (VRP)

October 31, 2015

 

Number
of Shares		                     Value  
   Preferred Stocks and Other Equity Interests(a)—57.2%         
   Banks—31.5%         
  77,272       Bank of America Corp., 3.00%, Series H          $ 1,412,532   
  54,292       Bank of America Corp., 4.00%, Series 4            1,187,909   
  107,384       Bank of America Corp., 4.00%, Series 5            2,250,769   
  80,872       Bank of America Corp., 4.00%, Series E            1,753,305   
  552,283       Citigroup Capital XIII, 6.69%            14,027,988   
  367,565       Citigroup, Inc., 6.88%, Series K            10,122,740   
  236,963       Citigroup, Inc., 7.13%, Series J            6,533,070   
  24,904       City National Corp., 6.75%, Series D (Canada)            723,461   
  118,051       Fifth Third Bancorp, 6.63%, Series I            3,293,623   
  91,636       First Niagara Financial Group, Inc., 8.63%, Series B            2,523,655   
  28,825       FNB Corp., 7.25%            841,690   
  136,425       HSBC USA, Inc., 3.50%, Series F            2,990,436   
  98,473       HSBC USA, Inc., 4.00%, Series G            2,319,039   
  258,720       Merrill Lynch Capital Trust I, 6.45%, Series K            6,662,040   
  232,309       Merrill Lynch Capital Trust II, 6.45%            5,979,634   
  186,117       Merrill Lynch Capital Trust III, 7.38%            4,878,127   
  394,666       PNC Financial Services Group, Inc. (The), 6.13%, Series P            10,991,448   
  131,574       Regions Financial Corp., 6.38%, Series B            3,484,080   
  54,452       Santander Finance Preferred SAU, 4.00%, Series 6 (Spain)            1,263,286   
  44,785       SunTrust Banks, Inc., 4.00%            997,362   
  33,765       Synovus Financial Corp., 7.88%, Series C            944,407   
  241,720       U.S. Bancorp, 3.50%, Series B            5,296,085   
  267,011       U.S. Bancorp, 6.00%, Series G            7,155,895   
  275,137       U.S. Bancorp, 6.50%, Series F            7,973,470   
  29,464       Valley National Bancorp, 6.25%, Series A            772,841   
  421,330       Wells Fargo & Co., 5.85%            10,950,367   
  206,856       Wells Fargo & Co., 6.63%            5,820,928   
  31,773       Wintrust Financial Corp., 6.50%, Series D            820,061   
  44,624       Zions Bancorp, 6.30%, Series G            1,166,025   
           

 

 

  
              125,136,273  
           

 

 

  
   Capital Markets—11.8%         
  190,085       Goldman Sachs Group, Inc. (The), 3.75%, Series A            3,683,847   
  51,647       Goldman Sachs Group, Inc. (The), 4.00%, Series C            1,107,312   
  337,692       Goldman Sachs Group, Inc. (The), 4.00%, Series D            6,872,032   
  246,776       Goldman Sachs Group, Inc. (The), 5.50%, Series J            6,142,255   
  178,327       Goldman Sachs Group, Inc. (The), 6.38%, Series K            4,784,513   
  208,034       Morgan Stanley, 4.00%, Series A            4,171,082   
  182,415       Morgan Stanley, 6.38%, Series I            4,724,548   
  156,290       Morgan Stanley, 6.88%, Series F            4,227,644   
  159,386       Morgan Stanley, 7.13%, Series E            4,438,900   
  197,232       State Street Corp., 5.90%, Series D            5,250,316   
  79,344       UBS Preferred Funding Trust IV, 0.90%, Series D (Switzerland)            1,459,930   
           

 

 

  
              46,862,379  
           

 

 

  
   Commercial Services & Supplies—0.7%         
  106,131       NuStar Logistics LP, 7.63%            2,719,076   
           

 

 

  
   Consumer Finance—4.5%         
  135,581       Ally Financial, Inc., 8.50%, Series A            3,484,432   
  556,663       GMAC Capital Trust I, 8.13%, Series 2            14,378,605   
           

 

 

  
              17,863,037  
           

 

 

  
   Electric Utilities—1.1%         
  72,336       SCE Trust III, 5.75%            2,014,558   
  83,492       SCE Trust IV, 5.38%, Series J(b)            2,198,344   
           

 

 

  
              4,212,902  
           

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   113  

 

 

PowerShares Variable Rate Preferred Portfolio (VRP) (continued)

October 31, 2015

 

Number
of Shares		                        Value  
   Preferred Stocks and Other Equity Interests(a) (continued)        
   Food Products—1.7%        
  129,785       CHS, Inc., 6.75%, Series 3         $ 3,499,004   
  110,234       CHS, Inc., 7.10%, Series 2           3,051,277   
          

 

 

  
             6,550,281  
          

 

 

  
   Insurance—4.9%        
  66,009       Aegon NV, 4.00%, Series 1 (Netherlands)           1,585,536   
  131,892       Allstate Corp. (The), 5.10%           3,393,581   
  71,211       Aspen Insurance Holdings Ltd., 5.95% (Bermuda)           1,815,168   
  34,565       Aspen Insurance Holdings Ltd., 7.40% (Bermuda)           882,790   
  158,147       Hartford Financial Services Group, Inc. (The), 7.88%           4,870,928   
  158,147       MetLife, Inc., 4.00%, Series A           3,861,950   
  105,491       Reinsurance Group of America, Inc., 6.20%           3,057,129   
          

 

 

  
             19,467,082  
          

 

 

  
   Multi-Utilities—0.6%        
  98,681       Integrys Holding, Inc., 6.00%           2,545,970   
          

 

 

  
   Oil, Gas & Consumable Fuels—0.3%        
  46,916       Legacy Reserves LP, 8.00%, Series B           529,213   
  25,154       Targa Resources Partners LP, 9.00%, Series A           624,825   
          

 

 

  
             1,154,038  
          

 

 

  
   Real Estate Investment Trusts—0.1%        
  30,958       Resource Capital Corp., 8.63%           571,485   
          

 

 

  
   Total Preferred Stocks and Other Equity Interests
(Cost $227,030,077)		           227,082,523  
          

 

 

  
          
Principal
Amount		           Interest
Rate		     Maturity
Date		         
   Corporate Bonds—42.0%        
   Banks—12.2%        
$ 3,045,000       BAC Capital Trust XIV, Series G      4.000 %      09/29/49         2,321,812   
  10,820,000       Goldman Sachs Capital II      4.000        12/29/49         7,871,550   
  5,235,000       JPMorgan Chase Capital XXI, Series U(c)      1.279        02/02/37         4,063,669   
  4,120,000       JPMorgan Chase Capital XXIII(c)      1.321        05/15/47         3,100,300   
  3,050,000       Mellon Capital IV, Series 1      4.000        06/29/49         2,401,875   
  5,110,000       State Street Capital Trust IV(c)      1.337        06/15/37         4,151,875   
  6,335,000       UBS Preferred Funding Trust V, Series 1 (Switzerland)      6.243        05/29/49         6,461,700   
  3,960,000       USB Capital IX      3.500        10/29/49         3,247,200   
  15,122,000       Wachovia Capital Trust III      5.570        03/29/49         14,876,268   
          

 

 

  
             48,496,249  
          

 

 

  
   Diversified Financial Services—6.1%        
  4,785,000       American Express Co.      6.800        09/01/66         4,844,812   
  5,370,000       GE Capital Trust I      6.375        11/15/67         5,772,750   
  10,545,000       General Electric Capital Corp., GMTN      6.375        11/15/67         11,335,875   
  3,010,000       Goldman Sachs Capital III, Series APEX      4.000        09/29/49         2,189,775   
          

 

 

  
             24,143,212  
          

 

 

  
   Electric—2.2%        
  4,320,000       Dominion Resources, Inc.      5.750        10/01/54         4,487,249   
  2,030,000       NextEra Energy Capital Holdings, Inc.      6.350        10/01/66         1,609,390   
  3,126,000       WEC Energy Group, Inc.      6.250        05/15/67         2,618,025   
          

 

 

  
             8,714,664  
          

 

 

  
   Hand/Machine Tools—0.7%        
  2,475,000       Stanley Black & Decker, Inc.      5.750        12/15/53         2,660,625   
          

 

 

  
   Insurance—16.3%        
  5,105,000       Allstate Corp. (The)      5.750        08/15/53         5,315,581   
  860,000       Assured Guaranty US Holdings, Inc., Series A      6.400        12/15/66         633,175   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   114  

 

 

PowerShares Variable Rate Preferred Portfolio (VRP) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Corporate Bonds (continued)        
   Insurance (continued)        
$ 6,465,000       Chubb Corp. (The)      6.375 %       03/29/67       $ 6,238,725   
  1,435,000       Everest Reinsurance Holdings, Inc.      6.600        05/15/37         1,347,106   
  3,625,000       Genworth Holdings, Inc.      6.150        11/15/66         1,631,250   
  3,200,000       Hartford Financial Services Group, Inc. (The)      8.125        06/15/38         3,576,000   
  4,595,000       Lincoln National Corp.      7.000        05/17/66         3,790,875   
  3,030,000       Lincoln National Corp.      6.050        04/20/67         2,530,050   
  2,575,000       Principal Financial Group, Inc.      4.700        05/15/55         2,538,610   
  3,789,000       Prudential Financial, Inc.      8.875        06/15/38         4,347,877   
  5,875,000       Prudential Financial, Inc.      5.875        09/15/42         6,256,875   
  9,250,000       Prudential Financial, Inc.      5.625        06/15/43         9,712,500   
  2,970,000       Prudential Financial, Inc.      5.200        03/15/44         2,966,288   
  5,995,000       Prudential Financial, Inc.      5.375        05/15/45         6,047,456   
  1,910,000       Reinsurance Group of America, Inc.      6.750        12/15/65         1,606,788   
  1,605,000       StanCorp Financial Group, Inc.      6.900        06/01/67         1,396,350   
  4,811,000       Voya Financial, Inc.      5.650        05/15/53         4,871,137   
          

 

 

  
             64,806,643  
          

 

 

  
   Pipelines—4.5%        
  3,370,000       Enterprise Products Operating LLC, Series A      8.375        08/01/66         3,319,450   
  4,502,000       Enterprise Products Operating LLC, Series B      7.034        01/15/68         4,777,748   
  6,320,000       TransCanada Pipelines Ltd. (Canada)      6.350        05/15/67         5,277,200   
  4,785,000       TransCanada Trust (Canada)      5.625        05/20/75         4,605,563   
          

 

 

  
             17,979,961  
          

 

 

  
   Total Corporate Bonds
(Cost $173,213,804)		           166,801,354  
          

 

 

  
   Total Investments
(Cost $400,243,881)—99.2%		           393,883,877   
   Other assets less liabilities—0.8%           3,181,521  
          

 

 

  
   Net Assets—100.0%         $ 397,065,398  
          

 

 

  

Investment Abbreviations:

GMTN—Global Medium-Term Note

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  Variable rate coupon. Stated interest rate was in effect at October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   115  

 

 

Schedule of Investments

PowerShares VRDO Tax-Free Weekly Portfolio (PVI)

October 31, 2015

 

Principal
Amount		           Interest
Rate(a)		     Maturity
Date		      Value  
   Municipal Bonds(b)—99.1%        
   College Revenue—8.0%        
$ 1,900,000       Rhode Island State Health & Educational Building Corp. Rev. (Catholic School Pool Program) Ser. 05A (LOC—Citizens Bank of Rhode Island)(c)      0.030 %      04/01/35       $ 1,900,000   
  4,600,000       WACO Texas Educational Finance Corp. Rev. Ref. (Baylor University) Ser. 08A (LOC—Bank of New York Mellon Trust)(c)      0.010        02/01/32         4,600,000   
          

 

 

  
             6,500,000  
          

 

 

  
   Electric Power Revenue—6.2%        
  5,005,000       Sevier County Tennessee Public Building Auth. (Local Government Improvement Program) Ser. 10V-D-1 (LOC—Bank of America N.A.)(c)      0.010        06/01/26         5,005,000   
          

 

 

  
   Health, Hospital, Nursing Home Revenue—25.7%        
  4,500,000       ABAG Finance Auth. For Nonprofit Corporations (Sharp HealthCare) Ser. 09A (LOC—Bank of America N.A.)(c)      0.010        08/01/24         4,500,000   
  2,500,000       Charlotte-Mecklenburg Hospital Auth. North Carolina Health Care System Rev. Ref. (Carolina-Remarketed) Ser. 07-C      0.010        01/15/37         2,500,000   
  3,500,000       Cleveland-Cuyahoga County Ohio Port Auth. Var. (Carnegie/89th Garage Project) Ser. 07 (LOC—JPMorgan Chase Bank)(c)      0.010        01/01/37         3,500,000   
  4,800,000       Maryland State Health & Higher Educational Facilities Auth. Rev. (University of Maryland Medical Systems) Ser. 07A (LOC—Wells Fargo Bank N.A.)(c)      0.010        07/01/34         4,800,000   
  2,500,000       Missouri State Health & Educational Facilities Auth. (BJC health System) Ser. 08C      0.010        05/15/38         2,500,000   
  3,000,000       North Carolina Medical Care Commission Health Care Facilities (Pennybyrn at Maryfield) Ser. 05A      0.060        11/01/34         3,000,000   
          

 

 

  
             20,800,000  
          

 

 

  
   Highway Tolls Revenue—12.4%        
  3,825,000       Bay Area California Auth. Toll Bridge Rev. Ser. 07 (LOC—Sumitomo Mitsui Banking)(c)      0.010        04/01/47         3,825,000   
  1,800,000       Illinois State Toll Highway Auth. Rev. Ref. Ser. 98B AGM      0.250        01/01/16         1,800,000   
  1,400,000       Illinois State Toll Highway Auth. Rev. Ref. Ser. 98B AGM      0.250        01/01/17         1,400,000   
  3,000,000       Texas Transportation Commission Rev.(First Tier) Ser. 06B      0.230        04/01/26         3,000,000   
          

 

 

  
             10,025,000  
          

 

 

  
   Income Tax Revenue—4.9%        
  4,000,000       New York City Transitional Finance Auth. Rev. (Future Tax Secured) Sub.-Ser. 99-B3      0.010        11/01/28         4,000,000   
          

 

 

  
   Industrial Revenue—1.9%        
  1,500,000       Mississippi Business Financing Corp. Rev. (DDR Gulfport Promenade LLC Project) Ser. 07 (LOC—Regions Bank)(c)      0.340        12/01/37         1,500,000   
          

 

 

  
   Lease Revenue—5.4%        
  4,400,000       Orange County Florida School Board COP Ser. 08C (LOC—Bank of America N.A.)(c)      0.020        08/01/25         4,400,000   
          

 

 

  
   Local or GTD Housing—4.3%        
  3,500,000       Indianapolis Indiana Multifamily Housing Rev. Var. (Capital Place-Convington) Ser. 08 FNMA      0.010        05/15/38         3,500,000   
          

 

 

  
   Miscellaneous Revenue—5.8%        
  2,285,000       Clarksville Tennessee Public Building Auth. Rev. (Pooled Financing Tennessee Municipal Bond Fund) Ser. 99 (LOC—Bank of America N.A.)(c)      0.060        06/01/29         2,285,000   
  400,000       Montgomery County Tennessee Public Building Auth. Pooled Funding Government Obligation (Tennessee County Loan Pool) Ser. 95 (LOC—Bank of America N.A.)(c)      0.060        03/01/25         400,000   
  2,000,000       New York State Urban Development Corp. Rev. Ref. (CVS Contract) Ser. 08A-1 (LOC—Wells Fargo Bank N.A.)(c)      0.010        01/01/30         2,000,000   
          

 

 

  
             4,685,000  
          

 

 

  
   Miscellaneous Taxes—4.4%        
  3,600,000       Jacksonville Florida Transit Rev. Ser. 08A      0.010        10/01/32         3,600,000   
          

 

 

  
   Multiple Utility Revenue—4.4%        
  3,560,000       Colorado Springs Colorado Utilities Rev. (Sub.-Lien Improvement) Ser. 06B      0.130        11/01/36         3,560,000   
          

 

 

  
   Sales Tax Revenue—10.3%        
  4,330,000       Florida State Department of Environmental Protection Preservation Rev. (Everglades Restoration) Ser. 07A AGC      0.030        07/01/27         4,330,000   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   116  

 

 

PowerShares VRDO Tax-Free Weekly Portfolio (PVI) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate(a)		     Maturity
Date		      Value  
   Municipal Bonds(b) (continued)        
   Sales Tax Revenue (continued)        
$ 4,000,000       New York State Local Government Assistance Corp. Various Sub. Lien (Remarketed 08/03/09) Ser. 03-8V      0.010 %       04/01/19       $ 4,000,000   
          

 

 

  
             8,330,000  
          

 

 

  
   Water Revenue—5.4%        
  2,500,000       JEA Florida Water & Sewer System Rev. Ser. 08B      0.010        10/01/41         2,500,000   
  1,900,000       Metropolitan Water District Southern California Waterworks Rev. Ref. Ser. 08A-2      0.010        07/01/37         1,900,000   
          

 

 

  
             4,400,000  
          

 

 

  
   Total Investments
(Cost $80,305,000)(d)—99.1%		           80,305,000   
   Other assets less liabilities—0.9%           704,988  
          

 

 

  
   Net Assets—100.0%         $ 81,009,988  
          

 

 

  

Investment Abbreviations:

AGC—Assured Guaranty Corp.

AGM—Assured Guaranty Municipal Corp.

Auth.—Authority

COP—Certificate of Participation

FNMA—Federal National Mortgage Association

LOC—Letter of Credit

Ref.—Refunding Bonds

Rev.—Revenue

Ser.—Series

Sub.—Subordinated

Var.—Variable

Notes to Schedule of Investments:

(a)  Variable rate coupon. Stated interest rate was in effect at October 31, 2015.
(b)  Demand Securities payable upon demand by the Fund for an amount equal to par value plus accrued interest at specified time intervals.
(c)  Principal and interest payments are fully enhanced by a letter of credit from the bank listed or a predecessor bank, branch or subsidiary.
(d)  The following table provides a listing of those entities that have either guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the value of securities held in the portfolio, as of October 31, 2015. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the borrower’s obligations but may be called upon to satisfy the borrower’s obligations.

 

Entities

   Percentage of
Total Investments		  
Assured Guaranty Corp.     5.4 % 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   117  

 

 

Statements of Assets and Liabilities

October 31, 2015

 

    PowerShares
1-30 Laddered
Treasury
Portfolio (PLW)		      PowerShares
Build America
Bond Portfolio
(BAB)		      PowerShares
California
AMT-Free
Municipal Bond
Portfolio  (PWZ)		      PowerShares
CEF Income
Composite
Portfolio
(PCEF)		  
Assets:           

Unaffiliated investments, at value(a)

   $ 264,725,351       $ 656,517,282       $ 107,259,989       $ 621,870,433   

Affiliated investments, at value

     173,549         8,939,806         —         6,953,706   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     264,898,900         665,457,088         107,259,989         628,824,139   

Cash

     —         2,892,456         1,866,911         —   

Cash segregated as collateral

     —         —         —         —   

Foreign currencies, at value

     —         —         —         —   

Receivables:

           

Investments sold

     3,229,495         —         —         —   

Dividends and interest

     2,468,204         9,984,646         1,386,315         914,028   

Shares sold

     —         1,459,402         —         —   

Securities lending

     —         —         —         —   

Foreign tax reclaims

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     270,596,599         679,793,592         110,513,215         629,738,167   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     —         —         —         792,337   

Payables:

           

Shares repurchased

     3,259,830         —         —         —   

Investments purchased

     —         2,795,684         1,118,650         —   

Collateral upon return of securities loaned

     —         —         —         —   

Collateral upon receipt of securities in-kind

     —         —         —         —   

Accrued unitary management fees

     58,369         157,817         25,840         262,315   

Accrued expenses

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     3,318,199         2,953,501         1,144,490         1,054,652   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 267,278,400       $ 676,840,091       $ 109,368,725       $ 628,683,515   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 265,265,961       $ 637,551,707       $ 107,957,431       $ 688,249,862   

Undistributed net investment income (loss)

     —         —         —         —   

Undistributed net realized gain (loss)

     (964,171 )       (17,375 )       (1,839,460 )       (16,949,995 ) 

Net unrealized appreciation (depreciation)

     2,976,610         39,305,759         3,250,754         (42,616,352 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 267,278,400       $ 676,840,091       $ 109,368,725       $ 628,683,515   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     8,200,000         23,250,000         4,300,000         28,700,000   

Net asset value

   $ 32.59       $ 29.11       $ 25.43       $ 21.91   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 32.60       $ 29.17       $ 25.50       $ 21.85   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 261,748,741       $ 617,211,523       $ 104,009,235       $ 663,417,602   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ 173,549       $ 8,939,806       $ —       $ 8,022,889   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 261,922,290       $ 626,151,329       $ 104,009,235       $ 671,440,491   
 

 

 

     

 

 

     

 

 

     

 

 

  

Foreign currencies, at cost

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

(a)   Includes securities on loan with an aggregate value of:

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   118  

 

 

 

PowerShares
Chinese Yuan
Dim Sum Bond
Portfolio (DSUM)		      PowerShares
Emerging Markets
Sovereign Debt
Portfolio (PCY)		      PowerShares
Fundamental
Emerging
Markets Local
Debt Portfolio
(PFEM)		      PowerShares
Fundamental
High Yield®
Corporate Bond
Portfolio (PHB)		      PowerShares
Fundamental
Investment
Grade
Corporate Bond
Portfolio (PFIG)		  
           
$ 80,012,353       $ 2,605,155,485       $ 4,115,438       $ 657,386,054       $ 33,622,878   
  917,229         17,276,978         99,488         737,695         97,795   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  80,929,582         2,622,432,463         4,214,926         658,123,749         33,720,673   
  —         6,107,417         —         —         —   
  —         9,905,000         —         388,850         —   
  29,069         —         9,895         —         —   
           
  —         —         —         1,507,321         —   
  937,273         35,688,743         85,171         9,876,449         353,044   
  —         28,822,533         —         3,843,374         —   
  —         473         —         —         —   
  —         —         4,641         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  81,895,924         2,702,956,629         4,314,633         673,739,743         34,073,717   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
  —         —         —         —         —   
           
  —         —         —         —         —   
  —         27,547,937         —         6,778,645         —   
  —         11,021,700         —         —         —   
  —         9,905,000         —         388,850         —   
  30,825         1,096,795         1,812         271,376         6,343   
  583         —         4,610         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  31,408         49,571,432         6,422         7,438,871         6,343   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 81,864,516       $ 2,653,385,197       $ 4,308,211       $ 666,300,872       $ 34,067,374   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
$ 88,213,683       $ 2,815,793,456       $ 5,857,086       $ 696,113,580       $ 34,068,088   
  —         1,626,852         —         —         —   
  (3,126,217 )       (88,681,467 )       (261,960 )       (13,263,220 )       (21,055 ) 
  (3,222,950 )       (75,353,644 )       (1,286,915 )       (16,549,488 )       20,341   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 81,864,516       $ 2,653,385,197       $ 4,308,211       $ 666,300,872       $ 34,067,374   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  3,400,000         94,500,000         250,001         36,500,000         1,350,000   
$ 24.08       $ 28.08       $ 17.23       $ 18.25       $ 25.24   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 23.97       $ 28.02       $ 17.20       $ 18.23       $ 25.27   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 83,236,823       $ 2,680,509,129       $ 5,401,633       $ 673,935,542       $ 33,602,537   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 917,229       $ 17,276,978       $ 99,488       $ 737,695       $ 97,795   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 84,154,052       $ 2,697,786,107       $ 5,501,121       $ 674,673,237       $ 33,700,332   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 29,022       $ —       $ 10,268       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ 10,768,039       $ —       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   119  

 

 

Statements of Assets and Liabilities (continued)

October 31, 2015

 

    PowerShares
Global Short
Term High
Yield Bond
Portfolio
(PGHY)		      PowerShares
International
Corporate Bond
Portfolio (PICB)		      PowerShares
LadderRite 0-5 Year
Corporate Bond
Portfolio (LDRI)		      PowerShares
National
AMT-Free
Municipal Bond
Portfolio (PZA)		  
Assets:           

Unaffiliated investments, at value(a)

   $ 25,990,221       $ 186,161,177       $ 6,120,823       $ 872,632,561   

Affiliated investments, at value

     862,975         57,510         84,916         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     26,853,196         186,218,687         6,205,739         872,632,561   

Cash

     —         —         102,401         16,943,577   

Cash segregated as collateral

     3,961,045         —         1,319,952         —   

Foreign currencies, at value

     —         153,510         —         —   

Receivables:

           

Investments sold

     5,653,575         193,845         —         —   

Dividends and interest

     614,964         3,074,401         65,361         11,392,177   

Shares sold

     —         —         —         —   

Securities lending

     —         —         —         —   

Foreign tax reclaims

     —         89,446         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     37,082,780         189,729,889         7,693,453         900,968,315   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     —         —         —         —   

Payables:

           

Shares repurchased

     5,871,728         —         —         —   

Investments purchased

     211,208         195,453         102,401         3,362,040   

Collateral upon return of securities loaned

     —         —         —         —   

Collateral upon return of securities in-kind

     3,961,045         —         1,319,952         —   

Accrued unitary management fees

     9,464         80,761         998         211,386   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     10,053,445         276,214         1,423,351         3,573,426   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 27,029,335       $ 189,453,675       $ 6,270,102       $ 897,394,889   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 28,728,641       $ 206,969,297       $ 6,268,870       $ 855,975,196   

Undistributed net investment income

     —         —         1,083         —   

Undistributed net realized gain (loss)

     (1,211,228 )       (2,652 )       7,046         (5,253,907 ) 

Net unrealized appreciation (depreciation)

     (488,078 )       (17,512,970 )       (6,897 )       46,673,600   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 27,029,335       $ 189,453,675       $ 6,270,102       $ 897,394,889   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     1,150,000         7,300,000         250,000         35,750,000   

Net asset value

   $ 23.50       $ 25.95       $ 25.08       $ 25.10   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 23.37       $ 25.89       $ 25.16       $ 25.15   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 26,478,299       $ 203,654,950       $ 6,127,720       $ 825,958,961   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ 862,975       $ 57,510       $ 84,916       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 27,341,274       $ 203,712,460       $ 6,212,636       $ 825,958,961   
 

 

 

     

 

 

     

 

 

     

 

 

  

Foreign currencies, at cost

   $ —       $ 153,298       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

(a)   Includes securities on loan with an aggregate value of:

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   120  

 

 

 

PowerShares
New York
AMT-Free
Municipal Bond
Portfolio (PZT)		      PowerShares
Preferred
Portfolio (PGX)		      PowerShares
Variable Rate
Preferred
Portfolio (VRP)		      PowerShares
VRDO
Tax-Free
Weekly
Portfolio (PVI)		  
        
$ 50,023,958       $ 3,108,961,950       $ 393,883,877       $ 80,305,000   
  —         125,456,367         —         —   

 

 

     

 

 

     

 

 

     

 

 

  
  50,023,958         3,234,418,317         393,883,877         80,305,000   
  25,568         —         —         716,005   
  —         —         —         —   
  —         —         —         —   
        
  —         2,328,605         —         —   
  655,012         8,186,884         3,488,078         6,373   
  —         3,696,072         12,180,559         —   
  —         305,396         —         —   
  —         1,843         —         —   

 

 

     

 

 

     

 

 

     

 

 

  
  50,704,538         3,248,937,117         409,552,514         81,027,378   

 

 

     

 

 

     

 

 

     

 

 

  
        
  —         21,798         397,941         —   
        
  —         1,480,334         —         —   
  —         9,297,321         11,930,974         —   
  —         119,779,600         —         —   
  —         —         —         —   
  12,039         1,266,666         158,201         17,390   

 

 

     

 

 

     

 

 

     

 

 

  
  12,039         131,845,719         12,487,116         17,390   

 

 

     

 

 

     

 

 

     

 

 

  
$ 50,692,499       $ 3,117,091,398       $ 397,065,398       $ 81,009,988   

 

 

     

 

 

     

 

 

     

 

 

  
        
$ 49,649,554       $ 3,106,254,739       $ 403,586,544       $ 81,009,992   
  —         497,674         —         —   
  (1,208,476 )       (51,297,869 )       (161,142 )       (4 ) 
  2,251,421         61,636,854         (6,360,004 )       —   

 

 

     

 

 

     

 

 

     

 

 

  
$ 50,692,499       $ 3,117,091,398       $ 397,065,398       $ 81,009,988   

 

 

     

 

 

     

 

 

     

 

 

  
  2,100,000         210,850,000         16,300,000         3,250,000   
$ 24.14       $ 14.78       $ 24.36       $ 24.93   

 

 

     

 

 

     

 

 

     

 

 

  
$ 24.05       $ 14.80       $ 24.40       $ 24.93   

 

 

     

 

 

     

 

 

     

 

 

  
$ 47,772,537       $ 3,047,325,096       $ 400,243,881       $ 80,305,000   

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ 125,456,367       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

  
$ 47,772,537       $ 3,172,781,463       $ 400,243,881       $ 80,305,000   

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ —       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ 116,528,349       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   121  

 

 

Statements of Operations

For the year ended October 31, 2015

 

    PowerShares
1-30 Laddered
Treasury
Portfolio (PLW)		      PowerShares
Build America
Bond Portfolio
(BAB)		          
PowerShares
California
AMT-Free
Municipal  Bond
Portfolio (PWZ)		      PowerShares
CEF Income
Composite
Portfolio
(PCEF)		  
Investment Income:           

Unaffiliated interest income

   $ 7,909,457       $ 35,261,817       $ 3,262,257       $ —   

Unaffiliated dividend income

     —         —         —         45,769,178   

Affiliated dividend income

     232         4,975         —         566,426   

Securities lending income

     —         —         —         —   

Foreign withholding tax

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     7,909,689         35,266,792         3,262,257         46,335,604   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:           

Unitary management fees

     826,019         2,027,421         260,334         3,260,841   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     (831 )       (19,779 )       —         (1,351 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     825,188         2,007,642         260,334         3,259,490   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income

     7,084,501         33,259,150         3,001,923         43,076,114   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):           

Net realized gain (loss) from:

           

Investment securities

     (646,593 )       267,153         45,523         (11,506,284 ) 

In-kind redemptions

     12,021,313         7,592,973         —         3,115,481   

Distributions of underlying fund shares

     —         —         —         612,389   

Foreign currencies

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     11,374,720         7,860,126         45,523         (7,778,414 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Change in net unrealized appreciation (depreciation) on:

           

Investment securities

     (10,829,679 )       (28,768,560 )       (483,236 )       (52,015,355 ) 

Foreign currencies

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation)

     (10,829,679 )       (28,768,560 )       (483,236 )       (52,015,355 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     545,041         (20,908,434 )       (437,713 )       (59,793,769 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ 7,629,542       $ 12,350,716       $ 2,564,210       $ (16,717,655 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   122  

 

 

 

PowerShares
Chinese Yuan
Dim Sum Bond
Portfolio (DSUM)		      PowerShares
Emerging Markets
Sovereign Debt
Portfolio (PCY)		      PowerShares
Fundamental
Emerging
Markets Local
Debt Portfolio
(PFEM)		      PowerShares
Fundamental
High Yield®
Corporate  Bond
Portfolio (PHB)		      PowerShares
Fundamental
Investment
Grade
Corporate Bond
Portfolio (PFIG)		  
           
$ 4,265,411       $ 143,136,060       $ 248,147       $ 30,670,872       $ 883,966   
  —         —         —         —         —   
  955         7,662         41         2,343         101   
  —         474         —         —         —   
  —         —         (6,557 )       —         (89 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  4,266,366         143,144,196         241,631         30,673,215         883,978   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
  532,676         12,450,040         22,600         3,169,756         72,921   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (3,513 )       (22,906 )       (100 )       (8,075 )       (310 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  529,163         12,427,134         22,500         3,161,681         72,611   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  3,737,203         130,717,062         219,131         27,511,534         811,367   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
           
  (5,263,172 )       (68,900,709 )       (194,696 )       (7,428,032 )       (19,872 ) 
  —         10,294,047         —         (5,117,708 )       (27,923 ) 
  —         —         —         —         —   
  (183,306 )       —         (13,862 )       —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (5,446,478 )       (58,606,662 )       (208,558 )       (12,545,740 )       (47,795 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
  (1,934,979 )       (27,719,771 )       (576,714 )       (21,537,524 )       (214,829 ) 
  (8,634 )       —         10,276         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (1,943,613 )       (27,719,771 )       (566,438 )       (21,537,524 )       (214,829 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (7,390,091 )       (86,326,433 )       (774,996 )       (34,083,264 )       (262,624 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ (3,652,888 )     $ 44,390,629       $ (555,865 )     $ (6,571,730 )     $ 548,743   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   123  

 

 

Statements of Operations (continued)

For the year ended October 31, 2015

 

    PowerShares
Global Short
Term High
Yield Bond
Portfolio
(PGHY)		      PowerShares
International
Corporate Bond
Portfolio (PICB)		      PowerShares
LadderRite 0-5 Year
Corporate Bond
Portfolio  (LDRI)		      PowerShares
National
AMT-Free
Municipal Bond
Portfolio (PZA)		  
Investment Income:           

Unaffiliated interest income

   $ 1,556,713       $ 6,186,422       $ 92,314       $ 33,233,154   

Unaffiliated dividend income

     —         —         —         —   

Affiliated dividend income

     373         278         46         —   

Securities lending income

     —         —         —         —   

Foreign withholding tax

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     1,557,086         6,186,700         92,360         33,233,154   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:           

Unitary management fees

     114,195         1,107,037         13,732         2,370,789   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     (1,181 )       (933 )       (142 )       —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     113,014         1,106,104         13,590         2,370,789   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

     1,444,072         5,080,596         78,770         30,862,365   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):           

Net realized gain (loss) from:

           

Investment securities

     (825,078 )       (4,422,001 )       7,033         327,140   

In-kind redemptions

     (351,484 )       (2,115,868 )       (3,657 )       —   

Foreign currencies

     —         (421,574 )       —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     (1,176,562 )       (6,959,443 )       3,376         327,140   
 

 

 

     

 

 

     

 

 

     

 

 

  

Change in net unrealized appreciation (depreciation) on:

           

Investment securities

     173,994         (17,709,693 )       8,611         (4,528,122 ) 

Foreign currencies

     —         268,633         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation)

     173,994         (17,441,060 )       8,611         (4,528,122 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     (1,002,568 )       (24,400,503 )       11,987         (4,200,982 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ 441,504       $ (19,319,907 )     $ 90,757       $ 26,661,383   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   124  

 

 

 

    
PowerShares
New York
AMT-Free
Municipal  Bond
Portfolio (PZT)		      PowerShares
Preferred
Portfolio (PGX)		      PowerShares
Variable Rate
Preferred
Portfolio (VRP)		      PowerShares
VRDO
Tax-Free
Weekly
Portfolio (PVI)		  
        
$ 1,802,771       $ —       $ 3,982,839       $ 96,106   
  —         170,839,498         7,437,459         —   
  —         6,681         491         —   
  —         3,676,992         —         —   
  —         (6,142 )       —         —   

 

 

     

 

 

     

 

 

     

 

 

  
  1,802,771         174,517,029         11,420,789         96,106   

 

 

     

 

 

     

 

 

     

 

 

  
        
  136,542         13,519,520         1,060,980         237,010   

 

 

     

 

 

     

 

 

     

 

 

  
  —         (18,568 )       (1,475 )       —   

 

 

     

 

 

     

 

 

     

 

 

  
  136,542         13,500,952         1,059,505         237,010   

 

 

     

 

 

     

 

 

     

 

 

  
  1,666,229         161,016,077         10,361,284         (140,904 ) 

 

 

     

 

 

     

 

 

     

 

 

  
        
        
  45,177         134,375         (113,143 )       —   
  —         16,640,173         —         —   
  —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

  
  45,177         16,774,548         (113,143 )       —   

 

 

     

 

 

     

 

 

     

 

 

  
        
  (447,025 )       19,492,438         (5,677,831 )       —   
  —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

  
  (447,025 )       19,492,438         (5,677,831 )       —   

 

 

     

 

 

     

 

 

     

 

 

  
  (401,848 )       36,266,986         (5,790,974 )       —   

 

 

     

 

 

     

 

 

     

 

 

  
$ 1,264,381       $ 197,283,063       $ 4,570,310       $ (140,904 ) 

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   125  

 

 

Statements of Changes in Net Assets

For the years ended October 31, 2015 and 2014

 

    PowerShares 1-30 Laddered Treasury
Portfolio (PLW)		      PowerShares Build
America Bond Portfolio (BAB)		  
    2015      2014      2015      2014  
Operations:           

Net investment income

   $ 7,084,501       $ 5,475,820       $ 33,259,150       $ 31,824,441   

Net realized gain (loss)

     11,374,720         1,117,394         7,860,126         2,581,255   

Net change in unrealized appreciation (depreciation)

     (10,829,679 )       12,982,028         (28,768,560 )       38,020,995   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     7,629,542         19,575,242         12,350,716         72,426,691   
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (7,109,980 )       (5,501,530 )       (33,376,382 )       (31,930,447 ) 

Net realized gains

     —         —         —         —   

Return of capital

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (7,109,980 )       (5,501,530 )       (33,376,382 )       (31,930,447 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     155,013,994         136,734,300         124,194,303         54,008,366   

Value of shares repurchased

     (167,890,135 )       (21,713,318 )       (122,670,963 )       (82,991,678 ) 

Transaction fees

     —         —         1,186,257         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     (12,876,141 )       115,020,982         2,709,597         (28,983,312 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     (12,356,579 )       129,094,694         (18,316,069 )       11,512,932   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     279,634,979         150,540,285         695,156,160         683,643,228   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 267,278,400       $ 279,634,979       $ 676,840,091       $ 695,156,160   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income at end of year

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     4,650,000         4,500,000         4,100,000         1,850,000   

Shares repurchased

     (5,200,000 )       (700,000 )       (4,200,000 )       (3,000,000 ) 

Shares outstanding, beginning of year

     8,750,000         4,950,000         23,350,000         24,500,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     8,200,000         8,750,000         23,250,000         23,350,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   126  

 

 

 

PowerShares
California
AMT-Free
Municipal Bond
Portfolio (PWZ)		      PowerShares CEF
Income Composite
Portfolio (PCEF)		      PowerShares Chinese
Yuan Dim Sum
Bond Portfolio (DSUM)		      PowerShares
Emerging
Markets
Sovereign Debt
Portfolio (PCY)		  
2015      2014      2015      2014      2015      2014      2015      2014  
                    
$ 3,001,923       $ 2,135,862       $ 43,076,114       $ 30,568,759       $ 3,737,203       $ 5,643,411       $ 130,717,062       $ 92,104,952   
  45,523         (1,432,271 )       (7,778,414 )       6,390,759         (5,446,478 )       (1,228,076 )       (58,606,662 )       (5,443,258 ) 
  (483,236 )       5,388,476         (52,015,355 )       3,972,215         (1,943,613 )       (2,475,949 )       (27,719,771 )       76,198,921   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  2,564,210         6,092,067         (16,717,655 )       40,931,733         (3,652,888 )       1,939,386         44,390,629         162,860,615   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  (3,001,923 )       (2,135,862 )       (42,122,623 )       (38,959,577 )       (828,895 )       (4,855,352 )       (129,090,210 )       (92,433,582 ) 
  –         –         –         (3,892,854 )       –         –         –         –   
  (15,761 )       (35,235 )       (13,115,497 )       –         (2,916,799 )       (741,356 )       –         –   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (3,017,684 )       (2,171,097 )       (55,238,120 )       (42,852,431 )       (3,745,694 )       (5,596,708 )       (129,090,210 )       (92,433,582 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  43,454,421         13,884,817         130,818,754         189,348,329         27,137,797         120,165,147         737,031,529         728,508,351   
  –         (12,878,472 )       (50,091,984 )       (37,303,822 )       (104,986,441 )       (58,155,138 )       (428,358,201 )       (377,799,613 ) 
  198,343         133,816         –         –         660,621         885,311         –         –   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  43,652,764         1,140,161         80,726,770         152,044,507         (77,188,023 )       62,895,320         308,673,328         350,708,738   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  43,199,290         5,061,131         8,770,995         150,123,809         (84,586,605 )       59,237,998         223,973,747         421,135,771   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  66,169,435         61,108,304         619,912,520         469,788,711         166,451,121         107,213,123         2,429,411,450         2,008,275,679   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 109,368,725       $ 66,169,435       $ 628,683,515       $ 619,912,520       $ 81,864,516       $ 166,451,121       $ 2,653,385,197       $ 2,429,411,450   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ –       $ –       $ –       $ –       $ –       $ –       $ 1,626,852       $ –   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  1,700,000         550,000         5,500,000         7,650,000         1,100,000         4,750,000         26,100,000         25,400,000   
  –         (550,000 )       (2,200,000 )       (1,500,000 )       (4,350,000 )       (2,350,001 )       (15,300,000 )       (13,600,000 ) 
  2,600,000         2,600,000         25,400,000         19,250,000         6,650,000         4,250,001         83,700,000         71,900,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  4,300,000         2,600,000         28,700,000         25,400,000         3,400,000         6,650,000         94,500,000         83,700,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   127  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

        
PowerShares Fundamental
Emerging Markets
Local Debt Portfolio
(PFEM)		      PowerShares Fundamental
High Yield® Corporate
Bond Portfolio (PHB)		  
    2015      2014      2015      2014  
Operations:           

Net investment income

   $ 219,131       $ 204,135       $ 27,511,534       $ 27,513,065   

Net realized gain (loss)

     (208,558 )       (213,490 )       (12,545,740 )       8,004,371   

Net change in unrealized appreciation (depreciation)

     (566,438 )       (234,708 )       (21,537,524 )       (9,108,988 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     (555,865 )       (244,063 )       (6,571,730 )       26,408,448   
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (46,280 )       (39,619 )       (27,639,812 )       (27,591,578 ) 

Net realized gains

     —         —         —         —   

Return of capital

     (169,710 )       (169,384 )       —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (215,990 )       (209,003 )       (27,639,812 )       (27,591,578 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     943,826         1,097,710         375,117,838         190,167,360   

Value of shares repurchased

     —         (1,042,935 )       (240,375,664 )       (244,643,297 ) 

Transaction fees

     4,719         6,300         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     948,545         61,075         134,742,174         (54,475,937 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     176,690         (391,991 )       100,530,632         (55,659,067 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     4,131,521         4,523,512         565,770,240         621,429,307   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 4,308,211       $ 4,131,521       $ 666,300,872       $ 565,770,240   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income (loss) at end of year

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     50,000         50,000         20,000,000         9,800,000   

Shares repurchased

     —         (50,000 )       (12,900,000 )       (12,700,000 ) 

Shares outstanding, beginning of year

     200,001         200,001         29,400,000         32,300,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     250,001         200,001         36,500,000         29,400,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period September 8, 2014 (commencement of investment operations) through October 31, 2014.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   128  

 

 

 

PowerShares Fundamental
Investment Grade Corporate
Bond Portfolio (PFIG)		      PowerShares Global
Short Term High Yield
Bond Portfolio (PGHY)		      PowerShares International
Corporate Bond
Portfolio (PICB)		      PowerShares
LadderRite 0-5
Year Corporate
Bond Portfolio
(LDRI)		  
2015      2014      2015      2014      2015      2014      2015      2014(a)  
                    
$ 811,367       $ 701,644       $ 1,444,072       $ 1,254,836       $ 5,080,596       $ 5,532,065       $ 78,770       $ 7,364   
  (47,795 )       (27,452 )       (1,176,562 )       (371,251 )       (6,959,443 )       733,390         3,376         13   
  (214,829 )       330,371         173,994         (734,495 )       (17,441,060 )       (7,938,243 )       8,611         (15,508 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  548,743         1,004,563         441,504         149,090         (19,319,907 )       (1,672,788 )       90,757         (8,131 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  (828,174 )       (687,625 )       (1,444,072 )       (1,262,978 )       (236,037 )       (5,340,605 )       (78,801 )       (6,250 ) 
  —         (18,158 )       —         —         —         (191,895 )       —         —   
  —         —         (7,319 )       (51,367 )       (4,826,517 )       —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (828,174 )       (705,783 )       (1,451,391 )       (1,314,345 )       (5,062,554 )       (5,532,500 )       (78,801 )       (6,250 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  5,067,646         5,082,256         4,729,721         23,651,095         8,422,218         136,165,187         3,755,338         6,270,863   
  (1,259,216 )       (8,767,232 )       (14,079,177 )       (25 )       (57,832,047 )       (22,226,207 )       (3,753,674 )       —   
  —         —         —         —         13,338         162,657         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  3,808,430         (3,684,976 )       (9,349,456 )       23,651,070         (49,396,491 )       114,101,637         1,664         6,270,863   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  3,528,999         (3,386,196 )       (10,359,343 )       22,485,815         (73,778,952 )       106,896,349         13,620         6,256,482   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  30,538,375         33,924,571         37,388,678         14,902,863         263,232,627         156,336,278         6,256,482         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 34,067,374       $ 30,538,375       $ 27,029,335       $ 37,388,678       $ 189,453,675       $ 263,232,627       $ 6,270,102       $ 6,256,482   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ 14,007       $ —       $ —       $ —       $ (984 )     $ 1,083       $ 1,114   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  200,000         200,000         200,000         950,000         300,000         4,600,000         150,000         250,001   
  (50,000 )       (350,001 )       (600,000 )       (1 )       (2,150,000 )       (750,000 )       (150,001 )       —   
  1,200,000         1,350,001         1,550,000         600,001         9,150,000         5,300,000         250,001         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  1,350,000         1,200,000         1,150,000         1,550,000         7,300,000         9,150,000         250,000         250,001   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   129  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

        
    
PowerShares National AMT-Free
Municipal Bond Portfolio (PZA)		      PowerShares New York AMT-Free
Municipal Bond Portfolio (PZT)		  
    2015      2014      2015      2014  
Operations:           

Net investment income (loss)

   $ 30,862,365       $ 25,517,623       $ 1,666,229       $ 1,810,877   

Net realized gain (loss)

     327,140         (971,808 )       45,177         (449,160 ) 

Net change in unrealized appreciation (depreciation)

     (4,528,122 )       47,882,478         (447,025 )       4,294,253   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     26,661,383         72,428,293         1,264,381         5,655,970   
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (30,862,365 )       (25,517,623 )       (1,666,229 )       (1,810,877 ) 

Return of capital

     (118,036 )       (378,681 )       (5,115 )       (20,357 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (30,980,401 )       (25,896,304 )       (1,671,344 )       (1,831,234 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     186,095,463         162,602,936         3,649,628         —   

Value of shares repurchased

     (24,895,192 )       (34,689,540 )       —         (5,578,672 ) 

Transaction fees

     527,476         943,156         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     161,727,747         128,856,552         3,649,628         (5,578,672 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     157,408,729         175,388,541         3,242,665         (1,753,936 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     739,986,160         564,597,619         47,449,834         49,203,770   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 897,394,889       $ 739,986,160       $ 50,692,499       $ 47,449,834   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income at end of year

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     7,350,000         6,650,000         150,000         —   

Shares repurchased

     (1,000,000 )       (1,500,000 )       —         (250,000 ) 

Shares outstanding, beginning of year

     29,400,000         24,250,000         1,950,000         2,200,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     35,750,000         29,400,000         2,100,000         1,950,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period April 28, 2014 (commencement of investment operations) through October 31, 2014.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   130  

 

 

 

PowerShares Preferred
Portfolio (PGX)		      PowerShares
Variable Rate
Preferred Portfolio
(VRP)		      PowerShares VRDO
Tax-Free Weekly
Portfolio (PVI)		  
2015      2014      2015      2014(a)      2015      2014  
              
$ 161,016,077       $ 132,458,152       $ 10,361,284       $ 1,051,191       $ (140,904 )     $ (172,026 ) 
  16,774,548         6,157,753         (113,143 )       (35,696 )       —         (4 ) 
  19,492,438         107,740,949         (5,677,831 )       (682,173 )       —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  197,283,063         246,356,854         4,570,310         333,322         (140,904 )       (172,030 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  (161,014,442 )       (132,194,912 )       (10,367,687 )       (1,051,191 )       —         —   
  —         —         (199,490 )       (70,809 )       (2,272 )       (7,525 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (161,014,442 )       (132,194,912 )       (10,567,177 )       (1,122,000 )       (2,272 )       (7,525 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  1,027,551,075         326,112,522         311,112,281         92,738,687         2,493,361         9,996,327   
  (211,486,686 )       (282,546,626 )       —         (25 )       (39,920,311 )       (84,936,246 ) 
  —         —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  816,064,389         43,565,896         311,112,281         92,738,662         (37,426,950 )       (74,939,919 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  852,333,010         157,727,838         305,115,414         91,949,984         (37,570,126 )       (75,119,474 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  2,264,758,388         2,107,030,550         91,949,984         —         118,580,114         193,699,588   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 3,117,091,398       $ 2,264,758,388       $ 397,065,398       $ 91,949,984       $ 81,009,988       $ 118,580,114   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 497,674       $ 40,676       $ —       $ —       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  69,850,000         22,700,000         12,600,000         3,700,001         100,000         400,000   
  (14,400,000 )       (20,250,000 )       —         (1 )       (1,600,000 )       (3,400,000 ) 
  155,400,000         152,950,000         3,700,000         —         4,750,000         7,750,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  210,850,000         155,400,000         16,300,000         3,700,000         3,250,000         4,750,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

 

   131  

 

 

Financial Highlights

 

PowerShares 1-30 Laddered Treasury Portfolio (PLW)

 

    Year Ended October 31,  
    2015      2014      2013     2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 31.96      $ 30.41      $ 32.96     $ 31.40       $ 29.24   

Net investment income(a)

     0.70        0.76        0.74       0.76         0.81   

Net realized and unrealized gain (loss) on investments

     0.63        1.54        (2.55 )      1.59         2.26   

Total from investment operations

     1.33        2.30        (1.81 )      2.35         3.07   

Distributions to shareholders from:

             

Net investment income

     (0.70 )      (0.75 )      (0.74 )      (0.79 )       (0.79 ) 

Net realized gains

     —         —         (0.00 )(b)      —        —  

Return of capital

     —         —         —       —         (0.12 ) 

Total distributions

     (0.70 )      (0.75 )      (0.74 )      (0.79 )       (0.91 ) 

Net asset value at end of year

   $ 32.59      $ 31.96      $ 30.41     $ 32.96       $ 31.40   

Market price at end of year(c)

   $ 32.60      $ 31.97      $ 30.40     $ 32.92       $ 31.54   
Net Asset Value Total Return(d)     4.18 %      7.71 %      (5.55 )%      7.56 %       10.86 % 
Market Price Total Return(d)     4.18 %      7.77 %      (5.47 )%      6.94 %       11.38 % 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 267,278      $ 279,635      $ 150,540     $ 166,458       $ 260,646   

Ratio to average net assets of:

             

Expenses

     0.25 %       0.25 %      0.25 %      0.25 %       0.25 % 

Net investment income

     2.14 %       2.47 %      2.33 %      2.34 %       2.82 % 

Portfolio turnover rate(e)

     7 %       5 %      5 %      4 %       4 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares Build America Bond Portfolio (BAB)

 

    Year Ended October 31,  
    2015      2014      2013     2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 29.77      $ 27.90      $ 30.19     $ 28.16       $ 26.13   

Net investment income(a)

     1.37        1.40        1.42       1.45         1.49   

Net realized and unrealized gain (loss) on investments

     (0.71 )      1.87        (2.29 )      2.06         2.03   

Total from investment operations

     0.66        3.27        (0.87 )      3.51         3.52   

Distributions to shareholders from:

             

Net investment income

     (1.37 )      (1.40 )      (1.42 )      (1.48 )       (1.49 ) 

Return of capital

     —         —         —       —         (0.00 )(b) 

Total distributions

     (1.37 )      (1.40 )      (1.42 )      (1.48 )       (1.49 ) 

Transaction fees(a)

     0.05        —         —        —         —   

Net asset value at end of year

   $ 29.11      $ 29.77      $ 27.90     $ 30.19       $ 28.16   

Market price at end of year(c)

   $ 29.17      $ 29.76      $ 27.79     $ 30.16       $ 28.18   
Net Asset Value Total Return(d)     2.40 %      12.03 %      (3.00 )%      12.74 %       14.10 % 
Market Price Total Return(d)     2.65 %      12.44 %      (3.28 )%      12.54 %       14.04 % 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 676,840      $ 695,156      $ 683,643     $ 1,070,328       $ 664,596   

Ratio to average net assets of:

             

Expenses, after Waivers

     0.28 %       0.27 %      0.28 %      0.28 %       0.28 % 

Expenses, prior to Waivers

     0.28 %       0 .28 %      0.28 %      0.31 %       0.35 % 

Net investment income, after Waivers

     4.59 %       4.86 %      4.80 %      4.92 %       5.68 % 

Portfolio turnover rate(e)

     9 %      7 %      5 %      2 %       15 % 

 

(a)  Based on average shares outstanding.
(b) Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares California AMT-Free Municipal Bond Portfolio (PWZ)

 

    Year Ended October 31,  
    2015     2014      2013     2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 25.45     $ 23.50      $ 25.34      $ 23.80      $ 24.24  

Net investment income(a)

     0.82       0.97        0.91        0.99         1.03   

Net realized and unrealized gain (loss) on investments

     (0.06 )     1.91        (1.84 )      1.54         (0.40 ) 

Total from investment operations

     0.76       2.88        (0.93 )      2.53        0.63  

Distributions to shareholders from:

            

Net investment income

     (0.83 )     (0.97 )      (0.91 )      (0.99 )       (1.07 ) 

Return of capital

     (0.00 )(b)      (0.02 )      (0.00 )(b)      —         —   

Total distributions

     (0.83 )     (0.99 )      (0.91 )      (0.99 )       (1.07 ) 

Transaction fees(a)

     0.05       0.06        —        —         —   

Net asset value at end of year

   $ 25.43     $ 25.45      $ 23.50      $ 25.34      $ 23.80  

Market price at end of year(c)

   $ 25.50     $ 25.61      $ 23.42      $ 25.34      $ 23.80  
Net Asset Value Total Return(d)     3.25 %     12.75 %      (3.74 )%      10.83 %       2.90 % 
Market Price Total Return(d)     2.87 %     13.84 %      (4.06 )%      10.83 %       2.90 % 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 109,369     $ 66,169      $ 61,108      $ 63,338       $ 36,884   

Ratio to average net assets of:

            

Expenses, after Waivers

     0.28 %      0.26 %      0.30 %      0.28 %       0.28 % 

Expenses, prior to Waivers

     0.28 %      0.26 %      0.30 %      0.31 %       0.35 % 

Net investment income, after Waivers

     3.23 %      3.95 %      3.70 %      3.98 %       4.52 % 

Portfolio turnover rate(e)

     3 %     28 %      1 %      6 %       33 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions. For the fiscal year ended October 31, 2014, the portfolio turnover calculation includes the value of securities purchased and sold in the effort to realign the Fund’s portfolio holdings due to the underlying index change.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares CEF Income Composite Portfolio (PCEF)

 

    Year Ended October 31,  
    2015     2014      2013      2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 24.41     $ 24.40      $ 25.47      $ 23.84      $ 26.16  

Net investment income(a)

     1.53       1.36        1.21         1.40         1.27   

Net realized and unrealized gain (loss) on investments

     (2.07 )     0.58        (0.31 )       4.28         (1.57 ) 

Total from investment operations

     (0.54 )     1.94        0.90        5.68        (0.30 ) 

Distributions to shareholders from:

             

Net investment income

     (1.49 )     (1.75 )      (1.49 )       (3.83 )       (1.39 ) 

Net realized gains

     —        (0.18 )       —         —         —   

Return of capital

     (0.47 )     —         (0.48 )       (0.22 )       (0.63 ) 

Total distributions

     (1.96 )     (1.93 )      (1.97 )       (4.05 )       (2.02 ) 

Net asset value at end of year

   $ 21.91     $ 24.41      $ 24.40      $ 25.47      $ 23.84  

Market price at end of year(b)

   $ 21.85     $ 24.42      $ 24.40      $ 25.52      $ 23.86  
Net Asset Value Total Return(c)     (2.31 )%     8.23 %      3.64 %       16.20 %       (1.26 )% 
Market Price Total Return(c)     (2.62 )%     8.27 %      3.43 %       16.32 %       (1.26 )% 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 628,684     $ 619,913      $ 469,789       $ 369,266       $ 244,408   

Ratio to average net assets of:

             

Expenses(d)

     0.50 %      0.50 %        0.50 %       0.50 %       0.50 % 

Net investment income

     6.61 %      5.54 %        4.82 %       5.67 %       5.04 % 

Portfolio turnover rate(e)

     20 %     19 %      33 %       22 %       32 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM)

 

    Year Ended October 31,     For the Period
September 22,  2011(a)
Through
October 31, 2011		  
    2015     2014      2013      2012    
Per Share Operating Performance:            

Net asset value at beginning of period

   $ 25.03     $ 25.23      $ 24.42      $ 23.57     $   24.42  

Net investment income(b)

     0.77       0.81        0.82         0.77        0.09   

Net realized and unrealized gain (loss) on investments

     (1.09 )     (0.34 )      0.59         0.77        (0.94 ) 

Total from investment operations

     (0.32 )     0.47        1.41        1.54       (0.85 ) 

Distributions to shareholders from:

            

Net investment income

     (0.17 )     (0.69 )      (0.82 )       (0.81 )      —   

Return of capital

     (0.60 )     (0.11 )      —         (0.02 )      —   

Total distributions

     (0.77 )     (0.80 )      (0.82 )      (0.83 )      —  

Transaction fees(b)

     0.14       0.13        0.22         0.14        —   

Net asset value at end of period

   $ 24.08     $ 25.03      $ 25.23      $ 24.42     $ 23.57  

Market price at end of period(c)

   $ 23.97     $ 24.88      $ 25.41      $ 24.57     $ 23.72  
Net Asset Value Total Return(d)     (0.71 )%     2.45 %      6.77 %       7.26 %      (3.48 )%(e) 
Market Price Total Return(d)     (0.56 )%     1.12 %      6.85 %       7.21 %      (2.87 )%(e) 
Ratios/Supplemental Data:            

Net assets at end of period (000’s omitted)

   $ 81,865     $ 166,451      $ 107,213       $ 17,093      $ 3,536   

Ratio to average net assets of:

            

Expenses

     0.45 %       0.45 %       0.45 %       0.45 %(g)      0.45 %(f) 

Net investment income

     3.16 %       3.24 %       3.30 %       3.21 %      3.46 %(f) 

Portfolio turnover rate(h)

     26 %     34 %      25 %       12 %      0 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (September 23, 2011, the first day of trading on the exchange) to October 31, 2011 was (1.38)%. The market price total return from Fund Inception to October 31, 2011, was (4.51)%.
(f)  Annualized.
(g) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(h)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)

 

    Year Ended October 31,  
    2015      2014      2013     2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 29.03      $ 27.93      $ 31.00     $ 27.42      $ 28.25  

Net investment income(a)

     1.48        1.28        1.30        1.44         1.42   

Net realized and unrealized gain (loss) on investments

     (0.97 )      1.10        (3.08 )      3.60         (0.76 ) 

Total from investment operations

     0.51        2.38        (1.78 )     5.04        0.66  

Distributions to shareholders from:

             

Net investment income

     (1.46 )      (1.28 )      (1.29 )      (1.46 )       (1.43 ) 

Return of capital

     —         —         —        —         (0.06 ) 

Total distributions

     (1.46 )      (1.28 )      (1.29 )     (1.46 )       (1.49 ) 

Net asset value at end of year

   $ 28.08      $ 29.03      $ 27.93     $ 31.00      $ 27.42  

Market price at end of year(b)

   $ 28.02      $ 29.08      $ 27.92     $ 31.11      $ 27.45  
Net Asset Value Total Return(c)     1.87 %      8.77 %      (5.85 )%      19.02 %       2.60 % 
Market Price Total Return(c)     1.49 %      9.00 %      (6.22 )%      19.30 %       2.60 % 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 2,653,385      $ 2,429,411      $ 2,008,276      $ 2,808,786       $ 1,319,124   

Ratio to average net assets of:

             

Expenses

     0.50 %        0.50 %      0.50 %      0.50 %       0.50 % 

Net investment income

     5.25 %        4.52 %      4.37 %      5.03 %       5.28 % 

Portfolio turnover rate(d)

     27 %      14 %      9 %      4 %       4 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   135  

 

 

Financial Highlights (continued)

 

PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)

 

   

Year Ended October 31,

     For the Period
May 6,  2013(a)
Through
October 31, 2013		  
    2015     2014    
Per Share Operating Performance:      

Net asset value at beginning of period

   $ 20.66     $   22.62     $   25.00  

Net investment income(b)

     0.90       0.94        0.44   

Net realized and unrealized gain (loss) on investments

     (3.45 )     (1.96 )     (2.56 )

Total from investment operations

     (2.55 )     (1.02 )     (2.12 )

Distributions to shareholders from:

      

Net investment income

     (0.19 )     (0.18 )      —   

Return of capital

     (0.71 )     (0.79 )     (0.46 ) 

Total distributions

     (0.90 )     (0.97 )     (0.46 ) 

Transaction fees(b)

     0.02       0.03       0.03  

Net increase from payments from service providers

     —        —        0.17   

Net asset value at end of period

   $ 17.23     $ 20.66     $ 22.62  

Market price at end of period(c)

   $ 17.20     $ 20.78     $ 22.59  
Net Asset Value Total Return(d)     (12.49 )%     (4.48 )%      (7.65 )%(e)(f) 
Market Price Total Return(d)     (13.18 )%     (3.81 )%      (7.77 )%(e) 
Ratios/Supplemental Data:      

Net assets at end of period (000’s omitted)

   $ 4,308     $ 4,132      $ 4,524   

Ratio to average net assets of:

      

Expenses

     0.50 %     0.50 %      0.50 %(g) 

Net investment income

     4.85 %     4.38 %      3.99 %(g) 

Portfolio turnover rate(h)

     8 %     23 %      56 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (May 9, 2013, the first day of trading on the exchange) to October 31, 2013 was (7.65)%. The market price total return from Fund Inception to October 31, 2013 was (8.32)%.
(f)  Amount includes the effect of the payments from service providers related to the economic impact of a transaction. Had the payments not been made, the net asset value total return would have been (8.34)%.
(g)  Annualized.
(h)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB)

 

    Year Ended October 31,  
    2015     2014     2013      2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 19.24     $ 19.24     $ 19.19      $ 18.22      $ 18.49  

Net investment income(a)

     0.81       0.85        0.90         0.98         1.03   

Net realized and unrealized gain (loss) on investments

     (0.98 )     (0.00 )(b)      0.05         0.97         (0.16 ) 

Total from investment operations

     (0.17 )     0.85       0.95        1.95        0.87  

Distributions to shareholders from:

            

Net investment income

     (0.82 )     (0.85 )      (0.90 )       (0.98 )       (1.07 ) 

Return of capital

     —        —        —         —         (0.07 ) 

Total distributions

     (0.82 )     (0.85 )     (0.90 )      (0.98 )       (1.14 ) 

Net asset value at end of year

   $ 18.25     $ 19.24     $ 19.24      $ 19.19      $ 18.22  

Market price at end of year(c)

   $ 18.23     $ 19.19     $ 19.26      $ 19.17      $ 18.21  
Net Asset Value Total Return(d)     (0.90 )%     4.49 %      5.06 %       11.02 %       4.85 % 
Market Price Total Return(d)     (0.75 )%     4.12 %      5.29 %       10.95 %       4.72 % 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 666,301     $ 565,770      $ 621,429       $ 838,586       $ 566,731   

Ratio to average net assets of:

            

Expenses

     0.50 %     0.50 %      0.50 %       0.50 %       0.50 % 

Net investment income

     4.34 %     4.37 %      4.66 %       5.26 %       5.63 % 

Portfolio turnover rate(e)

     16 %     20 %      23 %       21 %       27 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   136  

 

 

Financial Highlights (continued)

 

PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG)

 

    Year Ended October 31,      For the Period
September 12,  2011(a)
Through
October 31, 2011		  
    2015      2014      2013     2012     
Per Share Operating Performance:             

Net asset value at beginning of period

   $ 25.45      $ 25.13      $ 25.83     $ 24.79      $   24.85  

Net investment income(b)

     0.62        0.62        0.54        0.56         0.07   

Net realized and unrealized gain (loss) on investments

     (0.19 )      0.31        (0.69 )      1.11         (0.13 ) 

Total from investment operations

     0.43        0.93        (0.15 )     1.67        (0.06 ) 

Distributions to shareholders from:

             

Net investment income

     (0.64 )      (0.60 )      (0.55 )      (0.63 )       —   

Net realized gains

     —         (0.01 )      —        —         —   

Total distributions

     (0.64 )      (0.61 )      (0.55 )      (0.63 )       —   

Net asset value at end of period

   $ 25.24      $ 25.45      $ 25.13     $ 25.83      $ 24.79  

Market price at end of period(c)

   $ 25.27      $ 25.47      $ 25.12     $ 25.85      $ 25.25  
Net Asset Value Total Return(d)     1.69 %      3.75 %      (0.57 )%      6.85 %       (0.24 )%(e) 
Market Price Total Return(d)     1.72 %      3.88 %      (0.68 )%      4.97 %       1.61 %(e) 
Ratios/Supplemental Data:             

Net assets at end of period (000’s omitted)

   $ 34,067      $ 30,538      $ 33,925      $ 30,994       $ 4,958   

Ratio to average net assets of:

             

Expenses

     0.22 %        0.22 %      0.22 %      0.22 %       0.22 %(f) 

Net investment income

     2.45 %        2.43 %      2.15 %      2.23 %       2.39 %(f) 

Portfolio turnover rate(g)

     16 %      9 %       20 %      1 %       1 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (September 15, 2011, the first day of trading on the exchange) to October 31, 2011 was 0.40%. The market price total return from Fund Inception to October 31, 2011 was 2.43%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares Global Short Term High Yield Bond Portfolio (PGHY)

 

    Year Ended October 31,      For the Period
June 17,  2013(a)
Through
October 31, 2013		  
    2015       2014     
Per Share Operating Performance:        

Net asset value at beginning of period

   $ 24.12      $ 24.84      $ 24.70  

Net investment income(b)

     1.04        0.99        0.34   

Net realized and unrealized gain (loss) on investments

     (0.62 )      (0.67 )      0.10  

Total from investment operations

     0.42        0.32        0.44  

Distributions to shareholders from:

        

Net investment income

     (1.03 )      (1.00 )      (0.30 ) 

Return of capital

     (0.01 )      (0.04 )      —   

Total distributions

     (1.04 )      (1.04 )      (0.30 ) 

Net asset value at end of period

   $ 23.50      $ 24.12      $ 24.84  

Market price at end of period(c)

   $ 23.37      $ 24.04      $ 25.06  
Net Asset Value Total Return(d)     1.83 %      1.27 %      1.78 %(e) 
Market Price Total Return(d)     1.61 %      0.04 %      2.67 %(e) 
Ratios/Supplemental Data:        

Net assets at end of period (000’s omitted)

   $ 27,029      $ 37,389      $ 14,903   

Ratio to average net assets of:

        

Expenses

     0.35 %        0.35 %      0.35 %(f) 

Net investment income

     4.43 %        4.03 %      3.71 %(f) 

Portfolio turnover rate(g)

     50 %      29 %       4 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (June 20, 2013, the first day of trading on the exchange) to October 31, 2013 was 2.82%. The market price total return from Fund Inception to October 31, 2013 was 4.02%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares International Corporate Bond Portfolio (PICB)

 

    Year Ended October 31,  
    2015     2014     2013      2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 28.77     $ 29.50     $ 28.94      $ 27.92      $ 28.29  

Net investment income(a)

     0.62       0.77       0.86         0.93         0.95   

Net realized and unrealized gain (loss) on investments

     (2.82 )     (0.75 )     0.49         0.99         (0.29 ) 

Total from investment operations

     (2.20 )     0.02       1.35        1.92        0.66  

Distributions to shareholders from:

            

Net investment income

     (0.03 )     (0.74 )     (0.69 )       (0.89 )       (0.87 ) 

Net realized gains

     —        (0.03 )      —         —         —   

Return of capital

     (0.59 )     —        (0.13 )       (0.04 )       (0.16 ) 

Total distributions

     (0.62 )     (0.77 )     (0.82 )      (0.93 )       (1.03 ) 

Transaction fees(a)

     0.00 (b)      0.02       0.03         0.03         —   

Net asset value at end of year

   $ 25.95     $ 28.77     $ 29.50      $ 28.94      $ 27.92  

Market price at end of year(c)

   $ 25.89     $ 28.77     $ 29.55      $ 29.07      $ 27.67  
Net Asset Value Total Return(d)     (7.73 )%     0.09 %     4.88 %       7.28 %       2.45 % 
Market Price Total Return(d)     (7.94 )%     (0.08 )%     4.59 %       8.72 %       1.04 % 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 189,454     $ 263,233     $ 156,336       $ 131,675       $ 79,559   

Ratio to average net assets of:

            

Expenses

     0.50 %       0.50 %     0.50 %       0.50 %       0.50 % 

Net investment income

     2.29 %       2.57 %     2.99 %       3.39 %       3.48 % 

Portfolio turnover rate(e)

     13 %     17 %      27 %       12 %       12 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   138  

 

 

Financial Highlights (continued)

 

PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI)

 

    Year Ended
October 31, 2015		      For the Period
September 8,  2014(a)
Through
October 31, 2014		  
Per Share Operating Performance:     

Net asset value at beginning of period

   $ 25.03      $   25.07  

Net investment income(b)

     0.32        0.03  

Net realized and unrealized gain (loss) on investments

     0.05        (0.04 )

Total from investment operations

     0.37        (0.01 )

Distribution to shareholders from:

     

Net investment income

     (0.32 )        (0.03 )

Net asset value at end of period

   $ 25.08      $ 25.03  

Market price at end of period(c)

   $ 25.16      $ 25.04  
Net Asset Value Total Return(d)     1.48 %       (0.06 )%(e) 
Market Price Total Return(d)     1.76 %       (0.02 )%(e) 
Ratios/Supplemental Data:     

Net assets at end of period (000’s omitted)

   $ 6,270      $ 6,256  

Ratio to average net assets of:

     

Expenses

     0.22 %       0.22 %(f) 

Net investment income

     1.26 %       0.96 %(f) 

Portfolio turnover rate(g)

     9 %      0 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (September 10, 2014, the first day trading on the exchange) to October 31, 2014 was 0.22%. The market price total return from Fund Inception to October 31, 2014 was 0.26%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares National AMT-Free Municipal Bond Portfolio (PZA)

 

    Year Ended October 31,  
    2015     2014      2013     2012      2011  
Per Share Operating Performance:            

Net asset value at beginning of year

   $ 25.17     $ 23.28      $ 25.74     $ 23.97      $ 24.28  

Net investment income(a)

     0.92       1.00        0.98        1.05         1.08   

Net realized and unrealized gain (loss) on investments

     (0.09 )     1.87        (2.46 )      1.78         (0.28 ) 

Total from investment operations

     0.83       2.87        (1.48 )     2.83        0.80  

Distributions to shareholders from:

            

Net investment income

     (0.92 )     (1.01 )       (0.98 )      (1.06 )       (1.11 ) 

Return of capital

     (0.00 )(b)      (0.01 )      (0.00 )(b)      —         —   

Total distributions

     (0.92 )     (1.02 )      (0.98 )     (1.06 )       (1.11 ) 

Transaction fees(a)

     0.02       0.04        —        —         —   

Net asset value at end of year

   $ 25.10     $ 25.17      $ 23.28     $ 25.74      $ 23.97  

Market price at end of year(c)

   $ 25.15     $ 25.25      $ 23.23     $ 25.79      $ 23.98  
Net Asset Value Total Return(d)     3.45 %     12.77 %      (5.90 )%      12.02 %       3.63 % 
Market Price Total Return(d)     3.32 %     13.35 %      (6.27 )%      12.18 %       3.63 % 
Ratios/Supplemental Data:            

Net assets at end of year (000’s omitted)

   $ 897,395     $ 739,986      $ 564,598      $ 933,177       $ 535,671   

Ratio to average net assets of:

            

Expenses, after Waivers

     0.28 %      0.28 %      0.28 %      0.28 %       0.28 % 

Expenses, prior to Waivers

     0.28 %      0.28 %      0.28 %      0.31 %       0.35 % 

Net investment income, after Waivers

     3.64 %      4.13 %      3.93 %      4.18 %       4.72 % 

Portfolio turnover rate(e)

     4 %     15 %       12 %      15 %       17 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions. For the fiscal year ended October 31, 2014, the portfolio turnover calculation includes the value of securities purchased and sold in the effort to realign the Fund’s portfolio holdings due to the underlying index change.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   139  

 

 

Financial Highlights (continued)

 

PowerShares New York AMT-Free Municipal Bond Portfolio (PZT)

 

    Year Ended October 31,  
    2015     2014      2013     2012     2011  
Per Share Operating Performance:           

Net asset value at beginning of year

   $ 24.33     $ 22.37      $ 24.82     $ 23.49     $ 23.83  

Net investment income(a)

     0.83       0.92        0.92        0.98        1.00   

Net realized and unrealized gain (loss) on investments

     (0.19 )     1.96        (2.45 )      1.33        (0.30 ) 

Total from investment operations

     0.64       2.88        (1.53 )     2.31       0.70  

Distributions to shareholders from:

           

Net investment income

     (0.83 )     (0.91 )       (0.92 )      (0.98 )      (1.04 ) 

Return of capital

     (0.00 )(b)      (0.01 )      (0.00 )(b)      (0.00 )(b)      —   

Total distributions

     (0.83 )     (0.92 )      (0.92 )     (0.98 )      (1.04 ) 

Net asset value at end of year

   $ 24.14     $ 24.33      $ 22.37     $ 24.82     $ 23.49  

Market price at end of year(c)

   $ 24.05     $ 24.22      $ 22.28     $ 24.86     $ 23.45  
Net Asset Value Total Return(d)     2.68 %     13.16 %      (6.32 )%      10.02 %      3.24 % 
Market Price Total Return(d)     2.77 %     13.11 %      (6.83 )%      10.38 %      3.07 % 
Ratios/Supplemental Data:           

Net assets at end of year (000’s omitted)

   $ 50,692     $ 47,450      $ 49,204      $ 71,983      $ 37,584   

Ratio to average net assets of:

           

Expenses, after Waivers

     0.28 %       0.26 %      0.30 %      0.28 %      0.28 % 

Expenses, prior to Waivers

     0.28 %       0.26 %      0.31 %      0.31 %      0.35 % 

Net investment income, after Waivers

     3.42 %       3.92 %      3.84 %      4.02 %      4.41 % 

Portfolio turnover rate(e)

     18 %     18 %       20 %      0 %      37 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions. For the fiscal year ended October 31, 2014, the portfolio turnover calculation includes the value of securities purchased and sold in the effort to realign the Fund’s portfolio holdings due to the underlying index change.

PowerShares Preferred Portfolio (PGX)

 

    Year Ended October 31,  
    2015      2014      2013     2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 14.57      $ 13.78      $ 14.82     $ 13.96      $ 14.28  

Net investment income(a)

     0.87        0.88        0.91        0.94         0.95   

Net realized and unrealized gain (loss) on investments

     0.21        0.79        (1.03 )      0.86         (0.32 ) 

Total from investment operations

     1.08        1.67        (0.12 )     1.80        0.63  

Distributions to shareholders from:

             

Net investment income

     (0.87 )      (0.88 )      (0.92 )      (0.94 )       (0.95 ) 

Net asset value at end of year

   $ 14.78      $ 14.57      $ 13.78     $ 14.82      $ 13.96  

Market price at end of year(b)

   $ 14.80      $ 14.62      $ 13.79     $ 14.84      $ 14.00  
Net Asset Value Total Return(c)     7.66 %      12.51 %      (0.88 )%      13.37 %       4.53 % 
Market Price Total Return(c)     7.43 %      12.81 %      (0.95 )%      13.18 %       4.75 % 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 3,117,091      $ 2,264,758      $ 2,107,031      $ 2,081,189       $ 1,395,458   

Ratio to average net assets of:

             

Expenses

     0.50 %        0.50 %      0.50 %      0.50 %       0.50 % 

Net investment income

     5.95 %        6.21 %      6.27 %      6.52 %       6.70 % 

Portfolio turnover rate(d)

     12 %        13 %       29 %      29 %       30 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   140  

 

 

Financial Highlights (continued)

 

PowerShares Variable Rate Preferred Portfolio (VRP)

 

    Year Ended
October 31, 2015		      For the Period
April 28,  2014(a)
Through
October 31, 2014		  
Per Share Operating Performance:     

Net asset value at beginning of period

   $ 24.85      $ 24.87  

Net investment income(b)

     1.20        0.60  

Net realized and unrealized gain (loss) on investments

     (0.47 )      (0.08 )

Total from investment operations

     0.73        0.52  

Distributions to shareholders from:

     

Net investment income

     (1.20 )      (0.51 )

Return of capital

     (0.02 )      (0.03 ) 

Total distributions

     (1.22 )      (0.54 ) 

Net asset value at end of period

   $ 24.36      $ 24.85  

Market price at end of period(c)

   $ 24.40      $ 24.92  
Net Asset Value Total Return(d)     2.99 %        2.09 %(e) 
Market Price Total Return(d)     2.85 %        2.38 %(e) 
Ratios/Supplemental Data:     

Net assets at end of period (000’s omitted)

   $ 397,065      $ 91,950  

Ratio to average net assets of:

     

Expenses

     0.50 %        0.50 %(f) 

Net investment income

     4.88 %        4.79 %(f) 

Portfolio turnover rate(g)

     5 %      6 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (May 1, 2014, the first day of trading on the exchange) to October 31, 2014 was 1.93%. The market price total return from Fund Inception to October 31, 2014 was 2.01%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares VRDO Tax-Free Weekly Portfolio (PVI)

 

    Year Ended October 31,  
    2015     2014     2013     2012      2011  
Per Share Operating Performance:           

Net asset value at beginning of year

   $ 24.96     $ 24.99     $ 25.00      $ 25.00       $ 25.00   

Net investment income (loss)(a)

     (0.03 )     (0.02 )     0.01        0.06         0.14   

Net realized and unrealized gain (loss) on investments

     —        (0.01 )     (0.01 )      —         —   

Total from investment operations

     (0.03 )     (0.03 )     —        0.06         0.14   

Distributions to shareholders from:

           

Net investment income

     —        —        (0.01 )      (0.06 )       (0.14 ) 

Return of capital

     (0.00 )(b)      (0.00 )(b)      (0.00 )(b)      —         —   

Total distributions

     (0.00 )(b)      (0.00 )(b)      (0.01 )      (0.06 )       (0.14 ) 

Net asset value at end of year

   $ 24.93     $ 24.96     $ 24.99      $ 25.00       $ 25.00   

Market price at end of year(c)

   $ 24.93     $ 24.97     $ 24.99      $ 24.99       $ 25.00   
Net Asset Value Total Return(d)     (0.12 )%     (0.12 )%     (0.00 )%(e)      0.23 %       0.55 % 
Market Price Total Return(d)     (0.16 )%     (0.08 )%     0.04 %      0.18 %       0.55 % 
Ratios/Supplemental Data:           

Net assets at end of year (000’s omitted)

   $ 81,010     $ 118,580     $ 193,700      $ 317,449       $ 427,502   

Ratio to average net assets of:

           

Expenses

     0.25 %       0.25 %     0.25 %      0.25 %       0.25 % 

Net investment income (loss)

     (0.15 )%       (0.11 )%      0.03 %      0.22 %       0.57 % 

 

(a)  Based on average shares outstanding.
(b)  Amount represents less than $0.005.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Amount represents less than 0.005%.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust II

October 31, 2015

 

Note 1. Organization

PowerShares Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust on October 10, 2006 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of October 31, 2015, the Trust offered sixty-six portfolios. This report includes the following portfolios:

 

Full Name

   

Short Name

PowerShares 1-30 Laddered Treasury Portfolio (PLW)    “1-30 Laddered Treasury Portfolio”
PowerShares Build America Bond Portfolio (BAB)    “Build America Bond Portfolio”
PowerShares California AMT-Free Municipal Bond Portfolio (PWZ)    “California AMT-Free Municipal Bond Portfolio”
PowerShares CEF Income Composite Portfolio (PCEF)    “CEF Income Composite Portfolio”
PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM)    “Chinese Yuan Dim Sum Bond Portfolio”
PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)    “Emerging Markets Sovereign Debt Portfolio”
PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)    “Fundamental Emerging Markets Local Debt Portfolio”
PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB)    “Fundamental High Yield® Corporate Bond Portfolio”
PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG)    “Fundamental Investment Grade Corporate Bond Portfolio”
PowerShares Global Short Term High Yield Bond Portfolio (PGHY)    “Global Short Term High Yield Bond Portfolio”
PowerShares International Corporate Bond Portfolio (PICB)    “International Corporate Bond Portfolio”
PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI)    “LadderRite 0-5 Year Corporate Bond Portfolio”
PowerShares National AMT-Free Municipal Bond Portfolio (PZA)    “National AMT-Free Municipal Bond Portfolio”
PowerShares New York AMT-Free Municipal Bond Portfolio (PZT)    “New York AMT-Free Municipal Bond Portfolio”
PowerShares Preferred Portfolio (PGX)    “Preferred Portfolio”
PowerShares Variable Rate Preferred Portfolio (VRP)    “Variable Rate Preferred Portfolio”
PowerShares VRDO Tax-Free Weekly Portfolio (PVI)    “VRDO Tax-Free Weekly Portfolio”

Each portfolio (each, a “Fund”, and collectively, the “Funds”) represents a separate series of the Trust. The shares of the Funds are referred to herein as “Shares” or “Fund’s Shares.” Each Fund’s Shares are listed and traded on NYSE Arca, Inc., except for Shares of LadderRite 0-5 Year Corporate Bond Portfolio, which are listed and traded on The NASDAQ Stock Market LLC.

The market price of each Share may differ to some degree from the Fund’s net asset value (“NAV”). Unlike conventional mutual funds, each Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units of 1-30 Laddered Treasury Portfolio, CEF Income Composite Portfolio, Emerging Markets Sovereign Debt Portfolio, Fundamental High Yield® Corporate Bond Portfolio, Fundamental Investment Grade Corporate Bond Portfolio, Global Short Term High Yield Bond Portfolio, International Corporate Bond Portfolio, LadderRite 0-5 Year Corporate Bond Portfolio, Preferred Portfolio and Variable Rate Preferred Portfolio are issued and redeemed principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”). Creation Units of Build America Bond Portfolio, California AMT-Free Municipal Bond Portfolio, Chinese Yuan Dim Sum Bond Portfolio, Fundamental Emerging Markets Local Debt Portfolio, National AMT-Free Municipal Bond Portfolio, New York AMT-Free Municipal Bond Portfolio and VRDO Tax-Free Weekly Portfolio are issued and redeemed principally in exchange for the deposit or delivery of cash. Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Funds.

The investment objective of each Fund is to seek investment results that generally correspond (before fees and expenses) to the price and yield of its respective index listed below (each, an “Underlying Index”):

 

Fund

   

Underlying Index

1-30 Laddered Treasury Portfolio    Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index
Build America Bond Portfolio    The BofA Merrill Lynch Build America Bond Index
California AMT-Free Municipal Bond Portfolio    The BofA Merrill Lynch California Long-Term Core Plus Municipal Securities Index
CEF Income Composite Portfolio    S-Network Composite Closed-End Fund IndexSM
Chinese Yuan Dim Sum Bond Portfolio    Citi Custom Dim Sum (Offshore CNY) Bond Index

 

 

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Fund

   

Underlying Index

Emerging Markets Sovereign Debt Portfolio    DB Emerging Market USD Liquid Balanced Index
Fundamental Emerging Markets Local Debt Portfolio    Citi RAFI Bonds Sovereign Emerging Markets Extended Local Currency Index
Fundamental High Yield® Corporate Bond Portfolio    RAFI® Bonds U.S. High Yield 1-10 Index
Fundamental Investment Grade Corporate Bond Portfolio    RAFI® Bonds U.S. Investment Grade 1-10 Index
Global Short Term High Yield Bond Portfolio    DB Global Short Maturity High Yield Bond Index
International Corporate Bond Portfolio    S&P International Corporate Bond Index®
LadderRite 0-5 Year Corporate Bond Portfolio    NASDAQ LadderRite® 0-5 Year USD Corporate Bond Index
National AMT-Free Municipal Bond Portfolio    The BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index
New York AMT-Free Municipal Bond Portfolio    The BofA Merrill Lynch New York Long-Term Core Plus Municipal Securities Index
Preferred Portfolio    The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index
Variable Rate Preferred Portfolio    Wells Fargo® Hybrid and Preferred Securities Floating and Variable Rate Index
VRDO Tax-Free Weekly Portfolio    Bloomberg US Municipal AMT-Free Weekly VRDO 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 (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. Certain prior year amounts have been reclassified to conform to the current year presentation. In addition, the Funds monitor for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. The following is a summary of the significant accounting policies followed by the Funds in preparation of the financial statements.

A. Security Valuation

Securities, including restricted securities, are valued according to the following policies:

Securities, including restricted securities in a fund that are held as investments (the “Underlying Fund”) of a Fund, are valued in accordance with the Underlying Fund’s valuation policy. The policies of Underlying Funds affiliated with the Funds as a result of having the same investment adviser are set forth below.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco PowerShares Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have

 

 

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affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

Each Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Other Risks

Index Risk. Unlike many investment companies, the Funds do not utilize investing strategies that seek returns in excess of their Underlying Indexes. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its respective Underlying Index, even if that security generally is underperforming.

Changing Fixed-Income Market Conditions. The current historically low interest rate environment was created in part by the Federal Reserve Board (“FRB”) and certain foreign central banks keeping the federal funds and equivalent foreign rates at or near zero. There is a risk that interest rates will rise when the FRB and central banks raise these rates. This risk is heightened due to the “tapering” of the FRB’s quantitative easing program and other similar foreign central bank actions. This tapering and eventual increase in the federal funds and equivalent foreign rates may expose fixed-income markets to heightened volatility and reduced liquidity for certain fixed-income investments, particularly those with longer maturities. In addition, decreases in fixed-income dealer market-making capacity may also potentially lead to heightened volatility and reduced liquidity in the fixed-income markets. As a result, the value of the Fund’s investments and share price may decline. Changes in central bank policies could also result in higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Funds’ transaction costs.

Fixed-Income Securities Risk. Each Fund, except for CEF Income Composite Portfolio and Variable Rate Preferred Portfolio, invests in fixed-income securities. Fixed-income securities are subject to interest rate risk and credit risk. Interest rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. Fixed-income securities with longer maturities typically are more sensitive to changes in interest rates, making them more volatile than securities with shorter maturities. Credit risk refers to the possibility that the issuer of a security will be unable and/or unwilling to make timely interest payments and/or repay the principal on its debt. Debt instruments are subject to varying degrees of credit risk, which may be reflected in credit ratings. There is a possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Securities issued by the U.S. Government are subject to limited credit risk; however, securities issued by U.S. Government agencies are not necessarily backed by the full faith and credit of the U.S. Government.

Industry or Geographic Concentration Risk. In following its methodology, each Fund’s Underlying Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or a sector, or, in a specific country or geographic region. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry, sector, country or region, each Fund will also concentrate its investments to approximately the same extent. By so concentrating its

 

 

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investments, a Fund may face more risks than if it were diversified broadly over numerous industries, sectors, countries or geographic regions. In addition, at times, an industry or sector may be out of favor and underperform other industries or the market as a whole. Any factors detrimental to the performance of such industry or sector will disproportionately impact a Fund’s NAV. Also, a natural or other disaster could occur in a country or geographic region in which a Fund invests, which could affect the economy or particular business operations of companies in that specific country or geographic region and adversely impact such Fund’s investments in the affected country or region.

Non-Diversified Fund Risk. Each Fund (except for Build America Bond Portfolio, CEF Income Composite Portfolio, Chinese Yuan Dim Sum Bond Portfolio, Fundamental High Yield® Corporate Bond Portfolio, Fundamental Investment Grade Corporate Bond Portfolio, International Corporate Bond Portfolio, National AMT-Free Municipal Bond Portfolio and VRDO Tax-Free Weekly Portfolio) is non-diversified and can invest a greater portion of its assets in securities of individual issuers than diversified funds. As a result, changes in the market value of a single investment could cause greater fluctuations in Share price than would occur in a diversified fund. This may increase a Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on a Fund’s performance.

Non-Correlation Risk. Each Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, each Fund incurs operating expenses not applicable to its Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. To the extent that a Fund issues and redeems Creation Units principally for cash, it will incur higher costs in buying and selling securities than if it issued and redeemed Creation Units principally in-kind. In addition, the performance of each Fund and its Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.

Sampling Risk. Each Fund’s (except for 1-30 Laddered Treasury Portfolio and CEF Income Composite Portfolio) use of a representative sampling approach will result in the Fund holding a smaller number of securities than are in its respective Underlying Index. As a result, an adverse development with respect to an issuer of securities that a Fund holds could result in a greater decline in NAV than would be the case if a Fund held all of the securities in its Underlying Index. To the extent the assets in a Fund are smaller, these risks will be greater.

Cash Transaction Risk. Unlike most exchange-traded funds (“ETFs”), the Build America Bond Portfolio, California AMT-Free Municipal Bond Portfolio, Chinese Yuan Dim Sum Bond Portfolio, Fundamental Emerging Markets Local Debt Portfolio, International Corporate Bond Portfolio, National AMT-Free Municipal Bond Portfolio, New York AMT-Free Municipal Bond Portfolio and VRDO Tax-Free Weekly Portfolio currently effect creations and redemptions principally for cash, rather than primarily in-kind, because of the nature of the Funds’ investments. As such, investments in such Funds’ Shares may be less tax efficient than investments in conventional ETFs.

Foreign Investment Risk. Investments in the securities of non-U.S issuers involve risks beyond those associated with investments in U.S. securities. Foreign securities may have relatively low market liquidity, greater market volatility, decreased publicly available information and less reliable financial information about issuers. Foreign securities also are subject to the risks of expropriation, nationalization, political instability, local taxation, potential currency transfer restrictions or other adverse political or economic developments and the difficulty of enforcing obligations in other countries. These risks may be exacerbated in emerging market countries. If a Fund invests in securities denominated in foreign currencies, fluctuations in the value of the U.S. dollar relative to the values of other currencies may adversely affect investments in foreign securities and may negatively impact the Fund’s returns. Such risks may be exacerbated in emerging markets, where securities laws are relatively new and unsettled.

Fund of Funds Risk. Because CEF Income Composite Portfolio is a fund of funds, its investment performance largely depends on the investment performance of the Underlying Funds in which it invests. An investment in the Fund is subject to the risks associated with the Underlying Funds that comprise its Underlying Index. The Fund will pay indirectly a proportional share of the fees and expenses of the Underlying Funds in which it invests, including their investment advisory and administration fees, while continuing to pay its own unitary management fee. As a result, shareholders will absorb duplicate levels of fees with respect to investments in the Underlying Funds. In addition, at times certain segments of the market represented by constituent Underlying Funds in its Underlying Index may be out of favor and underperform other segments.

Global Bonds Risk. Chinese Yuan Dim Sum Bond Portfolio, Emerging Markets Sovereign Debt Portfolio, Global Short Term High Yield Bond Portfolio and International Corporate Bond Portfolio invest in global bonds. Global bonds are subject to the same risks as other debt issues, notably credit risk, market risk, interest rate risk and liquidity risk. Generally, investments in the securities of non-U.S. issuers involve risks beyond those associated with investments in U.S. securities. These additional risks include greater market volatility, the availability of less reliable financial information, higher transactional costs, taxation by foreign governments, decreased market liquidity and political instability. Foreign issuers often are subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping than are U.S. securities and, therefore, not all material information regarding these issuers will be available. Securities exchanges or foreign governments may adopt rules or regulations that may negatively impact a Fund’s ability to invest in foreign securities or may prevent the Fund from repatriating its investments. In addition, a Fund may not receive shareholder communications or be permitted to vote the securities that it holds, as the issuers may be under no legal obligation to distribute them.

Municipal Securities Risk. Build America Bond Portfolio, California AMT-Free Municipal Bond Portfolio, National AMT-Free Municipal Bond Portfolio, New York AMT-Free Municipal Bond Portfolio and VRDO Tax-Free Weekly Portfolio invest in municipal securities. Municipal

 

 

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securities are subject to the risk that litigation, legislation or other political events, local business or economic conditions or the bankruptcy of the issuer could have a significant effect on an issuer’s ability to make payments of principal and/or interest. In addition, there is a risk that, as a result of the recent economic crisis, the ability of any issuer to pay, when due, the principal or interest on its municipal bonds may be materially affected.

Political changes and uncertainties in the municipal market related to taxation, legislative changes or the rights of municipal security holders can significantly affect municipal securities. Because many securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal market. In addition, changes in the financial condition of an individual municipal issuer can affect the overall municipal market.

Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the project or assets or the inability to collect revenues for the project or from the assets. If the Internal Revenue Service determines that an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly in value.

The market for municipal bonds may be less liquid than for taxable bonds. There also may be less information available on the financial condition of issuers of municipal securities than for public corporations. This means that it may be harder to buy and sell municipal securities, especially on short notice, and municipal securities may be more difficult for the Funds to value accurately than securities of public corporations. Since these Funds invest a significant portion of their portfolios in municipal securities, the Funds’ portfolios may have greater exposure to liquidity risk than funds that invest in non-municipal securities.

Sovereign Debt Risk. For Chinese Yuan Dim Sum Bond Portfolio, Emerging Markets Sovereign Debt Portfolio, Fundamental Emerging Markets Local Debt Portfolio and Global Short Term High Yield Bond Portfolio, risks of sovereign debt include the relative size of the debt burden to the economy as a whole and the government debtor’s policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject. The governmental authority that controls the repayment of sovereign debt may be unwilling or unable to repay the principal and/or interest when due in accordance with the terms of such securities due to the extent of its foreign reserves. If an issuer of sovereign debt defaults on payments of principal and/or interest, these Funds may have limited legal recourse against the issuer and/or guarantor. In certain cases, remedies must be pursued in the courts of the defaulting party itself, and the Fund’s ability to obtain recourse may be limited.

Risks of Investing in Closed-End Funds. For CEF Income Composite Portfolio, the shares of closed-end funds may trade at a discount or premium to, or at, their NAV. To the extent that the Fund invests a portion of its assets in closed-end funds, those assets will be subject to the risks of the closed-end fund’s portfolio securities, and a shareholder in the Fund will bear not only his or her proportionate share of the expenses of the Fund, but also, indirectly, the expenses of the closed-end fund. The securities of closed-end funds in which the Fund may invest may be leveraged. As a result, the Fund may be exposed indirectly to leverage through an investment in such securities. An investment in securities of closed-end funds that use leverage may expose the Fund to higher volatility in the market value of such securities and the possibility that the Fund’s long-term returns on such securities (and, indirectly, the long-term returns of the Shares) will be diminished.

Preferred Stock Risk. With respect to Preferred Portfolio and Variable Rate Preferred Portfolio, preferred stock is subject to issuer-specific and overall market risks that are generally applicable to equity securities as a whole; however, there are special risks associated with investing in preferred stock. Preferred stock may be less liquid than many other types of securities, such as common stock, and generally provides no voting rights with respect to the issuer. Preferred stock also may be subordinated to bonds or other debt instruments in an issuer’s capital structure, meaning that an issuer’s preferred stock generally pays dividends only after the issuer makes required payments to holders of its bonds and other debt. This subjects preferred stock to a greater risk of non-payment than more senior securities. Because of the subordinated position of preferred stock in an issuer’s capital structure, the ability to defer dividend or interest payments for extended periods of time without triggering an event of default for the issuer, and certain other features, its quality and value are heavily dependent on the profitability and cash flows of the issuer rather than on any legal claims to specific assets. Also, in certain circumstances, an issuer of a preferred stock may call or redeem it prior to a specified date or may convert it to common stock, all of which may negatively impact its return.

C. Federal Income Taxes

Each Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

Each Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed each Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

 

 

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Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, and passive foreign investment company adjustments, if any.

The Funds file U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, a Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

D. Investment Transactions and Investment Income

Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. Interest income is recorded on the accrual basis. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by a Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

Corporate actions (including cash dividends) are recorded net of non-reclaimable foreign tax withholdings on the ex-date.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statements of Operations and the Statements of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of each Fund’s net asset value and, accordingly, they reduce each Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statements of Operations and the Statements of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between each Fund and the Adviser.

E. Country Determination

For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

F. Expenses

Each Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Expenses of the Trust that are excluded from a Fund’s unitary management fee and are directly identifiable to a specific Fund are applied to that Fund. Expenses of the Trust that are excluded from each Fund’s unitary management fee and that 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.

To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

G. Dividends and Distributions to Shareholders

Each Fund declares and pays dividends from net investment income, if any, to its shareholders monthly and records such dividends on ex-dividend date. Generally, each Fund distributes net realized taxable capital gains, if any, annually in cash and records them on ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in such Fund’s financial statements as a tax return of capital at fiscal year-end.

H. Foreign Currency Translations

Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Funds do not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising

 

 

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from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statements of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period-end, resulting from changes in exchange rates.

The Funds may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which each Fund invests.

I. Securities Lending

During the fiscal year ended October 31, 2015, Emerging Markets Sovereign Debt Portfolio and Preferred Portfolio participated in securities lending. Each Fund loaned portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by cash collateral equal to no less than 102% (105% for international securities) of the market value of the loaned securities determined daily by the securities lending provider. Cash collateral received in connection with these loans is invested in an affiliated money market fund and is shown as such on the Schedules of Investments. Each Fund bears the risk of loss with respect to the investment of collateral. It is the policy of these Funds to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, each Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to each Fund if, and to the extent that, the market value of the securities loaned were to increase, and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or each Fund. Upon termination, the borrower will return to each Fund the securities loaned and each Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. Each Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to each Fund. Some of these losses may be indemnified by the lending agent. Each Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Securities lending income on the Statements of Operations. The aggregate value of securities out on loan, if any, is shown on the Statements of Assets and Liabilities.

Note 3. Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of each Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Funds’ investments, managing the Funds’ business affairs and providing certain clerical, bookkeeping and other administrative services.

As compensation for its services, each Fund has agreed to pay the Adviser an annual unitary management fee. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). The unitary management fee is paid by each Fund to the Adviser at the following annual rates:

 

     % of Average
Daily Net Assets		  
1-30 Laddered Treasury Portfolio      0.25 % 
Build America Bond Portfolio      0.28 % 
California AMT-Free Municipal Bond Portfolio      0.28 % 
CEF Income Composite Portfolio      0.50 % 
Chinese Yuan Dim Sum Bond Portfolio      0.45 % 
Emerging Markets Sovereign Debt Portfolio      0.50 % 
Fundamental Emerging Markets Local Debt Portfolio      0.50 % 
Fundamental High Yield® Corporate Bond Portfolio      0.50 % 
Fundamental Investment Grade Corporate Bond Portfolio      0.22 % 
Global Short Term High Yield Bond Portfolio      0.35 % 
International Corporate Bond Portfolio      0.50 % 
LadderRite 0-5 Year Corporate Bond Portfolio      0.22 % 

 

 

   148  

 

 

 

     % of Average
Daily Net Assets		  
National AMT-Free Municipal Bond Portfolio      0.28 % 
New York AMT-Free Municipal Bond Portfolio      0.28 % 
Preferred Portfolio      0.50 % 
Variable Rate Preferred Portfolio      0.50 % 
VRDO Tax-Free Weekly Portfolio      0.25 % 

Further, through August 31, 2017, the Adviser has contractually agreed to waive a portion of each Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

For the fiscal year ended October 31, 2015, the Adviser waived fees for each Fund in the following amounts:

 

1-30 Laddered Treasury Portfolio    $ 831   
Build America Bond Portfolio      19,779   
California AMT-Free Municipal Bond Portfolio      —   
CEF Income Composite Portfolio      1,351   
Chinese Yuan Dim Sum Bond Portfolio      3,513   
Emerging Markets Sovereign Debt Portfolio      22,906   
Fundamental Emerging Markets Local Debt Portfolio      100   
Fundamental High Yield® Corporate Bond Portfolio      8,075   
Fundamental Investment Grade Corporate Bond Portfolio      310   
Global Short Term High Yield Bond Portfolio      1,181   
International Corporate Bond Portfolio      933   
LadderRite 0-5 Year Corporate Bond Portfolio      142   
National AMT-Free Municipal Bond Portfolio      —   
New York AMT-Free Municipal Bond Portfolio      —   
Preferred Portfolio      18,568   
Variable Rate Preferred Portfolio      1,475   
VRDO Tax-Free Weekly Portfolio      —   

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for each Fund. The Distributor does not maintain a secondary market in the Shares. The Funds are not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into a licensing agreement for each Fund with the following entities (each, a “Licensor”):

 

Fund

   

Licensor

1-30 Laddered Treasury Portfolio    The NASDAQ OMX Group, Inc.
Build America Bond Portfolio    Merrill Lynch, Pierce, Fenner & Smith Inc.
California AMT-Free Municipal Bond Portfolio    Merrill Lynch, Pierce, Fenner & Smith Inc.
CEF Income Composite Portfolio    S-Network Global Indexes, LLC
Chinese Yuan Dim Sum Bond Portfolio    Citigroup Index LLC
Emerging Markets Sovereign Debt Portfolio    Deutsche Bank Securities Inc.
Fundamental Emerging Markets Local Debt Portfolio    Citigroup Index LLC
Fundamental High Yield® Corporate Bond Portfolio    Research Affiliates®
Fundamental Investment Grade Corporate Bond Portfolio    Research Affiliates®
Global Short Term High Yield Bond Portfolio    Deutsche Bank Securities Inc.
International Corporate Bond Portfolio    Standard & Poor’s®
LadderRite 0-5 Year Corporate Bond Portfolio    The NASDAQ OMX Group, Inc./LadderRite Portfolios
LLC
National AMT-Free Municipal Bond Portfolio    Merrill Lynch, Pierce, Fenner & Smith Inc.

 

 

   149  

 

 

 

Fund

   

Licensor

New York AMT-Free Municipal Bond Portfolio    Merrill Lynch, Pierce, Fenner & Smith Inc.
Preferred Portfolio    Merrill Lynch, Pierce, Fenner & Smith Inc.
Variable Rate Preferred Portfolio    Wells Fargo Securities LLC and Wells Fargo & Company
VRDO Tax-Free Weekly Portfolio    Bloomberg Finance L.P.

Each Underlying Index name trademark is owned by its respective Licensor. These trademarks have been licensed to the Adviser for use by the Funds. Each Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. 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 the Funds.

The Trust has entered into service agreements whereby The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for each Fund.

Note 4. Investments in Affiliates

The Fund’s Adviser and the adviser for Invesco Bond Fund and Invesco Senior Income Trust are wholly-owned subsidiaries of Invesco Ltd. and therefore, Invesco Bond Fund and Invesco Senior Income Trust are considered to be affiliated. The table below shows CEF Income Composite Portfolio’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended October 31, 2015.

CEF Income Composite Portfolio

 

     Value
October 31, 2014		      Purchases
at Cost		      Proceeds
from Sales		      Change in
Unrealized
Appreciation
(Depreciation)		      Realized
Gain (Loss)		     Value
October 31, 2015		      Dividend
Income		  
Invesco Bond Fund    $ 1,635,353       $ 379,350       $ (525,280 )     $ (4,806 )     $ (13,857 )(a)    $ 1,470,760       $ 104,360   
Invesco Senior Income Trust      6,484,355        2,052,038         (2,331,527 )       (210,027 )       (511,893 )      5,482,946         461,658   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
Total Investments in Affiliates    $ 8,119,708      $ 2,431,388       $ (2,856,807 )     $ (214,833 )     $ (525,750 )   $ 6,953,706       $ 566,018   

 

(a)  Includes $25,156 of capital gains distributions from affiliated Underlying Funds.

Note 5. Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

 

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.

 

  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect a Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

Except for all of the securities in CEF Income Composite Portfolio, Preferred Portfolio and certain Funds listed below, as of October 31, 2015, all of the securities in each Fund were valued based on Level 2 inputs (see the Schedules of Investments for security categories). All of the securities in CEF Income Composite Portfolio and Preferred Portfolio were valued based on Level 1 inputs (see the Schedules of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

     Investments in Securities  
     Level 1      Level 2      Level 3      Total  
1-30 Laddered Treasury Portfolio            

U.S. Treasury Securities

    $ —       $ 264,725,351       $ —       $ 264,725,351   

Money Market Fund

      173,549         —         —         173,549   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 173,549       $ 264,725,351       $ —       $ 264,898,900   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   150  

 

 

 

     Investments in Securities  
     Level 1      Level 2      Level 3      Total  
Build America Bond Portfolio            

Municipal Obligations

    $ —       $ 656,517,282       $ —       $ 656,517,282   

Money Market Fund

      8,939,806         —         —         8,939,806   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 8,939,806       $ 656,517,282       $ —       $ 665,457,088   
  

 

 

     

 

 

     

 

 

     

 

 

  
Chinese Yuan Dim Sum Bond Portfolio            

Foreign Corporate Debt Securities

    $ —       $ 55,848,045       $ —       $ 55,848,045   

Foreign Government Debt Securities

      —         24,164,308         —         24,164,308   

Money Market Fund

      917,229         —         —         917,229   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 917,229       $ 80,012,353       $ —       $ 80,929,582   
  

 

 

     

 

 

     

 

 

     

 

 

  
Emerging Markets Sovereign Debt Portfolio            

Foreign Government Debt Securities

    $ —       $ 2,605,155,485       $ —       $ 2,605,155,485   

Money Market Funds

      17,276,978         —         —         17,276,978   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 17,276,978       $ 2,605,155,485       $ —       $ 2,622,432,463   
  

 

 

     

 

 

     

 

 

     

 

 

  
Fundamental Emerging Markets Local Debt Portfolio            

Foreign Government Debt Securities

    $ —       $ 4,115,438       $ —       $ 4,115,438   

Money Market Fund

      99,488         —         —         99,488   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 99,488       $ 4,115,438       $ —       $ 4,214,926   
  

 

 

     

 

 

     

 

 

     

 

 

  
Fundamental High Yield® Corporate Bond Portfolio            

Corporate Debt Securities

    $ —       $ 657,386,054       $ —       $ 657,386,054   

Money Market Fund

      737,695         —         —         737,695   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 737,695       $ 657,386,054       $ —       $ 658,123,749   
  

 

 

     

 

 

     

 

 

     

 

 

  
Fundamental Investment Grade Corporate Bond Portfolio            

Corporate Debt Securities

    $ —       $ 33,622,878       $ —       $ 33,622,878   

Money Market Fund

      97,795         —         —         97,795   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 97,795       $ 33,622,878       $ —       $ 33,720,673   
  

 

 

     

 

 

     

 

 

     

 

 

  
Global Short Term High Yield Bond Portfolio            

Foreign Corporate Debt Securities

    $ —       $ 22,557,148       $ —       $ 22,557,148   

Foreign Government Debt Securities

      —         3,433,073         —         3,433,073   

Money Market Fund

      862,975         —         —         862,975   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 862,975       $ 25,990,221       $ —       $ 26,853,196   
  

 

 

     

 

 

     

 

 

     

 

 

  
International Corporate Bond Portfolio            

Foreign Corporate Debt Securities

    $ —       $ 185,301,785       $ —       $ 185,301,785   

Foreign Government Debt Securities

      —         859,392         —         859,392   

Money Market Fund

      57,510         —         —         57,510   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 57,510       $ 186,161,177       $ —       $ 186,218,687   
  

 

 

     

 

 

     

 

 

     

 

 

  
LadderRite 0-5 Year Corporate Bond Portfolio            

Corporate Debt Securities

    $ —       $ 6,120,823       $ —       $ 6,120,823   

Money Market Fund

      84,916         —         —         84,916   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 84,916       $ 6,120,823       $ —       $ 6,205,739   
  

 

 

     

 

 

     

 

 

     

 

 

  
Variable Rate Preferred Portfolio            

Corporate Debt Securities

    $ —       $ 166,801,354       $ —       $ 166,801,354   

Preferred Stock

      227,082,523         —         —         227,082,523   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 227,082,523       $ 166,801,354       $ —       $ 393,883,877   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   151  

 

 

 

Note 6. Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2015 and 2014:

 

    2015     2014  
    Ordinary
Income		     Long-Term
Capital Gains		     Return of
Capital		     Tax-Exempt
Income		     Ordinary
Income		     Long-Term
Capital Gains		     Return of
Capital		     Tax-Exempt
Income		  
1-30 Laddered Treasury Portfolio   $ 7,109,980      $ —      $ —      $ —      $ 5,501,530      $ —      $ —      $ —   
Build America Bond Portfolio     33,376,382        —        —        —        31,930,447        —        —        —   
California AMT-Free Municipal Bond Portfolio     124        —        15,761        3,001,799        183        —        35,235        2,135,679   
CEF Income Composite Portfolio     42,122,623        —        13,115,497        —        39,483,270        3,369,161        —        —   
Chinese Yuan Dim Sum Bond Portfolio     828,895        —        2,916,799        —        4,855,352        —        741,356        —   
Emerging Markets Sovereign Debt Portfolio     129,090,210        —        —        —        92,433,582        —        —        —   
Fundamental Emerging Markets Local Debt Portfolio     46,280        —        169,710        —        39,619        —        169,384        —   
Fundamental High Yield® Corporate Bond Portfolio     27,639,812        —        —        —        27,591,578        —        —        —   
Fundamental Investment Grade Corporate Bond Portfolio     828,174        —        —        —        687,637        18,146        —        —   
Global Short Term High Yield Bond Portfolio     1,444,072        —        7,319        —        1,262,978        —        51,367        —   
International Corporate Bond Portfolio     223,933        12,104        4,826,517        —        5,340,605        191,895        —        —   
LadderRite 0-5 Year Corporate Bond Portfolio     78,801        —        —        —        6,250        —        —        —   
National AMT-Free Municipal Bond Portfolio     —        —        118,036        30,862,365        —        —        378,681        25,517,623   
New York AMT-Free Municipal Bond Portfolio     —        —        5,115        1,666,229        3,335        —        20,357        1,807,542   
Preferred Portfolio     161,014,442        —        —        —        132,194,912        —        —        —   
Variable Rate Preferred Portfolio     10,363,861        3,826        199,490        —        1,051,191        —        70,809        —   
VRDO Tax-Free Weekly Portfolio     —        —        2,272        —        —        —        7,525        —   

Tax Components of Net Assets at Fiscal Year-End:

 

    Undistributed
Ordinary
Income		     Undistributed
Long-Term
Capital Gains		     Net
Unrealized
Appreciation
(Depreciation)—
Investment
Securities		     Net Unrealized
Appreciation
(Depreciation)—
Other Investments		     Capital Loss
Carryforwards		     Shares of
Beneficial
Interest		     Total Net
Assets		  
1-30 Laddered Treasury Portfolio   $ —      $ —      $ 2,277,162      $ —      $ (264,723 )    $ 265,265,961      $ 267,278,400   
Build America Bond Portfolio     —        —        39,305,759        —        (17,375 )      637,551,707        676,840,091   
California AMT-Free Municipal Bond Portfolio     —        —        3,250,754        —        (1,839,460 )      107,957,431        109,368,725   
CEF Income Composite Portfolio     —        —        (53,796,994 )      —        (5,769,353 )      688,249,862        628,683,515   
Chinese Yuan Dim Sum Bond Portfolio     —        —        (3,224,470 )      1,520        (3,126,217 )      88,213,683        81,864,516   
Emerging Markets Sovereign Debt Portfolio     1,626,852        —        (79,009,008 )      —        (85,026,103 )      2,815,793,456        2,653,385,197   
Fundamental Emerging Markets Local Debt Portfolio     —        —        (1,286,195 )      (720 )      (261,960 )      5,857,086        4,308,211   
Fundamental High Yield® Corporate Bond Portfolio     —        —        (16,549,488 )      —        (13,263,220 )      696,113,580        666,300,872   
Fundamental Investment Grade Corporate Bond Portfolio     —        —        (671 )      —        (43 )      34,068,088        34,067,374   
Global Short Term High Yield Bond Portfolio     —        —        (488,078 )      —        (1,211,228 )      28,728,641        27,029,335   
International Corporate Bond Portfolio     —        —        (17,496,425 )      (19,197 )      —        206,969,297        189,453,675   
LadderRite 0-5 Year Corporate Bond Portfolio     8,001        128        (6,897 )      —        —        6,268,870        6,270,102   
National AMT-Free Municipal Bond Portfolio     —        —        46,673,600        —        (5,253,907 )      855,975,196        897,394,889   

 

 

   152  

 

 

 

    Undistributed
Ordinary
Income		     Undistributed
Long-Term
Capital Gains		     Net
Unrealized
Appreciation
(Depreciation)—
Investment
Securities		     Net Unrealized
Appreciation
(Depreciation)—
Other Investments		     Capital Loss
Carryforwards		     Shares of
Beneficial
Interest		     Total Net
Assets		  
New York AMT-Free Municipal Bond Portfolio   $ —      $ —      $ 2,251,421      $ —      $ (1,208,476 )    $ 49,649,554      $ 50,692,499   
Preferred Portfolio     497,674        —        58,421,873        —        (48,082,888 )      3,106,254,739        3,117,091,398   
Variable Rate Preferred Portfolio     —        —        (6,521,146 )      —        —        403,586,544        397,065,398   
VRDO Tax-Free Weekly Portfolio     —        —        —        —        (4 )      81,009,992        81,009,988   

Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Funds to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The following table presents available capital loss carryforwards and expiration dates for each Fund as of October 31, 2015.

 

                            Post-effective/no
expiration		        
    2016     2017     2018     2019     Short-Term     Long-Term     Total*  
1-30 Laddered Treasury Portfolio   $ —      $ —      $ —      $ —      $ 242,791      $ 21,932      $ 264,723   
Build America Bond Portfolio     —        —        6,399        —        10,976        —        17,375   
California AMT-Free Municipal Bond Portfolio     —        —        —        438,783        323,917        1,076,760        1,839,460   
CEF Income Composite Portfolio     —        —        —        —        1,596,654        4,172,699        5,769,353   
Chinese Yuan Dim Sum Bond Portfolio     —        —        —        —        1,003,361        2,122,856        3,126,217   
Emerging Markets Sovereign Debt Portfolio     531,185        558,313        212,582        818,907        19,873,966        63,031,150        85,026,103   
Fundamental Emerging Markets Local Debt Portfolio     —        —        —        —        187,376        74,584        261,960   
Fundamental High Yield® Corporate Bond Portfolio     —        —        —        —        10,186,995        3,076,225        13,263,220   
Fundamental Investment Grade Corporate Bond Portfolio     —        —        —        —        —        43        43   
Global Short Term High Yield Bond Portfolio     —        —        —        —        427,875        783,353        1,211,228   
International Corporate Bond Portfolio     —        —        —        —        —        —        —   
LadderRite 0-5 Year Corporate Bond Portfolio     —        —        —        —        —        —        —   
National AMT-Free Municipal Bond Portfolio     —        —        —        3,919,330        389,796        944,781        5,253,907   
New York AMT-Free Municipal Bond Portfolio     136,120        125,849        —        74,902        284,244        587,361        1,208,476   
Preferred Portfolio     —        37,146,794        —        —        8,119,829        2,816,265        48,082,888   
Variable Rate Preferred Portfolio     —        —        —        —        —        —        —   
VRDO Tax-Free Weekly Portfolio     —        —        —        —        4        —        4   

 

* Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

Note 7. Investment Transactions

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations, money market funds and in-kind transactions, if any) were as follows:

 

     Purchases      Sales  
Build America Bond Portfolio    $ 138,261,438       $ 63,434,171   
California AMT-Free Municipal Bond Portfolio      49,085,366         3,000,000   
CEF Income Composite Portfolio      126,732,165         128,613,858   
Chinese Yuan Dim Sum Bond Portfolio      28,739,984         107,433,948   
Emerging Markets Sovereign Debt Portfolio      678,376,983         673,646,929   
Fundamental Emerging Markets Local Debt Portfolio      1,207,074         333,234   
Fundamental High Yield® Corporate Bond Portfolio      112,773,149         98,199,369   

 

 

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     Purchases      Sales  
Fundamental Investment Grade Corporate Bond Portfolio    $ 5,260,516       $ 5,130,785   
Global Short Term High Yield Bond Portfolio      17,284,701         15,175,693   
International Corporate Bond Portfolio      27,508,365         28,643,293   
LadderRite 0-5 Year Corporate Bond Portfolio      2,148,019         480,882   
National AMT-Free Municipal Bond Portfolio      189,969,004         29,005,268   
New York AMT-Free Municipal Bond Portfolio      13,780,087         8,665,447   
Preferred Portfolio      345,233,969         334,098,795   
Variable Rate Preferred Portfolio      19,067,884         11,456,922   
VRDO Tax-Free Weekly Portfolio      —         —   

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of U.S. Treasury Obligations (other than short-term securities, money market funds and in-kind transactions), for the 1-30 Laddered Treasury Portfolio amounted to $33,183,663 and $21,889,788, respectively.

For the fiscal year ended October 31, 2015, in-kind transactions associated with creations and redemptions were as follows:

 

     Cost of
Securities
Received		      Value of
Securities
Delivered		  
1-30 Laddered Treasury Portfolio    $ 148,501,814       $ 163,526,512   
Build America Bond Portfolio      —         60,609,881   
California AMT-Free Municipal Bond Portfolio      —         —   
CEF Income Composite Portfolio      132,014,905         50,690,018   
Chinese Yuan Dim Sum Bond Portfolio      —         —   
Emerging Markets Sovereign Debt Portfolio      701,367,724         400,990,930   
Fundamental Emerging Markets Local Debt Portfolio      —         —   
Fundamental High Yield® Corporate Bond Portfolio      353,038,636         229,391,846   
Fundamental Investment Grade Corporate Bond Portfolio      5,093,760         1,331,708   
Global Short Term High Yield Bond Portfolio      3,279,158         13,070,531   
International Corporate Bond Portfolio      7,044,202         52,256,105   
LadderRite 0-5 Year Corporate Bond Portfolio      2,939,839         3,605,308   
National AMT-Free Municipal Bond Portfolio      —         —   
New York AMT-Free Municipal Bond Portfolio      —         —   
Preferred Portfolio      976,103,161         171,371,878   
Variable Rate Preferred Portfolio      302,404,818         —   
VRDO Tax-Free Weekly Portfolio      —         —   

Gains (losses) on in-kind transactions are generally not considered taxable gains (losses) for federal income tax purposes.

At October 31, 2015, the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes were as follows:

 

     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
1-30 Laddered Treasury Portfolio    $ 2,933,519       $ (656,357 )     $ 2,277,162       $ 262,621,738   
Build America Bond Portfolio      51,019,758         (11,713,999 )       39,305,759         626,151,329   
California AMT-Free Municipal Bond Portfolio      3,844,033         (593,279 )       3,250,754         104,009,235   
CEF Income Composite Portfolio      17,199,488         (70,996,482 )       (53,796,994 )       682,621,133   
Chinese Yuan Dim Sum Bond Portfolio      505         (3,224,975 )       (3,224,470 )       84,154,052   
Emerging Markets Sovereign Debt Portfolio      53,093,402         (132,102,410 )       (79,009,008 )       2,701,441,471   
Fundamental Emerging Markets Local Debt Portfolio      41,865         (1,328,060 )       (1,286,195 )       5,501,121   
Fundamental High Yield® Corporate Bond Portfolio      6,097,713         (22,647,201 )       (16,549,488 )       674,673,237   
Fundamental Investment Grade Corporate Bond Portfolio      339,881         (340,552 )       (671 )       33,721,344   

 

 

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     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
Global Short Term High Yield Bond Portfolio    $ 152,014       $ (640,092 )     $ (488,078 )     $ 27,341,274   
International Corporate Bond Portfolio      1,377,483         (18,873,908 )       (17,496,425 )       203,715,112   
LadderRite 0-5 Year Corporate Bond Portfolio      9,678         (16,575 )       (6,897 )       6,212,636   
National AMT-Free Municipal Bond Portfolio      50,714,766         (4,041,166 )       46,673,600         825,958,961   
New York AMT-Free Municipal Bond Portfolio      2,610,824         (359,403 )       2,251,421         47,772,537   
Preferred Portfolio      76,639,091         (18,217,218 )       58,421,873         3,175,996,444   
Variable Rate Preferred Portfolio      2,083,434         (8,604,580 )       (6,521,146 )       400,405,023   
VRDO Tax-Free Weekly Portfolio      —         —         —         80,305,000   

Note 8. Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of in-kind transactions, foreign currency transactions, distributions and partnerships on October 31, 2015, amounts were reclassified between undistributed net investment income, undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended October 31, 2015, the reclassifications were as follows:

 

     Undistributed
Net Investment
Income (Loss)		      Undistributed
Net Realized
Gain (Loss)		      Shares of
Beneficial
Interest		  
1-30 Laddered Treasury Portfolio    $ 25,479       $ (11,820,038 )     $ 11,794,559   
Build America Bond Portfolio      117,232         (7,592,973 )       7,475,741   
California AMT-Free Municipal Bond Portfolio      —         —         —   
CEF Income Composite Portfolio      (953,491 )       (838,828 )       1,792,319   
Chinese Yuan Dim Sum Bond Portfolio      (2,908,308 )       2,908,308         —   
Emerging Markets Sovereign Debt Portfolio      —         (4,317,761 )       4,317,761   
Fundamental Emerging Markets Local Debt Portfolio      (172,851 )       172,851         —   
Fundamental High Yield® Corporate Bond Portfolio      128,278         5,132,280         (5,260,558 ) 
Fundamental Investment Grade Corporate Bond Portfolio      2,800         27,923         (30,723 ) 
Global Short Term High Yield Bond Portfolio      —         351,484         (351,484 ) 
International Corporate Bond Portfolio      (4,843,575 )       6,962,209         (2,118,634 ) 
LadderRite 0-5 Year Corporate Bond Portfolio      —         3,657         (3,657 ) 
National AMT-Free Municipal Bond Portfolio      —         —         —   
New York AMT-Free Municipal Bond Portfolio      —         —         —   
Preferred Portfolio      455,363         (16,433,856 )       15,978,493   
Variable Rate Preferred Portfolio      6,403         (12,303 )       5,900   
VRDO Tax-Free Weekly Portfolio      140,904         —         (140,904 ) 

Note 9. Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Funds to pay remuneration to each Trustee who is not an “interested person” as defined in the 1940 Act (an “Independent Trustee”) and an Officer of the Trust. The Adviser, as a result of each Fund’s unitary management fee, pays for such compensation. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, an Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of his compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select PowerShares Funds. The Deferral Fees payable to the Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Funds.

Note 10. Capital

Shares are created and redeemed by each Fund only in Creation Units of 50,000 Shares (100,000 Shares for Emerging Markets Sovereign Debt Portfolio, Fundamental High Yield® Corporate Bond Portfolio and Variable Rate Preferred Portfolio). Only Authorized Participants are permitted to purchase or redeem Creation Units from the Funds. For 1-30 Laddered Treasury Portfolio, CEF Income

 

 

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Composite Portfolio, Emerging Markets Sovereign Debt Portfolio, Fundamental High Yield® Corporate Bond Portfolio, Fundamental Investment Grade Corporate Bond Portfolio, Global Short Term High Yield Bond Portfolio, International Corporate Bond Portfolio, LadderRite 0-5 Year Corporate Bond Portfolio, Preferred Portfolio and Variable Rate Preferred Portfolio, Creation Units are principally permitted in exchange for Deposit Securities, with a balancing cash component to equate the transaction to the NAV per Share of a Fund of the Trust on the transaction date. However, for such Funds, cash in an amount equivalent to the value of certain securities may be substituted, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances. For Build America Bond Portfolio, California AMT-Free Municipal Bond Portfolio, Chinese Yuan Dim Sum Bond Portfolio, Fundamental Emerging Markets Local Debt Portfolio, National AMT-Free Municipal Bond Portfolio, New York AMT-Free Municipal Bond Portfolio and VRDO Tax-Free Weekly Portfolio, such transactions are principally in exchange for the deposit or delivery of cash.

To the extent that the Funds permit transactions in exchange for Deposit Securities, each Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

Build America Bond Portfolio, California AMT-Free Municipal Bond Portfolio, Chinese Yuan Dim Sum Bond Portfolio, Fundamental Emerging Markets Local Debt Portfolio, International Corporate Bond Portfolio and National AMT-Free Municipal Bond Portfolio charge certain transaction fees for creations and redemptions, which are treated as increases in capital. Such fees are shown in the Statements of Changes in Net Assets as Transaction fees.

Transactions in each Fund’s Shares are disclosed in detail in the Statements of Changes in Net Assets.

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. Each Independent Trustee is also indemnified against certain liabilities arising out of the performance of his duties to the Trust pursuant to an Indemnification Agreement between the Independent Trustee and 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. Subsequent Event

At a meeting held on December 17, 2015, the Board of Trustees of the Trust approved the termination and winding down of Fundamental Emerging Markets Local Debt Portfolio, with the liquidation payment to shareholders expected to take place on or about March 25, 2016. Investors, who have elected not to sell their shares before March 18, 2016, will receive cash equal to the amount of the net asset value of their shares, which will include any capital gains and dividends, on or about March 25, 2016.

 

 

   156  

 

 

Report of Independent Registered Public Accounting Firm

 

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

 

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of PowerShares 1-30 Laddered Treasury Portfolio, PowerShares Build America Bond Portfolio, PowerShares California AMT-Free Municipal Bond Portfolio, PowerShares CEF Income Composite Portfolio, PowerShares Chinese Yuan Dim Sum Bond Portfolio, PowerShares Emerging Markets Sovereign Debt Portfolio, PowerShares Fundamental Emerging Markets Local Debt Portfolio, PowerShares Fundamental High Yield® Corporate Bond Portfolio, PowerShares Fundamental Investment Grade Corporate Bond Portfolio, PowerShares Global Short Term High Yield Bond Portfolio, PowerShares International Corporate Bond Portfolio, PowerShares LadderRite 0-5 Year Corporate Bond Portfolio, PowerShares National AMT-Free Municipal Bond Portfolio, PowerShares New York AMT-Free Municipal Bond Portfolio, PowerShares Preferred Portfolio, PowerShares Variable Rate Preferred Portfolio, and PowerShares VRDO Tax-Free Weekly Portfolio (each an individual portfolio of PowerShares Exchange-Traded Fund Trust II, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations for the year then ended, and the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion. As disclosed in Note 12 to the financial statements, the PowerShares Fundamental Emerging Markets Local Debt Portfolio will liquidate after the close of business on March 18, 2016.

PricewaterhouseCoopers LLP

Chicago, IL

December 23, 2015

 

 

   157  

 

 

Fees and Expenses

 

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). 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 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, 2015.

In addition to the fees and expenses which the PowerShares CEF Income Composite Portfolio (the “Portfolio”) bears directly, the Portfolio indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Portfolio invests. The amount of fees and expenses incurred indirectly by the Portfolio will vary because the investment companies have varied expenses and fee levels and the Portfolio may own different proportions of the investment companies at different times. Estimated investment companies’ expenses are not expenses that are incurred directly by the Portfolio. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Portfolio invests in. The effect of the estimated investment companies’ expenses that the Portfolio bears indirectly is included in the Portfolio’s total return.

Actual Expenses

The first line in the following table 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 table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s 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 table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges and brokerage commissions. 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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by a Fund. If transaction costs and indirect expenses were included, your costs would have been higher.

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares 1-30 Laddered Treasury Portfolio (PLW)        

Actual

   $ 1,000.00      $ 998.66        0.25 %    $ 1.26   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares Build America Bond Portfolio (BAB)        

Actual

     1,000.00        995.47        0.28        1.41   

Hypothetical (5% return before expenses)

     1,000.00        1,023.79        0.28        1.43   
PowerShares California AMT-Free Municipal Bond Portfolio (PWZ)        

Actual

     1,000.00        1,017.84        0.28        1.42   

Hypothetical (5% return before expenses)

     1,000.00        1,023.79        0.28        1.43   
PowerShares CEF Income Composite Portfolio (PCEF)        

Actual

     1,000.00        951.49        0.50        2.46   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   

 

 

   158  

 

 

Fees and Expenses (continued)

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM)        

Actual

   $ 1,000.00      $ 999.13        0.45 %    $ 2.27   

Hypothetical (5% return before expenses)

     1,000.00        1,022.94        0.45        2.29   
PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)        

Actual

     1,000.00        1,003.78        0.50        2.53   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   
PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)        

Actual

     1,000.00        908.92        0.50        2.41   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   
PowerShares Fundamental High Yield® Corporate Bond Portfolio (PHB)        

Actual

     1,000.00        978.02        0.50        2.49   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   
PowerShares Fundamental Investment Grade Corporate Bond Portfolio (PFIG)        

Actual

     1,000.00        996.07        0.22        1.11   

Hypothetical (5% return before expenses)

     1,000.00        1,024.10        0.22        1.12   
PowerShares Global Short Term High Yield Bond Portfolio (PGHY)        

Actual

     1,000.00        1,018.47        0.35        1.78   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares International Corporate Bond Portfolio (PICB)        

Actual

     1,000.00        968.58        0.50        2.48   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   
PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI)        

Actual

     1,000.00        1,004.23        0.22        1.11   

Hypothetical (5% return before expenses)

     1,000.00        1,024.10        0.22        1.12   
PowerShares National AMT-Free Municipal Bond Portfolio (PZA)        

Actual

     1,000.00        1,016.15        0.28        1.42   

Hypothetical (5% return before expenses)

     1,000.00        1,023.79        0.28        1.43   
PowerShares New York AMT-Free Municipal Bond Portfolio (PZT)        

Actual

     1,000.00        1,014.80        0.28        1.42   

Hypothetical (5% return before expenses)

     1,000.00        1,023.79        0.28        1.43   
PowerShares Preferred Portfolio (PGX)        

Actual

     1,000.00        1,030.98        0.50        2.56   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   
PowerShares Variable Rate Preferred Portfolio (VRP)        

Actual

     1,000.00        995.03        0.50        2.51   

Hypothetical (5% return before expenses)

     1,000.00        1,022.68        0.50        2.55   
PowerShares VRDO Tax-Free Weekly Portfolio (PVI)        

Actual

     1,000.00        999.19        0.25        1.26   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   

 

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expense ratios based on the annualized data in the Financial Highlights.

 

 

   159  

 

 

Tax Information

 

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

Each Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2015:

 

     Qualified
Interest Income*		   Qualified Dividend
Income*		   Corporate
Dividends Received
Deduction*		   Tax Exempt
Income*		   Long-Term
Capital Gain
PowerShares 1-30 Laddered Treasury Portfolio        100 %       0 %       0 %       0 %     $ —  
PowerShares Build America Bond Portfolio        100 %       0 %       0 %       0 %       —  
PowerShares California AMT-Free Municipal Bond Portfolio        0 %       0 %       0 %       99 %       —  
PowerShares CEF Income Composite Portfolio        0 %       18 %       17 %       0 %       —  
PowerShares Chinese Yuan Dim Sum Bond Portfolio        0 %       0 %       0 %       0 %       —  
PowerShares Emerging Markets Sovereign Debt Portfolio        0 %       0 %       0 %       0 %       —  
PowerShares Fundamental Emerging Markets Local Debt Portfolio        0 %       0 %       0 %       0 %       —  
PowerShares Fundamental High Yield® Corporate Bond Portfolio        100 %       0 %       0 %       0 %       —  
PowerShares Fundamental Investment Grade Corporate Bond Portfolio        100 %       0 %       0 %       0 %       —  
PowerShares Global Short Term High Yield Bond Portfolio        54 %       0 %       0 %       0 %       —  
PowerShares International Corporate Bond Portfolio        0 %       0 %       0 %       0 %       12,104  
PowerShares LadderRite 0-5 Year Corporate Bond Portfolio        100 %       0 %       0 %       0 %       —  
PowerShares National AMT-Free Municipal Bond Portfolio        0 %       0 %       0 %       100 %       —  
PowerShares New York AMT-Free Municipal Bond Portfolio        0 %       0 %       0 %       100 %       —  
PowerShares Preferred Portfolio        0 %       64 %       62 %       0 %       —  
PowerShares Variable Rate Preferred Portfolio        0 %       48 %       46 %       0 %       3,826  
PowerShares VRDO Tax-Free Weekly Portfolio        0 %       0 %       0 %       0 %       —  

 

* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

 

   160  

 

 

Trustees and Officers

 

The Independent Trustees, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below.

The Trustees and officers information is current as of October 31, 2015.

 

Name, Address and Year of Birth
of Independent Trustee		   Position(s)
Held
with Trust		   Term of
Office
and
Length of
Time
Served*		   Principal
Occupation(s) During
Past 5 Years		   Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		   Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years
Ronn R. Bagge - 1958
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Nominating and Governance Committee and Trustee   Chairman of the Nominating and Governance Committee and Trustee since 2007   Founder and Principal, YQA Capital Management LLC (1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).   125   None
Todd J. Barre - 1957
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Trustee   Since 2010   Assistant Professor of Business, Trinity Christian College (2010-Present); formerly Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.   125   None
Marc M. Kole - 1960
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Audit Committee and Trustee   Chairman of the Audit Committee since 2008; Trustee since 2007   Senior Director of Finance, By The Hand Club for Kids (2015-Present); Formerly: Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Senior Vice President of Finance, United Healthcare (2004-2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).   125   None
Yung Bong Lim - 1964
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Investment Oversight Committee and Trustee   Chairman of the Investment Oversight Committee since 2014; Trustee since 2013   Managing Partner, Residential Dynamics Group LLC (2008-Present); formerly, Managing Director, Citadel Investment Group, L.L.C. (1999-2007).   125   None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   161  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of Birth
of Independent Trustee		   Position(s)
Held
with Trust		   Term of
Office
and
Length of
Time
Served*		   Principal
Occupation(s) During
Past 5 Years		   Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		   Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years
Philip M. Nussbaum - 1961
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Trustee   Since 2007   Chairman, Performance Trust Capital Partners (2004-Present).   125   None
Gary R. Wicker - 1961
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Trustee   Since 2013   Senior Vice President of Global Finance and Chief Financial Officer at RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (A division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005-2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider).   125   None
Donald H. Wilson - 1959
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Board and Trustee   Chairman since 2012; Trustee since 2007   Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank—Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).   125   None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   162  

 

 

Trustees and Officers (continued)

 

The Trustee who is an “interested person” (the “Non-Independent Trustee”) and the 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 the Non-Independent Trustee and the other directorships, if any, held by the Non-Independent Trustee are shown below.

 

Name, Address and Year of Birth
of Non-Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Non-Independent
Trustee		    Other
Directorships
Held by
Non-Independent
Trustee During
the Past 5 Years
Kevin M. Carome - 1956
Invesco Ltd.
Two Peachtree Pointe,
1555 Peachtree St., N.E.,
Suite 1800
Atlanta, GA 30309		    Trustee    Since 2010    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2006-Present); Director, Invesco Advisers, Inc. (2009-Present); Director, Invesco Finance PLC, INVESCO Funds Group, Inc., and Invesco Holding Company Limited; Director and Executive Vice President, Invesco Finance, Inc., Invesco Group Services, Inc., Invesco Investments (Bermuda) Ltd., Invesco North American Holdings, Inc., and IVZ, Inc. and Invesco Asset Management (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary, IVZ Bahamas Private Limited; formerly, Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2005); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    125    None

 

* This is the date the Non-Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   163  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years
Andrew Schlossberg - 1974
Invesco Management
Group, Inc.
11 Greenway Plaza,
Suite 1000
Houston, TX 77046		    President    Since 2009    President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—U.S. Strategy and Marketing (2010-Present) and Principal Executive Officer (2015-Present), Invesco PowerShares Capital Management LLC; Managing Director, Head of U.S. Retail Distribution (2012-Present) and Global ETFs (2010-Present) for Invesco Ltd.; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present); formerly, Mr. Schlossberg served in multiple roles within Invesco, including head of corporate development, as well as global leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions (2002-2007), Managing Director, U.S. head of business strategy and chief marketing officer for Invesco Ltd. in the United States (2008-2012) and Director, Invesco Distributors, Inc. (2012-2015).

Peter Hubbard - 1981
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Vice President and Director of Portfolio Management—Invesco PowerShares Capital Management LLC (2008-Present); formerly, Portfolio Manager, Invesco PowerShares Capital Management LLC (2007-2008); Research Analyst, Invesco PowerShares Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

David Warren - 1957
Invesco Canada Ltd.
5140 Yonge Street
Suite 800

Toronto, Ontario
M2N 6X7

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—Chief Administrative Officer, Americas, Invesco PowerShares Capital Management LLC; Senior Vice President, Invesco Advisers, Inc. (2009-Present); Director, Executive Vice President and Chief Financial Officer, Invesco Inc. (2009-Present); Senior Vice President, Invesco Management Group, Inc. (2007-Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) and Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Canada Holdings Inc. (2002-Present), Invesco Corporate Class Inc., and Invesco Canada Fund Inc.; Director, Invesco Financial Services Ltd. and Trimark Investments Ltd. (2014-Present); formerly, Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2006).

Sheri Morris - 1964
Invesco Management

Group, Inc.
11 Greenway Plaza,
Suite 1000
Houston, TX 77046

    Vice President    Since 2012    Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   164  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Rudolf E. Reitmann - 1971
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President    Since 2013    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global Exchange Traded Funds Operations, Invesco PowerShares Capital Management LLC (2013-Present).

Daniel E. Draper - 1968
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President    Since 2013    Senior Vice President, Invesco Distributors, Inc. (2014-Present); Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director, Invesco PowerShares Capital Management LLC (2013-Present); formerly, Managing Director, Credit Suisse Asset Management (2010-2013) and Lyxor Asset Management/Societe Generale (2007-2010).

Steven M. Hill - 1964
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President and Treasurer    Since 2013    Vice President and Treasurer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global ETF Administration, Invesco PowerShares Capital Management LLC (2011-Present); Principal Financial and Accounting Officer—Investment Pools, Invesco PowerShares Capital Management LLC (2015-Present); formerly, Senior Managing Director and Chief Financial Officer, Destra Capital Management LLC and its subsidiaries (2010-2011); Chief Financial Officer, Destra Investment Trust and Destra Investment Trust II (2010-2011); Senior Managing Director, Claymore Securities, Inc. (2003-2010); and Chief Financial Officer, Claymore sponsored mutual funds (2003-2010).
Christopher Joe - 1969
Invesco PowerShares
Capital Management LLC
11 Greenway Plaza,
Suite 1000
Houston, TX 77046		    Chief Compliance Officer    Since 2012    Chief Compliance Officer of Invesco PowerShares Capital Management LLC (2015-Present); Chief Compliance Officer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Chief Compliance Officer, Invesco Investment Advisers, LLC (registered investment adviser) (2010-2013), U.S. Compliance Director, Invesco, Ltd. (2006-2014) and Deputy Chief Compliance Officer of Invesco Advisers, Inc. (2014-2015).

Anna Paglia - 1974
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Secretary    Since 2011    Secretary, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2011-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco PowerShares Capital Management LLC; formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   165  

 

 

 

(This Page Intentionally Left Blank)

Proxy Voting Policies and Procedures

A description of the Trust’s 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) 983-0903. This information is also available on the Securities and Exchange Commission’s (“Commission”) website at www.sec.gov.

Information regarding how each 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) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Trust files its complete schedule of portfolio holdings for the Funds with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Trust’s 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.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of each Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net asset value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invescopowershares.com.

LOGO

©2015 Invesco PowerShares Capital Management LLC    P-PS-AR-9
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   
invescopowershares.com    800.983.0903   LOGO   @PowerShares   

LOGO

 

     October 31, 2015

2015 Annual Report to Shareholders

 

DWAS    PowerShares DWA SmallCap Momentum Portfolio
DWTR    PowerShares DWA Tactical Sector Rotation Portfolio
PSCD    PowerShares S&P SmallCap Consumer Discretionary Portfolio
PSCC    PowerShares S&P SmallCap Consumer Staples Portfolio
PSCE    PowerShares S&P SmallCap Energy Portfolio
PSCF    PowerShares S&P SmallCap Financials Portfolio
PSCH    PowerShares S&P SmallCap Health Care Portfolio
PSCI    PowerShares S&P SmallCap Industrials Portfolio
PSCT    PowerShares S&P SmallCap Information Technology Portfolio
PSCM    PowerShares S&P SmallCap Materials Portfolio
PSCU    PowerShares S&P SmallCap Utilities Portfolio

 

LOGO

 

Table of Contents

 

The Market Environment      3   
Manager’s Analysis      4   
SmallCap Sector Portfolios   
Schedules of Investments   

PowerShares DWA SmallCap Momentum Portfolio (DWAS)

      26   

PowerShares DWA Tactical Sector Rotation Portfolio (DWTR)

      29   

PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD)

      30   

PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC)

      32   

PowerShares S&P SmallCap Energy Portfolio (PSCE)

      33   

PowerShares S&P SmallCap Financials Portfolio (PSCF)

      34   

PowerShares S&P SmallCap Health Care Portfolio (PSCH)

      36   

PowerShares S&P SmallCap Industrials Portfolio (PSCI)

      38   

PowerShares S&P SmallCap Information Technology Portfolio (PSCT)

      40   

PowerShares S&P SmallCap Materials Portfolio (PSCM)

      42   

PowerShares S&P SmallCap Utilities Portfolio (PSCU)

      43   
Statements of Assets and Liabilities      44   
Statements of Operations      46   
Statements of Changes in Net Assets      48   
Financial Highlights      52   
Notes to Financial Statements      58   
Report of Independent Registered Public Accounting Firm      68   
Fees and Expenses      69   
Tax Information      71   
Trustees and Officers      72   
Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio      77   

 

 

   2  

 

 

The Market Environment

 

 

 

US Equity

The US economy improved slowly, but steadily, during the fiscal year ended October 31, 2015—although the health of individual economic sectors varied dramatically. The headline story was the continued slowdown in energy markets, as oil prices plummeted when too much supply overwhelmed slowing global demand. However, the more subtle story, which drove the economy forward during the fiscal year, was the improved position of the US consumer.

As the reporting period began in late 2014, economic growth appeared to be stronger in the US than in the rest of the world. US equity markets were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US. The continued strengthening of the US consumer led US equity markets higher through the spring. Continued low interest rates, the increasing availability of credit from lenders and an improving employment picture all contributed to higher consumer confidence. This strength also helped the markets overcome fears that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. In the summer of 2015, however, US equity markets moved sharply lower. A significant downturn in China’s financial markets and weak global economic growth led the US Federal Reserve to delay raising interest rates, which, in turn, increased investor uncertainty and market volatility. In October, however, US markets rallied, recovering from their earlier decline and finishing higher for the fiscal year.

 

 

 

   3  

 

 

 

DWAS    Manager’s Analysis
   PowerShares DWA SmallCap Momentum Portfolio (DWAS)

 

As an index fund, the PowerShares DWA SmallCap Momentum Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Dorsey Wright® SmallCap Technical Leaders Index (the “Index”). The Fund generally will invest at least 90% of its total assets in equity securities of small capitalization companies that comprise the Index.

Strictly in accordance with its guidelines and mandated procedures, Dorsey, Wright & Associates, LLC (the “Index Provider”) includes securities in the Index pursuant to a proprietary selection methodology that is designed to identify listed companies that demonstrate powerful relative strength characteristics. “Relative strength” is an investing technique that seeks to determine the strongest performing securities by measuring certain factors, such as a security’s relative performance against the overall market or a security’s relative strength value, which is derived by comparing the rate of increase of the security’s price over a set period as compared to that of a benchmark index. The Index Provider selects securities for inclusion in the Index from an eligible universe of the smallest 2,000 constituents by market capitalization that trade on a U.S. exchange and that are included within the NASDAQ US Benchmark Index. The Index Provider assigns a relative strength score to each eligible security and selects approximately 200 securities with the greatest scores for inclusion in the Index. Component security weights are based on relative scores, with securities with higher scores receiving larger weights. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (0.08)%. On a net asset value (“NAV”) basis, the Fund returned (0.05)%. During the same time period, the Index returned 0.52%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred, as well as trading costs around quarterly rebalances during the period.

During this same time period, the Russell 2000® Index (the “Benchmark Index”) returned 0.34%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a small cap, market cap weighted benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the health care sector and most underweight in the financials sector during the fiscal year ended October 31, 2015. The

majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s fees and operating expenses as well as the stock selection in the health care, energy and industrials sectors.

For the fiscal year ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the materials and information technology sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the health care and industrials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included US Concrete, Inc., a materials company (portfolio average weight of 1.43%), and LendingTree, Inc., a financials company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Puma Biotechnology, Inc., a health care company (no longer held at fiscal year-end), and Exact Sciences Corporation, a health care company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Health Care      26.2   
Financials      22.4   
Consumer Discretionary      16.8   
Information Technology      14.8   
Industrials      8.2   
Materials      5.3   
Consumer Staples      3.1   
Telecommunication Services      2.4   
Energy      0.8   
Money Market Fund Plus Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Security

  

US Concrete, Inc.

      1.9   

Lithia Motors, Inc., Class A

      1.5   

MarketAxess Holdings, Inc.

      1.5   

Headwaters, Inc.

      1.4   

Starz, Class A

      1.4   

On Assignment, Inc.

      1.3   

Cantel Medical Corp.

      1.3   

FBL Financial Group, Inc., Class A

      1.3   

HFF, Inc., Class A

      1.2   

Anacor Pharmaceuticals, Inc.

      1.1   

Total

      13.9   

 

* Excluding money market fund holdings.
 

 

 

   4  

 

 

PowerShares DWA SmallCap Momentum Portfolio (DWAS) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
Dorsey Wright® SmallCap Technical Leaders Index     0.52 %      14.99 %      52.04 %        14.88 %      57.68 % 
Russell 2000® Index     0.34        13.90        47.77          13.47        51.39   
Fund            
NAV Return     (0.05 )      14.29        49.29          14.17        54.55   
Market Price Return     (0.08 )      14.38        49.66          14.12        54.32   

 

Fund Inception: July 19, 2012

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.60% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   5  

 

 

 

DWTR    Manager’s Analysis
   PowerShares DWA Tactical Sector Rotation Portfolio (DWTR)

 

As an index fund, the PowerShares DWA Tactical Sector Rotation Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Dorsey Wright® Sector 4 Index (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index. The Fund is a “fund of funds,” meaning that it invests its assets in the shares of other exchange-traded funds (“ETFs”) eligible for inclusion in the Index, rather than in securities of individual companies. The Fund also may invest in 1- to 6-month U.S. Treasury Bills included in the Index. The underlying funds included in the Index are ETFs advised by the Fund’s adviser or its affiliates (“PowerShares ETF’s”).

Strictly in accordance with its guidelines and mandated procedures, Dorsey, Wright & Associates, LLC (the “Index Provider” or “Dorsey Wright”) compiles, maintains and calculates the Index which, at any given time, is composed of up to four PowerShares ETFs from an eligible universe of nine PowerShares ETFs, each of which is designed to seek to track separate sector-specific underlying indexes. Each PowerShares ETF’s underlying index also is compiled and maintained by the Index Provider. The PowerShares ETFs that are eligible for inclusion in the Index represent the nine macroeconomic sectors of the U.S. equity markets. The Index seeks to gain exposure to the sectors of the U.S. equity markets that display the strongest relative strength, as evaluated on a monthly basis. “Relative strength” is the measurement of a security’s performance in a given universe as compared to the performance of all other securities in that universe. Therefore, at any given time, the components of the Index are those PowerShares ETFs that the Index Provider believes offer the greatest potential to outperform each other eligible PowerShares ETF.

The Fund commenced investment operations on October 7, 2015, and began trading on October 9, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 1.81%. On a net asset value (“NAV”) basis, the Fund returned 1.73%. During the same time period, the Index returned 1.73%. During the fiscal period, the Fund fully replicated the components of the Index.

During this same time period, the Russell® 3000 Index (the “Benchmark Index”) returned 2.67%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 3,010 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market. The performance of the Fund differed from the Benchmark Index primarily due to the Fund’s thematic objective and weighting methodology across the underlying PowerShares ETFs.

Relative to the Benchmark Index, the Fund was most overweight in the consumer staples sector and most underweight in the

financials sector during the fiscal period ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to stock selection in the consumer discretionary sector.

For the fiscal period ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the technology and consumer discretionary sectors, respectively. There were no detracting sectors.

Positions that contributed most significantly to the Fund’s return included PowerShares DWA Consumer Staples Momentum Portfolio, a PowerShares ETF holding positions in consumer staples companies (portfolio average weight of 26.22%), and PowerShares DWA Technology Momentum Portfolio, a PowerShares ETF holding positions in technology companies (portfolio average weight of 21.11%). There were no detracting positions.

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Consumer Staples      27.6   
Consumer Discretionary      26.1   
Healthcare      24.7   
Technology      21.6   
Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

PowerShares DWA Consumer Staples Momentum Portfolio

      27.6   

PowerShares DWA Consumer Cyclicals Momentum Portfolio

      26.1   

PowerShares DWA Healthcare Momentum Portfolio

      24.7   

PowerShares DWA Technology Momentum Portfolio

      21.6   

Total

      100.0   
 

 

 

   6  

 

 

PowerShares DWA Tactical Sector Rotation Portfolio (DWTR) (continued)

 

Fund Performance History as of October 31, 2015

 

        Fund Inception†  
Index       Cumulative  
Dorsey Wright® Sector 4 Index (Net)††       1.73 % 
Russell 3000® Index       2.67   
Fund    
NAV Return       1.73   
Market Price Return       1.81   

 

Fund Inception: October 9, 2015

Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.75% includes the unitary management fee of 0.15% and acquired fund fees and expenses of 0.60%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. See invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index

and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   7  

 

 

 

PSCD    Manager’s Analysis
   PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD)

 

As an index fund, the PowerShares S&P SmallCap Consumer Discretionary Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Consumer Discretionary Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. consumer discretionary companies that comprise the Index. These companies are principally engaged in the business of providing consumer goods and services that are cyclical in nature, including, but not limited to, household durables, leisure products and services, apparel and luxury goods, computers and electronics, automobiles and auto components, hotel and restaurant services and television and other entertainment goods and services.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 5.45%. On a net asset value (“NAV”) basis, the Fund returned 5.43%. During the same time period, the Index returned 5.68%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the specialty retail industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the hotels, restaurants & leisure industry.

For the fiscal year ended October 31, 2015, the hotels, restaurants & leisure industry contributed most significantly to the Fund’s return, followed by the distributors and household durables

industries, respectively. The specialty retail industry detracted most significantly from the Fund’s return, followed by the diversified consumer services and multi-line retail industries, respectively.

Positions that contributed most significantly to the Fund’s return included Skechers U.S.A., Inc., Class A, a textiles, apparel & luxury goods company (no longer held at fiscal year-end), and Pool Corp., a distributors company (portfolio average weight of 2.94%). Positions that detracted most significantly from the Fund’s return included Iconix Brand Group, Inc., a textiles, apparel & luxury goods company (portfolio average weight of 1.29%), and Lumber Liquidators Holdings, Inc., a specialty retail company (portfolio average weight of 0.92%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Specialty Retail      30.2   
Hotels, Restaurants & Leisure      21.9   
Textiles, Apparel & Luxury Goods      10.8   
Household Durables      10.5   
Auto Components      7.3   
Distributors      6.0   
Media      4.8   
Diversified Consumer Services      2.7   
Leisure Products      2.3   
Internet & Catalog Retail      2.1   
Multi-line Retail      0.8   
Automobiles      0.6   
Money Market Funds Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Pool Corp.      3.9   
Helen of Troy Ltd.      3.1   
Lithia Motors, Inc., Class A      3.1   
Monro Muffler Brake, Inc.      2.6   
G-III Apparel Group Ltd.      2.4   
Texas Roadhouse, Inc.      2.4   
Pinnacle Entertainment, Inc.      2.3   
Papa John’s International, Inc.      2.2   
Group 1 Automotive, Inc.      2.2   
Steven Madden Ltd.      2.2   
Total      26.4   

 

* Excluding money market fund holdings.
 

 

 

   8  

 

 

PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Consumer Discretionary Index     5.68 %      16.64 %      58.70 %      15.78 %      108.05 %        13.41 %      101.43 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     5.43        16.37        57.59        15.49        105.42          13.11        98.50   
Market Price Return     5.45        16.39        57.67        15.50        105.51          13.13        98.76   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   9  

 

 

 

PSCC    Manager’s Analysis
   PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC)

 

As an index fund, the PowerShares S&P SmallCap Consumer Staples Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Consumer Staples Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. consumer staples companies that comprise the Index. These companies are principally engaged in the business of providing consumer goods and services that have noncyclical characteristics, including tobacco, food and beverage, and non-discretionary retail.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 8.54%. On a net asset value (“NAV”) basis, the Fund returned 8.44%. During the same time period, the Index returned 8.61%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the food products industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the household products industry.

For the fiscal year ended October 31, 2015, the household products industry contributed most significantly to the Fund’s return, followed by the beverages and food & staples retailing industries, respectively. The personal products industry was the only detracting industry.

Positions that contributed most significantly to the Fund’s return included Central Garden & Pet Co., Class A, a household products company (portfolio average weight of 4.27%), and Boston Beer Co., Inc., a beverages company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Darling Ingredients, Inc., a food products company (portfolio average weight of 11.62%), and Andersons, Inc. (The), a food & staples retailing company (portfolio average weight of 4.52%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Food Products      63.3   
Household Products      10.0   
Food & Staples Retailing      9.5   
Personal Products      9.2   
Tobacco      4.7   
Other Assets Less Liabilities      3.3   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

B&G Foods, Inc.

      11.5   

Snyders-Lance, Inc.

      10.1   

Darling Ingredients, Inc.

      9.1   

Cal-Maine Foods, Inc.

      9.0   

Seneca Foods Corp., Class A

      4.8   

Andersons, Inc. (The)

      4.8   

SpartanNash Co.

      4.7   

Sanderson Farms, Inc.

      4.7   

Calavo Growers, Inc.

      4.7   

J & J Snack Foods Corp.

      4.7   

Total

      68.1   
 

 

 

   10  

 

 

PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Consumer Staples Index     8.61 %      20.17 %      73.55 %      17.17 %      120.80 %        16.97 %      139.20 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     8.44        19.91        72.42        16.97        118.95          16.75        136.80   
Market Price Return     8.54        20.05        73.02        16.97        118.99          16.77        137.02   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   11  

 

 

 

PSCE    Manager’s Analysis
   PowerShares S&P SmallCap Energy Portfolio (PSCE)

 

As an index fund, the PowerShares S&P SmallCap Energy Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Energy Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. energy companies that comprise the Index. These companies are principally engaged in the business of producing, distributing or servicing energy related products, including oil and gas exploration and production, refining, oil services and pipelines.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (51.85)%. On a net asset value (“NAV”) basis, the Fund returned (51.89)%. During the same time period, the Index returned (51.78)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the energy equipment & services industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the energy equipment & services industry.

For the fiscal year ended October 31, 2015, there were no contributing industries. The energy equipment & services industry detracted most significantly from the Fund’s return, followed by the oil, gas & consumable fuels industry.

Positions that contributed most significantly to the Fund’s return included PDC Energy, Inc., an oil, gas & consumable fuels company (portfolio average weight of 8.71%), and Helix Energy Solutions Group, Inc., an energy equipment & services company (portfolio average weight of 0.28%). Positions that detracted most significantly from the Fund’s return included Bristow Group, Inc., an energy equipment & services company (portfolio average weight of 8.11%), and Exterran Holdings, Inc., an energy equipment & services company (portfolio average weight of 8.89%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Energy Equipment & Services      55.9   
Oil, Gas & Consumable Fuels      44.0   
Money Market Funds Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
PDC Energy, Inc.      13.2   
Carrizo Oil & Gas, Inc.      10.9   
Exterran Holdings, Inc.      8.2   
Bristow Group, Inc.      6.6   
SEACOR Holdings, Inc.      5.2   
Synergy Resources Corp.      5.0   
US Silica Holdings, Inc.      4.3   
Green Plains, Inc.      4.1   
Unit Corp.      3.6   
Matrix Service Co.      3.4   
Total      64.5   

 

* Excluding money market fund holdings.
 

 

 

   12  

 

 

PowerShares S&P SmallCap Energy Portfolio (PSCE) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Energy Index     (51.78 )%      (17.35 )%      (43.53 )%      (6.43 )%      (28.27 )%        (5.28 )%      (26.07 )% 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     (51.89 )      (17.57 )      (44.00 )      (6.72 )      (29.36 )        (5.57 )      (27.32 ) 
Market Price Return     (51.85 )      (17.52 )      (43.88 )      (6.70 )      (29.32 )        (5.53 )      (27.17 ) 

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   13  

 

 

 

PSCF    Manager’s Analysis
   PowerShares S&P SmallCap Financials Portfolio (PSCF)

 

As an index fund, the PowerShares S&P SmallCap Financials Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Financials Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. financial service companies that comprise the Index. These companies are principally engaged in the business of providing financial services and products, including banking, investment services, insurance and real estate finance services.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 5.80%. On a net asset value (“NAV”) basis, the Fund returned 5.68%. During the same time period, the Index returned 5.96%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the real estate investment trusts (REITs) industry and most underweight in the health care equipment & supplies industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the banks industry.

For the fiscal year ended October 31, 2015, the banks industry contributed most significantly to the Fund’s return, followed by the insurance and diversified financial services industries, respectively. The consumer finance industry detracted most significantly from the Fund’s return, followed by the capital markets and real estate investment trusts (REITs) industries, respectively.

Positions that contributed most significantly to the Fund’s return included MarketAxess Holdings, Inc., a capital markets company (no longer held at fiscal year-end), and Interactive Brokers Group, Inc., Class A, a capital markets company (portfolio average weight of 1.27%). Positions that detracted most significantly from the Fund’s return included FXCM Inc. Class A, a capital markets company (no longer held at fiscal year-end), and First Cash Financial Services, Inc., a consumer finance company (portfolio average weight of 0.83%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Banks      38.7   
Real Estate Investment Trusts      31.0   
Insurance      12.1   
Thrifts & Mortgage Finance      6.6   
Capital Markets      6.4   
Consumer Finance      4.8   
Real Estate Management & Development      0.3   
Money Market Funds Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

PrivateBancorp, Inc.

      2.2   

EPR Properties

      2.1   

ProAssurance Corp.

      1.8   

PRA Group, Inc.

      1.7   

Healthcare Realty Trust, Inc.

      1.7   

Medical Properties Trust, Inc.

      1.7   

United Bankshares, Inc.

      1.7   

Home BancShares, Inc.

      1.6   

Texas Capital Bancshares, Inc.

      1.6   

Wintrust Financial Corp.

      1.6   

Total

      17.7   

 

* Excluding money market fund holdings.
 

 

 

   14  

 

 

PowerShares S&P SmallCap Financials Portfolio (PSCF) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Financials Index     5.96 %      14.93 %      51.80 %      14.05 %      92.95 %        12.11 %      88.90 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     5.68        14.62        50.59        13.72        90.19          11.77        85.82   
Market Price Return     5.80        14.68        50.82        13.76        90.51          11.78        85.91   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.37% includes the unitary management fee of 0.29% and acquired fund fees and expenses of 0.08%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   15  

 

 

 

PSCH    Manager’s Analysis
   PowerShares S&P SmallCap Health Care Portfolio (PSCH)

 

As an index fund, the PowerShares S&P SmallCap Health Care Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Health Care Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. health care companies that comprise the Index. These companies are principally engaged in the business of providing health care-related products, facilities and services including, but not limited to, biotechnology, pharmaceuticals, medical technology and supplies.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 14.12%. On a net asset value (“NAV”) basis, the Fund returned 13.96%. During the same time period, the Index returned 14.41%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the health care equipment & supplies industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the health care equipment & supplies industry.

For the fiscal year ended October 31, 2015, the health care equipment & supplies industry contributed most significantly to the Fund’s return, followed by the health care providers & services and life sciences tools & services industries, respectively. The health care technology industry was the only detracting industry.

Positions that contributed most significantly to the Fund’s return included ABIOMED, Inc., a health care equipment & supplies company (portfolio average weight of 2.84%), and AmSurg Corp., a health care providers & services company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Kindred Healthcare, Inc., a health care providers & services company (portfolio average weight of 1.85%), and Mimedx Group, Inc., a biotechnology company (portfolio average weight of 0.38%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Health Care Equipment & Supplies      34.9   
Health Care Providers & Services      26.4   
Pharmaceuticals      15.6   
Biotechnology      9.7   
Health Care Technology      9.2   
Life Sciences Tools & Services      4.2   
Money Market Funds Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
ABIOMED, Inc.      3.6   
Chemed Corp.      3.3   
Prestige Brands Holdings, Inc.      3.3   
Medidata Solutions, Inc.      3.0   
Impax Laboratories, Inc.      2.9   
NuVasive, Inc.      2.9   
Medicines Co. (The)      2.9   
Cantel Medical Corp.      2.7   
Neogen Corp.      2.5   
Masimo Corp.      2.3   
Total      29.4   

 

* Excluding money market fund holdings.
 

 

 

   16  

 

 

PowerShares S&P SmallCap Health Care Portfolio (PSCH) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Health Care Index     14.41 %      26.46 %      102.26 %      22.82 %      179.45 %        20.51 %      182.42 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     13.96        26.06        100.32        22.45        175.24          20.14        177.74   
Market Price Return     14.12        26.13        100.65        22.46        175.44          20.17        178.18   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

 

 

 

   17  

 

 

 

PSCI    Manager’s Analysis
   PowerShares S&P SmallCap Industrials Portfolio (PSCI)

 

As an index fund, the PowerShares S&P SmallCap Industrials Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Industrials Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. industrials companies that comprise the Index. These companies are principally engaged in the business of providing industrial products and services including, but not limited to, engineering, heavy machinery, construction, electrical equipment, aerospace and defense and general manufacturing.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 2.69%. On a net asset value (“NAV”) basis, the Fund returned 2.51%. During the same time period, the Index returned 2.82%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the machinery industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s slight underperformance relative to the Benchmark Index during the period can be attributed to fees and operating expenses that the Fund incurred during the period.

For the fiscal year ended October 31, 2015, the construction & engineering industry contributed most significantly to the Fund’s return, followed by the professional services and building products industries, respectively. The machinery industry detracted most

significantly from the Fund’s return, followed by the road & rail and trading companies & distributors industries, respectively.

Positions that contributed most significantly to the Fund’s return included Dycom Industries, Inc., a communications equipment company (portfolio average weight of 1.59%), and Allegiant Travel Co., an airlines company (portfolio average weight of 2.18%). Positions that detracted most significantly from the Fund’s return included Saia, Inc., a road & rail company (portfolio average weight of 0.95%), and Moog, Inc., Class A, an aerospace & defense company (portfolio average weight of 2.44%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Machinery      20.9   
Commercial Services & Supplies      17.1   
Professional Services      10.5   
Aerospace & Defense      10.1   
Building Products      8.1   
Construction & Engineering      7.3   
Electrical Equipment      6.9   
Airlines      5.0   
Air Freight & Logistics      4.6   
Road & Rail      4.6   
Trading Companies & Distributors      3.1   
Marine      1.8   
Money Market Funds Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

Curtiss-Wright Corp.

      3.0   

EMCOR Group, Inc.

      2.7   

EnerSys

      2.6   

Healthcare Services Group, Inc.

      2.4   

Allegiant Travel Co.

      2.4   

Dycom Industries, Inc.

      2.3   

On Assignment, Inc.

      1.9   

Moog, Inc., Class A

      1.9   

Matson, Inc.

      1.8   

Barnes Group, Inc.

      1.7   

Total

      22.7   

 

* Excluding money market fund holdings.
 

 

 

   18  

 

 

PowerShares S&P SmallCap Industrials Portfolio (PSCI) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Industrials Index     2.82 %      15.89 %      55.65 %      13.50 %      88.36 %        12.53 %      92.85 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     2.51        15.52        54.15        13.14        85.39          12.17        89.52   
Market Price Return     2.69        15.61        54.53        13.15        85.47          12.19        89.68   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   19  

 

 

 

PSCT    Manager’s Analysis
   PowerShares S&P SmallCap Information Technology Portfolio (PSCT)

 

As an index fund, the PowerShares S&P SmallCap Information Technology Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Information Technology Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. information technology companies that comprise the Index. These companies are principally engaged in the business of providing information technology-related products and services including, but not limited, to computer hardware and software, internet, electronics and semiconductors, and communication technologies.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 7.92%. On a net asset value (“NAV”) basis, the Fund returned 7.75%. During the same time period, the Index returned 8.06%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the electronic equipment instruments & components industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the IT services industry.

For the fiscal year ended October 31, 2015, the IT services industry contributed most significantly to the Fund’s return, followed by the semiconductors & semiconductor equipment and

software industries, respectively. The electronic equipment instruments & components industry detracted most significantly from the Fund’s return, followed by the communications equipment and technology hardware storage & peripherals industries, respectively.

Positions that contributed most significantly to the Fund’s return included Manhattan Associates, Inc., a software company (no longer held at fiscal year-end), and TriQuint Semiconductor, Inc., a semiconductors & semiconductor equipment company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Veeco Instruments, Inc., a semiconductors & semiconductor equipment company (portfolio average weight of 1.04%), and Synchronoss Technologies, Inc., a software company (portfolio average weight of 1.44%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Electronic Equipment, Instruments & Components      26.1   
Semiconductors & Semiconductor Equipment      21.6   
Software      13.6   
IT Services      13.1   
Internet Software & Services      11.3   
Communications Equipment      10.3   
Technology Hardware, Storage & Peripherals      4.0   
Money Market Funds Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

j2 Global, Inc.

      3.3   

Microsemi Corp.

      3.1   

Blackbaud, Inc.

      2.7   

ViaSat, Inc.

      2.7   

Take-Two Interactive Software, Inc.

      2.6   

Heartland Payment Systems, Inc.

      2.5   

SYNNEX Corp.

      2.4   

CACI International, Inc., Class A

      2.2   

Monolithic Power Systems, Inc.

      2.1   

Littelfuse, Inc.

      2.1   

Total

      25.7   

 

* Excluding money market fund holdings.
 

 

 

   20  

 

 

PowerShares S&P SmallCap Information Technology Portfolio (PSCT) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Information Technology Index     8.06 %      21.28 %      78.39 %      15.09 %      101.94 %        14.18 %      109.15 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     7.75        20.93        76.86        14.76        99.02          13.83        105.66   
Market Price Return     7.92        21.03        77.28        14.80        99.37          13.86        106.02   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   21  

 

 

 

PSCM    Manager’s Analysis
   PowerShares S&P SmallCap Materials Portfolio (PSCM)

 

As an index fund, the PowerShares S&P SmallCap Materials Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Materials Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. basic materials companies that comprise the Index. These companies are principally engaged in the business of producing raw materials, including paper or wood products, chemicals, construction materials, and mining and metals.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (20.88)%. On a net asset value (“NAV”) basis, the Fund returned (20.94)%. During the same time period, the Index returned (20.68)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the chemicals industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the metals & mining industry.

For the fiscal year ended October 31, 2015, the construction materials industry contributed most significantly to the Fund’s return, followed by the containers & packaging industry. The metals & mining industry detracted most significantly from the Fund’s return, followed by the chemicals and paper & forest products industries, respectively.

Positions that contributed most significantly to the Fund’s return included Headwaters, Inc., a construction materials company (portfolio average weight of 3.68%), and Balchem Corp., a chemicals company (portfolio average weight of 5.2%). Positions that detracted most significantly from the Fund’s return included SunCoke Energy, Inc., a metals & mining company (portfolio average weight of 2.74%), and Century Aluminum Co., a metals & mining company (portfolio average weight of 2.05%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Chemicals      47.5   
Paper & Forest Products      26.9   
Metals & Mining      19.4   
Construction Materials      5.0   
Containers & Packaging      1.2   
Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

Balchem Corp.

      7.0   

H.B. Fuller Co.

      6.2   

KapStone Paper and Packaging Corp.

      6.1   

Headwaters, Inc.

      4.9   

Kaiser Aluminum Corp.

      4.6   

Innospec, Inc.

      4.3   

Schweitzer-Mauduit International, Inc.

      3.9   

Boise Cascade Co.

      3.8   

Stillwater Mining Co.

      3.7   

Neenah Paper, Inc.

      3.7   

Total

      48.2   
 

 

 

   22  

 

 

PowerShares S&P SmallCap Materials Portfolio (PSCM) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Materials Index     (20.68 )%      5.70 %      18.09 %      6.79 %      38.90 %        6.53 %      42.17 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     (20.94 )      5.36        16.94        6.47        36.80          6.21        39.85   
Market Price Return     (20.88 )      5.38        17.02        6.47        36.84          6.22        39.90   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   23  

 

 

 

PSCU    Manager’s Analysis
   PowerShares S&P SmallCap Utilities Portfolio (PSCU)

 

As an index fund, the PowerShares S&P SmallCap Utilities Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Capped Utilities & Telecommunication Services Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks of small capitalization U.S. utility companies that comprise the Index. These companies are principally engaged in providing either energy, water, electric or natural gas utilities or providing telecommunications services. These companies may include, but are not limited to, companies that generate and supply electricity, including electricity wholesalers; distribute natural gas to customers; provide water to customers, as well as deal with associated wastewater; and provide land line or wireless telephone services.

S&P Dow Jones Indices, LLC, a division of The McGraw-Hill-Companies, Inc., the Index provider, defines sectors according to the Global Industry Classification Standard (“GICS”) and compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 13.52%. On a net asset value (“NAV”) basis, the Fund returned 13.43%. During the same time period, the Index returned 13.72%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P SmallCap 600® Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of small cap securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap stock market.

Relative to the Benchmark Index, the Fund was most overweight in the gas utilities industry and most underweight in the real estate investment trusts (REITs) industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s concentration in the gas utilities industry.

For the fiscal year ended October 31, 2015, the gas utilities industry contributed most significantly to the Fund’s return,

followed by the electric utilities and diversified telecommunication services industries, respectively. The wireless telecommunication services industry was the only detracting industry.

Positions that contributed most significantly to the Fund’s return included Piedmont Natural Gas Co., Inc., a gas utilities company (portfolio average weight of 9.79%), and UIL Holdings Corp., an electric utilities company (portfolio average weight of 8.66%). Positions that detracted most significantly from the Fund’s return included NTELOS Holdings Corp., a diversified telecommunication services company (no longer held at fiscal year-end), and Iridium Communications, Inc., a diversified telecommunication services company (portfolio average weight of 2.57%).

 

Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Gas Utilities      42.6   
Diversified Telecommunication Services      23.1   
Electric Utilities      16.7   
Multi-Utilities      11.7   
Water Utilities      4.1   
Wireless Telecommunication Services      1.8   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

Piedmont Natural Gas Co., Inc.

      13.1   

Southwest Gas Corp.

      8.4   

UIL Holdings Corp.

      8.4   

New Jersey Resources Corp.

      7.9   

NorthWestern Corp.

      7.4   

Laclede Group, Inc. (The)

      4.5   

Consolidated Communications Holdings, Inc.

      4.4   

South Jersey Industries, Inc.

      4.4   

El Paso Electric Co.

      4.3   

Avista Corp.

      4.3   

Total

      67.1   
 

 

 

   24  

 

 

PowerShares S&P SmallCap Utilities Portfolio (PSCU) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		     5 Years
Average
Annualized		     5 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P SmallCap 600® Capped Utilities & Telecommunication Services Index     13.72 %      14.80 %      51.29 %      12.85 %      83.04 %        13.26 %      99.91 % 
S&P SmallCap 600® Index     2.85        16.06        56.34        14.44        96.33          13.14        98.74   
Fund                
NAV Return     13.43        14.46        49.94        12.52        80.33          12.92        96.66   
Market Price Return     13.52        14.51        50.16        12.54        80.50          12.93        96.77   

 

Fund Inception: April 7, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.29% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   25  

 

 

Schedule of Investments(a)

PowerShares DWA SmallCap Momentum Portfolio (DWAS)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Consumer Discretionary—16.8%   
  45,861       2U, Inc.(b)(c)    $ 962,164   
  26,845       Asbury Automotive Group, Inc.(c)      2,126,124   
  52,650       Bassett Furniture Industries, Inc.      1,682,694   
  37,846       CalAtlantic Group, Inc.(c)      1,441,554   
  121,688       Carrols Restaurant Group, Inc.(c)      1,431,051   
  33,539       Cheesecake Factory, Inc. (The)      1,616,580   
  11,755       Churchill Downs, Inc.      1,725,987   
  39,702       Cooper Tire & Rubber Co.      1,659,146   
  51,360       Culp, Inc.      1,541,314   
  141,396       Denny’s Corp.(c)      1,549,700   
  17,464       DineEquity, Inc.      1,457,371   
  46,370       Dorman Products, Inc.(b)(c)      2,164,552   
  33,563       Fiesta Restaurant Group, Inc.(c)      1,186,788   
  78,571       Gentherm, Inc.(c)      3,862,550   
  36,078       G-III Apparel Group Ltd.(c)      1,987,537   
  17,750       Helen of Troy Ltd.(c)      1,760,977   
  85,694       Isle of Capri Casinos, Inc.(c)      1,639,326   
  58,194       La-Z-Boy, Inc.      1,661,439   
  57,159       LGI Homes, Inc.(b)(c)      1,602,167   
  54,036       Lithia Motors, Inc., Class A      6,343,286   
  64,679       M/I Homes, Inc.(c)      1,484,383   
  23,099       Marriott Vacations Worldwide Corp.      1,487,576   
  31,260       Monro Muffler Brake, Inc.      2,318,554   
  59,401       Nutrisystem, Inc.      1,373,945   
  36,348       Papa John’s International, Inc.      2,550,539   
  92,151       Papa Murphy’s Holdings, Inc.(b)(c)      1,272,605   
  22,346       Pool Corp.      1,822,093   
  40,867       Popeyes Louisiana Kitchen, Inc.(c)      2,306,533   
  21,291       Red Robin Gourmet Burgers, Inc.(c)      1,594,483   
  103,647       Sequential Brands Group, Inc.(b)(c)      1,296,624   
  93,441       Skechers U.S.A., Inc., Class A(c)      2,915,359   
  115,821       Sportsman’s Warehouse Holdings, Inc.(c)      1,246,234   
  173,521       Starz, Class A(c)      5,814,689   
  43,665       Texas Roadhouse, Inc.      1,499,893   
  54,822       Unifi, Inc.(c)      1,677,005   
     

 

 

  
        70,062,822   
     

 

 

  
   Consumer Staples—3.1%   
  29,568       Cal-Maine Foods, Inc.(b)      1,580,705   
  9,582       Coca-Cola Bottling Co. Consolidated      2,023,814   
  33,839       Ingles Markets, Inc., Class A      1,689,920   
  47,632       John B. Sanfilippo & Son, Inc.      3,082,743   
  23,572       Post Holdings, Inc., Class A(c)      1,514,972   
  209,460       SUPERVALU, Inc.(c)      1,376,152   
  13,026       USANA Health Sciences, Inc.(c)      1,675,144   
     

 

 

  
        12,943,450   
     

 

 

  
   Energy—0.8%   
  338,514       McDermott International, Inc.(b)(c)      1,560,549   
  31,236       REX American Resources Corp.(c)      1,715,169   
     

 

 

  
        3,275,718   
     

 

 

  
   Financials—22.4%   
  67,261       American Equity Investment Life Holding Co.      1,727,262   
  57,658       Ameris Bancorp      1,816,227   
  91,087       Atlas Financial Holdings, Inc.(c)      1,732,475   
  81,436       Bank of the Ozarks, Inc.      4,073,429   
  73,369       BNC Bancorp      1,647,134   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Financials (continued)   
  53,474       BofI Holding, Inc.(b)(c)    $ 4,278,455   
  53,724       Cathay General Bancorp      1,681,561   
  8,420       Diamond Hill Investment Group, Inc.      1,684,421   
  42,852       Eagle Bancorp, Inc.(c)      2,039,755   
  82,708       FBL Financial Group, Inc., Class A      5,202,333   
  79,867       Fidelity Southern Corp.      1,673,214   
  45,382       First Defiance Financial Corp.      1,738,130   
  66,572       First Financial Bankshares, Inc.(b)      2,214,185   
  63,805       First Merchants Corp.      1,673,605   
  41,399       Great Southern Bancorp, Inc.      2,000,814   
  66,223       Hanmi Financial Corp.      1,688,686   
  149,881       HFF, Inc., Class A      5,173,892   
  14,383       Hingham Institution for Savings      1,832,538   
  41,613       Home BancShares, Inc.      1,786,030   
  48,450       Horace Mann Educators Corp.      1,658,928   
  257,104       Independent Bank Corp.      3,722,866   
  40,963       Interactive Brokers Group, Inc., Class A      1,685,218   
  61,902       MarketAxess Holdings, Inc.      6,271,292   
  121,892       Meridian Bancorp, Inc.      1,711,364   
  38,212       Meta Financial Group, Inc.      1,646,173   
  421,084       MGIC Investment Corp.(c)      3,958,190   
  85,868       Pacific Premier Bancorp, Inc.(c)      1,833,282   
  35,086       Pinnacle Financial Partners, Inc.      1,846,225   
  54,524       Preferred Bank      1,805,290   
  43,875       PrivateBancorp, Inc.      1,835,291   
  39,774       RLI Corp.      2,420,248   
  41,539       Stewart Information Services Corp.      1,668,622   
  81,557       United Community Banks, Inc.      1,644,189   
  106,316       Universal Insurance Holdings, Inc.      3,354,270   
  213,300       Waterstone Financial, Inc.      2,841,156   
  58,771       Webster Financial Corp.      2,180,404   
  62,018       Western Alliance Bancorp(c)      2,217,143   
  152,753       Wilshire Bancorp, Inc.      1,632,929   
  77,325       Yadkin Financial Corp.      1,821,004   
     

 

 

  
        93,418,230   
     

 

 

  
   Health Care—26.2%   
  30,205       ABIOMED, Inc.(c)      2,224,900   
  66,547       Aerie Pharmaceuticals, Inc.(b)(c)      1,517,937   
  36,098       Almost Family, Inc.(c)      1,493,735   
  41,706       Amedisys, Inc.(c)      1,650,723   
  322,323       Amicus Therapeutics, Inc.(c)      2,417,422   
  47,575       AMN Healthcare Services, Inc.(c)      1,349,703   
  19,725       AmSurg Corp.(c)      1,382,525   
  42,320       Anacor Pharmaceuticals, Inc.(c)      4,757,191   
  65,393       AtriCure, Inc.(c)      1,211,405   
  86,048       Cambrex Corp.(c)      3,955,627   
  88,721       Cantel Medical Corp.      5,259,381   
  77,823       Cara Therapeutics, Inc.(c)      1,102,752   
  397,809       Catalyst Pharmaceuticals, Inc.(b)(c)      1,257,076   
  38,185       Chimerix, Inc.(c)      1,496,088   
  15,498       Clovis Oncology, Inc.(c)      1,548,405   
  86,357       Concert Pharmaceuticals, Inc.(c)      1,961,167   
  110,853       Cross Country Healthcare, Inc.(c)      1,496,515   
  221,851       Cytokinetics, Inc.(c)      1,910,137   
  53,330       Dermira, Inc.(c)      1,439,377   
  54,846       Dynavax Technologies Corp.(c)      1,245,553   
  61,381       Eagle Pharmaceuticals, Inc.(b)(c)      3,910,584   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   26  

 

 

PowerShares DWA SmallCap Momentum Portfolio (DWAS) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Health Care (continued)   
  399,883       Exelixis, Inc.(b)(c)    $ 2,407,296   
  265,447       Fibrocell Science, Inc.(b)(c)      1,014,008   
  67,672       Heron Therapeutics, Inc.(b)(c)      1,855,566   
  14,082       ICU Medical, Inc.(c)      1,548,598   
  38,204       Impax Laboratories, Inc.(c)      1,323,005   
  35,375       Inogen, Inc.(c)      1,511,927   
  61,899       Intersect ENT, Inc.(c)      1,185,985   
  37,494       Intra-Cellular Therapies, Inc.(c)      1,794,088   
  75,617       iRadimed Corp.(c)      2,003,850   
  126,983       Lexicon Pharmaceuticals, Inc.(b)(c)      1,207,608   
  34,084       LHC Group, Inc.(c)      1,535,995   
  16,519       Ligand Pharmaceuticals, Inc.(c)      1,492,492   
  77,934       Loxo Oncology, Inc.(c)      1,822,097   
  42,053       Medidata Solutions, Inc.(c)      1,808,279   
  150,914       MiMedx Group, Inc.(b)(c)      1,098,654   
  22,057       Molina Healthcare, Inc.(c)      1,367,534   
  41,062       Natus Medical, Inc.(c)      1,869,553   
  69,945       Neogen Corp.(c)      3,780,527   
  235,255       NeoGenomics, Inc.(c)      1,658,548   
  57,768       Neurocrine Biosciences, Inc.(c)      2,835,831   
  31,282       NewLink Genetics Corp.(b)(c)      1,197,162   
  31,001       NuVasive, Inc.(c)      1,462,007   
  48,947       PharMerica Corp.(c)      1,398,416   
  45,945       Phibro Animal Health Corp., Class A      1,532,725   
  31,018       Portola Pharmaceuticals, Inc.(c)      1,476,767   
  36,667       PRA Health Sciences, Inc.(c)      1,284,812   
  41,580       Prestige Brands Holdings, Inc.(c)      2,037,836   
  29,824       Prothena Corp. PLC (Ireland)(c)      1,536,234   
  37,469       Providence Service Corp. (The)(c)      1,935,274   
  113,487       Repligen Corp.(c)      3,772,308   
  46,079       Sarepta Therapeutics, Inc.(b)(c)      1,108,661   
  98,586       Sucampo Pharmaceuticals, Inc., Class A(c)      1,908,625   
  91,606       Supernus Pharmaceuticals, Inc.(c)      1,511,499   
  377,301       Teligent, Inc.(b)(c)      2,742,978   
  45,282       Vascular Solutions, Inc.(c)      1,454,458   
  105,629       Vitae Pharmaceuticals, Inc.(b)(c)      1,254,873   
  36,690       Zafgen, Inc.(b)(c)      353,325   
  43,982       Zeltiq Aesthetics, Inc.(c)      1,483,953   
     

 

 

  
        109,161,557   
     

 

 

  
   Industrials—8.2%   
  50,193       Advanced Drainage Systems, Inc.      1,577,064   
  28,957       American Woodmark Corp.(c)      2,105,174   
  36,034       Apogee Enterprises, Inc.      1,784,764   
  44,840       Argan, Inc.      1,656,838   
  106,996       Builders FirstSource, Inc.(c)      1,264,693   
  56,353       Comfort Systems USA, Inc.      1,799,351   
  27,324       Dycom Industries, Inc.(c)      2,079,083   
  79,644       Hawaiian Holdings, Inc.(c)      2,763,647   
  82,087       Healthcare Services Group, Inc.      3,058,562   
  24,181       Huron Consulting Group, Inc.(c)      1,167,942   
  69,356       Lawson Products, Inc.(c)      1,803,949   
  27,457       Multi-Color Corp.      2,137,253   
  21,643       Nortek, Inc.(c)      1,327,798   
  118,169       On Assignment, Inc.(c)      5,330,604   
  76,307       Patrick Industries, Inc.(c)      3,096,538   
  33,908       US Ecology, Inc.      1,329,533   
     

 

 

  
        34,282,793   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks (continued)   
   Information Technology—14.8%   
  75,403       ACI Worldwide, Inc.(c)    $ 1,805,902   
  98,250       Callidus Software, Inc.(c)      1,706,602   
  194,406       EarthLink Holdings Corp.      1,662,171   
  35,886       Electronics for Imaging, Inc.(c)      1,666,546   
  22,914       Ellie Mae, Inc.(c)      1,672,264   
  27,468       EPAM Systems, Inc.(c)      2,124,650   
  54,047       ePlus, Inc.(c)      4,562,648   
  24,801       Euronet Worldwide, Inc.(c)      1,990,032   
  19,410       Fair Isaac Corp.      1,792,902   
  65,742       GTT Communications, Inc.(c)      1,230,690   
  117,343       Hackett Group, Inc. (The)      1,746,064   
  38,907       Heartland Payment Systems, Inc.      2,879,118   
  26,101       Imperva, Inc.(c)      1,843,253   
  81,928       Infinera Corp.(c)      1,618,897   
  66,172       Inphi Corp.(c)      1,969,940   
  22,925       j2 Global, Inc.      1,777,834   
  19,215       Littelfuse, Inc.      1,920,155   
  25,773       LogMeIn, Inc.(c)      1,736,069   
  129,683       MaxLinear, Inc., Class A(c)      1,685,879   
  64,266       Mentor Graphics Corp.      1,748,035   
  32,331       Monolithic Power Systems, Inc.      2,018,101   
  43,313       Paycom Software, Inc.(c)      1,646,327   
  147,754       PFSweb, Inc.(c)      2,367,019   
  30,992       Plantronics, Inc.      1,661,791   
  35,233       Proofpoint, Inc.(c)      2,481,813   
  56,443       Q2 Holdings, Inc.(c)      1,391,320   
  62,542       QAD, Inc., Class A      1,597,323   
  31,228       SPS Commerce, Inc.(c)      2,242,795   
  20,514       Stamps.com, Inc.(c)      1,551,064   
  56,090       Super Micro Computer, Inc.(c)      1,582,299   
  54,152       Take-Two Interactive Software, Inc.(c)      1,797,846   
  35,231       Virtusa Corp.(c)      2,023,316   
     

 

 

  
        61,500,665   
     

 

 

  
   Materials—5.3%   
  288,513       Headwaters, Inc.(c)      5,928,942   
  54,876       Innospec, Inc.      3,031,350   
  56,152       Neenah Paper, Inc.      3,785,206   
  20,496       Quaker Chemical Corp.      1,626,973   
  138,032       US Concrete, Inc.(c)      7,655,255   
     

 

 

  
        22,027,726   
     

 

 

  
   Telecommunication Services—2.4%   
  104,031       FairPoint Communications, Inc.(c)      1,668,657   
  154,877       Inteliquent, Inc.      3,209,051   
  40,295       Shenandoah Telecommunications Co.      1,885,403   
  45,046       Straight Path Communications, Inc., Class B(b)(c)      1,396,426   
  262,212       Vonage Holdings Corp.(c)      1,591,627   
     

 

 

  
        9,751,164   
     

 

 

  
   Total Investments
(excluding investments purchased with cash
collateral from securities on loan)
(Cost $388,137,323)—100.0%		      416,424,125   
     

 

 

  
     
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   27  

 

 

PowerShares DWA SmallCap Momentum Portfolio (DWAS) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—6.6%   
  27,521,604       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $27,521,604)		    $ 27,521,604   
     

 

 

  
   Total Investments
(Cost $415,658,927)—106.6%		      443,945,729   
   Other assets less
liabilities—(6.6)%		      (27,629,811 ) 
     

 

 

  
   Net Assets—100.0%    $ 416,315,918   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Non-income producing security.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   28  

 

 

Schedule of Investments

PowerShares DWA Tactical Sector Rotation Portfolio (DWTR)

October 31, 2015

 

Number
of Shares		           Value  
   Exchange—Traded Funds—100.0%(a)   
  238,164       PowerShares DWA Consumer Cyclicals Momentum Portfolio    $ 11,110,351   
  207,102       PowerShares DWA Consumer Staples Momentum Portfolio      11,753,038   
  191,707       PowerShares DWA Healthcare Momentum Portfolio(b)      10,541,968   
  222,756       PowerShares DWA Technology Momentum Portfolio      9,202,050   
     

 

 

  
   Total Investments
(Cost $41,828,462)—100.0%		      42,607,407   
   Other assets less
liabilities—(0.0)%		      (3,373 ) 
     

 

 

  
   Net Assets—100.0%    $ 42,604,034   
     

 

 

  

Notes to Schedule of Investments:

(a)  Affiliated company. The Fund’s Adviser also serves as the adviser for PowerShares DWA Consumer Cyclicals Momentum Portfolio, PowerShares DWA Consumer Staples Momentum Portfolio, PowerShares DWA Healthcare Momentum Portfolio and PowerShares DWA Technology Momentum Portfolio and therefore, PowerShares DWA Consumer Cyclicals Momentum Portfolio, PowerShares DWA Consumer Staples Momentum Portfolio, PowerShares DWA Healthcare Momentum Portfolio and PowerShares DWA Technology Momentum Portfolio are considered to be affiliated. See Note 4.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   29  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Auto Components—7.3%   
  39,459       Dorman Products, Inc.(b)(c)    $ 1,841,946   
  30,744       Drew Industries, Inc.      1,839,414   
  45,917       Gentherm, Inc.(c)      2,257,280   
  23,146       Motorcar Parts of America, Inc.(c)      779,094   
  25,282       Standard Motor Products, Inc.      1,118,728   
  29,795       Superior Industries International, Inc.      586,366   
     

 

 

  
        8,422,828   
     

 

 

  
   Automobiles—0.6%   
  34,298       Winnebago Industries, Inc.(b)      719,915   
     

 

 

  
   Distributors—6.0%   
  29,351       Core-Mark Holding Co., Inc.      2,385,943   
  54,670       Pool Corp.      4,457,792   
  25,422       VOXX International Corp., Class A(c)      131,177   
     

 

 

  
        6,974,912   
     

 

 

  
   Diversified Consumer Services—2.7%   
  21,106       American Public Education, Inc.(c)      458,633   
  13,983       Capella Education Co.      631,332   
  86,526       Career Education Corp.(c)      312,359   
  53,991       Regis Corp.(c)      891,931   
  14,043       Strayer Education, Inc.(c)      743,156   
  26,742       Universal Technical Institute, Inc.      113,654   
     

 

 

  
        3,151,065   
     

 

 

  
   Hotels, Restaurants & Leisure—21.9%   
  1,342       Biglari Holdings, Inc.(c)      515,502   
  26,731       BJ’s Restaurants, Inc.(c)      1,147,562   
  28,485       Bob Evans Farms, Inc.      1,232,546   
  101,718       Boyd Gaming Corp.(c)      2,033,343   
  21,629       DineEquity, Inc.      1,804,940   
  49,770       Interval Leisure Group, Inc.      878,440   
  24,040       Marcus Corp. (The)      497,388   
  34,879       Marriott Vacations Worldwide Corp.      2,246,208   
  13,619       Monarch Casino & Resort, Inc.(c)      298,801   
  37,183       Papa John’s International, Inc.      2,609,131   
  77,306       Pinnacle Entertainment, Inc.(c)      2,706,483   
  29,163       Popeyes Louisiana Kitchen, Inc.(c)      1,645,960   
  18,046       Red Robin Gourmet Burgers, Inc.(c)      1,351,465   
  78,901       Ruby Tuesday, Inc.(c)      412,652   
  44,838       Ruth’s Hospitality Group, Inc.      695,437   
  63,595       Scientific Games Corp., Class A(b)(c)      705,268   
  66,116       Sonic Corp.      1,886,951   
  80,303       Texas Roadhouse, Inc.      2,758,408   
     

 

 

  
        25,426,485   
     

 

 

  
   Household Durables—10.5%   
  33,280       Ethan Allen Interiors, Inc.      905,549   
  36,443       Helen of Troy Ltd.(c)      3,615,510   
  38,028       iRobot Corp.(c)      1,141,220   
  64,387       La-Z-Boy, Inc.      1,838,249   
  31,266       M/I Homes, Inc.(c)      717,555   
  46,970       Meritage Homes Corp.(c)      1,656,162   
  48,720       TopBuild Corp.(c)      1,370,494   
  19,332       Universal Electronics, Inc.(c)      919,623   
     

 

 

  
        12,164,362   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks (continued)   
   Internet & Catalog Retail—2.1%   
  14,657       Blue Nile, Inc.(c)    $ 499,803   
  23,363       FTD Cos., Inc.(c)      661,640   
  37,006       Nutrisystem, Inc.      855,949   
  25,890       PetMed Express, Inc.(b)      435,470   
     

 

 

  
        2,452,862   
     

 

 

  
   Leisure Products—2.3%   
  16,534       Arctic Cat, Inc.      339,608   
  100,072       Callaway Golf Co.      995,717   
  23,816       Sturm Ruger & Co., Inc.      1,356,083   
     

 

 

  
        2,691,408   
     

 

 

  
   Media—4.8%   
  68,143       E.W. Scripps Co. (The), Class A      1,503,235   
  146,488       Gannett Co., Inc.      2,317,440   
  60,475       Harte-Hanks, Inc.      257,019   
  32,885       Scholastic Corp.      1,344,010   
  25,212       Sizmek, Inc.(c)      149,507   
     

 

 

  
        5,571,211   
     

 

 

  
   Multi-line Retail—0.8%   
  44,482       Fred’s, Inc., Class A      615,186   
  56,102       Tuesday Morning Corp.(c)      303,512   
     

 

 

  
        918,698   
     

 

 

  
   Specialty Retail—30.2%   
  49,670       Barnes & Noble Education, Inc.(c)      732,632   
  78,592       Barnes & Noble, Inc.      1,020,910   
  23,735       Big 5 Sporting Goods Corp.      217,175   
  35,845       Buckle, Inc. (The)(b)      1,270,347   
  55,702       Caleres, Inc.      1,702,253   
  33,514       Cato Corp. (The), Class A      1,265,489   
  25,868       Children’s Place, Inc. (The)      1,388,335   
  93,853       Express, Inc.(c)      1,811,363   
  57,141       Finish Line, Inc. (The), Class A      1,064,537   
  53,889       Francesca’s Holdings Corp.(c)      765,763   
  30,614       Genesco, Inc.(c)      1,917,967   
  29,174       Group 1 Automotive, Inc.      2,536,679   
  26,248       Haverty Furniture Cos., Inc.      614,466   
  31,347       Hibbett Sports, Inc.(c)      1,070,813   
  20,042       Kirkland’s, Inc.      460,766   
  30,226       Lithia Motors, Inc., Class A      3,548,230   
  34,491       Lumber Liquidators Holdings, Inc.(b)(c)      476,666   
  32,542       MarineMax, Inc.(c)      514,164   
  61,537       Men’s Wearhouse, Inc. (The)      2,460,249   
  40,687       Monro Muffler Brake, Inc.      3,017,755   
  23,083       Outerwall, Inc.(b)      1,384,980   
  68,592       Pep Boys-Manny, Moe & Jack (The)(c)      1,031,624   
  65,472       Select Comfort Corp.(c)      1,388,006   
  41,885       Sonic Automotive, Inc., Class A      1,044,612   
  40,685       Stage Stores, Inc.      395,865   
  37,232       Stein Mart, Inc.      329,875   
  37,533       Vitamin Shoppe, Inc.(c)      1,076,822   
  25,467       Zumiez, Inc.(c)      445,163   
     

 

 

  
        34,953,506   
     

 

 

  
   Textiles, Apparel & Luxury Goods—10.8%   
  95,105       Crocs, Inc.(c)      1,027,134   
  50,674       G-III Apparel Group Ltd.(c)      2,791,631   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   30  

 

 

PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Textiles, Apparel & Luxury Goods (continued)   
  61,457       Iconix Brand Group, Inc.(c)    $ 941,521   
  21,080       Movado Group, Inc.      542,599   
  18,583       Oxford Industries, Inc.      1,353,214   
  14,911       Perry Ellis International, Inc.(c)      320,139   
  72,392       Steven Madden Ltd.(c)      2,522,861   
  19,077       Unifi, Inc.(c)      583,566   
  131,291       Wolverine World Wide, Inc.      2,438,074   
     

 

 

  
        12,520,739   
     

 

 

  
   Total Common Stocks
(Cost $112,420,138)		      115,967,991   
     

 

 

  
     
   Money Market Fund—0.0%   
  9,490       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $9,490)		      9,490   
     

 

 

  
   Total Investments
(excluding investments purchased with cash
collateral from securities on loan)
(Cost $112,429,628)—100.0%		      115,977,481   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—4.4%   
  5,134,086       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $5,134,086)		      5,134,086   
     

 

 

  
   Total Investments
(Cost $117,563,714)—104.4%		      121,111,567   
   Other assets less
liabilities—(4.4)%		      (5,137,541 ) 
     

 

 

  
   Net Assets—100.0%    $ 115,974,026   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Non-income producing security.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   31  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—96.7%   
   Food & Staples Retailing—9.5%   
  42,494       Andersons, Inc. (The)    $ 1,504,288   
  53,347       SpartanNash Co.      1,488,381   
     

 

 

  
        2,992,669   
     

 

 

  
   Food Products—63.3%   
  99,339       B&G Foods, Inc.      3,605,012   
  28,864       Calavo Growers, Inc.      1,483,898   
  53,160       Cal-Maine Foods, Inc.      2,841,934   
  283,070       Darling Ingredients, Inc.(b)      2,864,668   
  37,391       Diamond Foods, Inc.(b)      1,481,432   
  12,067       J & J Snack Foods Corp.      1,481,707   
  21,387       Sanderson Farms, Inc.      1,486,610   
  51,576       Seneca Foods Corp., Class A(b)      1,504,988   
  89,613       Snyder’s-Lance, Inc.      3,184,846   
     

 

 

  
        19,935,095   
     

 

 

  
   Household Products—10.0%   
  23,544       Central Garden & Pet Co.(b)      374,585   
  77,829       Central Garden & Pet Co., Class A(b)      1,313,754   
  15,437       WD-40 Co.      1,475,468   
     

 

 

  
        3,163,807   
     

 

 

  
   Personal Products—9.2%   
  53,108       Inter Parfums, Inc.      1,466,843   
  51,196       Medifast, Inc.(b)      1,431,952   
     

 

 

  
        2,898,795   
     

 

 

  
   Tobacco—4.7%   
  27,361       Universal Corp.      1,477,768   
     

 

 

  
   Total Investments
(Cost $30,099,822)—96.7%		      30,468,134   
   Other assets less liabilities—3.3%      1,025,462   
     

 

 

  
   Net Assets—100.0%    $ 31,493,596   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   32  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Energy Portfolio (PSCE)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—99.9%   
   Energy Equipment & Services—55.9%   
  82,117       Basic Energy Services, Inc.(b)(c)    $ 304,654   
  70,484       Bristow Group, Inc.      2,447,909   
  40,970       CARBO Ceramics, Inc.(b)      717,794   
  40,509       Era Group, Inc.(c)      563,480   
  140,169       Exterran Holdings, Inc.      3,047,274   
  27,530       Geospace Technologies Corp.(c)      422,861   
  28,015       Gulf Island Fabrication, Inc.      283,232   
  53,799       Gulfmark Offshore, Inc., Class A(b)      335,706   
  206,332       Helix Energy Solutions Group, Inc.(c)      1,192,599   
  66,777       Hornbeck Offshore Services, Inc.(c)      902,157   
  268,995       ION Geophysical Corp.(c)      99,528   
  55,944       Matrix Service Co.(c)      1,269,929   
  176,190       Newpark Resources, Inc.(c)      997,235   
  135,045       Pioneer Energy Services Corp.(c)      311,954   
  33,251       SEACOR Holdings, Inc.(c)      1,942,523   
  81,670       Tesco Corp.      653,360   
  167,909       TETRA Technologies, Inc.(c)      1,131,707   
  98,342       Tidewater, Inc.      1,214,524   
  105,560       Unit Corp.(c)      1,331,112   
  88,446       US Silica Holdings, Inc.(b)      1,597,335   
     

 

 

  
        20,766,873   
     

 

 

  
   Oil, Gas & Consumable Fuels—44.0%   
  77,282       Approach Resources, Inc.(b)(c)      182,386   
  104,589       Bill Barrett Corp.(c)      509,348   
  85,416       Bonanza Creek Energy, Inc.(c)      486,017   
  107,868       Carrizo Oil & Gas, Inc.(c)      4,059,073   
  127,795       Cloud Peak Energy, Inc.(c)      379,551   
  36,595       Contango Oil & Gas Co.(c)      279,952   
  74,963       Green Plains, Inc.      1,537,491   
  107,057       Northern Oil and Gas, Inc.(b)(c)      539,567   
  80,939       PDC Energy, Inc.(c)      4,883,859   
  150,080       Penn Virginia Corp.(b)(c)      92,884   
  12,145       REX American Resources Corp.(c)      666,882   
  100,153       Rex Energy Corp.(b)(c)      226,346   
  119,871       Stone Energy Corp.(c)      670,079   
  164,988       Synergy Resources Corp.(c)      1,846,216   
     

 

 

  
        16,359,651   
     

 

 

  
   Total Common Stocks
(Cost $56,099,646)		      37,126,524   
     

 

 

  
     
   Money Market Fund—0.1%   
  21,743       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $21,743)		      21,743   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $56,121,389)—100.0%		      37,148,267   
     

 

 

  
     
Number
of Shares		           Value  
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—10.5%   
  3,891,750       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $3,891,750)		    $ 3,891,750   
     

 

 

  
   Total Investments
(Cost $60,013,139)—110.5%		      41,040,017   
   Other assets less liabilities—(10.5)%      (3,891,109 ) 
     

 

 

  
   Net Assets—100.0%    $ 37,148,908   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Non-income producing security.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   33  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Financials Portfolio (PSCF)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—99.9%   
   Banks—38.7%   
  30,232       Ameris Bancorp    $ 952,308   
  24,089       Banner Corp.      1,182,047   
  93,407       BBCN Bancorp, Inc.      1,568,304   
  98,129       Boston Private Financial Holdings, Inc.      1,124,558   
  37,819       Cardinal Financial Corp.      859,626   
  36,787       Central Pacific Financial Corp.      822,557   
  17,984       City Holding Co.      860,175   
  67,789       Columbia Banking System, Inc.      2,258,729   
  48,108       Community Bank System, Inc.      1,960,882   
  116,119       CVB Financial Corp.      2,026,277   
  205,816       F.N.B. Corp.      2,772,342   
  136,142       First BanCorp(b)      515,978   
  104,454       First Commonwealth Financial Corp.      959,932   
  72,458       First Financial Bancorp      1,396,990   
  75,353       First Financial Bankshares, Inc.      2,506,241   
  91,548       First Midwest Bancorp, Inc.      1,631,385   
  18,538       First NBC Bank Holding Co.(b)      689,428   
  88,686       Glacier Bancorp, Inc.      2,426,449   
  37,546       Hanmi Financial Corp.      957,423   
  69,233       Home BancShares, Inc.      2,971,480   
  30,770       Independent Bank Corp./MA      1,438,190   
  51,439       LegacyTexas Financial Group, Inc.      1,476,299   
  82,113       MB Financial, Inc.      2,647,323   
  164,625       National Penn Bancshares, Inc.      1,982,085   
  51,341       NBT Bancorp, Inc.      1,443,196   
  51,508       OFG Bancorp      474,389   
  135,269       Old National Bancorp      1,893,766   
  39,677       Pinnacle Financial Partners, Inc.      2,087,804   
  92,510       PrivateBancorp, Inc.      3,869,693   
  40,874       S&T Bancorp, Inc.      1,303,063   
  33,036       Simmons First National Corp., Class A      1,702,675   
  27,690       Southside Bancshares, Inc.      744,861   
  140,135       Sterling Bancorp      2,156,678   
  73,691       Talmer Bancorp, Inc., Class A      1,239,483   
  53,799       Texas Capital Bancshares, Inc.(b)      2,969,705   
  14,386       Tompkins Financial Corp.      780,872   
  49,215       UMB Financial Corp.      2,415,472   
  75,932       United Bankshares, Inc.      3,003,111   
  68,182       United Community Banks, Inc.      1,374,549   
  30,001       Westamerica Bancorp.      1,326,344   
  82,979       Wilshire Bancorp, Inc.      887,046   
  56,629       Wintrust Financial Corp.      2,859,198   
     

 

 

  
        70,518,913   
     

 

 

  
   Capital Markets—6.4%   
  20,249       Calamos Asset Management, Inc., Class A      190,138   
  40,476       Evercore Partners, Inc., Class A      2,185,704   
  60,777       Financial Engines, Inc.      1,954,588   
  12,090       Greenhill & Co., Inc.      312,164   
  40,427       HFF, Inc., Class A      1,395,540   
  67,400       Interactive Brokers Group, Inc., Class A      2,772,836   
  18,090       INTL FCStone, Inc.(b)      578,699   
  39,882       Investment Technology Group, Inc.      638,511   
  17,733       Piper Jaffray Cos.(b)      630,763   
  8,077       Virtus Investment Partners, Inc.      945,332   
     

 

 

  
        11,604,275   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Consumer Finance—4.8%   
  31,219       Cash America International, Inc.    $ 1,077,992   
  27,558       Encore Capital Group, Inc.(b)      1,121,611   
  31,385       Enova International, Inc.(b)      408,005   
  60,858       EZCORP, Inc., Class A(b)      405,314   
  32,873       First Cash Financial Services, Inc.(b)      1,254,105   
  55,030       Green Dot Corp., Class A(b)      1,020,256   
  56,755       PRA Group, Inc.(b)      3,110,174   
  10,010       World Acceptance Corp.(b)(c)      381,681   
     

 

 

  
        8,779,138   
     

 

 

  
   Insurance—12.1%   
  95,527       American Equity Investment Life Holding Co.      2,453,133   
  22,321       AMERISAFE, Inc.      1,221,628   
  19,530       eHealth, Inc.(b)      233,384   
  37,616       Employers Holdings, Inc.      995,696   
  10,606       HCI Group, Inc.      462,528   
  48,338       Horace Mann Educators Corp.      1,655,093   
  13,368       Infinity Property & Casualty Corp.      1,076,391   
  12,847       Navigators Group, Inc. (The)(b)      1,096,492   
  63,014       ProAssurance Corp.      3,337,222   
  44,164       RLI Corp.      2,687,379   
  16,480       Safety Insurance Group, Inc.      955,016   
  67,056       Selective Insurance Group, Inc.      2,446,873   
  26,108       Stewart Information Services Corp.      1,048,758   
  24,715       United Fire Group, Inc.      919,151   
  20,981       United Insurance Holdings Corp.      346,606   
  38,171       Universal Insurance Holdings, Inc.      1,204,295   
     

 

 

  
        22,139,645   
     

 

 

  
   Real Estate Investment Trusts—31.0%   
  80,816       Acadia Realty Trust REIT      2,658,038   
  20,264       Agree Realty Corp. REIT      656,148   
  45,876       American Assets Trust, Inc. REIT      1,934,132   
  112,513       Capstead Mortgage Corp. REIT      1,085,750   
  56,525       CareTrust REIT, Inc. REIT      639,863   
  87,833       Cedar Realty Trust, Inc. REIT      613,953   
  70,055       Chesapeake Lodging Trust REIT      1,929,315   
  31,152       CoreSite Realty Corp. REIT      1,711,802   
  241,701       Cousins Properties, Inc. REIT      2,426,678   
  235,695       DiamondRock Hospitality Co. REIT      2,752,917   
  37,635       EastGroup Properties, Inc. REIT      2,113,582   
  56,791       Education Realty Trust, Inc. REIT      2,039,365   
  67,864       EPR Properties REIT      3,855,354   
  104,695       Franklin Street Properties Corp. REIT      1,090,922   
  87,669       Geo Group, Inc. (The) REIT      2,829,079   
  30,609       Getty Realty Corp. REIT      516,680   
  83,464       Government Properties Income Trust REIT      1,358,794   
  117,908       Healthcare Realty Trust, Inc. REIT      3,108,055   
  106,236       Inland Real Estate Corp. REIT      940,189   
  97,841       Kite Realty Group Trust REIT      2,583,981   
  249,739       Lexington Realty Trust REIT      2,207,693   
  41,765       LTC Properties, Inc. REIT      1,789,630   
  274,653       Medical Properties Trust, Inc. REIT      3,103,579   
  95,620       Parkway Properties, Inc. REIT      1,599,723   
  81,214       Pennsylvania Real Estate Investment Trust REIT      1,825,691   
  22,802       PS Business Parks, Inc. REIT      1,956,183   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   34  

 

 

PowerShares S&P SmallCap Financials Portfolio (PSCF) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Real Estate Investment Trusts (continued)   
  115,966       Retail Opportunity Investments Corp. REIT    $ 2,102,463   
  76,478       Sabra Health Care REIT, Inc. REIT      1,734,521   
  13,442       Saul Centers, Inc. REIT      753,693   
  101,675       Summit Hotel Properties, Inc. REIT      1,329,909   
  14,381       Universal Health Realty Income Trust REIT      714,592   
  31,181       Urstadt Biddle Properties, Inc., Class A REIT      626,738   
     

 

 

  
        56,589,012   
     

 

 

  
   Real Estate Management & Development—0.3%   
  39,469       Forestar Group, Inc.(b)      558,486   
     

 

 

  
   Thrifts & Mortgage Finance—6.6%   
  106,512       Astoria Financial Corp.      1,699,931   
  50,153       Bank Mutual Corp.      363,108   
  16,713       BofI Holding, Inc.(b)      1,337,207   
  82,333       Brookline Bancorp, Inc.      934,480   
  35,806       Dime Community Bancshares, Inc.      621,234   
  7,850       LendingTree, Inc.(b)      952,676   
  53,752       Northfield Bancorp, Inc.      823,481   
  119,377       Northwest Bancshares, Inc.      1,606,814   
  43,925       Oritani Financial Corp.      699,286   
  69,003       Provident Financial Services, Inc.      1,402,141   
  111,720       TrustCo Bank Corp. NY      696,016   
  31,511       Walker & Dunlop, Inc.(b)      914,134   
     

 

 

  
        12,050,508   
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $155,224,796)		      182,239,977   
     

 

 

  
     
   Money Market Fund—0.0%   
  11,317       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $11,317)		      11,317   
     

 

 

  
   Total Investments
(excluding investments purchased with cash
collateral from securities on loan)
(Cost $155,236,113)—99.9%		      182,251,294   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—0.2%   
  294,295       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $294,295)		      294,295   
     

 

 

  
   Total Investments
(Cost $155,530,408)—100.1%		      182,545,589   
   Other assets less liabilities—(0.1)%      (198,935 ) 
     

 

 

  
   Net Assets—100.0%    $ 182,346,654   
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  All or a portion of this security was out on loan at October 31, 2015.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   35  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Health Care Portfolio (PSCH)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Biotechnology—9.7%   
  124,349       Acorda Therapeutics, Inc.(b)    $ 4,481,538   
  87,833       Emergent Biosolutions, Inc.(b)      2,823,831   
  38,019       Enanta Pharmaceuticals, Inc.(b)      1,067,954   
  52,437       Ligand Pharmaceuticals, Inc.(b)      4,737,683   
  287,631       MiMedx Group, Inc.(b)(c)      2,093,953   
  181,742       Momenta Pharmaceuticals, Inc.(b)      2,982,386   
  95,512       Repligen Corp.(b)      3,174,819   
  171,909       Spectrum Pharmaceuticals, Inc.(b)      895,646   
     

 

 

  
        22,257,810   
     

 

 

  
   Health Care Equipment & Supplies—34.9%   
  61,974       Abaxis, Inc.      3,111,714   
  112,286       ABIOMED, Inc.(b)      8,270,987   
  36,107       Analogic Corp.      3,163,695   
  76,417       AngioDynamics, Inc.(b)      961,326   
  42,465       Anika Therapeutics, Inc.(b)      1,635,752   
  103,698       Cantel Medical Corp.      6,147,217   
  74,764       CONMED Corp.      3,032,428   
  73,318       CryoLife, Inc.      772,772   
  65,886       Cynosure, Inc., Class A(b)      2,479,949   
  74,169       Greatbatch, Inc.(b)      3,964,333   
  147,682       Haemonetics Corp.(b)      4,988,698   
  41,351       ICU Medical, Inc.(b)      4,547,369   
  40,989       Inogen, Inc.(b)      1,751,870   
  82,543       Integra LifeSciences Holdings Corp.(b)      4,917,086   
  86,675       Invacare Corp.      1,497,744   
  133,188       Masimo Corp.(b)      5,284,900   
  121,066       Meridian Bioscience, Inc.      2,301,465   
  128,174       Merit Medical Systems, Inc.(b)      2,376,346   
  96,020       Natus Medical, Inc.(b)      4,371,791   
  108,151       Neogen Corp.(b)      5,845,561   
  142,032       NuVasive, Inc.(b)      6,698,229   
  37,532       SurModics, Inc.(b)      800,558   
  50,272       Vascular Solutions, Inc.(b)      1,614,737   
     

 

 

  
        80,536,527   
     

 

 

  
   Health Care Providers & Services—26.4%   
  84,501       Aceto Corp.      2,548,550   
  103,774       Air Methods Corp.(b)      4,247,470   
  23,940       Almost Family, Inc.(b)      990,637   
  82,073       Amedisys, Inc.(b)      3,248,449   
  138,294       AMN Healthcare Services, Inc.(b)      3,923,401   
  49,103       Chemed Corp.      7,723,411   
  30,076       CorVel Corp.(b)      998,523   
  93,565       Cross Country Healthcare, Inc.(b)      1,263,128   
  68,985       Ensign Group, Inc. (The)      2,908,408   
  114,550       ExamWorks Group, Inc.(b)      3,234,892   
  102,573       Hanger, Inc.(b)      1,479,103   
  100,420       HealthEquity, Inc.(b)      3,284,738   
  90,473       Healthways, Inc.(b)      1,064,867   
  50,545       IPC Healthcare, Inc.(b)      3,967,783   
  243,427       Kindred Healthcare, Inc.      3,261,922   
  27,800       Landauer, Inc.      1,097,822   
  37,529       LHC Group, Inc.(b)      1,691,244   
  78,395       Magellan Health, Inc.(b)      4,186,293   
  88,320       PharMerica Corp.(b)      2,523,302   
  38,203       Providence Service Corp. (The)(b)      1,973,185   
  305,037       Select Medical Holdings Corp.      3,446,918   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Health Care Providers & Services (continued)   
  36,049       US Physical Therapy, Inc.    $ 1,768,564   
     

 

 

  
        60,832,610   
     

 

 

  
   Health Care Technology—9.2%   
  30,508       Computer Programs & Systems, Inc.      1,159,609   
  70,706       HealthStream, Inc.(b)      1,683,510   
  257,000       HMS Holdings Corp.(b)      2,706,210   
  174,139       MedAssets, Inc.(b)      4,123,612   
  160,481       Medidata Solutions, Inc.(b)      6,900,683   
  104,207       Omnicell, Inc.(b)      2,834,430   
  127,789       Quality Systems, Inc.      1,795,435   
     

 

 

  
        21,203,489   
     

 

 

  
   Life Sciences Tools & Services—4.2%   
  231,655       Affymetrix, Inc.(b)      2,131,226   
  78,198       Albany Molecular Research, Inc.(b)      1,410,692   
  91,051       Cambrex Corp.(b)      4,185,614   
  111,189       Luminex Corp.(b)      2,023,640   
     

 

 

  
        9,751,172   
     

 

 

  
   Pharmaceuticals—15.6%   
  21,934       ANI Pharmaceuticals, Inc.(b)      917,719   
  175,039       Depomed, Inc.(b)      3,063,182   
  197,254       Impax Laboratories, Inc.(b)      6,830,906   
  80,457       Lannett Co., Inc.(b)(c)      3,602,060   
  193,776       Medicines Co. (The)(b)      6,634,890   
  384,170       Nektar Therapeutics(b)      4,560,098   
  153,023       Prestige Brands Holdings, Inc.(b)      7,499,657   
  69,258       Sagent Pharmaceuticals, Inc.(b)      1,164,227   
  98,421       Supernus Pharmaceuticals, Inc.(b)      1,623,947   
     

 

 

  
        35,896,686   
     

 

 

  
   Total Common Stocks
(Cost $220,618,688)		      230,478,294   
     

 

 

  
     
   Money Market Fund—0.0%   
  77,426       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $77,426)		      77,426   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $220,696,114)—100.0%		      230,555,720   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—0.7%   
  1,558,000       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $1,558,000)		      1,558,000   
     

 

 

  
   Total Investments
(Cost $222,254,114)—100.7%		      232,113,720   
   Other assets less liabilities—(0.7)%      (1,609,592 ) 
     

 

 

  
   Net Assets—100.0%    $ 230,504,128   
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   36  

 

 

PowerShares S&P SmallCap Health Care Portfolio (PSCH) (continued)

October 31, 2015

 

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  All or a portion of this security was out on loan at October 31, 2015.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   37  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Industrials Portfolio (PSCI)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Aerospace & Defense—10.1%   
  21,157       AAR Corp.    $ 480,052   
  40,157       Aerojet Rocketdyne Holdings, Inc.(b)      680,260   
  13,183       Aerovironment, Inc.(b)      304,132   
  4,547       American Science & Engineering, Inc.      170,422   
  13,858       Cubic Corp.      621,531   
  29,879       Curtiss-Wright Corp.      2,078,383   
  11,011       Engility Holdings, Inc.      354,444   
  21,586       Moog, Inc., Class A(b)      1,333,151   
  3,088       National Presto Industries, Inc.      271,899   
  34,291       TASER International, Inc.(b)      802,752   
     

 

 

  
        7,097,026   
     

 

 

  
   Air Freight & Logistics—4.6%   
  15,944       Atlas Air Worldwide Holdings, Inc.(b)      657,530   
  16,330       Echo Global Logistics, Inc.(b)      388,491   
  19,752       Forward Air Corp.      895,951   
  22,901       Hub Group, Inc., Class A(b)      915,582   
  58,689       UTi Worldwide, Inc.(b)      418,453   
     

 

 

  
        3,276,007   
     

 

 

  
   Airlines—5.0%   
  8,433       Allegiant Travel Co.      1,665,096   
  31,076       Hawaiian Holdings, Inc.(b)      1,078,337   
  32,391       Republic Airways Holdings, Inc.(b)      186,572   
  32,204       SkyWest, Inc.      613,164   
     

 

 

  
        3,543,169   
     

 

 

  
   Building Products—8.1%   
  25,884       AAON, Inc.      529,846   
  8,691       American Woodmark Corp.(b)      631,836   
  18,605       Apogee Enterprises, Inc.      921,506   
  18,732       Gibraltar Industries, Inc.(b)      474,294   
  25,056       Griffon Corp.      430,462   
  30,919       PGT, Inc.(b)      372,883   
  21,556       Quanex Building Products Corp.      406,762   
  26,585       Simpson Manufacturing Co., Inc.      1,009,698   
  12,813       Universal Forest Products, Inc.      930,608   
     

 

 

  
        5,707,895   
     

 

 

  
   Commercial Services & Supplies—17.1%   
  35,770       ABM Industries, Inc.      1,015,868   
  30,407       Brady Corp., Class A      691,759   
  31,087       Brink’s Co. (The)      963,075   
  24,188       Essendant, Inc.      836,179   
  12,703       G&K Services, Inc., Class A      836,112   
  45,782       Healthcare Services Group, Inc.      1,705,837   
  41,933       Interface, Inc.      819,790   
  20,990       Matthews International Corp., Class A      1,211,753   
  28,910       Mobile Mini, Inc.      989,878   
  38,337       Tetra Tech, Inc.      1,031,265   
  9,708       UniFirst Corp.      1,020,020   
  13,814       US Ecology, Inc.      541,647   
  12,778       Viad Corp.      384,746   
     

 

 

  
        12,047,929   
     

 

 

  
   Construction & Engineering—7.3%   
  23,062       Aegion Corp.(b)      444,866   
  23,897       Comfort Systems USA, Inc.      763,031   
  21,702       Dycom Industries, Inc.(b)      1,651,305   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Construction & Engineering (continued)   
  39,984       EMCOR Group, Inc.    $ 1,930,428   
  13,390       MYR Group, Inc.(b)      301,275   
  17,337       Orion Marine Group, Inc.(b)      67,788   
     

 

 

  
        5,158,693   
     

 

 

  
   Electrical Equipment—6.9%   
  16,401       AZZ, Inc.      907,467   
  13,204       Encore Wire Corp.      564,735   
  29,530       EnerSys      1,801,035   
  25,145       Franklin Electric Co., Inc.      828,779   
  31,133       General Cable Corp.      479,137   
  5,743       Powell Industries, Inc.      191,357   
  10,487       Vicor Corp.(b)      101,304   
     

 

 

  
        4,873,814   
     

 

 

  
   Machinery—20.9%   
  37,852       Actuant Corp., Class A      863,026   
  18,328       Albany International Corp., Class A      688,583   
  11,994       Astec Industries, Inc.      389,805   
  32,737       Barnes Group, Inc.      1,230,584   
  27,993       Briggs & Stratton Corp.      497,436   
  19,439       Chart Industries, Inc.(b)      334,156   
  10,483       CIRCOR International, Inc.      481,379   
  13,973       EnPro Industries, Inc.      686,214   
  16,609       ESCO Technologies, Inc.      616,028   
  39,777       Federal Signal Corp.      599,042   
  50,972       Harsco Corp.      546,929   
  40,076       Hillenbrand, Inc.      1,189,055   
  18,582       John Bean Technologies Corp.      833,588   
  7,282       Lindsay Corp.(c)      493,574   
  10,825       Lydall, Inc.(b)      370,540   
  36,286       Mueller Industries, Inc.      1,143,735   
  26,153       SPX Corp.      320,374   
  26,168       SPX FLOW, Inc.(b)      887,095   
  8,128       Standex International Corp.      729,244   
  11,614       Tennant Co.      672,683   
  27,737       Titan International, Inc.      196,933   
  17,973       Watts Water Technologies, Inc., Class A      978,450   
     

 

 

  
        14,748,453   
     

 

 

  
   Marine—1.8%   
  27,716       Matson, Inc.      1,270,224   
     

 

 

  
   Professional Services—10.5%   
  9,275       CDI Corp.      74,200   
  16,497       Exponent, Inc.      848,111   
  10,994       Heidrick & Struggles International, Inc.      292,001   
  11,981       Insperity, Inc.      556,637   
  18,829       Kelly Services, Inc., Class A      297,498   
  32,838       Korn/Ferry International      1,194,318   
  30,480       Navigant Consulting, Inc.(b)      524,256   
  30,166       On Assignment, Inc.(b)      1,360,788   
  23,795       Resources Connection, Inc.      427,120   
  26,703       TrueBlue, Inc.(b)      773,586   
  22,830       WageWorks, Inc.(b)      1,096,297   
     

 

 

  
        7,444,812   
     

 

 

  
   Road & Rail—4.6%   
  15,520       ArcBest Corp.      401,968   
  17,294       Celadon Group, Inc.      250,417   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   38  

 

 

PowerShares S&P SmallCap Industrials Portfolio (PSCI) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Road & Rail (continued)   
  39,700       Heartland Express, Inc.    $ 747,551   
  39,355       Knight Transportation, Inc.      1,000,404   
  15,191       Marten Transport Ltd.      248,981   
  19,238       Roadrunner Transportation Systems, Inc.(b)      204,692   
  15,883       Saia, Inc.(b)      374,998   
     

 

 

  
        3,229,011   
     

 

 

  
   Trading Companies & Distributors—3.1%   
  25,265       Applied Industrial Technologies, Inc.      1,043,697   
  7,977       DXP Enterprises, Inc.(b)      241,384   
  17,299       Kaman Corp.      672,758   
  5,193       Veritiv Corp.(b)      218,106   
     

 

 

  
        2,175,945   
     

 

 

  
   Total Common Stocks
(Cost $66,514,444)		      70,572,978   
     

 

 

  
     
   Money Market Fund—0.0%   
  31,701       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $31,701)		      31,701   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $66,546,145)—100.0%		      70,604,679   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—0.5%   
  369,783       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $369,783)		      369,783   
     

 

 

  
   Total Investments
(Cost $66,915,928)—100.5%		      70,974,462   
   Other assets less liabilities—(0.5)%      (366,031 ) 
     

 

 

  
   Net Assets—100.0%    $ 70,608,431   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  All or a portion of this security was out on loan at October 31, 2015.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   39  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Information Technology Portfolio (PSCT)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Communications Equipment—10.3%   
  179,369       ADTRAN, Inc.    $ 2,785,601   
  31,791       Bel Fuse, Inc., Class B      573,192   
  55,236       Black Box Corp.      674,432   
  130,288       CalAmp Corp.(b)      2,470,260   
  57,910       Comtech Telecommunications Corp.      1,399,106   
  89,759       Digi International, Inc.(b)      1,157,891   
  316,605       Harmonic, Inc.(b)      1,823,645   
  217,688       Ixia(b)      3,136,884   
  167,874       Lumentum Holdings, Inc.(b)      2,407,313   
  115,476       NETGEAR, Inc.(b)      4,780,706   
  314,697       Ruckus Wireless, Inc.(b)      3,549,782   
  159,645       ViaSat, Inc.(b)      10,530,184   
  845,422       Viavi Solutions, Inc.(b)      5,030,261   
     

 

 

  
        40,319,257   
     

 

 

  
   Electronic Equipment, Instruments & Components—26.1%   
  54,350       Agilysys, Inc.(b)      617,959   
  101,862       Anixter International, Inc.(b)      6,985,696   
  52,138       Badger Meter, Inc.      3,158,520   
  183,728       Benchmark Electronics, Inc.(b)      3,634,140   
  151,465       Checkpoint Systems, Inc.      1,132,958   
  89,228       Coherent, Inc.(b)      4,836,158   
  117,940       CTS Corp.      2,144,149   
  138,375       Daktronics, Inc.      1,342,238   
  61,970       DTS, Inc.(b)      1,844,227   
  98,832       Electro Scientific Industries, Inc.      461,545   
  20,950       ePlus, Inc.(b)      1,768,599   
  108,226       Fabrinet (Thailand)(b)      2,345,257   
  62,486       FARO Technologies, Inc.(b)      2,111,402   
  189,152       II-VI, Inc.(b)      3,427,434   
  133,246       Insight Enterprises, Inc.(b)      3,384,448   
  137,015       Itron, Inc.(b)      5,032,561   
  81,361       Littelfuse, Inc.      8,130,405   
  117,506       Mercury Systems, Inc.(b)      2,016,403   
  138,226       Methode Electronics, Inc.      4,607,073   
  53,664       MTS Systems Corp.      3,543,434   
  142,198       Newport Corp.(b)      2,148,612   
  66,016       OSI Systems, Inc.(b)      5,689,259   
  73,252       Park Electrochemical Corp.      1,196,938   
  120,842       Plexus Corp.(b)      4,183,550   
  101,247       Rofin-Sinar Technologies, Inc.(b)      2,932,113   
  67,023       Rogers Corp.(b)      3,117,910   
  289,042       Sanmina Corp.(b)      5,974,498   
  99,208       ScanSource, Inc.(b)      3,423,668   
  103,936       SYNNEX Corp.      9,192,100   
  231,473       TTM Technologies, Inc.(b)      1,689,753   
     

 

 

  
        102,073,007   
     

 

 

  
   Internet Software & Services—11.3%   
  147,163       Blucora, Inc.(b)      1,442,197   
  116,764       comScore, Inc.(b)      4,995,164   
  115,529       Constant Contact, Inc.(b)      3,015,307   
  155,938       DHI Group, Inc.(b)      1,411,239   
  165,313       j2 Global, Inc.      12,820,023   
  86,298       Liquidity Services, Inc.(b)      706,781   
  176,612       LivePerson, Inc.(b)      1,377,574   
  89,320       LogMeIn, Inc.(b)      6,016,595   
  327,677       Monster Worldwide, Inc.(b)      2,054,535   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Internet Software & Services (continued)   
  219,232       NIC, Inc.    $ 4,158,831   
  127,730       QuinStreet, Inc.(b)      708,901   
  53,314       Stamps.com, Inc.(b)      4,031,071   
  84,852       XO Group, Inc.(b)      1,283,811   
     

 

 

  
        44,022,029   
     

 

 

  
   IT Services—13.1%   
  86,919       CACI International, Inc., Class A(b)      8,434,620   
  161,242       Cardtronics, Inc.(b)      5,562,849   
  255,802       Ciber, Inc.(b)      913,213   
  117,459       CSG Systems International, Inc.      3,937,226   
  119,112       ExlService Holdings, Inc.(b)      5,271,897   
  36,053       Forrester Research, Inc.      1,163,430   
  132,032       Heartland Payment Systems, Inc.      9,770,368   
  87,516       ManTech International Corp., Class A      2,529,212   
  126,786       Perficient, Inc.(b)      2,119,862   
  142,279       Sykes Enterprises, Inc.(b)      4,126,091   
  58,999       TeleTech Holdings, Inc.      1,716,871   
  97,035       Virtusa Corp.(b)      5,572,720   
     

 

 

  
        51,118,359   
     

 

 

  
   Semiconductors & Semiconductor Equipment—21.6%   
  147,367       Advanced Energy Industries, Inc.(b)      4,167,539   
  242,462       Brooks Automation, Inc.      2,676,780   
  87,790       Cabot Microelectronics Corp.(b)      3,702,104   
  73,806       CEVA, Inc.(b)      1,724,846   
  228,124       Cirrus Logic, Inc.(b)      7,033,063   
  89,104       Cohu, Inc.      1,121,819   
  139,681       Diodes, Inc.(b)      3,198,695   
  79,540       DSP Group, Inc.(b)      803,354   
  172,832       Exar Corp.(b)      983,414   
  224,725       Kopin Corp.(b)      600,016   
  262,422       Kulicke & Soffa Industries, Inc. (Singapore)(b)      2,781,673   
  342,895       Microsemi Corp.(b)      12,347,649   
  191,770       MKS Instruments, Inc.      6,757,975   
  130,888       Monolithic Power Systems, Inc.      8,170,029   
  86,800       Nanometrics, Inc.(b)      1,326,304   
  72,236       Pericom Semiconductor Corp.      1,260,518   
  104,573       Power Integrations, Inc.      5,292,440   
  418,032       Rambus, Inc.(b)      4,314,090   
  113,589       Rudolph Technologies, Inc.(b)      1,452,803   
  238,679       Semtech Corp.(b)      4,176,883   
  176,000       Tessera Technologies, Inc.      6,154,720   
  98,310       Ultratech, Inc.(b)      1,536,585   
  146,535       Veeco Instruments, Inc.(b)      2,640,561   
     

 

 

  
        84,223,860   
     

 

 

  
   Software—13.6%   
  168,397       Blackbaud, Inc.      10,556,808   
  139,910       Bottomline Technologies (de), Inc.(b)      3,872,709   
  96,554       Ebix, Inc.      2,677,443   
  115,378       Epiq Systems, Inc.      1,592,216   
  62,268       Interactive Intelligence Group, Inc.(b)      2,013,747   
  33,519       MicroStrategy, Inc., Class A(b)      5,767,614   
  142,815       Monotype Imaging Holdings, Inc.      3,904,562   
  179,625       Progress Software Corp.(b)      4,361,295   
  141,821       Synchronoss Technologies, Inc.(b)      4,989,263   
  306,815       Take-Two Interactive Software, Inc.(b)      10,186,258   
  133,977       Tangoe, Inc.(b)      1,109,330   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   40  

 

 

PowerShares S&P SmallCap Information Technology Portfolio (PSCT) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Software (continued)   
  106,522       VASCO Data Security International, Inc.(b)(c)    $ 2,024,983   
     

 

 

  
        53,056,228   
     

 

 

  
   Technology Hardware, Storage & Peripherals—4.0%   
  169,972       Electronics for Imaging, Inc.(b)      7,893,500   
  314,862       QLogic Corp.(b)      3,904,289   
  130,748       Super Micro Computer, Inc.(b)      3,688,401   
     

 

 

  
        15,486,190   
     

 

 

  
   Total Common Stocks
(Cost $355,472,132)		      390,298,930   
     

 

 

  
     
   Money Market Fund—0.0%   
  31,302       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $31,302)		      31,302   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $355,503,434)—100.0%		      390,330,232   
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—0.5%   
  1,920,976       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $1,920,976)		      1,920,976   
     

 

 

  
   Total Investments
(Cost $357,424,410)—100.5%		      392,251,208   
   Other assets less liabilities—(0.5)%      (1,936,005 ) 
     

 

 

  
   Net Assets—100.0%    $ 390,315,203   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  All or a portion of this security was out on loan at October 31, 2015.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   41  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Materials Portfolio (PSCM)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Chemicals—47.5%   
  9,842       A. Schulman, Inc.    $ 353,229   
  8,635       American Vanguard Corp.      115,795   
  10,575       Balchem Corp.      722,273   
  17,597       Calgon Carbon Corp.      302,668   
  18,014       Flotek Industries, Inc.(b)      326,053   
  7,640       FutureFuel Corp.      117,732   
  16,974       H.B. Fuller Co.      644,842   
  3,222       Hawkins, Inc.      133,520   
  6,604       Innophos Holdings, Inc.      280,604   
  8,115       Innospec, Inc.      448,273   
  18,941       Intrepid Potash, Inc.(b)      73,112   
  6,906       Koppers Holdings, Inc.      130,938   
  10,535       Kraton Performance Polymers, Inc.(b)      214,809   
  6,587       LSB Industries, Inc.(b)      103,087   
  4,482       Quaker Chemical Corp.      355,781   
  14,410       Rayonier Advanced Materials, Inc.      132,860   
  6,144       Stepan Co.      325,202   
  8,345       Tredegar Corp.      119,000   
     

 

 

  
        4,899,778   
     

 

 

  
   Construction Materials—5.0%   
  24,825       Headwaters, Inc.(b)      510,154   
     

 

 

  
   Containers & Packaging—1.2%   
  7,708       Myers Industries, Inc.      120,322   
     

 

 

  
   Metals & Mining—19.4%   
  59,759       AK Steel Holding Corp.(b)      172,703   
  16,645       Century Aluminum Co.(b)      60,255   
  21,809       Globe Specialty Metals, Inc.      275,229   
  4,182       Haynes International, Inc.      164,980   
  5,789       Kaiser Aluminum Corp.      470,588   
  6,763       Materion Corp.      203,904   
  3,068       Olympic Steel, Inc.      29,361   
  40,628       Stillwater Mining Co.(b)      379,465   
  21,933       SunCoke Energy, Inc.      108,788   
  12,865       Timkensteel Corp.      136,884   
     

 

 

  
        2,002,157   
     

 

 

  
   Paper & Forest Products—26.9%   
  13,169       Boise Cascade Co.(b)      394,148   
  6,403       Clearwater Paper Corp.(b)      322,903   
  3,733       Deltic Timber Corp.      231,297   
  28,788       KapStone Paper and Packaging Corp.      626,139   
  5,624       Neenah Paper, Inc.      379,114   
  14,570       P.H. Glatfelter Co.      282,658   
  10,241       Schweitzer-Mauduit International, Inc.      397,556   
  13,968       Wausau Paper Corp.      142,613   
     

 

 

  
        2,776,428   
     

 

 

  
   Total Investments
(Cost $13,791,424)—100.0%		      10,308,839   
   Other assets less liabilities—(0.0)%      (286 ) 
     

 

 

  
   Net Assets—100.0%    $ 10,308,553   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   42  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Utilities Portfolio (PSCU)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Diversified Telecommunication Services—23.1%   
  159,715       8x8, Inc.(b)    $ 1,702,562   
  19,378       Atlantic Tele-Network, Inc.      1,480,867   
  378,326       Cincinnati Bell, Inc.(b)      1,426,289   
  80,674       Consolidated Communications Holdings, Inc.      1,782,895   
  54,170       General Communication, Inc., Class A(b)      1,103,172   
  145,347       Iridium Communications, Inc.(b)      1,193,299   
  41,285       Lumos Networks Corp.      535,054   
     

 

 

  
        9,224,138   
     

 

 

  
   Electric Utilities—16.7%   
  32,013       ALLETE, Inc.      1,607,373   
  44,383       El Paso Electric Co.      1,716,291   
  65,471       UIL Holdings Corp.      3,338,366   
     

 

 

  
        6,662,030   
     

 

 

  
   Gas Utilities—42.6%   
  30,515       Laclede Group, Inc. (The)      1,787,263   
  98,895       New Jersey Resources Corp.      3,132,994   
  35,722       Northwest Natural Gas Co.      1,706,440   
  91,601       Piedmont Natural Gas Co., Inc.      5,249,653   
  66,729       South Jersey Industries, Inc.      1,768,986   
  54,432       Southwest Gas Corp.      3,345,391   
     

 

 

  
        16,990,727   
     

 

 

  
   Multi-Utilities—11.7%   
  50,557       Avista Corp.      1,711,354   
  54,434       NorthWestern Corp.      2,949,779   
     

 

 

  
        4,661,133   
     

 

 

  
   Water Utilities—4.1%   
  40,242       American States Water Co.      1,639,861   
     

 

 

  
   Wireless Telecommunication Services—1.8%   
  38,778       Spok Holdings, Inc.      699,167   
     

 

 

  
   Total Investments
(Cost $36,918,839)—100.0%		      39,877,056   
   Other assets less liabilities—0.0%      10,318   
     

 

 

  
   Net Assets—100.0%    $ 39,887,374   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   43  

 

 

Statements of Assets and Liabilities

October 31, 2015

 

    PowerShares
DWA SmallCap
Momentum
Portfolio (DWAS)		      PowerShares
DWA Tactical
Sector Rotation
Portfolio (DWTR)		      PowerShares
S&P SmallCap
Consumer
Discretionary
Portfolio (PSCD)		      PowerShares
S&P SmallCap
Consumer
Staples
Portfolio (PSCC)		  
Assets:           

Unaffiliated investments, at value(a)

   $ 416,424,125       $ —       $ 115,967,991       $ 30,468,134   

Affiliated investments, at value

     27,521,604         42,607,407         5,143,576         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     443,945,729         42,607,407         121,111,567         30,468,134   

Receivables:

           

Dividends

     86,603         —         19,789         67,450   

Securities lending

     31,959         —         5,170         —   

Foreign tax reclaims

     1,694         —         —         —   

Shares sold

     —         6,495,696         —         —   

Investments sold

     —         —         —         1,027,090   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     444,065,985         49,103,103         121,136,526         31,562,674   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     13,475         168         —         61,394   

Payables:

           

Collateral upon return of securities loaned

     27,521,604         —         5,134,086         —   

Investments purchased

     —         6,496,055         —         —   

Shares repurchased

     —         —         —         —   

Accrued unitary management fees

     214,988         2,846         28,414         7,684   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     27,750,067         6,499,069         5,162,500         69,078   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 416,315,918       $ 42,604,034       $ 115,974,026       $ 31,493,596   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 488,739,346       $ 41,828,050       $ 116,772,372       $ 31,883,126   

Undistributed net investment income (loss)

     156,729         (2,780 )       137,706         239,884   

Undistributed net realized gain (loss)

     (100,866,959 )       (181 )       (4,483,905 )       (997,726 ) 

Net unrealized appreciation (depreciation)

     28,286,802         778,945         3,547,853         368,312   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 416,315,918       $ 42,604,034       $ 115,974,026       $ 31,493,596   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     10,900,000         1,650,001         2,350,000         550,000   

Net asset value

   $ 38.19       $ 25.82       $ 49.35       $ 57.26   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 38.18       $ 25.84       $ 49.37       $ 57.31   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 388,137,323       $ —       $ 112,420,138       $ 30,099,822   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ 27,521,604       $ 41,828,462       $ 5,143,576       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 415,658,927       $ 41,828,462       $ 117,563,714       $ 30,099,822   
 

 

 

     

 

 

     

 

 

     

 

 

  

(a) Includes securities on loan with an aggregate value of:

   $ 25,911,882       $ —       $ 5,036,434       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   44  

 

 

 

PowerShares
S&P SmallCap
Energy
Portfolio (PSCE)		      PowerShares
S&P SmallCap
Financials
Portfolio (PSCF)		      PowerShares
S&P SmallCap
Health Care
Portfolio (PSCH)		      PowerShares
S&P SmallCap
Industrials
Portfolio (PSCI)		      PowerShares
S&P SmallCap
Information
Technology
Portfolio (PSCT)		      PowerShares
S&P SmallCap
Materials
Portfolio (PSCM)		      PowerShares
S&P SmallCap
Utilities
Portfolio (PSCU)		  
                 
$ 37,126,524       $ 182,239,977       $ 230,478,294       $ 70,572,978       $ 390,298,930       $ 10,308,839       $ 39,877,056   
  3,913,493         305,612         1,635,426         401,484         1,952,278         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  41,040,017         182,545,589         232,113,720         70,974,462         392,251,208         10,308,839         39,877,056   
                 
  4,198         153,868         5,505         19,805         51,260         5,882         26,560   
  6,749         769         544         930         27,214         —         20   
  —         —         —         —         —         —         —   
  —         4,318,383         —         —         —         —         —   
  905,438         5,174,861         —         —         —         8,053         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  41,956,402         192,193,470         232,119,769         70,995,197         392,329,682         10,322,774         39,903,636   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
  —         —         —         —         —         11,701         11,271   
                 
  3,891,750         294,295         1,558,000         369,783         1,920,976         —         —   
  —         5,267,954         —         —         —         —         —   
  906,076         4,240,587         —         —         —         —         —   
  9,668         43,980         57,641         16,983         93,503         2,520         4,991   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  4,807,494         9,846,816         1,615,641         386,766         2,014,479         14,221         16,262   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 37,148,908       $ 182,346,654       $ 230,504,128       $ 70,608,431       $ 390,315,203       $ 10,308,553       $ 39,887,374   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
$ 81,586,630       $ 156,800,611       $ 225,948,193       $ 68,526,056       $ 365,771,763       $ 14,758,940       $ 38,277,796   
  56,440         738,811         (71,383 )       95,419         396,799         22,780         91,932   
  (25,521,040 )       (2,207,949 )       (5,232,288 )       (2,071,578 )       (10,680,157 )       (990,582 )       (1,440,571 ) 
  (18,973,122 )       27,015,181         9,859,606         4,058,534         34,826,798         (3,482,585 )       2,958,217   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 37,148,908       $ 182,346,654       $ 230,504,128       $ 70,608,431       $ 390,315,203       $ 10,308,553       $ 39,887,374   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  2,050,000         4,300,000         3,450,000         1,550,000         7,550,000         300,000         950,000   
$ 18.12       $ 42.41       $ 66.81       $ 45.55       $ 51.70       $ 34.36       $ 41.99   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 18.13       $ 42.45       $ 66.86       $ 45.57       $ 51.77       $ 34.37       $ 42.01   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 56,099,646       $ 155,224,796       $ 220,618,688       $ 66,514,444       $ 355,472,132       $ 13,791,424       $ 36,918,839   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 3,913,493       $ 305,612       $ 1,635,426       $ 401,484       $ 1,952,278       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 60,013,139       $ 155,530,408       $ 222,254,114       $ 66,915,928       $ 357,424,410       $ 13,791,424       $ 36,918,839   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 3,728,902       $ 270,723       $ 1,497,082       $ 369,401       $ 1,921,987       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   45  

 

 

Statements of Operations

For the year ended October 31, 2015

 

    PowerShares
DWA SmallCap
Momentum
Portfolio (DWAS)		      PowerShares
DWA Tactical
Sector Rotation
Portfolio (DWTR)(a)		      PowerShares
S&P SmallCap
Consumer
Discretionary
Portfolio (PSCD)		      PowerShares
S&P SmallCap
Consumer
Staples
Portfolio (PSCC)		  
Investment Income:           

Unaffiliated dividend income

   $ 2,005,505       $ —       $ 1,334,237       $ 487,896   

Affiliated dividend income

     66         —         18         8   

Securities lending income

     519,360         —         78,151         —   

Foreign withholding tax

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     2,524,931         —         1,412,406         487,904   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:           

Unitary management fees

     2,295,615         2,846         328,029         100,993   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     (227 )       —         (83 )       (31 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     2,295,388         2,846         327,946         100,962   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

     229,543         (2,846 )       1,084,460         386,942   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):           

Net realized gain (loss) from:

           

Investment securities

     (51,247,220 )       (115 )       (3,224,827 )       (908,989 ) 

In-kind redemptions

     34,403,131         —         12,876,205         5,003,340   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     (16,844,089 )       (115 )       9,651,378         4,094,351   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation) on investment securities

     1,721,890         778,945         (7,660,124 )       (1,405,657 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     (15,122,199 )       778,830         1,991,254         2,688,694   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ (14,892,656 )     $ 775,984       $ 3,075,714       $ 3,075,636   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) For the period October 7, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   46  

 

 

 

PowerShares
S&P SmallCap
Energy
Portfolio (PSCE)		      PowerShares
S&P SmallCap
Financials
Portfolio (PSCF)		      PowerShares
S&P SmallCap
Health Care
Portfolio (PSCH)		      PowerShares
S&P SmallCap
Industrials
Portfolio (PSCI)		      PowerShares
S&P SmallCap
Information
Technology
Portfolio (PSCT)		      PowerShares
S&P SmallCap
Materials
Portfolio (PSCM)		      PowerShares
S&P SmallCap
Utilities
Portfolio (PSCU)		  
                 
$ 327,415       $ 3,391,457       $ 566,636       $ 1,090,749       $ 1,256,065       $ 232,978       $ 1,020,015   
  5         25         18         16         63         2         7   
  18,002         769         553         1,662         42,536         —         6,213   
  (1,913 )       (1,438 )       —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  343,509         3,390,813         567,207         1,092,427         1,298,664         232,980         1,026,235   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
  115,517         368,964         610,214         248,635         831,644         58,199         101,874   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (16 )       (87 )       (95 )       (42 )       (192 )       (11 )       (21 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  115,501         368,877         610,119         248,593         831,452         58,188         101,853   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  228,008         3,021,936         (42,912 )       843,834         467,212         174,792         924,382   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                 
                 
  (15,679,934 )       (81,379 )       (5,223,794 )       (897,608 )       (4,881,730 )       (940,638 )       (409,917 ) 
  390,264         6,860,932         29,884,396         8,737,264         26,278,858         (423,246 )       7,832,553   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (15,289,670 )       6,779,553         24,660,602         7,839,656         21,397,128         (1,363,884 )       7,422,636   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

(10,658,757

) 

      (2,029,901 )       (9,397,398 )       (6,337,677 )       907,630         (3,414,711 )       (5,488,733 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (25,948,427 )       4,749,652         15,263,204         1,501,979         22,304,758         (4,778,595 )       1,933,903   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ (25,720,419 )     $ 7,771,588       $ 15,220,292       $ 2,345,813       $ 22,771,970       $ (4,603,803 )     $ 2,858,285   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   47  

 

 

Statements of Changes in Net Assets

For the years ended October 31, 2015 and 2014

 

    PowerShares DWA SmallCap
Momentum Portfolio (DWAS)		      PowerShares
DWA Tactical
Sector Rotation
Portfolio (DWTR)(a)		  
    2015      2014      2015  
Operations:        

Net investment income (loss)

   $ 229,543       $ 187,267       $ (2,846 ) 

Net realized gain (loss)

     (16,844,089 )       (7,791,356 )       (115 ) 

Net change in unrealized appreciation (depreciation)

     1,721,890         (5,259,970 )       778,945   
 

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     (14,892,656 )       (12,864,059 )       775,984   
 

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:        

Net investment income

     (313,026 )       (207,003 )       —   

Net realized gains

     —         —         —   

Return of capital

     —         (136,683 )       —   
 

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (313,026 )       (343,686 )       —   
 

 

 

     

 

 

     

 

 

  
Shareholder Transactions:        

Proceeds from shares sold

     330,233,347         203,215,850         41,828,050   

Value of shares repurchased

     (191,228,931 )       (402,536,898 )       —   
 

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     139,004,416         (199,321,048 )       41,828,050   
 

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     123,798,734         (212,528,793 )       42,604,034   
 

 

 

     

 

 

     

 

 

  
Net Assets:        

Beginning of year

     292,517,184         505,045,977         —   
 

 

 

     

 

 

     

 

 

  

End of year

   $ 416,315,918       $ 292,517,184       $ 42,604,034   
 

 

 

     

 

 

     

 

 

  

Undistributed net investment income (loss) at end of year

   $ 156,729       $ —       $ (2,780 ) 
 

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:        

Shares sold

     8,100,000         5,200,000         1,650,001   

Shares repurchased

     (4,850,000 )       (11,150,001 )       —   

Shares outstanding, beginning of year

     7,650,000         13,600,001         —   
 

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     10,900,000         7,650,000         1,650,001   
 

 

 

     

 

 

     

 

 

  

 

(a) For the period October 7, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   48  

 

 

 

PowerShares S&P SmallCap
Consumer Discretionary
Portfolio (PSCD)		      PowerShares S&P SmallCap
Consumer Staples
Portfolio (PSCC)		      PowerShares S&P SmallCap
Energy Portfolio (PSCE)		      PowerShares S&P SmallCap
Financials Portfolio (PSCF)		  
2015      2014      2015      2014      2015      2014      2015      2014  
                    
$ 1,084,460       $ 763,426       $ 386,942       $ 210,106       $ 228,008       $ 35,539       $ 3,021,936       $ 2,476,234   
  9,651,378         19,836,520         4,094,351         7,632,092         (15,289,670 )       1,551,315         6,779,553         1,868,178   
  (7,660,124 )       (17,461,256 )       (1,405,657 )       (5,019,624 )       (10,658,757 )       (11,272,819 )       (2,029,901 )       5,380,014   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  3,075,714         3,138,690         3,075,636         2,822,574         (25,720,419 )       (9,685,965 )       7,771,588         9,724,426   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  (1,104,227 )       (677,116 )       (236,050 )       (207,301 )       (171,568 )       (17,300 )       (2,648,802 )       (2,634,796 ) 
  —         —         (487,206 )       —         —         —         —         (77,662 ) 
  —         —         —         —         —         (4,640 )       —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (1,104,227 )       (677,116 )       (723,256 )       (207,301 )       (171,568 )       (21,940 )       (2,648,802 )       (2,712,458 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  50,801,801         40,321,607         30,057,465         42,197,537         35,063,123         17,822,356         85,664,792         19,531,664   
  (28,947,395 )       (52,832,637 )       (33,211,698 )       (58,668,397 )       (2,303,063 )       (26,112,756 )       (23,193,508 )       (9,760,305 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  21,854,406         (12,511,030 )       (3,154,233 )       (16,470,860 )       32,760,060         (8,290,400 )       62,471,284         9,771,359   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  23,825,893         (10,049,456 )       (801,853 )       (13,855,587 )       6,868,073         (17,998,305 )       67,594,070         16,783,327   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  92,148,133         102,197,589         32,295,449         46,151,036         30,280,835         48,279,140         114,752,584         97,969,257   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 115,974,026       $ 92,148,133       $ 31,493,596       $ 32,295,449       $ 37,148,908       $ 30,280,835       $ 182,346,654       $ 114,752,584   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 137,706       $ 157,473       $ 239,884       $ 88,992       $ 56,440       $ —       $ 738,811       $ 365,677   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  950,000         850,000         550,000         850,000         1,350,000         350,000         2,050,000         500,000   
  (550,000 )       (1,150,000 )       (600,000 )       (1,200,000 )       (100,000 )       (550,000 )       (550,000 )       (250,000 ) 
  1,950,000         2,250,000         600,000         950,000         800,000         1,000,000         2,800,000         2,550,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  2,350,000         1,950,000         550,000         600,000         2,050,000         800,000         4,300,000         2,800,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   49  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

    PowerShares S&P SmallCap
Health Care Portfolio (PSCH)		      PowerShares S&P SmallCap
Industrials Portfolio (PSCI)		  
    2015      2014      2015      2014  
Operations:           

Net investment income (loss)

   $ (42,912 )     $ 141,605       $ 843,834       $ 834,733   

Net realized gain (loss)

     24,660,602         39,262,515         7,839,656         5,966,721   

Net change in unrealized appreciation (depreciation)

     (9,397,398 )       (12,286,159 )       (6,337,677 )       (2,335,814 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     15,220,292         27,117,961         2,345,813         4,465,640   
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (74,412 )       (125,592 )       (878,298 )       (762,996 ) 

Net realized gains

     (3,889,593 )       —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (3,964,005 )       (125,592 )       (878,298 )       (762,996 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     153,561,248         69,523,254         6,725,540         49,048,765   

Value of shares repurchased

     (99,513,782 )       (109,478,843 )       (38,582,315 )       (25,780,785 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     54,047,466         (39,955,589 )       (31,856,775 )       23,267,980   
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     65,303,753         (12,963,220 )       (30,389,260 )       26,970,624   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     165,200,375         178,163,595         100,997,691         74,027,067   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 230,504,128       $ 165,200,375       $ 70,608,431       $ 100,997,691   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income (loss) at end of year

   $ (71,383 )     $ 43,900       $ 95,419       $ 129,883   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     2,200,000         1,250,000         150,000         1,100,000   

Shares repurchased

     (1,500,000 )       (2,000,000 )       (850,000 )       (600,000 ) 

Shares outstanding, beginning of year

     2,750,000         3,500,000         2,250,000         1,750,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     3,450,000         2,750,000         1,550,000         2,250,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   50  

 

 

 

PowerShares S&P SmallCap
Information Technology
Portfolio (PSCT)		      PowerShares S&P SmallCap
Materials Portfolio (PSCM)		      PowerShares S&P SmallCap
Utilities Portfolio (PSCU)		  
2015      2014      2015      2014      2015      2014  
              
$ 467,212       $ 488,008       $ 174,792       $ 286,427       $ 924,382       $ 1,013,859   
  21,397,128         26,552,386         (1,363,884 )       2,288,387         7,422,636         1,322,479   
  907,630         4,030,338         (3,414,711 )       (1,663,452 )       (5,488,733 )       2,810,881   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  22,771,970         31,070,732         (4,603,803 )       911,362         2,858,285         5,147,219   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  (210,333 )       (471,499 )       (223,243 )       (227,942 )       (1,042,947 )       (957,249 ) 
  —         —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (210,333 )       (471,499 )       (223,243 )       (227,942 )       (1,042,947 )       (957,249 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  215,140,141         76,868,743         —         50,738,005         30,306,896         8,862,303   
  (73,086,656 )       (91,786,214 )       (35,428,789 )       (19,011,318 )       (32,494,100 )       (5,366,354 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  142,053,485         (14,917,471 )       (35,428,789 )       31,726,687         (2,187,204 )       3,495,949   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  164,615,122         15,681,762         (40,255,835 )       32,410,107         (371,866 )       7,685,919   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  225,700,081         210,018,319         50,564,388         18,154,281         40,259,240         32,573,321   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 390,315,203       $ 225,700,081       $ 10,308,553       $ 50,564,388       $ 39,887,374       $ 40,259,240   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 396,799       $ 73,622       $ 22,780       $ 71,231       $ 91,932       $ 210,497   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  4,300,000         1,700,000         —         1,150,000         750,000         250,000   
  (1,450,000 )       (2,050,000 )       (850,000 )       (450,000 )       (850,000 )       (150,000 ) 
  4,700,000         5,050,000         1,150,000         450,000         1,050,000         950,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  7,550,000         4,700,000         300,000         1,150,000         950,000         1,050,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   51  

 

 

Financial Highlights

 

PowerShares DWA SmallCap Momentum Portfolio (DWAS)

 

    Year Ended October 31,     For the Period
July 16,  2012(a)
Through
October 31, 2012		  
    2015     2014      2013    
Per Share Operating Performance:         

Net asset value at beginning of period

   $ 38.24      $ 37.14      $ 25.87     $ 24.85  

Net investment income(b)

     0.02        0.01          0.04        0.03   

Net realized and unrealized gain (loss) on investments

     (0.04 )      1.11        11.50        0.99 (c) 

Total from investment operations

     (0.02 )      1.12        11.54       1.02  

Distributions to shareholders from:

         

Net investment income

     (0.03 )      (0.01 )      (0.27 )      —   

Return of capital

     —        (0.01 )       —        —   

Total distributions

     (0.03 )      (0.02 )       (0.27 )      —   

Net asset value at end of period

   $ 38.19      $ 38.24      $ 37.14     $ 25.87  

Market price at end of period(d)

   $ 38.18      $ 38.24      $ 37.22     $ 25.80  
Net Asset Value Total Return(e)     (0.05 )%      3.03 %       44.98 %      4.10 %(f) 
Market Price Total Return(e)     (0.08 )%      2.80 %       45.69 %      3.82 %(f) 
Ratios/Supplemental Data:         

Net assets at end of period (000’s omitted)

   $ 416,316      $ 292,517      $ 505,046      $ 14,231   

Ratio to average net assets of:

         

Expenses

     0.60 %      0.60 %       0.60 %(g)      0.60 %(h) 

Net investment income

     0.06 %      0.04 %       0.10 %      0.41 %(h) 

Portfolio turnover rate(i)

     141 %      168 %       145 %      18 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  Due to the timing of creations and redemptions of capital shares, the net realized and unrealized gain (loss) per share is not in accord with the Fund’s change in net realized and unrealized gain (loss) on investment securities and in-kind transactions for the period.
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (July 19, 2012, the first day of trading on the exchange) to October 31, 2012 was 3.52%. The market price total return from Fund Inception to October 31, 2012 was 3.12%.
(g)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(h)  Annualized.
(i)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   52  

 

 

Financial Highlights (continued)

 

PowerShares DWA Tactical Sector Rotation Portfolio (DWTR)

 

    For the Period
October 7,  2015(a)
Through
October 31, 2015		  
Per Share Operating Performance:  

Net asset value at beginning of period

   $ 25.17  

Net investment income (loss)(b)

     (0.00 )(c) 

Net realized and unrealized gain on investments

     0.65    

Total from investment operations

     0.65  

Net asset value at end of period

   $ 25.82  

Market price at end of period(d)

   $ 25.84  
Net Asset Value Total Return(e)     2.58 %(f) 
Market Price Total Return(e)     2.66 %(f) 
Ratios/Supplemental Data:  

Net assets at end of period (000’s omitted)

   $ 42,604  

Ratio to average net assets of:

  

Expenses(g)

     0.15 %(h) 

Net investment income

     (0.15 )%(h) 

Portfolio turnover rate(i)

     0 %(j)

 

(a)  Commencement of Investment Operations
(b)  Based on average shares outstanding.
(c)  Amount represents less than $(0.005).
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (October 9, 2015, the first day of trading on the exchange) to October 31, 2015 was 1.73%. The market price total return from Fund Inception to October 31, 2015 was 1.81%.
(g)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(h)  Annualized.
(i)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.
(j)  Amount represents less than 0.5%.

PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD)

 

        Year Ended October 31,  
        2015      2014      2013      2012      2011  
Per Share Operating Performance:                

Net asset value at beginning of year

     $ 47.26      $ 45.42      $ 32.18      $ 27.16      $ 24.96  

Net investment income(a)

       0.50        0.32        0.40         0.15         0.17   

Net realized and unrealized gain on investments

       2.10        1.80        13.25         5.03         2.18   

Total from investment operations

       2.60        2.12        13.65        5.18        2.35  

Distributions to shareholders from:

                

Net investment income

       (0.51 )      (0.28 )      (0.41 )       (0.16 )       (0.15 ) 

Net asset value at end of year

     $ 49.35      $ 47.26      $ 45.42      $ 32.18      $ 27.16  

Market price at end of year(b)

     $ 49.37      $ 47.27      $ 45.52      $ 32.18      $ 27.19  
Net Asset Value Total Return(c)       5.43 %       4.66 %       42.81 %       19.17 %       9.39 % 
Market Price Total Return(c)       5.45 %       4.45 %       43.13 %       19.04 %       9.51 % 
Ratios/Supplemental Data:                

Net assets at end of year (000’s omitted)

     $ 115,974      $ 92,148      $ 102,198       $ 61,151       $ 43,450   

Ratio to average net assets of:

                

Expenses

       0.29 %       0.29 %       0.30 %       0.29 %       0.29 % 

Net investment income

       0.96 %       0.69 %       1.04 %       0.50 %       0.61 % 

Portfolio turnover rate(d)

       19 %       13 %       10 %       8 %       8 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   53  

 

 

Financial Highlights (continued)

 

PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC)

 

    Year Ended October 31,  
    2015      2014      2013      2012      2011  
Per Share Operating Performance:              

Net asset value at beginning of year

   $ 53.83      $ 48.58      $ 34.23      $ 30.81      $ 27.42  

Net investment income(a)

     0.61          0.28          0.28         0.34         0.33   

Net realized and unrealized gain on investments

     3.88        5.21        14.31         3.30         3.37   

Total from investment operations

     4.49        5.49        14.59        3.64        3.70  

Distributions to shareholders from:

              

Net investment income

     (0.36 )      (0.24 )      (0.24 )       (0.22 )       (0.31 ) 

Net realized gains

     (0.70 )      —         —         —         —   

Total distributions

     (1.06 )      (0.24 )       (0.24 )       (0.22 )       (0.31 ) 

Net asset value at end of year

   $ 57.26      $ 53.83      $ 48.58      $ 34.23      $ 30.81  

Market price at end of year(b)

   $ 57.31      $ 53.82      $ 48.68      $ 34.14      $ 30.84  
Net Asset Value Total Return(c)     8.43 %       11.34 %       42.83 %       11.86 %       13.53 % 
Market Price Total Return(c)     8.54 %       11.08 %       43.51 %       11.45 %       13.55 % 
Ratios/Supplemental Data:              

Net assets at end of year (000’s omitted)

   $ 31,494      $ 32,295      $ 46,151       $ 29,097       $ 12,324   

Ratio to average net assets of:

              

Expenses

     0.29 %       0.29 %       0.30 %       0.29 %       0.29 % 

Net investment income

     1.11 %       0.57 %       0.69 %       1.01 %       1.07 % 

Portfolio turnover rate(d)

     39 %       33 %       23 %       14 %       30 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask price.
(c)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P SmallCap Energy Portfolio (PSCE)

 

    Year Ended October 31,  
    2015     2014     2013      2012     2011  
Per Share Operating Performance:           

Net asset value at beginning of year

   $ 37.85     $ 48.28     $ 32.77      $ 33.59     $ 26.33  

Net investment income(a)

     0.14         0.04         0.29         0.01        0.11   

Net realized and unrealized gain (loss) on investments

     (19.74 )     (10.45 )     15.47         (0.81 )      7.57 (b) 

Total from investment operations

     (19.60 )     (10.41 )     15.76        (0.80 )      7.68  

Distributions to shareholders from:

           

Net investment income

     (0.13 )     (0.02 )     (0.25 )       (0.02 )      (0.24 ) 

Return of capital

     —        (0.00 )(c)      —         (0.00 )(c)      (0.18 ) 

Total distributions

     (0.13 )     (0.02 )     (0.25 )       (0.02 )      (0.42 ) 

Net asset value at end of year

   $ 18.12     $ 37.85     $ 48.28      $ 32.77     $ 33.59  

Market price at end of year(d)

   $ 18.13     $ 37.84     $ 48.42      $ 32.72     $ 33.62  
Net Asset Value Total Return(e)     (51.89 )%      (21.57 )%      48.41 %       (2.37 )%      29.21 % 
Market Price Total Return(e)     (51.85 )%      (21.82 )%      49.07 %       (2.61 )%      29.33 % 
Ratios/Supplemental Data:           

Net assets at end of year (000’s omitted)

   $ 37,149     $ 30,281     $ 48,279       $ 39,320      $ 57,106   

Ratio to average net assets of:

           

Expenses

     0.29 %      0.29 %      0.29 %       0.29 %      0.29 % 

Net investment income

     0.57 %      0.07 %      0.74 %       0.03 %      0.28 % 

Portfolio turnover rate(f)

     38 %      27 %      38 %       36 %      46 % 

 

(a)  Based on average shares outstanding.
(b)  Due to the timing of creations and redemptions of capital shares, the net realized and unrealized gain (loss) per share is not in accord with the Fund’s change in net realized and unrealized gain (loss) on investment securities and in-kind transactions for the period.
(c)  Amount represents less than $(0.005).
(d)  The mean between the last bid and ask price.
(e)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   54  

 

 

Financial Highlights (continued)

 

PowerShares S&P SmallCap Financials Portfolio (PSCF)

 

    Year Ended October 31,  
    2015     2014     2013     2012      2011  
Per Share Operating Performance:           

Net asset value at beginning of year

   $ 40.98     $ 38.42     $ 30.41     $ 26.33      $ 25.04  

Net investment income(a)

     0.98       0.89       0.88        0.60         0.57   

Net realized and unrealized gain on investments

     1.32       2.67       8.14        3.99         1.25   

Total from investment operations

     2.30       3.56        9.02       4.59        1.82  

Distributions to shareholders from:

           

Net investment income

     (0.87 )     (0.97 )     (1.01 )      (0.51 )       (0.53 ) 

Net realized gains

     —        (0.03 )     —        —         —   

Total distributions

     (0.87 )     (1.00 )     (1.01 )      (0.51 )       (0.53 ) 

Net asset value at end of year

   $ 42.41     $ 40.98     $ 38.42     $ 30.41      $ 26.33  

Market price at end of
year(b)

   $ 42.45     $ 40.97     $ 38.50     $ 30.39      $ 26.36  
Net Asset Value Total
Return(c)		     5.68 %      9.40 %      30.26 %      17.67 %       7.33 % 
Market Price Total Return(c)     5.80 %      9.14 %      30.62 %      17.46 %       7.54 % 
Ratios/Supplemental Data:           

Net assets at end of year (000’s omitted)

   $ 182,347     $ 114,753     $ 97,969      $ 71,475       $ 60,557   

Ratio to average net assets of:

           

Expenses

     0.29 %(d)      0.29 %(d)      0.30 %(d)      0.29 %       0.29 % 

Net investment income

     2.38 %      2.31 %      2.56 %      2.05 %       2.14 % 

Portfolio turnover rate(e)

     16 %      16 %      24 %      10 %       13 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P SmallCap Health Care Portfolio (PSCH)

 

        Year Ended October 31,  
        2015     2014      2013      2012      2011  
Per Share Operating Performance:               

Net asset value at beginning of year

     $ 60.07     $ 50.90      $ 34.33      $ 30.42      $ 25.31  

Net investment income (loss)(a)

       (0.01 )     0.04        0.15         0.01         (0.02 ) 

Net realized and unrealized gain on investments

       8.22       9.17        16.56         4.22         5.20   

Total from investment operations

       8.21       9.21        16.71        4.23        5.18  

Distributions to shareholders from:

               

Net investment income

       (0.03 )     (0.04 )      (0.14 )       (0.32 )       (0.07 ) 

Net realized gains

       (1.44 )     —         —         —         —   

Total distributions

       (1.47 )     (0.04 )       (0.14 )       (0.32 )       (0.07 ) 

Net asset value at end of year

     $ 66.81     $ 60.07      $ 50.90      $ 34.33      $ 30.42  

Market price at end of year(b)

     $ 66.86     $ 60.03      $ 50.99      $ 34.30      $ 30.46  
Net Asset Value Total Return(c)       13.96 %      18.10 %       48.85 %       14.01 %       20.51 % 
Market Price Total Return(c)       14.12 %      17.81 %       49.25 %       13.77 %       20.67 % 
Ratios/Supplemental Data:               

Net assets at end of year (000’s omitted)

     $ 230,504     $ 165,200      $ 178,164       $ 121,865       $ 106,481   

Ratio to average net assets of:

               

Expenses

       0.29 %      0.29 %       0.30 %       0.29 %       0.29 % 

Net investment income (loss)

       (0.02 )%      0.08 %       0.35 %       0.04 %       (0.06 )% 

Portfolio turnover rate(d)

       22 %      27 %       16 %       23 %       15 % 

 

(a)  Based on average shares outstanding.
(b)  The mean between the last bid and ask prices.
(c)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(d)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   55  

 

 

Financial Highlights (continued)

 

PowerShares S&P SmallCap Industrials Portfolio (PSCI)

 

        Year Ended October 31,  
        2015      2014      2013      2012     2011  
Per Share Operating Performance:               

Net asset value at beginning of year

     $ 44.89      $ 42.30      $ 30.61      $ 27.05     $ 25.88  

Net investment income(a)

       0.45        0.34        0.32         0.42 (b)      0.19   

Net realized and unrealized gain on investments

       0.68        2.57        11.97         3.39        1.20   

Total from investment operations

       1.13        2.91        12.29        3.81       1.39  

Distributions to shareholders from:

               

Net investment income

       (0.47 )      (0.32 )      (0.60 )       (0.25 )      (0.22 ) 

Net asset value at end of year

     $ 45.55      $ 44.89      $ 42.30      $ 30.61     $ 27.05  

Market price at end of year(c)

     $ 45.57      $ 44.83      $ 42.38      $ 30.55     $ 27.07  
Net Asset Value Total Return(d)       2.51 %       6.87 %       40.72 %       14.16 %      5.34 % 
Market Price Total Return(d)       2.69 %       6.53 %       41.27 %       13.85 %      5.42 % 
Ratios/Supplemental Data:               

Net assets at end of year (000’s omitted)

     $ 70,608      $ 100,998      $ 74,027       $ 18,363      $ 25,698   

Ratio to average net assets of:

               

Expenses

       0.29 %       0.29 %       0.30 %       0.29 %      0.29 % 

Net investment income

       0.98 %       0.78 %       0.88 %       1.44 %(b)      0.63 % 

Portfolio turnover rate(e)

       11 %       15 %       30 %       9 %      9 % 

 

(a)  Based on average shares outstanding.
(b)  Net Investment income per share and the ratio of net investment income to average net assets include a special cash dividend received of $10.50 per share owned of Kaydon Corp. on March 27, 2012. Net investment income per share and the ratio of net investment income to average net assets excluding the special dividends are $0.26 and 0.88%, respectively.
(c)  The mean between the last bid and ask price.
(d)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P SmallCap Information Technology Portfolio (PSCT)

 

    Year Ended October 31,  
    2015      2014      2013      2012      2011  
Per Share Operating Performance:              

Net asset value at beginning of year

   $ 48.02      $ 41.59      $ 29.62      $ 27.80      $ 26.39  

Net investment income(a)

     0.08        0.09        0.08         0.22         0.01   

Net realized and unrealized gain on investments

     3.64        6.43        12.21         1.62         1.46 (b) 

Total from investment operations

     3.72        6.52        12.29        1.84        1.47  

Distributions to shareholders from:

              

Net investment income

     (0.04 )      (0.09 )      (0.32 )       (0.02 )       (0.05 ) 

Return of capital

     —         —         —         —         (0.01 ) 

Total distributions

     (0.04 )      (0.09 )      (0.32 )       (0.02 )       (0.06 ) 

Net asset value at end of year

   $ 51.70      $ 48.02      $ 41.59      $ 29.62      $ 27.80  

Market price at end of
year(c)

   $ 51.77      $ 48.01      $ 41.67      $ 29.59      $ 27.80  
Net Asset Value Total
Return(d)		     7.75 %       15.69 %       41.86 %       6.61 %       5.56 % 
Market Price Total Return(d)     7.92 %       15.44 %       42.28 %       6.50 %       5.60 % 
Ratios/Supplemental Data:              

Net assets at end of year (000’s omitted)

   $ 390,315      $ 225,700      $ 210,018       $ 78,506       $ 80,620   

Ratio to average net assets of:

              

Expenses

     0.29 %       0.29 %       0.29 %       0.29 %       0.29 % 

Net investment income

     0.16 %       0.21 %       0.23 %       0.74 %       0.02 % 

Portfolio turnover rate(e)

     15 %       10 %       17 %       14 %       9 % 

 

(a)  Based on average shares outstanding.
(b)  Due to the timing of creations and redemptions of capital shares, the net realized and unrealized gain (loss) per share is not in accord with the Fund’s change in net realized and unrealized gain (loss) on investment securities and in-kind transactions for the period.
(c)  The mean between the last bid and ask price.
(d)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares S&P SmallCap Materials Portfolio (PSCM)

 

    Year Ended October 31,  
    2015     2014      2013      2012      2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 43.97     $ 40.34      $ 30.23      $ 25.92      $ 26.22  

Net investment income(a)

     0.35       0.28        0.32         0.19         0.16   

Net realized and unrealized gain (loss) on investments

     (9.50 )     3.58        10.18         4.26         (0.20 )(b) 

Total from investment operations

     (9.15 )     3.86        10.50        4.45        (0.04 ) 

Distributions to shareholders from:

             

Net investment income

     (0.46 )     (0.23 )      (0.39 )       (0.14 )       (0.26 ) 

Net asset value at end of year

   $ 34.36     $ 43.97      $ 40.34      $ 30.23      $ 25.92  

Market price at end of year(c)

   $ 34.37     $ 43.95      $ 40.42      $ 30.22      $ 25.89  
Net Asset Value Total Return(d)     (20.94 )%      9.56 %       35.00 %       17.24 %       (0.21 )% 
Market Price Total Return(d)     (20.88 )%      9.30 %       35.31 %       17.34 %       (0.33 )% 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 10,309     $ 50,564      $ 18,154       $ 6,045       $ 6,481   

Ratio to average net assets of:

             

Expenses

     0.29 %      0.29 %       0.30 %       0.29 %       0.31 % 

Net investment income

     0.87 %      0.63 %       0.91 %       0.68 %       0.63 % 

Portfolio turnover rate(e)

     17 %      12 %       15 %       14 %       17 % 

 

(a)  Based on average shares outstanding.
(b)  Due to the timing of creations and redemptions of capital shares, the net realized and unrealized gain (loss) per share is not in accord with the Fund’s change in net realized and unrealized gain (loss) on investment securities and in-kind transactions for the period.
(c)  The mean between the last bid and ask price.
(d)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P SmallCap Utilities Portfolio (PSCU)

 

    Year Ended October 31,  
    2015      2014      2013      2012     2011  
Per Share Operating Performance:             

Net asset value at beginning of year

   $ 38.34      $ 34.29      $ 31.10      $ 30.03     $ 27.50  

Net investment income(a)

     1.02        1.00        1.00         1.13 (b)      0.91   

Net realized and unrealized gain on investments

     3.96        4.01        3.53         0.84        2.54   

Total from investment operations

     4.98        5.01        4.53        1.97       3.45  

Distributions to shareholders from:

             

Net investment income

     (1.33 )      (0.96 )      (1.34 )       (0.90 )      (0.92 ) 

Net asset value at end of year

   $ 41.99      $ 38.34      $ 34.29      $ 31.10     $ 30.03  

Market price at end of year(c)

   $ 42.01      $ 38.33      $ 34.34      $ 31.07     $ 30.02  
Net Asset Value Total Return(d)     13.43 %       14.87 %       15.06 %       6.66 %      12.76 % 
Market Price Total Return(d)     13.52 %       14.68 %       15.34 %       6.59 %      12.77 % 
Ratios/Supplemental Data:             

Net assets at end of year (000’s omitted)

   $ 39,887      $ 40,259      $ 32,573       $ 29,541      $ 46,548   

Ratio to average net assets of:

             

Expenses

     0.29 %       0.29 %       0.30 %       0.29 %      0.29 % 

Net investment income

     2.63 %       2.86 %       3.10 %       3.70 %(b)      3.16 % 

Portfolio turnover rate(e)

     18 %       34 %       17 %       6 %      8 % 

 

(a)  Based on average shares outstanding.
(b)  Net Investment income per share and the ratio of net investment income to average net assets include a special cash dividend received of $3.00 per share owned of Neutral Tandem, Inc. on October 31, 2012. Net investment income per share and the ratio of net investment income to average net assets excluding the special dividends are $0.97 and 3.17%, respectively.
(c)  The mean between the last bid and ask price.
(d)  Net asset value total 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 the redemption on the last day of the period. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust II

October 31, 2015

 

Note 1. Organization

PowerShares Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust on October 10, 2006 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of October 31, 2015, the Trust offered sixty-six portfolios. This report includes the following portfolios:

 

Full Name

   

Short Name

PowerShares DWA SmallCap Momentum Portfolio (DWAS)    “DWA SmallCap Momentum Portfolio”
PowerShares DWA Tactical Sector Rotation Portfolio (DWTR)*    “DWA Tactical Sector Rotation Portfolio”
PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD)    “S&P SmallCap Consumer Discretionary Portfolio”
PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC)    “S&P SmallCap Consumer Staples Portfolio”
PowerShares S&P SmallCap Energy Portfolio (PSCE)    “S&P SmallCap Energy Portfolio”
PowerShares S&P SmallCap Financials Portfolio (PSCF)    “S&P SmallCap Financials Portfolio”
PowerShares S&P SmallCap Health Care Portfolio (PSCH)    “S&P SmallCap Health Care Portfolio”
PowerShares S&P SmallCap Industrials Portfolio (PSCI)    “S&P SmallCap Industrials Portfolio”
PowerShares S&P SmallCap Information Technology Portfolio (PSCT)    “S&P SmallCap Information Technology Portfolio”
PowerShares S&P SmallCap Materials Portfolio (PSCM)    “S&P SmallCap Materials Portfolio”
PowerShares S&P SmallCap Utilities Portfolio (PSCU)    “S&P SmallCap Utilities Portfolio”

 

*Commenced operations on October 7, 2015

Each portfolio (each, a “Fund”, and collectively, the “Funds”) represents a separate series of the Trust. The shares of the Funds are referred to herein as “Shares” or “Fund’s Shares.” Each Fund’s Shares are listed and traded on The NASDAQ Stock Market LLC, except for Shares of the DWA SmallCap Momentum Portfolio, which are listed and traded on NYSE Arca, Inc.

The market price of each Share may differ to some degree from the Fund’s net asset value (“NAV”). Unlike conventional mutual funds, each Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units are issued and redeemed principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”). Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Funds.

The investment objective of each Fund is to seek investment results that generally correspond (before fees and expenses) to the price and yield of its respective index listed below (each, an “Underlying Index”):

 

Fund

   

Underlying Index

DWA SmallCap Momentum Portfolio    Dorsey Wright® SmallCap Technical Leaders Index
DWA Tactical Sector Rotation Portfolio    Dorsey Wright® Sector 4 Index
S&P SmallCap Consumer Discretionary Portfolio    S&P SmallCap 600® Capped Consumer Discretionary Index
S&P SmallCap Consumer Staples Portfolio    S&P SmallCap 600® Capped Consumer Staples Index
S&P SmallCap Energy Portfolio    S&P SmallCap 600® Capped Energy Index
S&P SmallCap Financials Portfolio    S&P SmallCap 600® Capped Financials Index
S&P SmallCap Health Care Portfolio    S&P SmallCap 600® Capped Health Care Index
S&P SmallCap Industrials Portfolio    S&P SmallCap 600® Capped Industrials Index
S&P SmallCap Information Technology Portfolio    S&P SmallCap 600® Capped Information Technology Index
S&P SmallCap Materials Portfolio    S&P SmallCap 600® Capped Materials Index
S&P SmallCap Utilities Portfolio    S&P SmallCap 600® Capped Utilities & Telecommunication Services 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 (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. In addition, the Funds monitor for material events or transactions that may occur or become known after the period-end date and before the date the

 

 

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financial statements are released to print. The following is a summary of the significant accounting policies followed by the Funds in preparation of the financial statements.

A. Security Valuation

Securities, including restricted securities, are valued according to the following policies:

Securities, including restricted securities in a fund that are held as investments (the “Underlying Fund”) of a Fund, are valued in accordance with the Underlying Fund’s valuation policy. The policies of Underlying Funds affiliated with the Funds as a result of having the same investment adviser are set forth below.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco PowerShares Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

Each Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in

 

 

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interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Other Risks

Index Risk. Unlike many investment companies, the Funds do not utilize investing strategies that seek returns in excess of their Underlying Indexes. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its respective Underlying Index, even if that security generally is underperforming.

Equity Risk. Equity risk is the risk that the value of the securities that each Fund holds will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities that a Fund holds participate or factors relating to specific companies in which the Fund invests. For example, an adverse event, such as an unfavorable earnings report, may depress the value of securities a Fund holds; the price of securities may be particularly sensitive to general movements in the stock market; or a drop in the stock market may depress the price of most or all of the securities a Fund holds. In addition, securities of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition.

Industry Concentration Risk. In following its methodology, each Fund’s Underlying Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or a sector. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry or sector, each Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or sector, a Fund may face more risks than if it were diversified broadly over numerous industries or sectors. In addition, at times, an industry or sector may be out of favor and underperform other industries or the market as a whole. Any factors detrimental to the performance of such industry or sector will disproportionately impact a Fund’s NAV.

Non-Diversified Fund Risk. Each Fund (except S&P SmallCap Consumer Discretionary Portfolio, S&P SmallCap Financials Portfolio and S&P SmallCap Information Technology Portfolio) is non-diversified and can invest a greater portion of its assets in securities of individual issuers than diversified funds. As a result, changes in the market value of a single investment could cause greater fluctuations in Share price than would occur in a diversified fund. This may increase a Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on a Fund’s performance.

Non-Correlation Risk. Each Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, each Fund incurs operating expenses not applicable to its Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. In addition, the performance of each Fund and its Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.

Small and Medium Capitalization Company Risk. Investing in securities of small and medium capitalization companies involves greater risk than customarily is associated with investing in larger, more established companies. These companies’ securities may be more volatile and less liquid than those of more established companies. These securities may have returns that vary, sometimes significantly, from the overall securities market. Often small and medium capitalization companies and the industries in which they focus are still evolving and, as a result, they may be more sensitive to changing market conditions.

Fund of Funds Risk. Because DWA Tactical Sector Rotation Portfolio invests primarily in other funds, the Fund’s investment performance largely depends on the investment performance of those Underlying Funds. An investment in the Fund is subject to the risks associated with the Underlying Funds that comprise the Underlying Index. There is a risk that the index provider’s evaluations and assumptions regarding the asset classes represented by the Underlying Funds in the Underlying Index at any given time may be incorrect based on actual market conditions. In addition, at times, certain of the segments of the market represented by constituent Underlying Funds in the Underlying Index may be out of favor and underperform other segments. The Fund indirectly pays a proportional share of the expense of the Underlying Funds in which it invests (including operating expenses and management fees), in addition to the fees and expenses it already pays to the Adviser.

C. Federal Income Taxes

Each Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

 

 

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Each Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed each Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, and passive foreign investment company adjustments, if any.

The Funds file U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, a Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

D. Investment Transactions and Investment Income

Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Interest income is recorded on the accrual basis. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by a Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

Corporate actions (including cash dividends) are recorded net of non-reclaimable foreign tax withholdings on the ex-date.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statements of Operations and the Statements of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of each Fund’s net asset value and, accordingly, they reduce each Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statements of Operations and the Statements of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between each Fund and the Adviser.

E. Country Determination

For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

F. Expenses

Each Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Expenses of the Trust that are excluded from a Fund’s unitary management fee and are directly identifiable to a specific Fund are applied to that Fund. Expenses of the Trust that are excluded from each Fund’s unitary management fee and that 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.

To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

G. Dividends and Distributions to Shareholders

Each Fund declares and pays dividends from net investment income, if any, to its shareholders quarterly and records such dividends on ex-dividend date. Generally, each Fund distributes net realized taxable capital gains, if any, annually in cash and records them on ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in such Fund’s financial statements as a tax return of capital at fiscal year-end.

H. Securities Lending

During the fiscal year ended October 31, 2015, DWA SmallCap Momentum Portfolio, S&P SmallCap Consumer Discretionary Portfolio, S&P SmallCap Energy Portfolio, S&P SmallCap Financials Portfolio, S&P SmallCap Health Care Portfolio, S&P SmallCap Industrials Portfolio, S&P SmallCap Information Technology Portfolio and S&P SmallCap Utilities Portfolio participated in securities lending. Each Fund loaned portfolio securities having a market value up to one-third of each Fund’s total assets. Such loans are secured by cash collateral equal to no less than 102% (105% for international securities) of the market value of the loaned securities determined daily

 

 

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by the securities lending provider. Cash collateral received in connection with these loans is invested in an affiliated money market fund and is shown as such on the Schedules of Investments. Each Fund bears the risk of loss with respect to the investment of collateral. It is the policy of these Funds to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, each Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to each Fund if, and to the extent that, the market value of the securities loaned were to increase, and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or each Fund. Upon termination, the borrower will return to each Fund the securities loaned and each Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. Each Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to each Fund. Some of these losses may be indemnified by the lending agent. Each Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Securities lending income on the Statements of Operations. The aggregate value of securities out on loan, if any, is shown on the Statements of Assets and Liabilities.

Note 3. Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of each Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Funds’ investments, managing the Funds’ business affairs and providing certain clerical, bookkeeping and other administrative services.

As compensation for its services, each Fund (except for DWA SmallCap Momentum Portfolio and DWA Tactical Sector Rotation Portfolio) has agreed to pay the Adviser an annual unitary management fee of 0.29% of each Fund’s average daily net assets. Each of DWA SmallCap Momentum Portfolio and DWA Tactical Sector Rotation Portfolio have agreed to pay the Adviser an annual unitary management fee of 0.60% and 0.15% of the Fund’s average daily net assets, respectively. Out of the unitary management fee, the Adviser has agreed to pay substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Further, through August 31, 2017, the Adviser has contractually agreed to waive a portion of each Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

For the fiscal year ended October 31, 2015, the Adviser waived fees for each Fund in the following amounts:

 

DWA SmallCap Momentum Portfolio    $ 227   
DWA Tactical Sector Rotation Portfolio      —   
S&P SmallCap Consumer Discretionary Portfolio      83   
S&P SmallCap Consumer Staples Portfolio      31   
S&P SmallCap Energy Portfolio      16   
S&P SmallCap Financials Portfolio      87   
S&P SmallCap Health Care Portfolio      95   
S&P SmallCap Industrials Portfolio      42   
S&P SmallCap Information Technology Portfolio      192   
S&P SmallCap Materials Portfolio      11   
S&P SmallCap Utilities Portfolio      21   

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for each Fund. The Distributor does not maintain a secondary market in the Shares. The Funds are not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into a licensing agreement for each Fund with the following entities (each, a “Licensor”):

 

Fund

   

Licensor

DWA SmallCap Momentum Portfolio    Dorsey Wright & Associates, LLC
DWA Tactical Sector Rotation Portfolio    Dorsey Wright & Associates, LLC
S&P SmallCap Consumer Discretionary Portfolio    Standard & Poor’s
S&P SmallCap Consumer Staples Portfolio    Standard & Poor’s
S&P SmallCap Energy Portfolio    Standard & Poor’s
S&P SmallCap Financials Portfolio    Standard & Poor’s
S&P SmallCap Health Care Portfolio    Standard & Poor’s

 

 

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Fund

   

Licensor

S&P SmallCap Industrials Portfolio    Standard & Poor’s
S&P SmallCap Information Technology Portfolio    Standard & Poor’s
S&P SmallCap Materials Portfolio    Standard & Poor’s
S&P SmallCap Utilities Portfolio    Standard & Poor’s

Each Underlying Index name trademark is owned by the respective Licensor. These trademarks have been licensed to the Adviser for use by the Funds. Each Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. 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 the Funds.

The Trust has entered into service agreements whereby The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for each Fund.

Note 4. Investments in Affiliates

The Adviser also serves as the adviser for PowerShares DWA Consumer Cyclicals Momentum Portfolio, PowerShares DWA Consumer Staples Momentum Portfolio, PowerShares DWA Healthcare Momentum Portfolio and PowerShares DWA Technology Momentum Portfolio and therefore, PowerShares DWA Consumer Cyclicals Momentum Portfolio, PowerShares DWA Consumer Staples Momentum Portfolio, PowerShares DWA Healthcare Momentum Portfolio and PowerShares DWA Technology Momentum Portfolio are considered to be affiliated with the Funds. The table below shows DWA Tactical Sector Rotation Portfolio’s transactions in, and earnings from, its investment in affiliates for the fiscal period ended October 31, 2015.

DWA Tactical Sector Rotation Portfolio

 

    Value
October 7, 2015		     Purchases
at Cost		     Proceeds
from Sales		     Change in
Unrealized
Appreciation		     Realized
Gain
(Loss)		     Value
October 31, 2015		     Dividend
Income		  
PowerShares DWA Consumer Cyclicals Momentum Portfolio   $ —      $ 11,046,421      $ (11,906 )    $ 75,782      $ 54      $ 11,110,351      $ —   
PowerShares DWA Consumer Staples Momentum Portfolio     —        11,587,757        (12,522 )      177,791        12        11,753,038        —   
PowerShares DWA Healthcare Momentum Portfolio     —        10,242,131        (10,957 )      310,975        (181 )      10,541,968        —   
PowerShares DWA Technology Momentum Portfolio     —        8,987,653        —        214,397        —        9,202,050        —   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Total Investments in Affiliates   $ —      $ 41,863,962      $ (35,385 )    $ 778,945      $ (115 )    $ 42,607,407      $ —   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Note 5. Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

 

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.

 

  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect a Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

As of October 31, 2015, all of the securities in each Fund were valued based on Level 1 inputs (see the Schedules of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

 

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Note 6. Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2015 and 2014:

 

     For the Year Ended
October 31, 2015		      For the Year Ended
October 31, 2014		  
     Ordinary
Income		      Long-Term
Capital Gains		      Return of
Capital		      Ordinary
Income		      Long-Term
Capital Gains		      Return of
Capital		  
DWA SmallCap Momentum Portfolio    $ 313,026       $ —       $ —       $ 207,003       $ —       $ 136,683   
DWA Tactical Sector Rotation Portfolio      —         —         —         —         —         —   
S&P SmallCap Consumer Discretionary Portfolio      1,104,227         —         —         677,116         —         —   
S&P SmallCap Consumer Staples Portfolio      341,358         381,898         —         207,301         —         —   
S&P SmallCap Energy Portfolio      171,568         —         —         17,300         —         4,640   
S&P SmallCap Financials Portfolio      2,648,802         —         —         2,651,418         61,040         —   
S&P SmallCap Health Care Portfolio      1,577,214         2,386,791         —         125,592         —         —   
S&P SmallCap Industrials Portfolio      878,298         —         —         762,996         —         —   
S&P SmallCap Information Technology Portfolio      210,333         —         —         471,499         —         —   
S&P SmallCap Materials Portfolio      223,243         —         —         227,942         —         —   
S&P SmallCap Utilities Portfolio      1,042,947         —         —         957,249         —         —   

Tax Components of Net Assets at Fiscal Year-End:

 

    Undistributed
Ordinary
Income		     Undistributed
Long-Term
Capital Gains		     Net
Unrealized
Appreciation
(Depreciation)		     Capital Loss
Carryforwards		     Late-year
Ordinary
Loss
Deferrals		     Shares of
Beneficial
Interest		     Total Net
Assets		  
DWA SmallCap Momentum Portfolio   $ 156,729      $ —      $ 27,765,108      $ (100,345,265 )    $ —      $ 488,739,346      $ 416,315,918   
DWA Tactical Sector Rotation Portfolio     —        —        778,764        —        (2,780 )      41,828,050        42,604,034   
S&P SmallCap Consumer Discretionary Portfolio     137,706        —        (76,943 )      (859,109 )      —        116,772,372        115,974,026   
S&P SmallCap Consumer Staples Portfolio     239,884        —        (450,102 )      (179,312 )      —        31,883,126        31,493,596   
S&P SmallCap Energy Portfolio     56,440        —        (28,836,342 )      (15,657,820 )      —        81,586,630        37,148,908   
S&P SmallCap Financials Portfolio     907,845        169,715        24,468,483        —        —        156,800,611        182,346,654   
S&P SmallCap Health Care Portfolio     —        —        4,935,503        (308,185 )      (71,383 )      225,948,193        230,504,128   
S&P SmallCap Industrials Portfolio     95,419        —        3,074,320        (1,087,364 )      —        68,526,056        70,608,431   
S&P SmallCap Information Technology Portfolio     396,799        —        25,848,700        (1,702,059 )      —        365,771,763        390,315,203   
S&P SmallCap Materials Portfolio     22,780        —        (3,548,069 )      (925,098 )      —        14,758,940        10,308,553   
S&P SmallCap Utilities Portfolio     91,932        —        2,885,728        (1,368,082 )      —        38,277,796        39,887,374   

Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Funds to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The following table presents available capital loss carryforwards and expiration dates for each Fund as of October 31, 2015.

 

            Post-effective/no expiration         
     2019      Short-Term      Long-Term      Total*  
DWA SmallCap Momentum Portfolio    $ —       $ 100,345,265       $ —       $ 100,345,265   
DWA Tactical Sector Rotation Portfolio      —         —         —         —   
S&P SmallCap Consumer Discretionary Portfolio      8,689         27,471         822,949         859,109   
S&P SmallCap Consumer Staples Portfolio      —         —         179,312         179,312   
S&P SmallCap Energy Portfolio      2,406,357         4,314,381         8,937,082         15,657,820   
S&P SmallCap Financials Portfolio      —         —         —         —   
S&P SmallCap Health Care Portfolio      —         73,835         234,350         308,185   

 

 

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            Post-effective/no expiration         
     2019      Short-Term      Long-Term      Total*  
S&P SmallCap Industrials Portfolio    $ 74,295       $ 358,499       $ 654,570       $ 1,087,364   
S&P SmallCap Information Technology Portfolio      567,102         428,077         706,880         1,702,059   
S&P SmallCap Materials Portfolio      82,457         418,913         423,728         925,098   
S&P SmallCap Utilities Portfolio      122,619         —         1,245,463         1,368,082   

 

* Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required be the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

Note 7. Investment Transactions

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations, money market funds and in-kind transactions, if any) were as follows:

 

     Purchases      Sales  
DWA SmallCap Momentum Portfolio    $ 540,266,753       $ 540,003,974   
DWA Tactical Sector Rotation Portfolio      35,325         35,385   
S&P SmallCap Consumer Discretionary Portfolio      24,040,786         21,905,933   
S&P SmallCap Consumer Staples Portfolio      13,460,962         16,931,179   
S&P SmallCap Energy Portfolio      15,161,628         14,788,704   
S&P SmallCap Financials Portfolio      20,847,105         23,708,410   
S&P SmallCap Health Care Portfolio      45,312,470         51,535,961   
S&P SmallCap Industrials Portfolio      9,365,585         9,550,266   
S&P SmallCap Information Technology Portfolio      44,116,412         43,736,338   
S&P SmallCap Materials Portfolio      3,507,345         3,565,919   
S&P SmallCap Utilities Portfolio      6,374,592         7,679,755   

For the fiscal year ended October 31, 2015, in-kind transactions associated with creations and redemptions were as follows:

 

     Cost of
Securities
Received		      Value of
Securities
Delivered		  
DWA SmallCap Momentum Portfolio    $ 330,128,488       $ 190,802,333   
DWA Tactical Sector Rotation Portfolio      41,828,637         —   
S&P SmallCap Consumer Discretionary Portfolio      50,447,046         30,713,291   
S&P SmallCap Consumer Staples Portfolio      30,016,705         30,980,404   
S&P SmallCap Energy Portfolio      34,696,819         2,288,083   
S&P SmallCap Financials Portfolio      85,243,054         19,024,062   
S&P SmallCap Health Care Portfolio      153,228,411         96,996,006   
S&P SmallCap Industrials Portfolio      6,724,654         38,451,548   
S&P SmallCap Information Technology Portfolio      215,067,965         72,926,774   
S&P SmallCap Materials Portfolio      —         35,406,596   
S&P SmallCap Utilities Portfolio      30,273,703         31,279,035   

Gains (losses) on in-kind transactions are generally not considered taxable gains (losses) for federal income tax purposes.

At October 31, 2015, the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes were as follows:

 

     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
DWA SmallCap Momentum Portfolio    $ 44,013,954       $ (16,248,846 )     $ 27,765,108       $ 416,180,621   
DWA Tactical Sector Rotation Portfolio      778,764         —         778,764         41,828,643   
S&P SmallCap Consumer Discretionary Portfolio      13,392,773         (13,469,716 )       (76,943 )       121,188,510   
S&P SmallCap Consumer Staples Portfolio      3,133,063         (3,583,165 )       (450,102 )       30,918,236   

 

 

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     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
S&P SmallCap Energy Portfolio    $ 689,078       $ (29,525,420 )     $ (28,836,342 )     $ 69,876,359   
S&P SmallCap Financials Portfolio      27,816,870         (3,348,387 )       24,468,483         158,077,106   
S&P SmallCap Health Care Portfolio      26,267,539         (21,332,036 )       4,935,503         227,178,217   
S&P SmallCap Industrials Portfolio      9,753,477         (6,679,157 )       3,074,320         67,900,142   
S&P SmallCap Information Technology Portfolio      49,568,948         (23,720,248 )       25,848,700         366,402,508   
S&P SmallCap Materials Portfolio      430,352         (3,978,421 )       (3,548,069 )       13,856,908   
S&P SmallCap Utilities Portfolio      3,069,837         (184,109 )       2,885,728         36,991,328   

Note 8. Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of in-kind transactions and net operating losses, amounts were reclassified between undistributed net investment income (loss), undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended October 31, 2015, the reclassifications were as follows:

 

     Undistributed
Net Investment
Income (Loss)		      Undistributed
Net Realized
Gain (Loss)		      Shares of
Beneficial
Interest		  
DWA SmallCap Momentum Portfolio    $ 240,212       $ (33,113,301 )     $ 32,873,089   
DWA Tactical Sector Rotation Portfolio      66         (66 )       —   
S&P SmallCap Consumer Discretionary Portfolio      —         (12,354,588 )       12,354,588   
S&P SmallCap Consumer Staples Portfolio      —         (4,742,222 )       4,742,222   
S&P SmallCap Energy Portfolio      —         585,167         (585,167 ) 
S&P SmallCap Financials Portfolio      —         (6,683,760 )       6,683,760   
S&P SmallCap Health Care Portfolio      2,041         (28,253,766 )       28,251,725   
S&P SmallCap Industrials Portfolio      —         (8,268,981 )       8,268,981   
S&P SmallCap Information Technology Portfolio      66,298         (25,535,913 )       25,469,615   
S&P SmallCap Materials Portfolio      —         888,759         (888,759 ) 
S&P SmallCap Utilities Portfolio      —         (7,597,949 )       7,597,949   

Note 9. Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Funds to pay remuneration to each Trustee who is not an “interested person” as defined in the 1940 Act (an “Independent Trustee”) and an Officer of the Trust. The Adviser, as a result of each Fund’s unitary management fee, pays for such compensation. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, an Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of his compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select PowerShares Funds. The Deferral Fees payable to the Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Funds.

Note 10. Capital

Shares are created and redeemed by each Fund only in Creation Units of 50,000 Shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Funds. Such transactions are principally permitted in exchange for Deposit Securities, with a balancing cash component to equate the transaction to the NAV per Share of a Fund of the Trust on the transaction date. However, for all Funds, cash in an amount equivalent to the value of certain securities may be substituted, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances.

To the extent that the Funds permit transactions in exchange for Deposit Securities, each Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will

 

 

   66  

 

be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

Transactions in each Fund’s Shares are disclosed in detail in the Statements of Changes in Net Assets.

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. Each Independent Trustee is also indemnified against certain liabilities arising out of the performance of his duties to the Trust pursuant to an Indemnification Agreement between the Independent Trustee and 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.

 

 

   67  

 

 

Report of Independent Registered Public Accounting Firm

 

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

 

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of PowerShares DWA SmallCap Momentum Portfolio, PowerShares DWA Tactical Sector Rotation Portfolio, PowerShares S&P SmallCap Consumer Discretionary Portfolio, PowerShares S&P SmallCap Consumer Staples Portfolio, PowerShares S&P SmallCap Energy Portfolio, PowerShares S&P SmallCap Financials Portfolio, PowerShares S&P SmallCap Health Care Portfolio, PowerShares S&P SmallCap Industrials Portfolio, PowerShares S&P SmallCap Information Technology Portfolio, PowerShares S&P SmallCap Materials Portfolio, and PowerShares S&P SmallCap Utilities Portfolio (each an individual portfolio of PowerShares Exchange-Traded Fund Trust II, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Chicago, IL

December 23, 2015

 

 

   68  

 

 

Fees and Expenses

 

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). 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 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, 2015.

In addition to the fees and expenses which the PowerShares DWA Tactical Sector Rotation Portfolio and PowerShares SmallCap Financials Portfolio (collectively, the “Portfolios”) bear directly, the Portfolios indirectly bear a pro rata share of the fees and expenses of the investment companies in which the Portfolios invest. The amount of fees and expenses incurred indirectly by the Portfolios will vary because the investment companies have varied expenses and fee levels and the Portfolios may own different proportions of the investment companies at different times. Estimated investment companies’ expenses are not expenses that are incurred directly by the Portfolios. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Portfolios invest in. The effect of the estimated investment companies’ expenses that the Portfolios bear indirectly is included in each Portfolio’s total return.

Actual Expenses

The first line in the following table 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 table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s 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 table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as sales charges and brokerage commissions. 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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by a Fund. If transaction costs and indirect expenses were included, your costs would have been higher.

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares DWA SmallCap Momentum Portfolio (DWAS)        

Actual

   $ 1,000.00      $ 967.16        0.60 %    $ 2.97   

Hypothetical (5% return before expenses)

     1,000.00        1,022.18        0.60        3.06   
PowerShares DWA Tactical Sector Rotation Portfolio (DWTR)(2)        

Actual

     1,000.00        1,025.80        0.15        0.10   

Hypothetical (5% return before expenses)

     1,000.00        1,024.45        0.15        0.77   
PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD)        

Actual

     1,000.00        953.44        0.29        1.43   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Consumer Staples Portfolio (PSCC)        

Actual

     1,000.00        1,095.56        0.29        1.53   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   

 

 

   69  

 

 

Fees and Expenses (continued)

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares S&P SmallCap Energy Portfolio (PSCE)        

Actual

   $ 1,000.00      $ 575.06        0.29 %    $ 1.15   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Financials Portfolio (PSCF)        

Actual

     1,000.00        1,044.73        0.29        1.49   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Health Care Portfolio (PSCH)        

Actual

     1,000.00        1,011.64        0.29        1.47   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Industrials Portfolio (PSCI)        

Actual

     1,000.00        987.52        0.29        1.45   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Information Technology Portfolio (PSCT)        

Actual

     1,000.00        1,006.03        0.29        1.47   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Materials Portfolio (PSCM)        

Actual

     1,000.00        841.24        0.29        1.35   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P SmallCap Utilities Portfolio (PSCU)        

Actual

     1,000.00        1,115.67        0.29        1.55   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   

 

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expense ratios based on the annualized data in the Financial Highlights.

 

(2)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period October 7, 2015 (commencement of investment operations) to October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 25/365. Hypothetical expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365.

 

 

   70  

 

 

Tax Information

 

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

Each Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2015:

 

     Qualified Dividend
Income*		   Corporate
Dividends-Received
Deduction*		   Long-Term
Capital Gains
PowerShares DWA SmallCap Momentum Portfolio        100 %       100 %     $ —  
PowerShares DWA Tactical Sector Rotation Portfolio        0 %       0 %       —  
PowerShares S&P SmallCap Consumer Discretionary Portfolio        100 %       100 %       —  
PowerShares S&P SmallCap Consumer Staples Portfolio        89 %       94 %       381,898  
PowerShares S&P SmallCap Energy Portfolio        100 %       100 %       —  
PowerShares S&P SmallCap Financials Portfolio        100 %       79 %       —  
PowerShares S&P SmallCap Health Care Portfolio        41 %       39 %       2,386,791  
PowerShares S&P SmallCap Industrials Portfolio        100 %       100 %       —  
PowerShares S&P SmallCap Information Technology Portfolio        100 %       100 %       —  
PowerShares S&P SmallCap Materials Portfolio        100 %       100 %       —  
PowerShares S&P SmallCap Utilities Portfolio        100 %       100 %       —  

 

* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

 

   71  

 

 

Trustees and Officers

 

The Independent Trustees, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below.

The Trustees and officers information is current as of October 31, 2015.

 

Name, Address and Year of Birth
of Independent Trustee		   Position(s)
Held
with Trust		   Term of
Office
and
Length of
Time Served*		   Principal
Occupation(s) During
Past 5 Years		   Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		   Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years
Ronn R. Bagge—1958
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Nominating and Governance Committee and Trustee   Chairman of the Nominating and Governance Committee and Trustee since 2007   Founder and Principal, YQA Capital Management LLC (1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).   125   None
Todd J. Barre—1957
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Trustee   Since 2010   Assistant Professor of Business, Trinity Christian College (2010-Present); formerly Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.   125   None
Marc M. Kole—1960
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Audit Committee and Trustee   Chairman of the Audit Committee since 2008; Trustee since 2007   Senior Director of Finance, By The Hand Club for Kids (2015-Present); Formerly: Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Senior Vice President of Finance, United Healthcare (2004-2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).   125   None
Yung Bong Lim—1964
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Investment Oversight Committee and Trustee   Chairman of the Investment Oversight Committee since 2014; Trustee since 2013   Managing Partner, Residential Dynamics Group LLC (2008-Present); formerly, Managing Director, Citadel Investment Group, L.L.C. (1999-2007).   125   None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   72  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of Birth
of Independent Trustee		   Position(s)
Held
with Trust		   Term of
Office
and
Length of
Time Served*		   Principal
Occupation(s) During
Past 5 Years		   Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		   Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years
Philip M. Nussbaum—1961
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Trustee   Since 2007   Chairman, Performance Trust Capital Partners (2004-Present).   125   None
Gary R. Wicker—1961
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Trustee   Since 2013   Senior Vice President of Global Finance and Chief Financial Officer at RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (A division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005-2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider).   125   None
Donald H. Wilson—1959
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   Chairman of the Board and Trustee   Chairman since 2012; Trustee since 2007   Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank—Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).   125   None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   73  

 

 

Trustees and Officers (continued)

 

The Trustee who is an “interested person” (the “Non-Independent Trustee”) and the 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 the Non-Independent Trustee and the other directorships, if any, held by the Non-Independent Trustee are shown below.

 

Name, Address and Year of Birth
of Non-Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s)
During Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Non-Independent
Trustee		    Other
Directorships
Held by
Non-Independent
Trustee During
the Past 5 Years
Kevin M. Carome—1956
Invesco Ltd.
Two Peachtree Pointe,
1555 Peachtree St., N.E.,
Suite 1800
Atlanta, GA 30309		    Trustee    Since 2010    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2006-Present); Director, Invesco Advisers, Inc. (2009-Present); Director, Invesco Finance PLC, INVESCO Funds Group, Inc., and Invesco Holding Company Limited; Director and Executive Vice President, Invesco Finance, Inc., Invesco Group Services, Inc., Invesco Investments (Bermuda) Ltd., Invesco North American Holdings, Inc., and IVZ, Inc. and Invesco Asset Management (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary, IVZ Bahamas Private Limited; formerly, Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2005); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    125    None

 

* This is the date the Non-Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   74  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years
Andrew Schlossberg—1974
Invesco Management
Group, Inc.
11 Greenway Plaza,
Suite 1000
Houston, TX 77046		    President    Since 2009    President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—U.S. Strategy and Marketing (2010-Present) and Principal Executive Officer (2015-Present), Invesco PowerShares Capital Management LLC; Managing Director, Head of U.S. Retail Distribution (2012-Present) and Global ETFs (2010-Present) for Invesco Ltd.; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present); formerly, Mr. Schlossberg served in multiple roles within Invesco, including head of corporate development, as well as global leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions (2002-2007), Managing Director, U.S. head of business strategy and chief marketing officer for Invesco Ltd. in the United States (2008-2012) and Director, Invesco Distributors, Inc. (2012-2015).

Peter Hubbard—1981
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Vice President and Director of Portfolio Management—Invesco PowerShares Capital Management LLC (2008-Present); formerly, Portfolio Manager, Invesco PowerShares Capital Management LLC (2007-2008); Research Analyst, Invesco PowerShares Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

David Warren—1957
Invesco Canada Ltd.
5140 Yonge Street
Suite 800

Toronto, Ontario
M2N 6X7

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—Chief Administrative Officer, Americas, Invesco PowerShares Capital Management LLC; Senior Vice President, Invesco Advisers, Inc. (2009-Present); Director, Executive Vice President and Chief Financial Officer, Invesco Inc. (2009-Present); Senior Vice President, Invesco Management Group, Inc. (2007-Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) and Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Canada Holdings Inc. (2002-Present), Invesco Corporate Class Inc., and Invesco Canada Fund Inc.; Director, Invesco Financial Services Ltd. and Trimark Investments Ltd. (2014-Present); formerly, Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2006).

Sheri Morris—1964
Invesco Management

Group, Inc.
11 Greenway Plaza,
Suite 1000
Houston, TX 77046

    Vice President    Since 2012    Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   75  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years

Rudolf E. Reitmann—1971
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President    Since 2013    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global Exchange Traded Funds Operations, Invesco PowerShares Capital Management LLC (2013-Present).

Daniel E. Draper—1968
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President    Since 2013    Senior Vice President, Invesco Distributors, Inc. (2014-Present); Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director, Invesco PowerShares Capital Management LLC (2013-Present); formerly, Managing Director, Credit Suisse Asset Management (2010-2013) and Lyxor Asset Management/Societe Generale (2007-2010).

Steven M. Hill—1964
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Vice President and Treasurer    Since 2013    Vice President and Treasurer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global ETF Administration, Invesco PowerShares Capital Management LLC (2011-Present); Principal Financial and Accounting Officer—Investment Pools, Invesco PowerShares Capital Management LLC (2015-Present); formerly, Senior Managing Director and Chief Financial Officer, Destra Capital Management LLC and its subsidiaries (2010-2011); Chief Financial Officer, Destra Investment Trust and Destra Investment Trust II (2010-2011); Senior Managing Director, Claymore Securities, Inc. (2003-2010); and Chief Financial Officer, Claymore sponsored mutual funds (2003-2010).
Christopher Joe—1969
Invesco PowerShares
Capital Management LLC
11 Greenway Plaza,
Suite 1000
Houston, TX 77046		    Chief Compliance Officer    Since 2012    Chief Compliance Officer of Invesco PowerShares Capital Management LLC (2015-Present); Chief Compliance Officer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Chief Compliance Officer, Invesco Investment Advisers, LLC (registered investment adviser) (2010-2013), U.S. Compliance Director, Invesco, Ltd. (2006-2014) and Deputy Chief Compliance Officer of Invesco Advisers, Inc. (2014-2015).

Anna Paglia—1974
Invesco PowerShares
Capital Management LLC
3500 Lacey Road,

Suite 700
Downers Grove, IL 60515

    Secretary    Since 2011    Secretary, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2011-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco PowerShares Capital Management LLC; formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   76  

 

 

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio

 

At a meeting held on September 24, 2015, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust II (the “Trust”), including the Independent Trustees, approved the Investment Advisory Agreement (the “Agreement”) between Invesco PowerShares Capital Management LLC (the “Adviser”) and the Trust for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio (each a “Fund” and together, the “Funds”).

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

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser’s services, the Trustees reviewed information concerning the functions to be performed by the Adviser for each Fund, information describing the Adviser’s current organization and staffing, including operational support that would be provided by the Adviser’s parent organization, Invesco Ltd., the background and experience of the persons who will be responsible for the day-to-day management of the Funds, and considered the quality of services provided by the Adviser to other exchange-traded funds (“ETFs”). The Trustees also reviewed information related to the Adviser’s portfolio transaction policies and procedures, as well as reports on the correlation and tracking error between the underlying indexes and the performance of other ETFs for which the Adviser serves as investment adviser.

The Trustees also considered the services to be provided by the Adviser in its oversight of the Funds’ administrator, custodian and transfer agent. They noted the significant amount of time, effort and resources that had been devoted to this oversight function for the other ETFs and that was expected to be provided for each Fund.

Based on their review, the Trustees concluded that the nature, extent and quality of the services to be provided by the Adviser to each Fund under the Agreement were expected to be appropriate and reasonable.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund’s proposed advisory fee, as compared to information compiled from Lipper Inc. (“Lipper”) databases on the median net expense ratios of ETF, open-end index (non-ETF) and open-end actively managed (non-ETF) peers. The Trustees noted that the proposed annual advisory fee to be charged to each Fund was a unitary fee, and that the Adviser has agreed to pay all other expenses of each Fund except brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses. The Trustees also compared each Fund’s proposed unitary advisory fee against the median net expense ratio of its ETF, open-end index and open-end actively managed peer groups, if any, as illustrated in the table below:

 

PowerShares Fund

    Equal to/Lower
than ETF Median		      Equal to/Lower
than Open-End
Index Fund
Median1		    Equal to/Lower
than Open-End
Active Fund
Median		  
PowerShares Russell 1000 Low Beta Equal Weight Portfolio       X      X   
PowerShares FTSE International Low Beta Equal Weight Portfolio            X   
PowerShares DWA Tactical Sector Rotation Portfolio      X       N/A      X   

 

1  The information provided by the Adviser indicated that the Fund with “N/A” noted did not have open-end index fund peers.

The Trustees noted that the comparable fee data provided by the Adviser for PowerShares DWA Tactical Sector Rotation Portfolio (which is structured as a fund-of-funds) had only one peer fund and that, in response to a request from counsel for the Independent Trustees, the Adviser provided supplemental data that showed the unitary fees for four other fund-of-funds that invested in affiliated ETFs. The Trustees considered that the unitary advisory fees for those other funds were higher than for PowerShares DWA Tactical Sector Rotation Portfolio, but that the adviser to the other funds agreed to waive a portion of the unitary fee approximately equal to the estimated Acquired Fund Fees and Expenses through November 30, 2015, such that the net unitary fee for those other funds is slightly less than the Fund’s unitary fee.

 

 

   77  

 

 

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio (continued)

 

The Trustees considered each Fund’s proposed advisory fee in light of the administrative, operational and management oversight costs for the Adviser. The Trustees noted that each Fund’s proposed licensing fee will be payable out of the proposed unitary fee to be charged to each Fund. The Board concluded that the unitary advisory fee to be charged to each Fund is reasonable and appropriate in light of the services expected to be provided by the Adviser.

In conjunction with their review of the unitary advisory fee, the Trustees also considered information provided by the Adviser on the proposed costs of services for each Fund and the estimated fees to be paid by the Adviser. The Trustees considered information provided by the Adviser on its profitability, as well as any profits or losses realized by the Adviser from its relationship with other ETFs for which it serves as investment adviser. The Trustees concluded that the estimated profits to be realized by the Adviser with respect to each Fund appeared to be reasonable in comparison with the proposed cost of providing investment advisory services to each Fund.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale may be realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees noted that any reduction in fixed costs associated with the management of each Fund would be enjoyed by the Adviser, but that a unitary fee provides a level of certainty in expenses for each Fund. The Trustees considered whether the proposed advisory fee rate for each Fund is reasonable in relation to the projected asset size of each Fund, and concluded that the flat advisory fee was reasonable and appropriate.

The Trustees noted that the Adviser had not identified any further benefits that it would derive from its relationships with each Fund, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the Agreement for each Fund.

 

 

   78  

 

Proxy Voting Policies and Procedures

A description of the Trust’s 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) 983-0903. This information is also available on the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov.

Information regarding how each Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is available, without charge and upon request, by (i) calling (800) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Form N-Qs will be available on the Commission’s website at www.sec.gov. The Trust’s Form N-Qs may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of each Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net asset value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invescopowershares.com.

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©2015 Invesco PowerShares Capital Management LLC    P-SCS-AR-1
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   
invescopowershares.com    800.983.0903   LOGO   @PowerShares   

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     October 31, 2015

2015 Annual Report to Shareholders

 

CNTR    PowerShares Contrarian Opportunities Portfolio
(formerly, PowerShares NYSE Century Portfolio)
KBWB    PowerShares KBW Bank Portfolio
KBWC    PowerShares KBW Capital Markets Portfolio
KBWD    PowerShares KBW High Dividend Yield Financial Portfolio
KBWI    PowerShares KBW Insurance Portfolio
KBWY    PowerShares KBW Premium Yield Equity REIT Portfolio
KBWP    PowerShares KBW Property & Casualty Insurance Portfolio
KBWR    PowerShares KBW Regional Banking Portfolio
EQAL    PowerShares Russell 1000 Equal Weight Portfolio

 

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Table of Contents

 

The Market Environment      3   
Manager’s Analysis      4   
KBW Portfolios   
Schedules of Investments   

PowerShares Contrarian Opportunities Portfolio (formerly, PowerShares NYSE Century Portfolio) (CNTR)

     22   

PowerShares KBW Bank Portfolio (KBWB)

      24   

PowerShares KBW Capital Markets Portfolio (KBWC)

      25   

PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)

      26   

PowerShares KBW Insurance Portfolio (KBWI)

      27   

PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)

      28   

PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)

      29   

PowerShares KBW Regional Banking Portfolio (KBWR)

      30   

PowerShares Russell 1000 Equal Weight Portfolio (EQAL)

      31   
Statements of Assets and Liabilities      42   
Statements of Operations      44   
Statements of Changes in Net Assets      46   
Financial Highlights      49   
Notes to Financial Statements      54   
Report of Independent Registered Public Accounting Firm      64   
Fees and Expenses      65   
Tax Information      67   
Trustees and Officers      68   

 

 

   2  

 

 

The Market Environment

 

 

 

US Equity

The US economy improved slowly, but steadily, during the fiscal year ended October 31, 2015—although the health of individual economic sectors varied dramatically. The headline story was the continued slowdown in energy markets, as oil prices plummeted when too much supply overwhelmed slowing global demand. However, the more subtle story, which drove the economy forward during the fiscal year, was the improved position of the US consumer.

As the reporting period began in late 2014, economic growth appeared to be stronger in the US than in the rest of the world. US equity markets were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US. The continued strengthening of the US consumer led US equity markets higher through the spring. Continued low interest rates, the increasing availability of credit from lenders and an improving employment picture all contributed to higher consumer confidence. This strength also helped the markets overcome fears that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. In the summer of 2015, however, US equity markets moved sharply lower. A significant downturn in China’s financial markets and weak global economic growth led the US Federal Reserve to delay raising interest rates, which, in turn, increased investor uncertainty and market volatility. In October, however, US markets rallied, recovering from their earlier decline and finishing higher for the fiscal year.

 

 

 

   3  

 

 

 

CNTR    Manager’s Analysis
   PowerShares Contrarian Opportunities Portfolio (CNTR)

 

Effective after the close of markets on May 22, 2015, the PowerShares NYSE Century Portfolio changed its name to PowerShares Contrarian Opportunities Portfolio (the “Fund”) and the underlying index changed from NYSE Century IndexSM (the “Previous Index”) to Dow Jones U.S. Contrarian Opportunities Index (the “Index”). At that time, the Fund also changed its ticker symbol from NYCC to CNTR and changed its investment objective and investment policies.

As an index fund, the Fund is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Index and, through May 22, 2015, of the Previous Index. The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index and, through May 22, 2015, comprised the Previous Index.

A contrarian investment process seeks to identify companies that may have experienced adverse developments or negative investor sentiment, causing its securities to be out of favor or potentially undervalued, but which may offer promising future growth prospects. S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index, strictly in accordance with its existing guidelines and mandated procedures. The Index Provider screens the constituents of the Dow Jones U.S. Broad Stock Market Index, which comprises the largest 2,500 U.S. stocks by float-adjusted market capitalization, to identify the 1,250 stocks with the lowest relative three-year trailing total returns. These stocks are scored on 10 qualitative factors of company fundamentals, with the best-ranked stocks receiving the highest scores. The scores for all 10 variables are summed to a composite rank, with the top 125 selected as Index constituents, subject to a maximum sector weight of 30%. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (2.52)%. On a net asset value (“NAV”) basis, the Fund returned (2.59)%. During the same time period, the Blended-Dow Jones US Contrarian Opportunities Index (the “Blended-Index”) returned (2.09)%. The Blended-Index is a composite of the returns of the Previous Index through May 22, 2015, and of the Index for the remainder of the fiscal year. During this period, the Fund fully replicated the components of the Index (and the Previous Index through May 22, 2015); therefore, the Fund’s underperformance (NAV basis) differed from the return of the Blended Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500® Index (the “Benchmark Index”) returned 5.20%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities. The adviser provided this additional comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a broad-based market benchmark.

Relative to the Benchmark Index, the Fund was most overweight in the industrials sector and most underweight in the health care sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s stock selection within consumer discretionary and industrials sectors.

For the fiscal year ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the materials and health care sectors, respectively. The consumer discretionary sector detracted most significantly from the Fund’s return, followed by the energy and industrials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included IPC Healthcare, Inc., a health care company (no longer held at fiscal year-end), and FutureFuel Corp., a materials company (portfolio average weight of 0.19%). Positions that detracted most significantly from the Fund’s return included Chart Industries, Inc., an industrials company (portfolio average weight of 0.36%), and LB Foster Co., Class A, an industrials company (portfolio average weight of 0.26%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Industrials      24.6   
Consumer Discretionary      22.5   
Information Technology      21.3   
Financials      12.5   
Materials      9.4   
Health Care      6.1   
Consumer Staples      2.2   
Energy      1.4   
Money Market Fund Plus Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings
* (% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
FutureFuel Corp.      1.4   
Cavco Industries, Inc.      1.1   
Cohu, Inc.      1.1   
QLogic Corp.      1.1   
OSI Systems, Inc.      1.0   
Polycom, Inc.      1.0   
NVIDIA Corp.      1.0   
Francesca’s Holdings Corp.      1.0   
Innospec, Inc.      1.0   
Insteel Industries, Inc.      1.0   
Total      10.7   

 

* Excluding money market fund holdings.
 

 

 

   4  

 

 

PowerShares Contrarian Opportunities Portfolio (CNTR) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

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Fund Performance History as of October 31, 2015

 

   

1 Year

         Fund Inception†  
Index         Average
Annualized		     Cumulative  
Blended—Dow Jones U.S. Contrarian Opportunities Index††     (2.09 )%        2.34 %      4.24 % 
Dow Jones U.S. Contrarian Opportunities Index     (0.17 )        2.38        4.30   
NYSE Century IndexSM     0.57          3.89        7.07   
S&P 500® Index     5.20          8.99        16.69   
Fund        
NAV Return     (2.59 )        1.83        3.31   
Market Price Return     (2.52 )        1.86        3.35   

 

Fund Inception: January 15, 2014

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index, Blended-Index, Previous Index and Benchmark Index performance results are based upon a hypothetical investment in their respective

constituent securities. Index, Blended-Index, Previous Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index, Blended-Index, Previous Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Blended-Index, Previous Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  “The Blended-Dow Jones U.S. Contrarian Opportunities Index performance is comprised of the performance of the NYSE Century Index, the Fund’s previous underlying index, from Fund inception through the conversion date, May 22, 2015, followed by the performance of the Index starting from the conversion date through October 31, 2015.
 

 

 

   5  

 

 

 

KBWB    Manager’s Analysis
   PowerShares KBW Bank Portfolio (KBWB)

 

As an index fund, the PowerShares KBW Bank Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Bank Index (the “Index”), formerly KBW Bank Index. The Fund generally will invest at least 90% of its total assets in securities of national money centers (which are banks with more than $50 billion in assets and that have a branch network across geographic regions) and regional banks and thrifts that are listed on a U.S. national securities exchange and that comprise the Index.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, calculates and maintains the Index, which is a modified-market capitalization-weighted index that seeks to reflect the performance of national money centers and regional banks and thrifts that are publicly traded in the U.S. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 2.49%. On a net asset value (“NAV”) basis, the Fund returned 2.35%. During the same time period, the Index returned 2.74%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500® Financials Sector Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 90 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the United States financial sector equity market. The performance of the Fund differed from the Benchmark Index in part because the Benchmark Index is broadly diversified across all financial sub-industries and is not concentrated just on the banking sub-industry.

Relative to the Benchmark Index, the Fund was most overweight in the regional banks sub-industry and most underweight in the multi-sector holdings sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the lower level of diversification within the Fund relative to the Benchmark Index. The Fund was not allocated to the REIT sub-industry.

For the fiscal year ended October 31, 2015, the regional banks sub-industry contributed most significantly to the Fund’s return, followed by the diversified banks and thrifts & mortgage finance

sub-industries, respectively. The consumer finance sub-industry detracted most significantly from the Fund’s return, followed by the asset management & custody banks sub-industry.

Positions that contributed most significantly to the Fund’s return included First Republic Bank, a regional banks company (portfolio average weight of 2.36%), and JPMorgan Chase & Co., a diversified financial services company (portfolio average weight of 8.12%). Positions that detracted most significantly from the Fund’s return included Citizens Financial Group, Inc., a regional banks company (portfolio average weight of 1.36%), and State Street Corp., an asset management & custody banks company (portfolio average weight of 3.15%).

 

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Diversified Banks      43.1   
Regional Banks      39.3   
Asset Management & Custody Banks      11.6   
Consumer Finance      3.9   
Thrifts & Mortgage Finance      2.0   
Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Bank of America Corp.      8.5   
Citigroup, Inc.      8.2   
JPMorgan Chase & Co.      8.1   
U.S. Bancorp      8.1   
Wells Fargo & Co.      8.1   
M&T Bank Corp.      4.2   
SunTrust Banks, Inc.      4.0   
BB&T Corp.      4.0   
Bank of New York Mellon Corp. (The)      4.0   
Northern Trust Corp.      3.9   
Total      61.1   

 

 

 

 

   6  

 

 

PowerShares KBW Bank Portfolio (KBWB) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

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Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Bank Index     2.74 %      15.82 %      55.38 %        19.88 %      106.46 % 
S&P 500® Financials Sector Index     2.85        17.04        60.31          19.26        102.17   
Fund            
NAV Return     2.35        15.40        53.67          19.44        103.50   
Market Price Return     2.49        15.43        53.78          19.51        104.02   

 

Fund Inception: November 1, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses, currently or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   7  

 

 

 

KBWC    Manager’s Analysis
   PowerShares KBW Capital Markets Portfolio (KBWC)

 

As an index fund, the PowerShares KBW Capital Markets Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Capital Markets Index (the “Index”), formerly KBW Capital Markets Index. The Fund generally will invest at least 90% of its total assets in securities that comprise the index and that are of broker-dealers, asset managers, trusts and custody banks or exchanges that are active in U.S. capital markets (i.e., derive a large portion of their revenues from U.S. markets rather than international markets), and that are listed on a U.S. national securities exchange.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, maintains and calculates the Index, which is a modified-market capitalization-weighted index that seeks to reflect the performance of such broker-dealers, asset managers, trusts and custody banks or exchanges. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 3.75%. On a net asset value (“NAV”) basis, the Fund returned 3.48%. During the same time period, the Index returned 3.87%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500® Financials Sector Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 90 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the United States financial sector equity market. The performance of the Fund differed from the Benchmark Index in part because the Benchmark Index is diversified across all financials sub-industries whereas the Fund invests in only three such sub-industries.

Relative to the Benchmark Index, the Fund was most overweight in the investment banking & brokerage sub-industry and most underweight in the diversified banks sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to overweight investments in the specialized finance sub-industry and the investment banking & brokerage sub-industry.

For the fiscal year ended October 31, 2015, the specialized finance sub-industry contributed most significantly to the Fund’s return, followed by the investment banking & brokerage

sub-industry. The asset management & custody banks sub-industry was the only detracting sub-industry.

Positions that contributed most significantly to the Fund’s return included SEI Investments Co., an asset management & custody banks company (portfolio average weight of 4.66%), and Interactive Brokers Group, Inc., Class A, an investment banking & brokerage company (portfolio average weight of 2.52%). Positions that detracted most significantly from the Fund’s return included Franklin Resources, Inc., an asset management & custody banks company (portfolio average weight of 3.61%), and State Street Corp., an asset management & custody banks company (portfolio average weight of 6.88%).

 

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Asset Management & Custody Banks      41.2   
Investment Banking & Brokerage      40.1   
Specialized Finance      18.5   
Money Market Fund Plus Other Assets Less Liabilities      0.2   
Top Ten Fund Holdings
* (% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Charles Schwab Corp. (The)      8.3   
BlackRock, Inc.      8.2   
Goldman Sachs Group, Inc. (The)      7.8   
State Street Corp.      7.5   
Morgan Stanley      7.4   
CBOE Holdings, Inc.      4.9   
Nasdaq, Inc.      4.8   
SEI Investments Co.      4.7   
Intercontinental Exchange, Inc.      4.6   
CME Group, Inc., Class A      4.3   
Total      62.5   

 

* Excluding money market fund holdings.
 

 

 

   8  

 

 

PowerShares KBW Capital Markets Portfolio (KBWC) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

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Fund Performance History as of October 31, 2015

 

    1 Year    

3 Years

Average
Annualized

    

3 Years

Cumulative

         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Capital Markets Index     3.87 %      21.93 %      81.28 %        20.08 %      107.78 % 
S&P 500® Financials Sector Index     2.85        17.04        60.31          19.26        102.17   
Fund            
NAV Return     3.48        21.45        79.16          19.62        104.71   
Market Price Return     3.75        21.58        79.72          19.69        105.22   

 

Fund Inception: November 1, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   9  

 

 

 

KBWD    Manager’s Analysis
   PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)

 

As an index fund, the PowerShares KBW High Dividend Yield Financial Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Financial Sector Dividend Yield Index (the “Index”), formerly KBW Financial Sector Dividend Yield Index. The Fund generally will invest at least 90% of its total assets in the securities of publicly listed financial companies that principally are engaged in the business of providing financial services and products, including banking, insurance and diversified financial services, in the United States and that comprise the Index.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, maintains and calculates the Index, which is a modified-dividend yield-weighted index that seeks to reflect the performance of such companies. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (6.12)%. On a net asset value (“NAV”) basis, the Fund returned (6.08)%. During the same time period, the Index returned (5.63)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500® Financials Sector Index (the “Benchmark Index”) returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 90 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the United States financial sector equity market.

Relative to the Benchmark Index, the Fund was most overweight in the mortgage REITs sub-industry and most underweight in the diversified banks sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to investments in the mortgage REITs sub-industry as well as security selection within the asset management & custody banks sub-industry.

For the fiscal year ended October 31, 2015, the regional banks sub-industry contributed most significantly to the Fund’s return, followed by the thrifts & mortgage finance and property & casualty insurance sub-industries, respectively. The mortgage REITs sub-industry detracted most significantly from the Fund’s return, followed by the asset management & custody banks and

trading companies & distributors sub-industries, respectively.

Positions that contributed most significantly to the Fund’s return included Park National Corp., a regional banks company (portfolio average weight of 2.32%), and Sun Communities, Inc. REIT, a residential REITs company (portfolio average weight of 1.99%). Positions that detracted most significantly from the Fund’s return included PennyMac Mortgage Investment Trust REIT, a mortgage REITs company (portfolio average weight of 4.35%), and PennantPark Investment Corp., an asset management & custody banks company (portfolio average weight of 3.78%).

 

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Mortgage REITs      26.2   
Asset Management & Custody Banks      22.3   
Regional Banks      20.1   
Property & Casualty Insurance      10.2   
Thrifts & Mortgage Finance      5.1   
Residential REITs      4.8   
Trading Companies & Distributors      3.8   
Hotel & Resort REITs      3.8   
Insurance Brokers      2.7   
Investment Banking & Brokerage      1.0   
Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Park National Corp.      7.3   
Safety Insurance Group, Inc.      5.5   
Blackstone Group LP (The)      5.1   
Sun Communities, Inc. REIT      4.8   
Mercury General Corp.      4.7   
PennyMac Mortgage Investment Trust REIT      3.9   
Textainer Group Holdings Ltd.      3.8   
American Capital Agency Corp. REIT      3.8   
Hospitality Properties Trust REIT      3.8   
Bank of Hawaii Corp.      3.4   
Total      46.1   

 

 

 

 

   10  

 

 

PowerShares KBW High Dividend Yield Financial Portfolio (KBWD) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Financial Sector Dividend Yield Index     (5.63 )%      6.45 %      20.63 %        8.35 %      48.27 % 
S&P 500® Financials Sector Index     2.85        17.04        60.31          11.97        74.23   
Fund            
NAV Return     (6.08 )      6.00        19.11          7.88        45.12   
Market Price Return     (6.12 )      6.07        19.34          7.90        45.29   

 

Fund Inception: December 2, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 2.80% includes the unitary management fee of 0.35% and acquired fund fees and expenses of 2.45%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   11  

 

 

 

KBWI    Manager’s Analysis
   PowerShares KBW Insurance Portfolio (KBWI)

 

As an index fund, the PowerShares KBW Insurance Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Insurance Index (the “Index”), formerly KBW Insurance Index. The Fund generally will invest at least 90% of its total assets in securities of U.S. publicly traded companies in the insurance industry that comprise the Index, including, but not limited to, personal and commercial lines, property/casualty, life insurance, reinsurance, brokerage and financial guarantee companies.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, maintains and calculates the Index, which is a modified-market capitalization-weighted index that seeks to reflect the performance of such insurance companies. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 6.75%. On a net asset value (“NAV”) basis, the Fund returned 6.49%. During the same time period, the Index returned 6.87%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the fund incurred during the period.

During this same time period, the S&P 500® Insurance Index (the “Benchmark Index”) returned 7.22%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 25 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the United States insurance market. The performance of the Fund differed from the Benchmark Index in part because of the Fund’s diversification across nine sub-industries versus only four for the Benchmark Index.

Relative to the Benchmark Index, the Fund was most overweight in the property & casualty insurance sub-industry and most underweight in the multi-line insurance sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the allocation effect of the Fund being underweight in the multi-line insurance sub-industry.

For the fiscal year ended October 31, 2015, the property & casualty insurance sub-industry contributed most significantly to the Fund’s return, followed by the thrifts & mortgage finance and insurance brokers sub-industries, respectively. The multi-line insurance sub-industry detracted most significantly from the Fund’s return, followed by the life & health insurance and asset management & custody banks sub-industries, respectively.

Positions that contributed most significantly to the Fund’s return included Chubb Corp., a property & casualty insurance company (no longer held at fiscal year-end), and Travelers Cos., Inc., a property & casualty insurance company (portfolio average weight of 8.86%). Positions that detracted most significantly from the Fund’s return included Genworth Financial, Inc., Class A, a multi-line insurance company (portfolio average weight of 1.47%), and Prudential Financial, Inc., a life & health insurance company (portfolio average weight of 7.49%).

 

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Property & Casualty Insurance      36.7   
Life & Health Insurance      32.0   
Insurance Brokers      14.9   
Multi-line Insurance      7.9   
Asset Management & Custody Banks      3.8   
Reinsurance      3.3   
Thrifts & Mortgage Finance      1.3   
Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Travelers Cos., Inc. (The)      9.1   
Prudential Financial, Inc.      8.1   
MetLife, Inc.      8.1   
Marsh & McLennan Cos., Inc.      7.9   
Aon PLC      7.0   
Progressive Corp. (The)      5.1   
Hartford Financial Services Group, Inc. (The)      4.7   
Aflac, Inc.      4.3   
XL Group PLC      4.2   
Cincinnati Financial Corp.      4.1   
Total      62.6   
 

 

 

   12  

 

 

PowerShares KBW Insurance Portfolio (KBWI) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Insurance Index     6.87 %      20.94 %      76.91 %        21.06 %      114.65 % 
S&P 500® Insurance Index     7.22        18.74        67.41          18.83        99.32   
Fund            
NAV Return     6.49        20.51        75.02          20.63        111.77   
Market Price Return     6.75        20.59        75.36          20.70        112.23   

 

Fund Inception: November 1, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   13  

 

 

 

KBWY    Manager’s Analysis
   PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)

 

As an index fund, the PowerShares KBW Premium Yield Equity REIT Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Premium Yield Equity REIT Index (the “Index”), formerly KBW Premium Yield Equity REIT Index. The Fund generally will invest at least 90% of its total assets in the securities of small- and mid-cap equity real estate investment trusts (“REITs”) in the United States that comprise the Index.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, maintains and calculates the Index, which is a modified-dividend yield-weighted index that seeks to reflect the performance of such companies. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (1.88)%. On a net asset value (“NAV”) basis, the Fund returned (1.94)%. During the same time period, the Index returned (1.55)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred.

During this same time period, the Dow Jones U.S. Real Estate Index (the “Benchmark Index”) returned 4.76%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 120 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the United States REIT market. Relative to the Benchmark Index, the Fund was most overweight in the retail REIT sub-industry and most underweight in the residential REIT sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to security selection differences in the specialized REIT sub-industry.

For the fiscal year ended October 31, 2015, the residential REITs sub-industry contributed most significantly to the Fund’s return, followed by the hotel & resort REITs and diversified REITs sub-industries, respectively. The health care REITs sub-industry detracted most significantly from the Fund’s return, followed by the office REITs and retail REITs sub-industries, respectively.

Positions that contributed most significantly to the Fund’s return included Excel Trust, Inc. REIT, a real estate investment trusts company (no longer held at fiscal year-end), and Sun Communities, Inc. REIT, a residential REITs company (portfolio

average weight of 2.82%). Positions that detracted most significantly from the Fund’s return included Senior Housing Properties Trust REIT, a specialized REITs company (portfolio average weight of 4.69%), and Government Properties Income Trust REIT, an office REITs company (portfolio average weight of 5.04%).

 

REIT Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Retail      25.0   
Health Care      23.9   
Diversified      18.0   
Office      15.8   
Hotel & Resort      6.2   
Industrial      4.9   
Specialized      4.1   
Residential      2.1   
Other Assets Less Liabilities      (0.0)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Government Properties Income Trust      5.7   
STAG Industrial, Inc., Class A      4.9   
Senior Housing Properties Trust      4.9   
Lexington Realty Trust      4.7   
Hospitality Properties Trust      4.1   
EPR Properties      4.0   
One Liberty Properties, Inc.      3.9   
Agree Realty Corp.      3.8   
Inland Real Estate Corp.      3.6   
Medical Properties Trust, Inc.      3.6   
Total      43.2   
 

 

 

   14  

 

 

PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Premium Yield Equity REIT Index     (1.55 )%      10.93 %      36.50 %        10.79 %      65.44 % 
Dow Jones U.S. Real Estate Index     4.76        10.34        34.34          11.27        68.94   
Fund            
NAV Return     (1.94 )      10.47        34.83          10.34        62.14   
Market Price Return     (1.88 )      10.51        34.97          10.39        62.49   

 

Fund Inception: December 2, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   15  

 

 

 

KBWP    Manager’s Analysis
   PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)

 

As an index fund, the PowerShares KBW Property & Casualty Insurance Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Property & Casualty Index (the “Index”), formerly KBW Property & Casualty Index. The Fund generally will invest at least 90% of its total assets in the securities of property and casualty insurance companies that comprise the Index.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, maintains and calculates the Index using a modified-market capitalization-weighted methodology that seeks to reflect the performance of such property and casualty insurance companies. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 19.60%. On a net asset value (“NAV”) basis, the Fund returned 19.31%. During the same time period, the Index returned 19.74%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500® Property & Casualty Index (the “Benchmark Index”) returned 13.99%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 5 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a representation of the United States property and casualty market. The performance of the Fund differed from the Benchmark Index in part because of the Fund’s allocation in the multi-line insurance and reinsurance sub-industries.

Relative to the Benchmark Index, the Fund was most overweight in the reinsurance sub-industry and most underweight in the property & casualty insurance sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the broader diversification in the Fund relative to the index.

For the fiscal year ended October 31, 2015, the property & casualty insurance sub-industry contributed most significantly to the Fund’s return, followed by the multi-line insurance and reinsurance sub-industries, respectively. There were no detracting sub-industries.

Positions that contributed most significantly to the Fund’s return included Chubb Corp., a property & casualty insurance company

(no longer held at fiscal year-end), and HCC Insurance Holdings, Inc., a multi-line insurance company (no longer held at fiscal year-end). ACE Ltd., a property & casualty insurance company (portfolio average weight of 4.82%), was the only detracting position.

 

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Property & Casualty Insurance      78.4   
Reinsurance      15.5   
Multi-line Insurance      6.2   
Other Assets Less Liabilities      (0.1)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Progressive Corp. (The)      9.5   
Travelers Cos., Inc. (The)      8.6   
ACE Ltd.      8.3   
Allstate Corp. (The)      7.1   
XL Group PLC      5.4   
Cincinnati Financial Corp.      4.6   
Arch Capital Group Ltd.      4.6   
American Financial Group, Inc.      4.5   
W.R. Berkley Corp.      4.4   
RenaissanceRe Holdings Ltd.      4.2   
Total      61.2   
 

 

 

   16  

 

 

PowerShares KBW Property & Casualty Insurance Portfolio (KBWP) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Property & Casualty Index     19.74 %      20.14 %      73.41 %        17.17 %      117.75 % 
S&P 500® Property & Casualty Index     13.99        21.07        77.48          16.11        108.22   
Fund            
NAV Return     19.31        19.71        71.53          16.74        113.88   
Market Price Return     19.60        19.82        72.02          16.80        114.48   

 

Fund Inception: December 2, 2010

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   17  

 

 

 

KBWR    Manager’s Analysis
   PowerShares KBW Regional Banking Portfolio (KBWR)

 

As an index fund, the PowerShares KBW Regional Banking Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the KBW Nasdaq Regional Banking Index (the “Index”), formerly KBW Regional Banking Index. The Fund generally will invest at least 90% of its total assets in securities of publicly traded mid-capitalization companies that do business as regional banks and thrifts listed on U.S. stock markets and that comprise the Index.

Keefe, Bruyette & Woods, Inc. (“KBW”), the Index provider, compiles, maintains and calculates the Index, which is a modified-market capitalization-weighted index comprised of securities of 50 mid-cap banking companies that are publicly listed in the United States. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 10.29%. On a net asset value (“NAV”) basis, the Fund returned 10.24%. During the same time period, the Index returned 10.63%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the S&P 500® Composite 1500 Commercial Banks Index (the “Benchmark Index”) returned 4.13%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 80 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a representation of the United States commercial banking market. The performance of the Fund differed from the Benchmark Index in part because of allocation differences. The Fund makes no allocation to the diversified bank sub-industry, which constitutes 77% of the Benchmark Index.

Relative to the Benchmark Index, the Fund was most overweight in the regional banks sub-industry and most underweight in the diversified banks sub-industry during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund’s overweighting the regional bank sub-industry and not allocating to the diversified banks sub-industry.

For the fiscal year ended October 31, 2015, the regional banks sub-industry contributed most significantly to the Fund’s return, followed by the thrifts & mortgage finance sub-industry. There were no detracting sub-industries.

Positions that contributed most significantly to the Fund’s return included Susquehanna Bancshares, Inc., a regional banks

company (no longer held at fiscal year-end), and First Niagara Financial Group, Inc., a thrifts & mortgage finance company (portfolio average weight of 2.31%). Positions that detracted most significantly from the Fund’s return included Hancock Holding Co., a regional banks company (portfolio average weight of 1.36%), and UMB Financial Corp., a regional banks company (portfolio average weight of 1.45%).

 

Sub-Industry Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Regional Banks      95.5   
Thrifts & Mortgage Finance      4.5   
Money Market Fund Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
* (% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
PacWest Bancorp      4.2   
Signature Bank      4.1   
East West Bancorp, Inc.      3.6   
BOK Financial Corp.      3.6   
SVB Financial Group      3.5   
Pinnacle Financial Partners, Inc.      2.3   
First Niagara Financial Group, Inc.      2.3   
Washington Federal, Inc.      2.2   
First Financial Bankshares, Inc.      2.1   
PrivateBancorp, Inc.      2.1   
Total      30.0   

 

* Excluding money market fund holdings.
 

 

 

   18  

 

 

PowerShares KBW Regional Banking Portfolio (KBWR) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
KBW Nasdaq Regional Banking Index     10.63 %      17.79 %      63.44 %        19.72 %      105.31 % 
S&P 500® Composite 1500 Commercial Banks Index     4.13        16.80        59.33          20.88        113.41   
Fund            
NAV Return     10.24        17.38        61.72          19.30        102.55   
Market Price Return     10.29        17.40        61.79          19.38        103.09   

 

Fund Inception: November 1, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   19  

 

 

 

EQAL    Manager’s Analysis
   PowerShares Russell 1000 Equal Weight Portfolio (EQAL)

 

As an index fund, the PowerShares Russell 1000 Equal Weight Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Russell 1000® Equal Weight Index (the “Index”). The Fund generally will invest at least 90% of its total assets in securities that comprise the Index.

Frank Russell Company (the “Index Provider”) compiles, maintains and calculates the Index strictly in accordance with its existing guidelines and mandated procedures. The Index is composed of all the securities in the Russell 1000® Index (the “Benchmark Index”), with each security receiving an equal weight. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

The Fund commenced investment operations on December 22, 2014, and began trading on December 23, 2014. During the period from inception to October 31, 2015, on a market price basis, the Fund returned (1.93)%. On a net asset value (“NAV”) basis, the Fund returned (2.01)%. During the same time period, the Index returned (1.85)%. During the fiscal period from inception, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Benchmark Index returned 1.43%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 1,030 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market. The performance of the Fund differed from the Benchmark Index in part because the Benchmark Index is weighted by market capitalization, whereas the Fund is weighted equally across all of its underlying constituents.

Relative to the Benchmark Index, the Fund was most overweight in the utilities sector and most underweight in the financials sector during the fiscal period ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s allocation to, and stock selection within, the energy sector.

For the fiscal period ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the information technology and consumer discretionary sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the materials and industrials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Kraft Heinz Company, a consumer staples company

(portfolio average weight of 0.22%), and Reynolds American, Inc., a consumer staples company (portfolio average weight of 0.24%). Positions that detracted most significantly from the Fund’s return included SandRidge Energy, Inc., an energy company (no longer held at fiscal year-end), and Seventy Seven Energy, Inc., an energy company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Information Technology      13.4   
Industrials      12.6   
Health Care      11.2   
Consumer Staples      11.1   
Energy      10.8   
Consumer Discretionary      10.2   
Financials      10.0   
Materials      9.4   
Utilities      9.1   
Telecommunication Services      2.2   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Rite Aid Corp.      0.3   
Mead Johnson Nutrition Co.      0.3   
Dr Pepper Snapple Group, Inc.      0.3   
Reynolds American, Inc.      0.2   
Level 3 Communications, Inc.      0.2   
Kimberly-Clark Corp.      0.2   
Altria Group, Inc.      0.2   
United States Cellular Corp.      0.2   
PepsiCo, Inc.      0.2   
Philip Morris International, Inc.      0.2   
Total      2.3   

 

 

 

 

   20  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
Russell 1000® Equal Weight Index     (1.85 )% 
Russell 1000® Index     1.43   
Fund  
NAV Return     (2.01 ) 
Market Price Return     (1.93 ) 

 

Fund Inception: December 23, 2014

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.20% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   21  

 

 

Schedule of Investments(a)

PowerShares Contrarian Opportunities Portfolio (CNTR)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Consumer Discretionary—22.5%   
  1,685       Ascena Retail Group, Inc.(b)    $ 22,444   
  735       Ascent Capital Group, Inc., Series A(b)      16,008   
  344       AutoNation, Inc.(b)      21,737   
  327       Bed Bath & Beyond, Inc.(b)      19,499   
  287       Cavco Industries, Inc.(b)      28,298   
  351       Children’s Place, Inc. (The)      18,838   
  413       Dick’s Sporting Goods, Inc.      18,399   
  263       Dollar General Corp.      17,824   
  340       Fossil Group, Inc.(b)      18,499   
  1,762       Francesca’s Holdings Corp.(b)      25,038   
  421       GNC Holdings, Inc., Class A      12,525   
  354       Harley-Davidson, Inc.      17,505   
  503       Hibbett Sports, Inc.(b)      17,183   
  979       Interval Leisure Group, Inc.      17,279   
  666       iRobot Corp.(b)      19,987   
  1,430       K12, Inc.(b)      13,885   
  371       Kohl’s Corp.      17,111   
  478       Michael Kors Holdings Ltd.(b)      18,470   
  861       Movado Group, Inc.      22,162   
  325       Outerwall, Inc.      19,500   
  360       Scripps Networks Interactive, Inc., Class A      21,629   
  814       Select Comfort Corp.(b)      17,257   
  764       Shoe Carnival, Inc.      17,167   
  1,267       Stage Stores, Inc.      12,328   
  264       Target Corp.      20,376   
  418       Tenneco, Inc.(b)      23,655   
  520       Toll Brothers, Inc.(b)      18,704   
  644       Urban Outfitters, Inc.(b)      18,418   
  259       Wyndham Worldwide Corp.      21,070   
  891       Zumiez, Inc.(b)      15,575   
     

 

 

  
        568,370   
     

 

 

  
   Consumer Staples—2.2%   
  1,712       Darling Ingredients, Inc.(b)      17,325   
  223       PriceSmart, Inc.      19,174   
  283       Sanderson Farms, Inc.      19,671   
     

 

 

  
        56,170   
     

 

 

  
   Energy—1.4%   
  3,568       Basic Energy Services, Inc.(b)      13,237   
  8,046       Parker Drilling Co.(b)      23,012   
     

 

 

  
        36,249   
     

 

 

  
   Financials—12.5%   
  42       Alleghany Corp.(b)      20,843   
  699       Altisource Portfolio Solutions SA(b)      18,740   
  791       Assured Guaranty Ltd.      21,705   
  100       Credit Acceptance Corp.(b)      18,909   
  824       Employers Holdings, Inc.      21,811   
  517       Encore Capital Group, Inc.(b)      21,042   
  272       Infinity Property & Casualty Corp.      21,902   
  727       INTL FCStone, Inc.(b)      23,257   
  435       Kansas City Life Insurance Co.      21,328   
  1,286       Maiden Holdings Ltd.      19,997   
  248       Morningstar, Inc.      20,363   
  269       Navigators Group, Inc. (The)(b)      22,959   
  662       Selective Insurance Group, Inc.      24,157   
  396       Stifel Financial Corp.(b)      17,594   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Financials (continued)   
  275       T. Rowe Price Group, Inc.    $ 20,796   
     

 

 

  
        315,403   
     

 

 

  
   Health Care—6.1%   
  526       Air Methods Corp.(b)      21,529   
  235       Express Scripts Holding Co.(b)      20,299   
  302       Health Net, Inc.(b)      19,407   
  255       LifePoint Health, Inc.(b)      17,564   
  1,074       Luminex Corp.(b)      19,547   
  362       Magellan Health, Inc.(b)      19,331   
  289       Quest Diagnostics, Inc.      19,638   
  865       Triple-S Management Corp.,
Class B(b)		      17,810   
     

 

 

  
        155,125   
     

 

 

  
   Industrials—24.6%   
  1,098       Aegion Corp.(b)      21,180   
  646       ArcBest Corp.      16,731   
  465       Atlas Air Worldwide Holdings, Inc.(b)      19,177   
  303       C.H. Robinson Worldwide, Inc.      21,022   
  840       Chart Industries, Inc.(b)      14,440   
  402       Chicago Bridge & Iron Co. NV      18,038   
  399       Clean Harbors, Inc.(b)      18,550   
  162       Cummins, Inc.      16,769   
  230       Danaher Corp.      21,461   
  305       Dycom Industries, Inc.(b)      23,207   
  524       FTI Consulting, Inc.(b)      17,821   
  282       Genesee & Wyoming, Inc., Class A(b)      18,922   
  835       GP Strategies Corp.(b)      20,950   
  1,164       Insteel Industries, Inc.      24,898   
  605       Korn/Ferry International      22,004   
  1,076       LB Foster Co., Class A      15,850   
  1,636       MRC Global, Inc.(b)      19,468   
  307       Multi-Color Corp.      23,897   
  709       MYR Group, Inc.(b)      15,953   
  861       Quanta Services, Inc.(b)      17,315   
  1,259       Resources Connection, Inc.      22,599   
  1,395       RPX Corp.(b)      19,865   
  535       Southwest Airlines Co.      24,765   
  876       SP Plus Corp.(b)      22,338   
  485       Textron, Inc.      20,452   
  902       Thermon Group Holdings, Inc.(b)      18,139   
  1,190       TriMas Corp.(b)      23,812   
  400       Triumph Group, Inc.      18,632   
  858       TrueBlue, Inc.(b)      24,856   
  225       Union Pacific Corp.      20,104   
  1,435       Wesco Aircraft Holdings, Inc.(b)      17,880   
     

 

 

  
        621,095   
     

 

 

  
   Information Technology—21.3%   
  918       ACI Worldwide, Inc.(b)      21,986   
  181       Apple, Inc.      21,630   
  708       Cirrus Logic, Inc.(b)      21,828   
  307       Cognizant Technology Solutions Corp., Class A(b)      20,910   
  2,238       Cohu, Inc.      28,176   
  912       Convergys Corp.      23,411   
  2,520       DHI Group, Inc.(b)      22,806   
  784       DTS, Inc.(b)      23,332   
  1,176       II-VI, Inc.(b)      21,309   
  421       InterDigital, Inc.      21,362   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   22  

 

 

PowerShares Contrarian Opportunities Portfolio (CNTR) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Information Technology (continued)   
  228       IPG Photonics Corp.(b)    $ 18,837   
  2,029       Kulicke & Soffa Industries, Inc. (Singapore)(b)      21,507   
  297       LogMeIn, Inc.(b)      20,006   
  730       NeuStar, Inc., Class A(b)      19,849   
  886       NVIDIA Corp.      25,136   
  2,111       ON Semiconductor Corp.(b)      23,221   
  301       OSI Systems, Inc.(b)      25,940   
  1,871       Polycom, Inc.(b)      25,782   
  2,248       QLogic Corp.(b)      27,875   
  271       Red Hat, Inc.(b)      21,439   
  827       Sykes Enterprises, Inc.(b)      23,983   
  447       Synchronoss Technologies, Inc.(b)      15,725   
  295       VeriSign, Inc.(b)      23,777   
  1,023       Western Union Co. (The)      19,693   
     

 

 

  
        539,520   
     

 

 

  
   Materials—9.4%   
  342       Balchem Corp.      23,358   
  3,556       Century Aluminum Co.(b)      12,873   
  533       Domtar Corp.      21,981   
  2,178       FutureFuel Corp.      33,563   
  452       Innospec, Inc.      24,968   
  667       Materion Corp.      20,110   
  1,804       Mercer International, Inc. (Canada)      19,483   
  481       Mosaic Co. (The)      16,253   
  352       Reliance Steel & Aluminum Co.      21,106   
  589       Schweitzer-Mauduit International, Inc.      22,865   
  2,290       Stillwater Mining Co.(b)      21,389   
     

 

 

  
        237,949   
     

 

 

  
   Total Common Stocks
(Cost $2,615,863)		      2,529,881   
     

 

 

  
     
   Money Market Fund—0.0%   
  438       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $438)		      438   
     

 

 

  
   Total Investments
(Cost $2,616,301)—100.0%		      2,530,319   
   Other assets less liabilities—(0.0)%      (740 ) 
     

 

 

  
   Net Assets—100.0%    $ 2,529,579   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   23  

 

 

Schedule of Investments(a)

PowerShares KBW Bank Portfolio (KBWB)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—99.9%   
   Asset Management & Custody Banks—11.6%   
  532,540       Bank of New York Mellon Corp. (The)    $ 22,180,291   
  313,261       Northern Trust Corp.      22,050,442   
  297,733       State Street Corp.      20,543,577   
     

 

 

  
        64,774,310   
     

 

 

  
   Consumer Finance—3.9%   
  278,043       Capital One Financial Corp.      21,937,593   
     

 

 

  
   Diversified Banks—43.1%   
  2,819,636       Bank of America Corp.      47,313,492   
  858,623       Citigroup, Inc.      45,652,985   
  278,132       Comerica, Inc.      12,070,929   
  709,111       JPMorgan Chase & Co.      45,560,381   
  1,078,427       U.S. Bancorp      45,488,051   
  833,886       Wells Fargo & Co.      45,146,588   
     

 

 

  
        241,232,426   
     

 

 

  
   Regional Banks—39.3%   
  601,399       BB&T Corp.      22,341,973   
  824,655       Citizens Financial Group, Inc.      20,039,116   
  98,767       Cullen/Frost Bankers, Inc.      6,759,613   
  1,155,394       Fifth Third Bancorp      22,010,256   
  222,378       First Republic Bank      14,523,507   
  1,255,397       Huntington Bancshares, Inc.      13,771,705   
  1,314,451       KeyCorp      16,325,481   
  194,012       M&T Bank Corp.      23,252,338   
  484,605       People’s United Financial, Inc.      7,729,450   
  242,533       PNC Financial Services Group, Inc. (The)      21,891,029   
  2,071,142       Regions Financial Corp.      19,365,178   
  546,040       SunTrust Banks, Inc.      22,671,581   
  319,144       Zions Bancorporation      9,181,773   
     

 

 

  
        219,863,000   
     

 

 

  
   Thrifts & Mortgage Finance—2.0%   
  694,578       New York Community Bancorp, Inc.      11,474,429   
     

 

 

  
   Total Investments
(Cost $579,982,019)—99.9%		      559,281,758   
   Other assets less liabilities—0.1%      349,852   
     

 

 

  
   Net Assets—100.0%    $ 559,631,610   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   24  

 

 

Schedule of Investments(a)

PowerShares KBW Capital Markets Portfolio (KBWC)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—99.8%   
   Asset Management & Custody Banks—41.2%   
  1,882       BlackRock, Inc.    $ 662,408   
  8,225       Eaton Vance Corp.      297,005   
  6,750       Franklin Resources, Inc.      275,130   
  8,654       Invesco Ltd.(b)      287,053   
  13,209       Janus Capital Group, Inc.      205,136   
  6,423       Legg Mason, Inc.      287,429   
  7,228       SEI Investments Co.      374,555   
  8,810       State Street Corp.      607,890   
  4,220       T. Rowe Price Group, Inc.      319,116   
     

 

 

  
        3,315,722   
     

 

 

  
   Investment Banking & Brokerage—40.1%   
  21,918       Charles Schwab Corp. (The)      668,937   
  3,366       Goldman Sachs Group, Inc. (The)      631,125   
  2,075       Greenhill & Co., Inc.      53,576   
  4,465       Interactive Brokers Group, Inc.,
Class A		      183,690   
  2,404       Investment Technology Group, Inc.      38,488   
  6,642       KCG Holdings, Inc., Class A(c)      82,959   
  6,233       Lazard Ltd., Class A      288,713   
  17,978       Morgan Stanley      592,735   
  1,069       Piper Jaffray Cos.(c)      38,024   
  5,964       Raymond James Financial, Inc.      328,676   
  9,315       TD Ameritrade Holding Corp.      321,088   
     

 

 

  
        3,228,011   
     

 

 

  
   Specialized Finance—18.5%   
  5,859       CBOE Holdings, Inc.      392,787   
  3,678       CME Group, Inc., Class A      347,461   
  1,452       Intercontinental Exchange, Inc.      366,485   
  6,704       Nasdaq, Inc.      388,095   
     

 

 

  
        1,494,828   
     

 

 

  
   Total Common Stocks
(Cost $8,081,515)		      8,038,561   
     

 

 

  
     
   Money Market Fund—0.1%   
  4,764       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $4,764)		      4,764   
     

 

 

  
   Total Investments
(Cost $8,086,279)—99.9%		      8,043,325   
   Other assets less liabilities—0.1%      4,755   
     

 

 

  
   Net Assets—100.0%    $ 8,048,080   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Affiliated company. The Fund’s Adviser is a wholly-owned subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated. See Note 4.
(c)  Non-income producing security.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   25  

 

 

Schedule of Investments(a)

PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Asset Management & Custody Banks—22.3%   
  616,602       Apollo Investment Corp.    $ 3,292,655   
  483,624       Ares Capital Corp.      7,365,593   
  429,906       Blackstone Group LP (The)      14,212,692   
  161,858       Federated Investors, Inc., Class B      4,973,896   
  536,364       Hercules Technology Growth Capital, Inc.      5,985,822   
  727,188       Medley Capital Corp.      5,417,551   
  739,435       PennantPark Investment Corp.      5,109,496   
  547,667       THL Credit, Inc.      6,276,264   
  541,900       Triangle Capital Corp.      9,304,423   
     

 

 

  
        61,938,392   
     

 

 

  
   Hotel & Resort REITs—3.8%   
  390,171       Hospitality Properties Trust REIT      10,472,190   
     

 

 

  
   Insurance Brokers—2.7%   
  169,855       Arthur J. Gallagher & Co.      7,427,759   
     

 

 

  
   Investment Banking & Brokerage—1.0%   
  320,394       BGC Partners, Inc., Class A      2,771,408   
     

 

 

  
   Mortgage REITs—26.2%   
  587,465       American Capital Agency Corp. REIT      10,474,501   
  598,520       Annaly Capital Management, Inc. REIT      5,955,274   
  598,520       Anworth Mortgage Asset Corp. REIT      2,854,940   
  597,103       Capstead Mortgage Corp. REIT      5,762,044   
  351,301       Colony Capital, Inc., Class A REIT      7,145,462   
  618,311       Hatteras Financial Corp. REIT      8,848,030   
  664,093       Invesco Mortgage Capital, Inc.
REIT(b)		      8,002,321   
  564,568       MFA Financial, Inc. REIT      3,906,811   
  745,733       PennyMac Mortgage Investment Trust REIT      10,902,617   
  452,715       Starwood Property Trust, Inc. REIT      9,095,044   
     

 

 

  
        72,947,044   
     

 

 

  
   Property & Casualty Insurance—10.2%   
  241,581       Mercury General Corp.      13,047,790   
  264,899       Safety Insurance Group, Inc.      15,350,897   
     

 

 

  
        28,398,687   
     

 

 

  
   Regional Banks—20.1%   
  145,531       Bank of Hawaii Corp.      9,529,370   
  177,017       City Holding Co.      8,466,723   
  191,755       F.N.B. Corp.      2,582,940   
  222,109       Park National Corp.      20,149,728   
  216,890       People’s United Financial, Inc.      3,459,396   
  200,442       Trustmark Corp.      4,816,621   
  171,633       United Bankshares, Inc.      6,788,085   
     

 

 

  
        55,792,863   
     

 

 

  
   Residential REITs—4.8%   
  198,336       Sun Communities, Inc. REIT      13,292,479   
     

 

 

  
   Thrifts & Mortgage Finance—5.1%   
  164,994       Dime Community Bancshares, Inc.      2,862,646   
  284,122       New York Community Bancorp, Inc.      4,693,695   
  218,836       Northwest Bancshares, Inc.      2,945,533   
  232,912       Oritani Financial Corp.      3,707,959   
     

 

 

  
        14,209,833   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Trading Companies & Distributors—3.8%   
  536,886       Textainer Group Holdings Ltd.    $ 10,501,490   
     

 

 

  
   Total Investments
(Cost $295,844,654)—100.0%		      277,752,145   
   Other assets less liabilities—(0.0)%      (59,739 ) 
     

 

 

  
   Net Assets—100.0%    $ 277,692,406   
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Affiliated company. The Fund’s Adviser and Invesco Mortgage Capital, Inc. REIT are wholly-owned subsidiaries of Invesco Ltd. and therefore, Invesco Ltd. and Invesco Mortgage Capital, Inc. REIT are considered to be affiliated. See Note 4.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   26  

 

 

Schedule of Investments(a)

PowerShares KBW Insurance Portfolio (KBWI)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—99.9%   
   Asset Management & Custody Banks—3.8%   
  4,716       Ameriprise Financial, Inc.    $ 544,038   
     

 

 

  
   Insurance Brokers—14.9%   
  10,721       Aon PLC      1,000,376   
  20,274       Marsh & McLennan Cos., Inc.      1,130,073   
     

 

 

  
        2,130,449   
     

 

 

  
   Life & Health Insurance—32.0%   
  9,540       Aflac, Inc.      608,175   
  10,403       Lincoln National Corp.      556,664   
  22,905       MetLife, Inc.      1,153,954   
  11,582       Principal Financial Group, Inc.      580,953   
  14,072       Prudential Financial, Inc.      1,160,940   
  14,584       Unum Group      505,336   
     

 

 

  
        4,566,022   
     

 

 

  
   Multi-line Insurance—7.9%   
  3,950       Assurant, Inc.      322,043   
  29,408       Genworth Financial, Inc., Class A(b)      137,629   
  14,369       Hartford Financial Services Group, Inc. (The)      664,710   
     

 

 

  
        1,124,382   
     

 

 

  
   Property & Casualty Insurance—36.7%   
  8,695       Allstate Corp. (The)      538,047   
  7,239       Arch Capital Group Ltd.(b)      542,129   
  5,950       Axis Capital Holdings Ltd.      321,300   
  9,701       Cincinnati Financial Corp.      584,291   
  15,702       FNF Group      553,966   
  9,977       MBIA, Inc.(b)      74,927   
  21,863       Progressive Corp. (The)      724,321   
  11,549       Travelers Cos., Inc. (The)      1,303,767   
  15,646       XL Group PLC      595,800   
     

 

 

  
        5,238,548   
     

 

 

  
   Reinsurance—3.3%   
  2,612       Everest Re Group Ltd.      464,858   
     

 

 

  
   Thrifts & Mortgage Finance—1.3%   
  20,080       MGIC Investment Corp.(b)      188,752   
     

 

 

  
   Total Investments
(Cost $13,709,911)—99.9%		      14,257,049   
   Other assets less liabilities—0.1%      7,876   
     

 

 

  
   Net Assets—100.0%    $ 14,264,925   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   27  

 

 

Schedule of Investments(a)

PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)

October 31, 2015

 

Number
of Shares		           Value  
   Real Estate Investment Trusts—100.0%   
   Diversified—18.0%   
  303,541       First Potomac Realty Trust    $ 3,578,749   
  582,730       Lexington Realty Trust      5,151,333   
  112,363       Liberty Property Trust      3,822,589   
  182,932       One Liberty Properties, Inc.      4,309,878   
  110,811       Washington Real Estate Investment Trust      2,993,005   
     

 

 

  
        19,855,554   
     

 

 

  
   Health Care—23.9%   
  127,875       Healthcare Realty Trust, Inc.      3,370,785   
  352,347       Medical Properties Trust, Inc.      3,981,521   
  107,740       OMEGA Healthcare Investors, Inc.      3,719,185   
  159,508       Sabra Health Care REIT, Inc.      3,617,641   
  353,207       Senior Housing Properties Trust      5,365,214   
  67,608       Universal Health Realty Income Trust      3,359,442   
  45,951       Welltower, Inc.      2,980,841   
     

 

 

  
        26,394,629   
     

 

 

  
   Hotel & Resort—6.2%   
  168,729       Hospitality Properties Trust      4,528,686   
  178,506       Summit Hotel Properties, Inc.      2,334,859   
     

 

 

  
        6,863,545   
     

 

 

  
   Industrial—4.9%   
  264,622       STAG Industrial, Inc., Class A      5,430,043   
     

 

 

  
   Office—15.8%   
  228,255       Brandywine Realty Trust      3,081,442   
  138,991       Corporate Office Properties Trust      3,196,793   
  382,581       Government Properties Income Trust      6,228,419   
  65,998       Highwoods Properties, Inc.      2,867,613   
  95,576       Mack-Cali Realty Corp.      2,079,734   
     

 

 

  
        17,454,001   
     

 

 

  
   Residential—2.1%   
  34,168       Sun Communities, Inc.      2,289,939   
     

 

 

  
   Retail—25.0%   
  128,417       Agree Realty Corp.      4,158,143   
  267,533       CBL & Associates Properties, Inc.      3,900,631   
  450,354       Inland Real Estate Corp.      3,985,633   
  110,203       Kite Realty Group Trust      2,910,461   
  80,522       National Retail Properties, Inc.      3,059,836   
  119,254       Pennsylvania Real Estate Investment Trust      2,680,830   
  195,386       Ramco-Gershenson Properties Trust      3,282,485   
  177,303       Urstadt Biddle Properties, Inc.,
Class A		      3,563,790   
     

 

 

  
        27,541,809   
     

 

 

  
   Specialized—4.1%   
  78,328       EPR Properties      4,449,814   
     

 

 

  
   Total Investments
(Cost $116,520,347)—100.0%		      110,279,334   
   Other assets less liabilities—(0.0)%      (85 ) 
     

 

 

  
   Net Assets—100.0%    $ 110,279,249   
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   28  

 

 

Schedule of Investments(a)

PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.1%   
   Multi-line Insurance—6.2%   
  53,704       American Financial Group, Inc.    $ 3,876,892   
  42,553       Kemper Corp.      1,519,993   
     

 

 

  
        5,396,885   
     

 

 

  
   Property & Casualty Insurance—78.4%   
  63,721       ACE Ltd.      7,234,882   
  74,589       Allied World Assurance Co. Holdings AG      2,712,056   
  99,510       Allstate Corp. (The)      6,157,679   
  33,382       AmTrust Financial Services, Inc.      2,277,320   
  52,874       Arch Capital Group Ltd.(b)      3,959,734   
  49,929       Aspen Insurance Holdings Ltd. (Bermuda)      2,427,049   
  61,990       Axis Capital Holdings Ltd.      3,347,460   
  66,269       Cincinnati Financial Corp.      3,991,382   
  36,300       Hanover Insurance Group, Inc. (The)      3,058,275   
  45,319       Mercury General Corp.      2,447,679   
  44,091       ProAssurance Corp.      2,335,059   
  250,210       Progressive Corp. (The)      8,289,457   
  35,520       RLI Corp.      2,161,392   
  46,913       Selective Insurance Group, Inc.      1,711,856   
  66,088       Travelers Cos., Inc. (The)      7,460,674   
  69,008       W.R. Berkley Corp.      3,852,717   
  122,082       XL Group PLC      4,648,882   
     

 

 

  
        68,073,553   
     

 

 

  
   Reinsurance—15.5%   
  54,100       Endurance Specialty Holdings Ltd.      3,415,333   
  18,751       Everest Re Group Ltd.      3,337,115   
  33,435       RenaissanceRe Holdings Ltd. (Bermuda)      3,665,479   
  67,979       Validus Holdings Ltd.      3,011,470   
     

 

 

  
        13,429,397   
     

 

 

  
   Total Investments
(Cost $83,847,994)—100.1%		      86,899,835   
   Other assets less liabilities—(0.1)%      (71,814 ) 
     

 

 

  
   Net Assets—100.0%    $ 86,828,021   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   29  

 

 

Schedule of Investments(a)

PowerShares KBW Regional Banking Portfolio (KBWR)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Regional Banks—95.5%   
  53,001       Associated Banc-Corp.    $ 1,025,039   
  42,333       BancorpSouth, Inc.      1,055,362   
  16,221       Bank of Hawaii Corp.      1,062,151   
  28,119       BOK Financial Corp.      1,889,034   
  48,689       Boston Private Financial Holdings, Inc.      557,976   
  34,921       Cathay General Bancorp      1,093,027   
  8,923       City Holding Co.      426,787   
  33,635       Columbia Banking System, Inc.      1,120,718   
  22,123       Commerce Bancshares, Inc.      1,007,703   
  23,869       Community Bank System, Inc.      972,900   
  61,952       CVB Financial Corp.      1,081,062   
  47,595       East West Bancorp, Inc.      1,922,362   
  75,935       F.N.B. Corp.      1,022,845   
  51,827       First Commonwealth Financial Corp.      476,290   
  35,952       First Financial Bancorp      693,155   
  33,901       First Financial Bankshares, Inc.      1,127,547   
  69,321       First Horizon National Corp.      982,972   
  45,423       First Midwest Bancorp, Inc.      809,438   
  114,500       First Niagara Financial Group, Inc.      1,185,075   
  51,973       FirstMerit Corp.      976,573   
  79,842       Fulton Financial Corp.      1,071,480   
  36,280       Glacier Bancorp, Inc.      992,621   
  35,132       Hancock Holding Co.      969,643   
  17,111       IBERIABANK Corp.      1,037,440   
  84,211       Investors Bancorp, Inc.      1,053,480   
  31,668       MB Financial, Inc.      1,020,976   
  81,682       National Penn Bancshares, Inc.      983,451   
  67,116       Old National Bancorp      939,624   
  49,427       PacWest Bancorp      2,226,192   
  8,955       Park National Corp.      812,398   
  23,451       Pinnacle Financial Partners, Inc.      1,233,992   
  26,834       PrivateBancorp, Inc.      1,122,466   
  19,057       Prosperity Bancshares, Inc.      979,149   
  20,281       S&T Bancorp, Inc.      646,558   
  14,633       Signature Bank(b)      2,179,146   
  15,204       SVB Financial Group(b)      1,855,952   
  34,859       Synovus Financial Corp.      1,102,590   
  64,972       TCF Financial Corp.      999,919   
  18,785       Texas Capital Bancshares, Inc.(b)      1,036,932   
  39,358       Trustmark Corp.      945,773   
  21,237       UMB Financial Corp.      1,042,312   
  57,984       Umpqua Holdings Corp.      968,333   
  27,000       United Bankshares, Inc.      1,067,850   
  104,475       Valley National Bancorp      1,096,988   
  27,282       Webster Financial Corp.      1,012,162   
  14,885       Westamerica Bancorp.      658,066   
  20,725       Wintrust Financial Corp.      1,046,405   
     

 

 

  
        50,589,914   
     

 

 

  
   Thrifts & Mortgage Finance—4.5%   
  40,851       Brookline Bancorp, Inc.      463,659   
  38,265       Provident Financial Services, Inc.      777,545   
  45,780       Washington Federal, Inc.      1,141,753   
     

 

 

  
        2,382,957   
     

 

 

  
   Total Common Stocks
(Cost $52,335,514)		      52,972,871   
     

 

 

  
Number
of Shares		           Value  
   Money Market Fund—0.0%   
  12,450       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $12,450)		    $ 12,450   
     

 

 

  
   Total Investments
(Cost $52,347,964)—100.0%		      52,985,321   
   Other assets less liabilities—0.0%      10,396   
     

 

 

  
   Net Assets—100.0%    $ 52,995,717   
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   30  

 

 

Schedule of Investments(a)

PowerShares Russell 1000 Equal Weight Portfolio (EQAL)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Consumer Discretionary—10.2%   
  2,434       Aaron’s, Inc.    $ 60,047   
  517       Advance Auto Parts, Inc.      102,588   
  176       Amazon.com, Inc.(b)      110,158   
  1,227       AMC Networks, Inc., Class A(b)      90,663   
  2,926       Aramark      88,804   
  1,533       AutoNation, Inc.(b)      96,870   
  123       AutoZone, Inc.(b)      96,482   
  1,529       Bed Bath & Beyond, Inc.(b)      91,174   
  2,496       Best Buy Co., Inc.      87,435   
  2,277       BorgWarner, Inc.      97,501   
  1,731       Brinker International, Inc.      78,778   
  1,888       Brunswick Corp.      101,593   
  1,929       Cabela’s, Inc.(b)      75,559   
  217       Cable One, Inc.(b)      94,057   
  2,752       Cablevision Systems Corp., Class A      89,688   
  1,530       CarMax, Inc.(b)      90,285   
  1,796       Carnival Corp.      97,128   
  971       Carter’s, Inc.      88,245   
  2,236       CBS Corp., Class B      104,019   
  497       Charter Communications, Inc., Class A(b)      94,897   
  126       Chipotle Mexican Grill, Inc.(b)      80,669   
  1,894       Choice Hotels International, Inc.      99,075   
  2,807       Cinemark Holdings, Inc.      99,480   
  11,900       Clear Channel Outdoor Holdings, Inc., Class A(b)      89,012   
  3,200       Coach, Inc.      99,840   
  1,612       Comcast Corp., Class A      100,943   
  2,638       CST Brands, Inc.      94,783   
  2,975       D.R. Horton, Inc.      87,584   
  1,286       Darden Restaurants, Inc.      79,591   
  1,245       Delphi Automotive PLC (United Kingdom)      103,572   
  1,853       Dick’s Sporting Goods, Inc.      82,551   
  1,016       Dillard’s, Inc., Class A      90,912   
  3,272       Discovery Communications, Inc., Class A(b)      96,328   
  1,538       DISH Network Corp., Class A(b)      96,848   
  1,271       Dollar General Corp.      86,136   
  1,298       Dollar Tree, Inc.(b)      85,006   
  805       Domino’s Pizza, Inc.      85,869   
  3,394       DSW, Inc., Class A      84,646   
  1,840       Dunkin’ Brands Group, Inc.      76,194   
  761       Expedia, Inc., Class A      103,724   
  5,415       Extended Stay America, Inc.      103,968   
  1,203       Foot Locker, Inc.      81,503   
  6,735       Ford Motor Co.      99,745   
  1,600       Fossil Group, Inc.(b)      87,056   
  2,223       GameStop Corp., Class A      102,414   
  2,925       Gap, Inc. (The)      79,619   
  2,571       Garmin Ltd.      91,193   
  3,100       General Motors Co.      108,221   
  6,078       Gentex Corp.      99,618   
  1,085       Genuine Parts Co.      98,475   
  7,384       GNC Holdings, Inc., Class A      219,674   
  3,065       Goodyear Tire & Rubber Co. (The)      100,655   
  2,821       GoPro, Inc., Class A(b)      70,525   
  159       Graham Holdings Co., Class B      87,843   
  38,181       Groupon, Inc., Class A(b)      141,652   
  2,528       H&R Block, Inc.      94,193   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Consumer Discretionary (continued)   
  3,106       Hanesbrands, Inc.    $ 99,206   
  1,691       Harley-Davidson, Inc.      83,620   
  963       Harman International Industries, Inc.      105,892   
  1,216       Hasbro, Inc.      93,425   
  3,948       Hilton Worldwide Holdings, Inc.      98,661   
  782       Home Depot, Inc. (The)      96,687   
  1,889       Hyatt Hotels Corp., Class A(b)      95,206   
  5,479       International Game Technology PLC      88,869   
  4,720       Interpublic Group of Cos., Inc. (The)      108,230   
  9,664       J.C. Penney Co., Inc.(b)      88,619   
  1,775       Jarden Corp.(b)      79,520   
  1,819       John Wiley & Sons, Inc., Class A      95,188   
  2,280       Johnson Controls, Inc.      103,010   
  4,705       Kate Spade & Co.(b)      84,549   
  1,909       Kohl’s Corp.      88,043   
  993       L Brands, Inc.      95,308   
  2,187       Las Vegas Sands Corp.      108,278   
  855       Lear Corp.      106,926   
  2,185       Leggett & Platt, Inc.      98,391   
  1,805       Lennar Corp., Class A      90,376   
  1,714       Liberty Broadband Corp., Class C(b)      92,162   
  3,409       Liberty Interactive Corp. QVC Group, Class A, Series A(b)      93,304   
  2,603       Liberty Media Corp., Series C(b)      101,907   
  2,226       Liberty Ventures, Class A(b)      96,987   
  2,389       Lions Gate Entertainment Corp.      93,099   
  3,736       Live Nation Entertainment, Inc.(b)      101,918   
  3,126       LKQ Corp.(b)      92,561   
  1,326       Lowe’s Cos., Inc.      97,899   
  1,734       Lululemon Athletica, Inc.(b)      85,261   
  1,736       Macy’s, Inc.      88,501   
  439       Madison Square Garden Co. (The), Class A(b)      78,362   
  1,330       Marriott International, Inc., Class A      102,117   
  4,026       Mattel, Inc.      98,959   
  932       McDonald’s Corp.      104,617   
  4,610       MGM Resorts International(b)      106,906   
  2,147       Michael Kors Holdings Ltd.(b)      82,960   
  3,849       Michaels Cos., Inc. (The)(b)      89,990   
  475       Mohawk Industries, Inc.(b)      92,863   
  1,285       MSG Networks, Inc., Class A(b)      26,368   
  1,632       Murphy USA, Inc.(b)      100,156   
  892       Netflix, Inc.(b)      96,675   
  2,241       Newell Rubbermaid, Inc.      95,086   
  7,145       News Corp., Class A      110,033   
  731       NIKE, Inc., Class B      95,783   
  1,249       Nordstrom, Inc.      81,447   
  1,503       Norwegian Cruise Line Holdings
Ltd.(b)		      95,621   
  63       NVR, Inc.(b)      103,179   
  13,093       Office Depot, Inc.(b)      99,769   
  1,387       Omnicom Group, Inc.      103,914   
  362       O’Reilly Automotive, Inc.(b)      100,006   
  477       Panera Bread Co., Class A(b)      84,606   
  1,850       Penske Automotive Group, Inc.      90,354   
  741       Polaris Industries, Inc.      83,244   
  74       Priceline Group, Inc. (The)(b)      107,614   
  4,567       PulteGroup, Inc.      83,713   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   31  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Consumer Discretionary (continued)   
  869       PVH Corp.    $ 79,036   
  841       Ralph Lauren Corp., Class A      93,158   
  5,075       Regal Entertainment Group, Class A      98,354   
  1,857       Ross Stores, Inc.      93,927   
  1,001       Royal Caribbean Cruises Ltd.      98,448   
  3,758       Sally Beauty Holdings, Inc.(b)      88,351   
  1,838       Scripps Networks Interactive, Inc., Class A      110,427   
  3,694       Sears Holdings Corp.(b)      86,329   
  3,306       Service Corp. International      93,428   
  2,716       ServiceMaster Global Holdings, Inc.(b)      96,825   
  652       Signet Jewelers Ltd.      98,413   
  23,976       Sirius XM Holdings, Inc.(b)      97,822   
  1,966       Six Flags Entertainment Corp.      102,311   
  1,977       Skechers U.S.A., Inc., Class A(b)      61,682   
  7,367       Staples, Inc.      95,697   
  1,573       Starbucks Corp.      98,423   
  1,332       Starwood Hotels & Resorts Worldwide, Inc.      106,387   
  2,346       Starz, Class A(b)      78,614   
  1,154       Target Corp.      89,066   
  3,995       TEGNA, Inc.      108,025   
  1,201       Tempur Sealy International,
Inc.(b)		      93,486   
  354       Tesla Motors, Inc.(b)      73,253   
  1,652       Thomson Reuters Corp.      67,765   
  1,766       Thor Industries, Inc.      95,505   
  1,176       Tiffany & Co.      96,949   
  496       Time Warner Cable, Inc.      93,942   
  1,343       Time Warner, Inc.      101,182   
  1,279       TJX Cos., Inc. (The)      93,610   
  2,526       Toll Brothers, Inc.(b)      90,860   
  3,596       TopBuild Corp.(b)      101,155   
  1,085       Tractor Supply Co.      100,243   
  2,528       Tribune Media Co., Class A      101,954   
  1,425       TripAdvisor, Inc., Class A(b)      119,387   
  1,820       Tupperware Brands Corp.      107,143   
  3,541       Twenty-First Century Fox, Inc., Class A      108,673   
  542       Ulta Salon, Cosmetics & Fragrance, Inc.(b)      94,286   
  880       Under Armour, Inc., Class A(b)      83,670   
  3,099       Urban Outfitters, Inc.(b)      88,631   
  1,299       VF Corp.      87,708   
  2,094       Viacom, Inc., Class B      103,255   
  2,019       Vista Outdoor, Inc.(b)      90,290   
  906       Visteon Corp.(b)      98,817   
  910       Walt Disney Co. (The)      103,503   
  10,237       Wendy’s Co. (The)      93,771   
  587       Whirlpool Corp.      94,002   
  1,167       Williams-Sonoma, Inc.      86,066   
  1,240       Wyndham Worldwide Corp.      100,874   
  1,564       Wynn Resorts Ltd.      109,402   
  1,164       Yum! Brands, Inc.      82,539   
     

 

 

  
        15,127,677   
     

 

 

  
   Consumer Staples—11.1%   
  5,671       Altria Group, Inc.      342,925   
  7,293       Archer-Daniels-Midland Co.      332,998   
  26,415       Avon Products, Inc.      106,452   
  16,289       Blue Buffalo Pet Products, Inc.(b)      292,225   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Consumer Staples (continued)   
  3,106       Brown-Forman Corp., Class B    $ 329,795   
  4,375       Bunge Ltd.      319,200   
  6,003       Campbell Soup Co.      304,892   
  3,621       Church & Dwight Co., Inc.      311,732   
  2,675       Clorox Co. (The)      326,190   
  7,850       Coca-Cola Co. (The)      332,448   
  6,386       Coca-Cola Enterprises, Inc.      327,857   
  4,926       Colgate-Palmolive Co.      326,840   
  7,490       ConAgra Foods, Inc.      303,720   
  2,386       Constellation Brands, Inc.,
Class A		      321,633   
  627       Costco Wholesale Corp.      99,141   
  3,390       Coty, Inc., Class A      98,141   
  3,153       CVS Health Corp.      311,453   
  3,979       Dr Pepper Snapple Group, Inc.      355,603   
  3,814       Edgewell Personal Care Co.      323,084   
  7,729       Energizer Holdings, Inc.      331,033   
  1,144       Estee Lauder Cos., Inc. (The), Class A      92,046   
  12,245       Flowers Foods, Inc.      330,615   
  5,417       General Mills, Inc.      314,782   
  5,797       Hain Celestial Group, Inc. (The)(b)      288,980   
  5,803       Herbalife Ltd.(b)      325,200   
  3,341       Hershey Co. (The)      296,313   
  5,000       Hormel Foods Corp.      337,750   
  3,564       Ingredion, Inc.      338,794   
  2,720       JM Smucker Co. (The)      319,301   
  4,560       Kellogg Co.      321,571   
  5,603       Keurig Green Mountain, Inc.      284,352   
  2,869       Kimberly-Clark Corp.      343,448   
  4,229       Kraft Heinz Co. (The)      329,735   
  8,609       Kroger Co. (The)      325,420   
  3,708       McCormick & Co., Inc.      311,398   
  4,345       Mead Johnson Nutrition Co.      356,290   
  3,778       Molson Coors Brewing Co.,
Class B		      332,842   
  7,264       Mondelez International, Inc.,
Class A		      335,306   
  2,282       Monster Beverage Corp.(b)      311,082   
  7,541       Nu Skin Enterprises, Inc., Class A      288,142   
  3,328       PepsiCo, Inc.      340,088   
  3,837       Philip Morris International, Inc.      339,191   
  14,719       Pilgrim’s Pride Corp.      279,514   
  6,992       Pinnacle Foods, Inc.      308,207   
  4,279       Procter & Gamble Co. (The)      326,830   
  7,240       Reynolds American, Inc.      349,837   
  45,651       Rite Aid Corp.(b)      359,730   
  3,343       Spectrum Brands Holdings, Inc.      320,427   
  14,329       Sprouts Farmers Market, Inc.(b)      292,025   
  7,827       Sysco Corp.      322,864   
  7,174       Tyson Foods, Inc., Class A      318,239   
  3,644       Walgreens Boots Alliance, Inc.      308,574   
  1,427       Wal-Mart Stores, Inc.      81,682   
  6,985       WhiteWave Foods Co. (The)(b)      286,245   
  9,995       Whole Foods Market, Inc.      299,450   
     

 

 

  
        16,513,632   
     

 

 

  
   Energy—10.8%   
  3,143       Anadarko Petroleum Corp.      210,204   
  9,156       Antero Resources Corp.(b)      215,807   
  5,159       Apache Corp.      243,144   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   32  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Energy (continued)   
  3,752       Baker Hughes, Inc.    $ 197,655   
  8,271       Cabot Oil & Gas Corp.      179,563   
  71,154       California Resources Corp.      287,462   
  3,078       Cameron International Corp.(b)      209,335   
  4,064       Cheniere Energy, Inc.(b)      201,249   
  26,661       Chesapeake Energy Corp.      190,093   
  2,545       Chevron Corp.      231,290   
  1,934       Cimarex Energy Co.      228,328   
  27,790       Cobalt International Energy, Inc.(b)      213,149   
  10,376       Columbia Pipeline Group, Inc.      215,510   
  1,952       Concho Resources, Inc.(b)      226,256   
  4,176       ConocoPhillips      222,790   
  18,872       CONSOL Energy, Inc.      125,688   
  6,817       Continental Resources, Inc.(b)      231,164   
  4,786       CVR Energy, Inc.      212,786   
  73,521       Denbury Resources, Inc.      260,264   
  5,122       Devon Energy Corp.      214,765   
  10,744       Diamond Offshore Drilling, Inc.      213,591   
  2,987       Diamondback Energy, Inc.(b)      220,560   
  3,208       Dril-Quip, Inc.(b)      197,485   
  3,940       Energen Corp.      229,111   
  13,600       Ensco PLC, Class A      226,168   
  2,708       EOG Resources, Inc.      232,482   
  37,318       EP Energy Corp., Class A(b)      205,622   
  2,815       EQT Corp.      185,987   
  2,691       Exxon Mobil Corp.      222,653   
  6,003       FMC Technologies, Inc.(b)      203,082   
  12,347       Frank’s International NV      211,875   
  6,451       Golar LNG Ltd. (Bermuda)      187,144   
  6,354       Gulfport Energy Corp.(b)      193,606   
  5,369       Halliburton Co.      206,062   
  4,186       Helmerich & Payne, Inc.      235,546   
  3,920       Hess Corp.      220,343   
  3,963       HollyFrontier Corp.      194,068   
  6,697       Kinder Morgan, Inc.      183,163   
  35,761       Kosmos Energy Ltd.(b)      243,890   
  20,193       Laredo Petroleum, Inc.(b)      231,816   
  12,509       Marathon Oil Corp.      229,915   
  4,164       Marathon Petroleum Corp.      215,695   
  10,952       Memorial Resource Development Corp.(b)      193,741   
  7,962       Murphy Oil Corp.      226,360   
  19,699       Nabors Industries Ltd.      197,778   
  5,262       National Oilwell Varco, Inc.      198,062   
  5,922       Newfield Exploration Co.(b)      238,005   
  18,026       Noble Corp. PLC      242,810   
  6,234       Noble Energy, Inc.      223,427   
  2,982       Occidental Petroleum Corp.      222,278   
  4,945       Oceaneering International, Inc.      207,789   
  5,599       ONEOK, Inc.      189,918   
  14,103       Patterson-UTI Energy, Inc.      209,994   
  6,978       PBF Energy, Inc., Class A      237,252   
  2,547       Phillips 66      226,810   
  1,611       Pioneer Natural Resources Co.      220,933   
  16,111       QEP Resources, Inc.      249,076   
  5,632       Range Resources Corp.      171,438   
  11,062       Rice Energy, Inc.(b)      168,806   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Energy (continued)   
  12,154       Rowan Cos. PLC, Class A    $ 239,191   
  20,067       RPC, Inc.      221,339   
  2,703       Schlumberger Ltd.      211,266   
  31,885       Seadrill Ltd. (United Kingdom)(b)      206,296   
  6,185       SM Energy Co.      206,270   
  15,170       Southwestern Energy Co.(b)      167,477   
  7,099       Spectra Energy Corp.      202,818   
  14,465       Superior Energy Services, Inc.      204,824   
  3,649       Targa Resources Corp.      208,540   
  3,724       Teekay Corp. (Bermuda)      119,652   
  1,940       Tesoro Corp.      207,444   
  3,270       Valero Energy Corp.      215,558   
  22,647       Weatherford International PLC(b)      231,905   
  12,208       Whiting Petroleum Corp.(b)      210,344   
  4,736       Williams Cos., Inc. (The)      186,788   
  5,454       World Fuel Services Corp.      242,485   
  29,278       WPX Energy, Inc.(b)      200,847   
     

 

 

  
        16,113,887   
     

 

 

  
   Financials—10.0%   
  636       ACE Ltd.      72,211   
  386       Affiliated Managers Group, Inc.(b)      69,580   
  1,137       Aflac, Inc.      72,484   
  748       Alexandria Real Estate Equities, Inc. REIT      67,126   
  141       Alleghany Corp.(b)      69,974   
  1,714       Allied World Assurance Co. Holdings AG      62,321   
  1,114       Allstate Corp. (The)      68,934   
  3,160       Ally Financial, Inc.(b)      62,947   
  1,800       American Campus Communities, Inc. REIT      73,026   
  3,386       American Capital Agency Corp. REIT      60,372   
  875       American Express Co.      64,102   
  945       American Financial Group, Inc.      68,220   
  4,092       American Homes 4 Rent, Class A REIT      67,518   
  1,143       American International Group, Inc.      72,078   
  662       American National Insurance Co.      68,371   
  740       American Tower Corp. REIT      75,650   
  608       Ameriprise Financial, Inc.      70,139   
  1,057       AmTrust Financial Services, Inc.      72,109   
  6,302       Annaly Capital Management, Inc. REIT      62,705   
  730       Aon PLC      68,116   
  1,798       Apartment Investment & Management Co., Class A REIT      70,464   
  3,474       Apple Hospitality REIT, Inc. REIT      68,507   
  910       Arch Capital Group Ltd.(b)      68,150   
  1,563       Arthur J. Gallagher & Co.      68,350   
  1,808       Artisan Partners Asset Management, Inc., Class A      69,156   
  1,399       Aspen Insurance Holdings Ltd. (Bermuda)      68,005   
  3,628       Associated Banc-Corp.      70,166   
  843       Assurant, Inc.      68,730   
  2,548       Assured Guaranty Ltd.      69,917   
  386       AvalonBay Communities, Inc. REIT      67,484   
  1,193       Axis Capital Holdings Ltd.      64,422   
  4,133       Bank of America Corp.      69,352   
  1,043       Bank of Hawaii Corp.      68,296   
  1,657       Bank of New York Mellon Corp. (The)      69,014   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   33  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  1,812       BankUnited, Inc.    $ 67,370   
  1,841       BB&T Corp.      68,393   
  507       Berkshire Hathaway, Inc., Class B(b)      68,962   
  3,142       BioMed Realty Trust, Inc. REIT      73,554   
  219       BlackRock, Inc.      77,081   
  1,033       BOK Financial Corp.      69,397   
  572       Boston Properties, Inc. REIT      71,986   
  5,384       Brandywine Realty Trust REIT      72,684   
  2,808       Brixmor Property Group, Inc. REIT      71,941   
  2,101       Brown & Brown, Inc.      67,799   
  909       Camden Property Trust REIT      67,075   
  888       Capital One Financial Corp.      70,063   
  1,952       Care Capital Properties, Inc. REIT      64,318   
  4,460       CBL & Associates Properties, Inc. REIT      65,027   
  992       CBOE Holdings, Inc.      66,504   
  2,015       CBRE Group, Inc., Class A(b)      75,119   
  2,311       Charles Schwab Corp. (The)      70,532   
  4,559       Chimera Investment Corp. REIT      64,191   
  541       Chubb Corp. (The)      69,978   
  1,229       Cincinnati Financial Corp.      74,023   
  1,599       CIT Group, Inc.      68,757   
  1,298       Citigroup, Inc.      69,015   
  2,781       Citizens Financial Group, Inc.      67,578   
  710       CME Group, Inc., Class A      67,074   
  1,883       CNA Financial Corp.      68,842   
  2,852       Columbia Property Trust, Inc. REIT      70,844   
  1,574       Comerica, Inc.      68,312   
  1,446       Commerce Bancshares, Inc.      65,865   
  3,268       Communications Sales & Leasing, Inc. REIT(b)      65,654   
  3,100       Corporate Office Properties Trust REIT      71,300   
  2,138       Corrections Corp. of America REIT      60,933   
  319       Credit Acceptance Corp.(b)      60,320   
  833       Crown Castle International Corp. REIT      71,188   
  1,043       Cullen/Frost Bankers, Inc.      71,383   
  4,268       DDR Corp. REIT      71,702   
  1,028       Digital Realty Trust, Inc. REIT      76,031   
  1,262       Discover Financial Services      70,950   
  2,242       Douglas Emmett, Inc. REIT      68,493   
  3,432       Duke Realty Corp. REIT      71,042   
  2,483       E*TRADE Financial Corp.(b)      70,790   
  1,696       East West Bancorp, Inc.      68,501   
  1,921       Eaton Vance Corp.      69,367   
  3,879       Empire State Realty Trust, Inc., Class A REIT      69,124   
  1,066       Endurance Specialty Holdings Ltd.      67,297   
  236       Equinix, Inc. REIT      70,016   
  2,430       Equity Commonwealth REIT(b)      69,765   
  1,140       Equity Lifestyle Properties, Inc. REIT      68,947   
  903       Equity Residential REIT      69,820   
  805       Erie Indemnity Co., Class A      70,405   
  302       Essex Property Trust, Inc. REIT      66,573   
  378       Everest Re Group Ltd.      67,273   
  861       Extra Space Storage, Inc. REIT      68,226   
  412       FactSet Research Systems, Inc.      72,149   
  487       Federal Realty Investment Trust REIT      69,880   
  2,245       Federated Investors, Inc., Class B      68,989   
  3,410       Fifth Third Bancorp      64,960   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  4,622       First Horizon National Corp.    $ 65,540   
  6,337       First Niagara Financial Group, Inc.      65,588   
  1,045       First Republic Bank      68,249   
  1,796       FNF Group      63,363   
  3,245       Forest City Enterprises, Inc.,
Class A(b)		      71,715   
  1,760       Franklin Resources, Inc.      71,738   
  2,156       Gaming and Leisure Properties, Inc. REIT      62,891   
  2,585       General Growth Properties, Inc. REIT      74,836   
  13,268       Genworth Financial, Inc., Class A(b)      62,094   
  365       Goldman Sachs Group, Inc. (The)      68,438   
  833       Hanover Insurance Group, Inc. (The)      70,180   
  1,448       Hartford Financial Services Group, Inc. (The)      66,984   
  1,710       HCP, Inc. REIT      63,612   
  2,697       Healthcare Trust of America, Inc., Class A REIT      70,958   
  2,536       Hospitality Properties Trust REIT      68,066   
  4,042       Host Hotels & Resorts, Inc. REIT      70,048   
  551       Howard Hughes Corp. (The)(b)      68,093   
  6,262       Huntington Bancshares, Inc.      68,694   
  1,618       Interactive Brokers Group, Inc., Class A      66,565   
  281       Intercontinental Exchange, Inc.      70,924   
  2,050       Invesco Ltd.(c)      67,999   
  2,148       Iron Mountain, Inc. REIT      65,815   
  442       Jones Lang LaSalle, Inc.      73,686   
  1,067       JPMorgan Chase & Co.      68,555   
  4,975       KeyCorp      61,790   
  996       Kilroy Realty Corp. REIT      65,577   
  2,724       Kimco Realty Corp. REIT      72,921   
  1,719       Lamar Advertising Co., Class A REIT      97,003   
  1,432       Lazard Ltd., Class A      66,330   
  1,557       Legg Mason, Inc.      69,676   
  4,952       LendingClub Corp.(b)      70,219   
  3,242       Leucadia National Corp.      64,872   
  2,099       Liberty Property Trust REIT      71,408   
  1,369       Lincoln National Corp.      73,255   
  1,826       Loews Corp.      66,576   
  1,598       LPL Financial Holdings, Inc.      68,075   
  884       M&T Bank Corp.      105,947   
  853       Macerich Co. (The) REIT      72,283   
  83       Markel Corp.(b)      72,044   
  1,248       Marsh & McLennan Cos., Inc.      69,564   
  737       McGraw Hill Financial, Inc.      68,276   
  1,279       Mercury General Corp.      69,079   
  1,392       MetLife, Inc.      70,129   
  9,341       MFA Financial, Inc. REIT      64,640   
  813       Mid-America Apartment Communities, Inc. REIT      69,259   
  655       Moody’s Corp.      62,985   
  2,039       Morgan Stanley      67,226   
  805       Morningstar, Inc.      66,099   
  1,070       MSCI, Inc.      71,690   
  1,230       Nasdaq, Inc.      71,205   
  1,811       National Retail Properties, Inc. REIT      68,818   
  5,281       Navient Corp.      69,656   
  3,621       New York Community Bancorp, Inc.      59,819   
  950       Northern Trust Corp.      66,871   
  4,160       NorthStar Asset Management Group, Inc.      60,861   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   34  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  4,948       NorthStar Realty Finance Corp. REIT    $ 59,425   
  4,157       Old Republic International Corp.      74,992   
  1,849       OMEGA Healthcare Investors, Inc. REIT      63,827   
  4,132       Outfront Media, Inc. REIT      97,557   
  1,520       PacWest Bancorp      68,461   
  3,919       Paramount Group, Inc. REIT      69,641   
  477       PartnerRe Ltd. (Bermuda)      66,303   
  4,190       People’s United Financial, Inc.      66,831   
  3,718       Piedmont Office Realty Trust, Inc., Class A REIT      72,055   
  1,654       Plum Creek Timber Co., Inc. REIT      67,384   
  736       PNC Financial Services Group, Inc. (The)      66,431   
  2,173       Popular, Inc.      64,256   
  1,114       Post Properties, Inc. REIT      66,550   
  1,368       Principal Financial Group, Inc.      68,619   
  1,324       ProAssurance Corp.      70,119   
  2,141       Progressive Corp. (The)      70,931   
  1,699       Prologis, Inc. REIT      72,598   
  850       Prudential Financial, Inc.      70,125   
  314       Public Storage REIT      72,050   
  1,322       Raymond James Financial, Inc.      72,855   
  2,946       Rayonier, Inc. REIT      66,727   
  1,685       Realogy Holdings Corp.(b)      65,884   
  1,397       Realty Income Corp. REIT      69,096   
  1,072       Regency Centers Corp. REIT      72,853   
  7,235       Regions Financial Corp.      67,647   
  722       Reinsurance Group of America, Inc.      65,153   
  616       RenaissanceRe Holdings Ltd. (Bermuda)      67,532   
  4,693       Retail Properties of America, Inc., Class A REIT      70,254   
  3,080       Santander Consumer USA Holdings, Inc.(b)      55,471   
  1,365       SEI Investments Co.      70,734   
  4,040       Senior Housing Properties Trust REIT      61,368   
  473       Signature Bank(b)      70,439   
  359       Simon Property Group, Inc. REIT      72,324   
  598       SL Green Realty Corp. REIT      70,935   
  8,541       SLM Corp.(b)      60,299   
  7,125       Spirit Realty Capital, Inc. REIT      72,533   
  1,433       Springleaf Holdings, Inc.(b)      67,222   
  575       StanCorp Financial Group, Inc.      65,964   
  3,068       Starwood Property Trust, Inc. REIT      61,636   
  955       State Street Corp.      65,895   
  1,704       SunTrust Banks, Inc.      70,750   
  554       SVB Financial Group(b)      67,627   
  2,118       Synchrony Financial(b)      65,150   
  2,210       Synovus Financial Corp.      69,902   
  949       T. Rowe Price Group, Inc.      71,763   
  1,988       Tanger Factory Outlet Centers, Inc. REIT      69,481   
  951       Taubman Centers, Inc. REIT      73,208   
  4,308       TCF Financial Corp.      66,300   
  2,023       TD Ameritrade Holding Corp.      69,733   
  3,790       TFS Financial Corp.      66,552   
  1,146       Torchmark Corp.      66,479   
  659       Travelers Cos., Inc. (The)      74,395   
  6,920       Two Harbors Investment Corp. REIT      58,543   
  1,576       U.S. Bancorp      66,476   
  1,944       UDR, Inc. REIT      66,990   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  2,051       Unum Group    $ 71,067   
  1,452       Validus Holdings Ltd.      64,324   
  1,156       Ventas, Inc. REIT      62,100   
  8,271       VEREIT, Inc. REIT      68,318   
  721       Vornado Realty Trust REIT      72,497   
  1,649       Voya Financial, Inc.      66,900   
  1,207       W.R. Berkley Corp.      67,387   
  1,893       Waddell & Reed Financial, Inc., Class A      69,927   
  2,007       Weingarten Realty Investors REIT      71,770   
  1,278       Wells Fargo & Co.      69,191   
  971       Welltower, Inc. REIT      62,989   
  2,414       Weyerhaeuser Co. REIT      70,803   
  87       White Mountains Insurance Group Ltd.      68,730   
  1,116       WP Carey, Inc. REIT      70,721   
  5,445       WP GLIMCHER, Inc. REIT      63,271   
  1,787       XL Group PLC      68,049   
  2,330       Zions Bancorporation      67,034   
     

 

 

  
        14,929,545   
     

 

 

  
   Health Care—11.2%   
  3,782       Abbott Laboratories      169,434   
  2,771       AbbVie, Inc.      165,013   
  2,196       Acadia Healthcare Co., Inc.(b)      134,856   
  1,381       Aetna, Inc.      158,511   
  4,485       Agilent Technologies, Inc.      169,354   
  1,912       Agios Pharmaceuticals, Inc.(b)      139,308   
  4,815       Akorn, Inc.(b)      128,753   
  3,153       Alere, Inc.(b)      145,416   
  1,040       Alexion Pharmaceuticals, Inc.(b)      183,040   
  2,729       Align Technology, Inc.(b)      178,640   
  2,507       Alkermes PLC(b)      180,303   
  557       Allergan PLC(b)      171,818   
  11,880       Allscripts Healthcare Solutions, Inc.(b)      167,033   
  1,846       Alnylam Pharmaceuticals, Inc.(b)      158,664   
  1,547       AmerisourceBergen Corp.      149,301   
  1,116       Amgen, Inc.      176,529   
  1,089       Anthem, Inc.      151,534   
  1,145       athenahealth, Inc.(b)      174,555   
  4,690       Baxalta, Inc.      161,617   
  4,485       Baxter International, Inc.      167,694   
  1,136       Becton, Dickinson and Co.      161,903   
  554       Biogen, Inc.(b)      160,943   
  1,439       BioMarin Pharmaceutical, Inc.(b)      168,421   
  1,146       Bio-Rad Laboratories, Inc.,
Class A(b)		      159,844   
  1,701       Bio-Techne Corp.      150,028   
  1,541       Bluebird Bio, Inc.(b)      118,857   
  9,474       Boston Scientific Corp.(b)      173,185   
  2,566       Bristol-Myers Squibb Co.      169,228   
  6,333       Brookdale Senior Living, Inc.(b)      132,423   
  9,060       Bruker Corp.(b)      166,432   
  805       C.R. Bard, Inc.      150,012   
  1,943       Cardinal Health, Inc.      159,715   
  1,425       Celgene Corp.(b)      174,862   
  2,635       Centene Corp.(b)      156,730   
  2,545       Cerner Corp.(b)      168,708   
  2,387       Charles River Laboratories International, Inc.(b)      155,728   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   35  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Health Care (continued)   
  1,125       Cigna Corp.    $ 150,795   
  3,475       Community Health Systems, Inc.(b)      97,439   
  1,033       Cooper Cos., Inc. (The)      157,388   
  2,137       DaVita HealthCare Partners, Inc.(b)      165,639   
  2,978       DENTSPLY International, Inc.      181,211   
  1,678       DexCom, Inc.(b)      139,811   
  1,126       Edwards Lifesciences Corp.(b)      176,951   
  1,839       Eli Lilly & Co.      150,007   
  2,247       Endo International PLC(b)      134,798   
  3,947       Envision Healthcare Holdings, Inc.(b)      111,305   
  1,917       Express Scripts Holding Co.(b)      165,590   
  1,560       Gilead Sciences, Inc.      168,683   
  1,945       HCA Holdings, Inc.(b)      133,797   
  2,454       Health Net, Inc.(b)      157,694   
  1,183       Henry Schein, Inc.(b)      179,473   
  2,809       Hill-Rom Holdings, Inc.      148,006   
  3,862       Hologic, Inc.(b)      150,077   
  853       Humana, Inc.      152,371   
  2,073       IDEXX Laboratories, Inc.(b)      142,249   
  881       Illumina, Inc.(b)      126,230   
  4,475       IMS Health Holdings, Inc.(b)      121,810   
  1,449       Incyte Corp.(b)      170,301   
  6,525       Inovalon Holdings, Inc., Class A(b)      150,401   
  912       Intercept Pharmaceuticals, Inc.(b)      143,366   
  3,929       Intrexon Corp.(b)      132,014   
  328       Intuitive Surgical, Inc.(b)      162,885   
  3,513       Isis Pharmaceuticals, Inc.(b)      169,151   
  1,148       Jazz Pharmaceuticals PLC(b)      157,597   
  1,698       Johnson & Johnson      171,549   
  3,874       Juno Therapeutics, Inc.(b)      200,518   
  1,369       Laboratory Corp. of America Holdings(b)      168,031   
  2,121       LifePoint Health, Inc.(b)      146,095   
  2,288       Mallinckrodt PLC(b)      150,253   
  809       McKesson Corp.      144,649   
  3,713       Medivation, Inc.(b)      156,169   
  1,895       MEDNAX, Inc.(b)      133,541   
  2,323       Medtronic PLC      171,716   
  3,114       Merck & Co., Inc.      170,211   
  414       Mettler-Toledo International, Inc.(b)      128,750   
  3,544       Mylan NV(b)      156,255   
  17,015       OPKO Health, Inc.(b)      160,792   
  3,487       Patterson Cos., Inc.      165,284   
  3,377       PerkinElmer, Inc.      174,388   
  960       Perrigo Co. PLC      151,430   
  4,845       Pfizer, Inc.      163,858   
  4,465       Premier, Inc., Class A(b)      150,962   
  1,886       Puma Biotechnology, Inc.(b)      155,444   
  5,990       QIAGEN NV(b)      144,778   
  2,398       Quest Diagnostics, Inc.      162,944   
  2,108       Quintiles Transnational Holdings, Inc.(b)      134,174   
  317       Regeneron Pharmaceuticals, Inc.(b)      176,693   
  3,059       ResMed, Inc.      176,229   
  3,929       Seattle Genetics, Inc.(b)      163,014   
  1,578       Sirona Dental Systems, Inc.(b)      172,207   
  2,381       St. Jude Medical, Inc.      151,932   
  1,595       Stryker Corp.      152,514   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Health Care (continued)   
  1,204       Teleflex, Inc.    $ 160,132   
  3,814       Tenet Healthcare Corp.(b)      119,645   
  1,261       Thermo Fisher Scientific, Inc.      164,914   
  1,126       United Therapeutics Corp.(b)      165,105   
  1,328       UnitedHealth Group, Inc.      156,412   
  1,188       Universal Health Services, Inc., Class B      145,043   
  2,052       Varian Medical Systems, Inc.(b)      161,144   
  2,847       VCA, Inc.(b)      155,930   
  6,393       Veeva Systems, Inc., Class A(b)      162,190   
  1,497       Vertex Pharmaceuticals, Inc.(b)      186,736   
  6,019       VWR Corp.(b)      165,583   
  990       Waters Corp.(b)      126,522   
  1,638       Zimmer Biomet Holdings, Inc.      171,286   
  3,635       Zoetis, Inc.      156,341   
     

 

 

  
        16,606,794   
     

 

 

  
   Industrials—12.6%   
  830       3M Co.      130,484   
  1,706       A.O. Smith Corp.      131,055   
  1,244       Acuity Brands, Inc.      271,938   
  3,775       ADT Corp. (The)      124,726   
  4,387       AECOM(b)      129,285   
  2,525       AGCO Corp.      122,185   
  3,519       Air Lease Corp.      118,625   
  1,435       Alaska Air Group, Inc.      109,419   
  1,943       Allegion PLC      126,625   
  4,425       Allison Transmission Holdings, Inc.      126,997   
  224       AMERCO      91,013   
  2,879       American Airlines Group, Inc.      133,067   
  2,229       AMETEK, Inc.      122,194   
  4,319       Armstrong World Industries, Inc.(b)      214,309   
  2,024       Avis Budget Group, Inc.(b)      101,079   
  2,588       B/E Aerospace, Inc.      121,507   
  6,719       Babcock & Wilcox Enterprises, Inc.(b)      114,089   
  886       Boeing Co. (The)      131,190   
  4,548       BWX Technologies, Inc.      128,708   
  1,691       C.H. Robinson Worldwide, Inc.      117,322   
  1,217       Carlisle Cos., Inc.      105,879   
  1,782       Caterpillar, Inc.      130,068   
  2,839       Chicago Bridge & Iron Co. NV      127,386   
  1,310       Cintas Corp.      121,948   
  2,560       Clean Harbors, Inc.(b)      119,014   
  3,810       Colfax Corp.(b)      102,718   
  2,862       Copa Holdings SA, Class A (Panama)      144,588   
  3,388       Copart, Inc.(b)      122,679   
  6,340       Covanta Holding Corp.      106,258   
  2,474       Crane Co.      130,231   
  4,370       CSX Corp.      117,946   
  1,065       Cummins, Inc.      110,238   
  1,360       Danaher Corp.      126,902   
  1,527       Deere & Co.      119,106   
  2,516       Delta Air Lines, Inc.      127,913   
  4,089       Donaldson Co., Inc.      123,488   
  1,997       Dover Corp.      128,667   
  622       Dun & Bradstreet Corp. (The)      70,827   
  2,234       Eaton Corp. PLC      124,903   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   36  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Industrials (continued)   
  2,646       Emerson Electric Co.    $ 124,971   
  690       Equifax, Inc.      73,533   
  2,477       Expeditors International of Washington, Inc.      123,330   
  5,963       Fastenal Co.      233,511   
  809       FedEx Corp.      126,244   
  2,843       Flowserve Corp.      131,801   
  2,749       Fluor Corp.      131,430   
  1,848       Fortune Brands Home & Security, Inc.      96,706   
  2,517       GATX Corp.      117,544   
  839       General Dynamics Corp.      124,659   
  4,652       General Electric Co.      134,536   
  1,918       Genesee & Wyoming, Inc., Class A(b)      128,698   
  1,745       Graco, Inc.      128,083   
  3,784       HD Supply Holdings, Inc.(b)      112,725   
  5,125       Hertz Global Holdings, Inc.(b)      99,937   
  4,859       Hexcel Corp.      225,069   
  1,240       Honeywell International, Inc.      128,067   
  1,364       Hubbell, Inc., Class B      132,103   
  1,096       Huntington Ingalls Industries, Inc.      131,454   
  1,665       IDEX Corp.      127,805   
  1,042       IHS, Inc., Class A(b)      124,561   
  1,425       Illinois Tool Works, Inc.      131,014   
  4,169       Ingersoll-Rand PLC      247,055   
  3,439       ITT Corp.      136,116   
  1,571       J.B. Hunt Transport Services, Inc.      119,977   
  3,104       Jacobs Engineering Group, Inc.(b)      124,595   
  4,346       JetBlue Airways Corp.(b)      107,955   
  7,591       Joy Global, Inc.      130,413   
  1,275       Kansas City Southern      105,519   
  2,515       KAR Auction Services, Inc.      96,576   
  7,112       KBR, Inc.      131,145   
  4,673       Kennametal, Inc.      131,405   
  1,886       Kirby Corp.(b)      123,137   
  1,112       L-3 Communications Holdings, Inc.      140,557   
  1,721       Landstar System, Inc.      108,492   
  1,854       Lennox International, Inc.      246,230   
  2,170       Lincoln Electric Holdings, Inc.      129,788   
  572       Lockheed Martin Corp.      125,743   
  1,513       Macquarie Infrastructure Corp.      120,359   
  7,644       Manitowoc Co., Inc. (The)      116,953   
  1,397       ManpowerGroup, Inc.      128,217   
  8,399       Masco Corp.      243,571   
  1,072       Middleby Corp. (The)(b)      125,360   
  1,865       MSC Industrial Direct Co., Inc.,
Class A		      117,066   
  1,949       Nielsen Holdings PLC      92,597   
  1,861       Nordson Corp.      132,578   
  1,531       Norfolk Southern Corp.      122,526   
  710       Northrop Grumman Corp.      133,302   
  12,517       NOW, Inc.(b)      206,656   
  1,888       Old Dominion Freight Line, Inc.(b)      116,943   
  1,581       Orbital ATK, Inc.      135,365   
  3,208       Oshkosh Corp.      131,817   
  4,919       Owens Corning      223,962   
  2,180       PACCAR, Inc.      114,777   
  1,198       Parker-Hannifin Corp.      125,431   
  2,231       Pentair PLC (United Kingdom)      124,758   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Industrials (continued)   
  5,762       Pitney Bowes, Inc.    $ 118,985   
  957       Precision Castparts Corp.      220,885   
  4,754       Quanta Services, Inc.(b)      95,603   
  7,889       R.R. Donnelley & Sons Co.      133,087   
  1,093       Raytheon Co.      128,318   
  1,996       Regal Beloit Corp.      127,325   
  2,786       Republic Services, Inc.      121,860   
  2,289       Robert Half International, Inc.      120,539   
  1,161       Rockwell Automation, Inc.      126,735   
  1,438       Rockwell Collins, Inc.      124,703   
  4,207       Rollins, Inc.      112,832   
  752       Roper Technologies, Inc.      140,135   
  1,541       Ryder System, Inc.      110,613   
  755       Snap-on, Inc.      125,247   
  4,768       SolarCity Corp.(b)      141,371   
  3,043       Southwest Airlines Co.      140,860   
  2,327       Spirit AeroSystems Holdings, Inc., Class A(b)      122,726   
  2,384       Spirit Airlines, Inc.(b)      88,494   
  2,345       SPX Corp.      28,726   
  3,132       SPX FLOW, Inc.(b)      106,175   
  1,177       Stanley Black & Decker, Inc.      124,738   
  827       Stericycle, Inc.(b)      100,373   
  6,756       Terex Corp.      135,525   
  3,028       Textron, Inc.      127,691   
  8,080       Timken Co. (The)      255,328   
  1,629       Toro Co. (The)      122,615   
  966       Towers Watson & Co., Class A      119,359   
  519       TransDigm Group, Inc.(b)      114,102   
  2,570       TransUnion(b)      66,075   
  4,813       Trinity Industries, Inc.      130,288   
  2,688       Triumph Group, Inc.      125,207   
  3,361       Tyco International PLC      122,475   
  1,338       Union Pacific Corp.      119,550   
  2,092       United Continental Holdings,
Inc.(b)		      126,169   
  1,191       United Parcel Service, Inc.,
Class B		      122,697   
  1,846       United Rentals, Inc.(b)      138,192   
  1,327       United Technologies Corp.      130,590   
  7,871       USG Corp.(b)      185,519   
  2,249       Valmont Industries, Inc.      243,882   
  1,570       Verisk Analytics, Inc.(b)      112,428   
  544       W.W. Grainger, Inc.      114,240   
  886       WABCO Holdings, Inc.(b)      99,436   
  1,301       Wabtec Corp.      107,814   
  2,384       Waste Connections, Inc.      129,880   
  2,301       Waste Management, Inc.      123,702   
  1,774       Watsco, Inc.      218,255   
  2,344       WESCO International, Inc.(b)      114,692   
  3,571       Xylem, Inc.      130,020   
     

 

 

  
        18,727,359   
     

 

 

  
   Information Technology—13.4%   
  11,264       3D Systems Corp.(b)      113,316   
  1,195       Accenture PLC, Class A      128,104   
  4,277       Activision Blizzard, Inc.      148,669   
  1,668       Adobe Systems, Inc.(b)      147,885   
  1,943       Akamai Technologies, Inc.(b)      118,173   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   37  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Information Technology (continued)   
  254       Alliance Data Systems Corp.(b)    $ 75,517   
  227       Alphabet, Inc., Class C(b)      161,354   
  2,728       Altera Corp.      143,356   
  2,390       Amdocs Ltd.      142,372   
  2,709       Amphenol Corp., Class A      146,882   
  2,516       Analog Devices, Inc.      151,262   
  1,529       ANSYS, Inc.(b)      145,729   
  1,194       Apple, Inc.      142,683   
  9,388       Applied Materials, Inc.      157,437   
  2,157       Arista Networks, Inc.(b)      139,148   
  5,183       ARRIS Group, Inc.(b)      146,472   
  2,579       Arrow Electronics, Inc.(b)      141,819   
  17,091       Atmel Corp.      129,892   
  2,918       Autodesk, Inc.(b)      161,044   
  1,443       Automatic Data Processing, Inc.      125,527   
  1,081       Avago Technologies Ltd. (Singapore)      133,104   
  3,315       Avnet, Inc.      150,600   
  4,250       Black Knight Financial Services, Inc., Class A(b)      153,128   
  4,266       Booz Allen Hamilton Holding Corp.      125,676   
  2,628       Broadcom Corp., Class A      135,079   
  1,183       Broadridge Financial Solutions, Inc.      70,483   
  13,067       Brocade Communications Systems, Inc.      136,158   
  5,010       CA, Inc.      138,827   
  6,542       Cadence Design Systems, Inc.(b)      145,363   
  2,739       CDK Global, Inc.      136,375   
  3,360       CDW Corp.      150,158   
  5,268       Cisco Systems, Inc.      151,982   
  1,904       Citrix Systems, Inc.(b)      156,318   
  4,037       Cognex Corp.      151,791   
  2,238       Cognizant Technology Solutions Corp., Class A(b)      152,430   
  4,536       CommScope Holding, Inc.(b)      147,102   
  2,237       Computer Sciences Corp.      148,962   
  1,744       CoreLogic, Inc.(b)      67,981   
  8,271       Corning, Inc.      153,841   
  680       CoStar Group, Inc.(b)      138,088   
  5,723       Cree, Inc.(b)      144,162   
  15,648       Cypress Semiconductor Corp.(b)      164,930   
  4,364       Dolby Laboratories, Inc., Class A      151,300   
  1,292       DST Systems, Inc.      157,818   
  3,602       eBay, Inc.(b)      100,496   
  3,184       EchoStar Corp., Class A(b)      142,739   
  1,973       Electronic Arts, Inc.(b)      142,194   
  5,765       EMC Corp.      151,158   
  1,193       F5 Networks, Inc.(b)      131,469   
  1,480       Facebook, Inc., Class A(b)      150,916   
  962       Fidelity National Information Services, Inc.      70,149   
  4,202       FireEye, Inc.(b)      109,882   
  4,553       First Solar, Inc.(b)      259,840   
  749       Fiserv, Inc.(b)      72,286   
  2,423       Fitbit, Inc., Class A(b)      98,228   
  449       FleetCor Technologies, Inc.(b)      65,042   
  4,204       FLIR Systems, Inc.      112,121   
  3,038       Fortinet, Inc.(b)      104,386   
  3,760       Freescale Semiconductor Ltd.(b)      125,922   
  1,588       Gartner, Inc.(b)      143,984   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Information Technology (continued)   
  5,035       Genpact Ltd.(b)    $ 124,767   
  568       Global Payments, Inc.      77,481   
  5,328       GoDaddy, Inc., Class A(b)      146,413   
  1,896       Harris Corp.      150,030   
  3,388       HomeAway, Inc.(b)      106,925   
  5,480       HP, Inc.      147,741   
  2,048       IAC/InterActiveCorp.      137,236   
  5,120       Ingram Micro, Inc., Class A      152,474   
  4,758       Intel Corp.      161,106   
  955       International Business Machines Corp.      133,776   
  1,559       Intuit, Inc.      151,893   
  1,812       IPG Photonics Corp.(b)      149,707   
  6,266       Jabil Circuit, Inc.      143,993   
  938       Jack Henry & Associates, Inc.      72,545   
  5,424       Juniper Networks, Inc.      170,259   
  3,736       Keysight Technologies, Inc.(b)      123,587   
  10,229       King Digital Entertainment PLC (Ireland)      153,026   
  2,820       KLA-Tencor Corp.      189,278   
  2,172       Lam Research Corp.      166,353   
  3,247       Leidos Holdings, Inc.      170,695   
  4,062       Lexmark International, Inc., Class A      131,974   
  3,512       Linear Technology Corp.      156,003   
  715       LinkedIn Corp., Class A(b)      172,222   
  8,073       Lumentum Holdings, Inc.(b)      115,767   
  14,693       Marvell Technology Group Ltd. (Bermuda)      120,630   
  719       MasterCard, Inc., Class A      71,174   
  4,215       Maxim Integrated Products, Inc.      172,731   
  3,313       Microchip Technology, Inc.      159,985   
  9,195       Micron Technology, Inc.(b)      152,269   
  3,118       Microsoft Corp.      164,132   
  1,982       Motorola Solutions, Inc.      138,681   
  4,271       National Instruments Corp.      130,137   
  5,892       NCR Corp.(b)      156,727   
  4,635       NetApp, Inc.      157,590   
  1,579       NetSuite, Inc.(b)      134,326   
  8,237       Nuance Communications, Inc.(b)      139,782   
  5,804       NVIDIA Corp.      164,659   
  14,693       ON Semiconductor Corp.(b)      161,623   
  3,803       Oracle Corp.      147,709   
  759       Palo Alto Networks, Inc.(b)      122,199   
  4,367       Pandora Media, Inc.(b)      50,264   
  2,484       Paychex, Inc.      128,125   
  1,945       PayPal Holdings, Inc.(b)      70,039   
  4,215       PTC, Inc.(b)      149,380   
  2,873       Qorvo, Inc.(b)      126,211   
  2,576       QUALCOMM, Inc.      153,066   
  5,014       Rackspace Hosting, Inc.(b)      129,612   
  1,881       Red Hat, Inc.(b)      148,806   
  4,909       Sabre Corp.      143,932   
  1,915       salesforce.com, inc.(b)      148,815   
  2,695       SanDisk Corp.      207,515   
  1,883       ServiceNow, Inc.(b)      153,747   
  1,561       Skyworks Solutions, Inc.      120,572   
  3,430       SolarWinds, Inc.(b)      199,043   
  2,480       Solera Holdings, Inc.      135,557   
  2,394       Splunk, Inc.(b)      134,447   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   38  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Information Technology (continued)   
  1,941       SS&C Technologies Holdings, Inc.    $ 143,925   
  16,127       SunEdison, Inc.(b)      117,727   
  9,406       SunPower Corp.(b)      252,457   
  6,876       Symantec Corp.      141,646   
  2,929       Synopsys, Inc.(b)      146,391   
  1,650       Tableau Software, Inc., Class A(b)      138,534   
  4,753       Teradata Corp.(b)      133,607   
  7,914       Teradyne, Inc.      154,481   
  2,905       Texas Instruments, Inc.      164,772   
  1,410       Total System Services, Inc.      73,955   
  7,162       Trimble Navigation Ltd.(b)      162,936   
  5,422       Twitter, Inc.(b)      154,310   
  747       Ultimate Software Group, Inc. (The)(b)      152,649   
  1,429       Vantiv, Inc., Class A(b)      71,664   
  5,231       VeriFone Systems, Inc.(b)      157,662   
  1,979       VeriSign, Inc.(b)      159,507   
  24,830       Viavi Solutions, Inc.(b)      147,739   
  928       Visa, Inc., Class A      71,994   
  1,733       VMware, Inc., Class A(b)      104,240   
  1,945       Western Digital Corp.      129,965   
  3,605       Western Union Co. (The)      69,396   
  731       WEX, Inc.(b)      65,724   
  1,894       Workday, Inc., Class A(b)      149,569   
  11,500       Xerox Corp.      107,985   
  3,268       Xilinx, Inc.      155,622   
  4,704       Yahoo!, Inc.(b)      167,556   
  6,181       Yelp, Inc., Class A(b)      137,527   
  1,485       Zebra Technologies Corp.,
Class A(b)		      114,197   
  2,311       Zillow Group, Inc., Class A(b)      71,202   
  2,355       Zillow Group, Inc., Class C(b)      65,210   
  58,578       Zynga, Inc., Class A(b)      138,830   
     

 

 

  
        20,030,824   
     

 

 

  
   Materials—9.4%   
  1,716       Air Products & Chemicals, Inc.      238,490   
  2,420       Airgas, Inc.      232,707   
  4,875       Albemarle Corp.      260,910   
  24,137       Alcoa, Inc.      215,543   
  14,423       Allegheny Technologies, Inc.      212,018   
  3,342       AptarGroup, Inc.      245,837   
  2,059       Ashland, Inc.      225,913   
  2,042       Avery Dennison Corp.      132,669   
  8,377       Axalta Coating Systems Ltd.(b)      231,456   
  3,482       Ball Corp.      238,517   
  5,480       Bemis Co., Inc.      250,874   
  6,807       Cabot Corp.      244,644   
  3,647       Celanese Corp., Series A      259,119   
  4,740       CF Industries Holdings, Inc.      240,650   
  31,011       Chemours Co. (The)      214,906   
  2,788       Compass Minerals International, Inc.      226,497   
  4,742       Crown Holdings, Inc.(b)      251,516   
  2,971       Cytec Industries, Inc.      221,102   
  5,963       Domtar Corp.      245,914   
  5,175       Dow Chemical Co. (The)      267,392   
  4,539       E.I. du Pont de Nemours & Co.      287,773   
  3,000       Eagle Materials, Inc.      198,090   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Materials (continued)   
  3,287       Eastman Chemical Co.    $ 237,223   
  1,983       Ecolab, Inc.      238,654   
  6,354       FMC Corp.      258,671   
  22,341       Freeport-McMoRan, Inc.      262,954   
  16,325       Graphic Packaging Holding Co.      231,162   
  15,739       Huntsman Corp.      207,283   
  2,070       International Flavors & Fragrances, Inc.      240,244   
  5,659       International Paper Co.      241,583   
  2,592       LyondellBasell Industries NV, Class A      240,823   
  1,375       Martin Marietta Materials, Inc.      213,331   
  2,592       Monsanto Co.      241,626   
  6,811       Mosaic Co. (The)      230,144   
  594       NewMarket Corp.      233,881   
  13,207       Newmont Mining Corp.      257,008   
  5,703       Nucor Corp.      241,237   
  10,366       Owens-Illinois, Inc.(b)      223,387   
  3,573       Packaging Corp. of America      244,572   
  15,604       Platform Specialty Products Corp.(b)      162,906   
  2,480       PPG Industries, Inc.      258,565   
  2,186       Praxair, Inc.      242,843   
  4,005       Reliance Steel & Aluminum Co.      240,140   
  4,587       Royal Gold, Inc.      219,442   
  5,100       RPM International, Inc.      233,121   
  3,666       Scotts Miracle-Gro Co. (The), Class A      242,542   
  4,669       Sealed Air Corp.      229,341   
  970       Sherwin-Williams Co. (The)      258,825   
  1,569       Sigma-Aldrich Corp.      219,221   
  4,281       Silgan Holdings, Inc.      217,774   
  5,781       Sonoco Products Co.      246,791   
  8,210       Southern Copper Corp. (Peru)      227,910   
  12,692       Steel Dynamics, Inc.      234,421   
  26,411       Tahoe Resources, Inc.      220,532   
  20,292       United States Steel Corp.      237,011   
  3,028       Valspar Corp. (The)      245,117   
  2,384       Vulcan Materials Co.      230,247   
  2,299       W.R. Grace & Co.(b)      230,590   
  4,133       Westlake Chemical Corp.      249,096   
  4,250       WestRock Co.      228,480   
     

 

 

  
        14,061,235   
     

 

 

  
   Telecommunication Services—2.2%   
  9,064       AT&T, Inc.      303,735   
  11,552       CenturyLink, Inc.      325,882   
  58,410       Frontier Communications Corp.      300,227   
  6,756       Level 3 Communications, Inc.(b)      344,218   
  1,304       SBA Communications Corp., Class A(b)      155,202   
  67,928       Sprint Corp.(b)      321,300   
  11,445       Telephone & Data Systems, Inc.      327,785   
  6,832       T-Mobile US, Inc.(b)      258,865   
  8,354       United States Cellular Corp.(b)      340,342   
  6,632       Verizon Communications, Inc.      310,908   
  11,231       Zayo Group Holdings, Inc.(b)      297,958   
     

 

 

  
        3,286,422   
     

 

 

  
   Utilities—9.1%   
  29,359       AES Corp. (The)      321,481   
  4,806       AGL Resources, Inc.      300,375   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   39  

 

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Utilities (continued)   
  5,036       Alliant Energy Corp.    $ 297,225   
  7,102       Ameren Corp.      310,215   
  5,248       American Electric Power Co., Inc.      297,299   
  5,352       American Water Works Co., Inc.      306,991   
  11,118       Aqua America, Inc.      317,975   
  5,068       Atmos Energy Corp.      319,284   
  20,394       Calpine Corp.(b)      316,311   
  16,361       CenterPoint Energy, Inc.      303,497   
  8,495       CMS Energy Corp.      306,415   
  4,426       Consolidated Edison, Inc.      291,009   
  4,192       Dominion Resources, Inc.      299,435   
  3,708       DTE Energy Co.      302,536   
  4,158       Duke Energy Corp.      297,172   
  4,685       Edison International      283,536   
  4,540       Entergy Corp.      309,446   
  6,010       Eversource Energy      306,149   
  9,916       Exelon Corp.      276,855   
  9,425       FirstEnergy Corp.      294,060   
  11,151       Great Plains Energy, Inc.      306,652   
  10,382       Hawaiian Electric Industries, Inc.      303,777   
  8,711       ITC Holdings Corp.      285,024   
  17,681       MDU Resources Group, Inc.      333,464   
  5,893       National Fuel Gas Co.      309,559   
  2,981       NextEra Energy, Inc.      306,029   
  16,294       NiSource, Inc.      312,193   
  19,369       NRG Energy, Inc.      249,666   
  10,805       OGE Energy Corp.      308,051   
  12,362       Pepco Holdings, Inc.      329,200   
  5,527       PG&E Corp.      295,142   
  4,625       Pinnacle West Capital Corp.      293,734   
  9,170       PPL Corp.      315,448   
  7,184       Public Service Enterprise Group, Inc.      296,627   
  15,337       Questar Corp.      316,709   
  5,418       SCANA Corp.      320,854   
  3,125       Sempra Energy      320,031   
  6,636       Southern Co. (The)      299,284   
  11,042       TECO Energy, Inc.      298,134   
  12,043       TerraForm Power, Inc., Class A(b)      219,785   
  8,557       UGI Corp.      313,785   
  7,157       Vectren Corp.      325,429   
  5,767       WEC Energy Group, Inc.      297,347   
  7,715       Westar Energy, Inc.      306,286   
  8,415       Xcel Energy, Inc.      299,826   
     

 

 

  
        13,619,302   
     

 

 

  
   Total Investments
(Cost $158,624,539)—100.0%		      149,016,677   
   Other assets less liabilities—0.0%      67,095   
     

 

 

  
   Net Assets—100.0%    $ 149,083,772   
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  Affiliated company. The Fund’s Adviser is a wholly-owned subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated. See Note 4.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   40  

 

 

 

(This Page Intentionally Left Blank)

 

Statements of Assets and Liabilities

October 31, 2015

 

    PowerShares
Contrarian
Opportunities
Portfolio (CNTR)		      PowerShares
KBW Bank
Portfolio (KBWB)		      PowerShares
KBW Capital
Markets
Portfolio (KBWC)		      PowerShares
KBW High
Dividend Yield
Financial
Portfolio (KBWD)		  
Assets:           

Unaffiliated investments, at value

   $ 2,529,881       $ 559,281,758       $ 7,751,508       $ 269,749,824   

Affiliated investments, at value

     438         —         291,817         8,002,321   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     2,530,319         559,281,758         8,043,325         277,752,145   

Receivables:

           

Dividends

     —         748,343         4,877         371,625   

Investments sold

     —         —         2,181         210,226   

Shares sold

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     2,530,319         560,030,101         8,050,383         278,333,996   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     —         257,318         —         558,165   

Payables:

           

Investments purchased

     —         —         —         —   

Accrued unitary management fees

     740         141,173         2,303         83,425   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     740         398,491         2,303         641,590   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 2,529,579       $ 559,631,610       $ 8,048,080       $ 277,692,406   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 2,807,011       $ 580,139,599       $ 8,100,710       $ 331,042,255   

Undistributed net investment income

    2,450         1,363,059         16,923         –   

Undistributed net realized gain (loss)

     (193,900 )       (1,170,787 )       (26,599 )       (35,257,340 ) 

Net unrealized appreciation (depreciation)

     (85,982 )       (20,700,261 )       (42,954 )       (18,092,509 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 2,529,579       $ 559,631,610       $ 8,048,080       $ 277,692,406   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     100,001         14,950,000         150,001         12,400,000   

Net asset value

   $ 25.30       $ 37.43       $ 53.65       $ 22.39   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 25.31       $ 37.49       $ 53.78       $ 22.39   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 2,615,863       $ 579,982,019       $ 7,749,885       $ 284,892,118   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ 438       $ —       $ 336,394       $ 10,952,536   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 2,616,301       $ 579,982,019       $ 8,086,279       $ 295,844,654   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   42  

 

 

 

PowerShares
KBW Insurance
Portfolio (KBWI)		          
PowerShares
KBW Premium
Yield Equity REIT
Portfolio  (KBWY)		      PowerShares
KBW Property &
Casualty Insurance
Portfolio (KBWP)		      PowerShares
KBW Regional
Banking
Portfolio (KBWR)		      PowerShares
Russell 1000
Equal Weight
Portfolio (EQAL)		  
           
$ 14,257,049       $ 110,279,334       $ 86,899,835       $ 52,972,871       $ 148,948,678   
  —         —         —         12,450         67,999   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  14,257,049         110,279,334         86,899,835         52,985,321         149,016,677   
           
  17,000         555,440         —         24,310         108,119   
  —         —         —         146,167         136,494   
  —         —         —         1,350         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  14,274,049         110,834,774         86,899,835         53,157,148         149,261,290   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
  4,829         355,261         56,688         —         42,606   
           
  —         167,803         —         146,243         109,929   
  4,295         32,461         15,126         15,188         24,983   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  9,124         555,525         71,814         161,431         177,518   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 14,264,925       $ 110,279,249       $ 86,828,021       $ 52,995,717       $ 149,083,772   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
$ 13,966,439       $ 119,355,130       $ 83,972,080       $ 52,569,339       $ 160,069,118   
  32,044         —         67,677         139,515         306,782   
  (280,696 )       (2,834,868 )       (263,577 )       (350,494 )       (1,684,266 ) 
  547,138         (6,241,013 )       3,051,841         637,357         (9,607,862 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 14,264,925       $ 110,279,249       $ 86,828,021       $ 52,995,717       $ 149,083,772   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  200,001         3,500,000         1,800,000         1,250,000         6,100,001   
$ 71.32       $ 31.51       $ 48.24       $ 42.40       $ 24.44   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 71.44       $ 31.52       $ 48.36       $ 42.42       $ 24.48   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 13,709,911       $ 116,520,347       $ 83,847,994       $ 52,335,514       $ 158,544,736   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ —       $ —       $ 12,450       $ 79,803   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 13,709,911       $ 116,520,347       $ 83,847,994       $ 52,347,964       $ 158,624,539   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   43  

 

 

Statements of Operations

For the year ended October 31, 2015

 

    PowerShares
Contrarian
Opportunities
Portfolio (CNTR)		      PowerShares
KBW Bank
Portfolio (KBWB)		      PowerShares
KBW Capital
Markets
Portfolio (KBWC)		      PowerShares
KBW High
Dividend Yield
Financial
Portfolio (KBWD)		  
Investment Income:        

Unaffiliated dividend income

   $ 46,451       $ 7,054,692       $ 112,848       $ 20,967,702   

Affiliated dividend income

     —         53         6,562         1,408,197   

Foreign withholding tax

     (22 )       —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     46,429         7,054,745         119,410         22,375,899   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:        

Unitary management fees

     12,957         1,178,930         22,830         1,044,375   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     (2 )       (160 )       (5 )       (786 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     12,955         1,178,770         22,825         1,043,589   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income

     33,474         5,875,975         96,585         21,332,310   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):        

Net realized gain (loss) from:

        

Investment securities

     (195,179 )       (1,304,105 )       (24,917 )       (25,569,943 ) 

In-kind redemptions

     406,449         17,785,878         553,449         7,871,613   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     211,270         16,481,773         528,532         (17,698,330 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation) on investment securities

     (329,165 )       (28,464,427 )       (619,991 )       (24,246,761 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     (117,895 )       (11,982,654 )       (91,459 )       (41,945,091 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ (84,421 )     $ (6,106,679 )     $ 5,126       $ (20,612,781 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period December 22, 2014 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   44  

 

 

 

PowerShares
KBW Insurance
Portfolio (KBWI)		          
PowerShares
KBW Premium
Yield Equity REIT
Portfolio (KBWY)		      PowerShares
KBW Property &
Casualty Insurance
Portfolio (KBWP)		      PowerShares
KBW Regional
Banking
Portfolio (KBWR)		      PowerShares
Russell 1000
Equal Weight
Portfolio (EQAL)(a)		  
           
$ 182,831       $ 4,629,554       $ 378,667       $ 898,720       $ 1,844,738   
  —         86         9         8         1,262   
  —         —         —         —         (5,277 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  182,831         4,629,640         378,676         898,728         1,840,723   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
  32,160         412,729         64,838         135,730         217,649   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (4 )       (266 )       (42 )       (25 )       (34 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  32,156         412,463         64,796         135,705         217,615   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  150,675         4,217,177         313,880         763,023         1,623,108   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
           
           
  (272,823 )       (1,677,465 )       (288,186 )       (172,797 )       (1,935,166 ) 
  728,555         4,124,065         2,392,603         1,711,639         4,851,224   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  455,732         2,446,600         2,104,417         1,538,842         2,916,058   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

(105,350

) 

      (10,376,305 )       1,568,196         (37,364 )       (9,607,862 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  350,382         (7,929,705 )       3,672,613         1,501,478         (6,691,804 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 501,057       $ (3,712,528 )     $ 3,986,493       $ 2,264,501       $ (5,068,696 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   45  

 

 

Statements of Changes in Net Assets

For the years ended October 31, 2015 and 2014

 

    PowerShares Contrarian
Opportunities
Portfolio (CNTR)		          
PowerShares
KBW Bank Portfolio (KBWB)		  
    2015      2014(a)      2015      2014  
Operations:           

Net investment income

   $ 33,474       $ 47,323       $ 5,875,975       $ 3,086,912   

Net realized gain (loss)

     211,270         3,506         16,481,773         27,141,878   

Net change in unrealized appreciation (depreciation)

     (329,165 )       243,183         (28,464,427 )       (2,965,271 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     (84,421 )       294,012         (6,106,679 )       27,263,519   
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (40,081 )       (38,120 )       (5,033,214 )       (2,878,223 ) 

Net realized gains

     (3,828 )       —         (133,000 )       —   

Return of capital

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (43,909 )       (38,120 )       (5,166,214 )       (2,878,223 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     2,727,373         3,690,203         497,643,837         341,845,374   

Value of shares repurchased

     (4,015,559 )       —         (216,274,911 )       (226,864,114 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     (1,288,186 )       3,690,203         281,368,926         114,981,260   
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     (1,416,516 )       3,946,095         270,096,033         139,366,556   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     3,946,095         —         289,535,577         150,169,021   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 2,529,579       $ 3,946,095       $ 559,631,610       $ 289,535,577   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income at end of year

   $ 2,450       $ 9,203       $ 1,363,059       $ 502,324   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     100,000         150,001         12,800,000         9,600,000   

Shares repurchased

     (150,000 )       —         (5,650,000 )       (6,350,001 ) 

Shares outstanding, beginning of year

     150,001         —         7,800,000         4,550,001   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     100,001         150,001         14,950,000         7,800,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period January 13, 2014 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   46  

 

 

 

PowerShares KBW
Capital Markets
Portfolio (KBWC)		      PowerShares KBW
High Dividend Yield
Financial Portfolio (KBWD)		      PowerShares
KBW Insurance
Portfolio (KBWI)		      PowerShares KBW
Premium Yield Equity
REIT Portfolio (KBWY)		  
2015      2014      2015      2014      2015      2014      2015      2014  
                    
$ 96,585       $ 117,227       $ 21,332,310       $ 19,707,225       $ 150,675       $ 179,583       $ 4,217,177       $ 2,669,718   
  528,532         1,184,206         (17,698,330 )       4,768,839         455,732         1,571,321         2,446,600         (890,433 ) 
  (619,991 )       (184,993 )       (24,246,761 )       1,365,783         (105,350 )       (723,986 )       (10,376,305 )       8,740,704   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  5,126         1,116,440         (20,612,781 )       25,841,847         501,057         1,026,918         (3,712,528 )       10,519,989   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  (102,195 )       (116,518 )       (22,592,480 )       (19,988,348 )       (148,278 )       (165,394 )       (6,050,718 )       (3,898,608 ) 
  (32,254 )       —         —         —         —         —         —         —   
  —         —         (929,525 )       —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (134,449 )       (116,518 )       (23,522,005 )       (19,988,348 )       (148,278 )       (165,394 )       (6,050,718 )       (3,898,608 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  5,725,400         2,421,709         103,911,321         90,789,371         14,172,046         3,228,322         45,313,904         33,198,719   
  (2,840,044 )       (9,408,521 )       (54,341,384 )       (58,733,272 )       (7,068,573 )       (6,530,714 )       (23,374,221 )       (10,624,815 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  2,885,356         (6,986,812 )       49,569,937         32,056,099         7,103,473         (3,302,392 )       21,939,683         22,573,904   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  2,756,033         (5,986,890 )       5,435,151         37,909,598         7,456,252         (2,440,868 )       12,176,437         29,195,285   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  5,292,047         11,278,937         272,257,255         234,347,657         6,808,673         9,249,541         98,102,812         68,907,527   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 8,048,080       $ 5,292,047       $ 277,692,406       $ 272,257,255       $ 14,264,925       $ 6,808,673       $ 110,279,249       $ 98,102,812   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 16,923       $ 21,861       $ —       $ —       $ 32,044       $ 29,647       $ —       $ —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  100,000         50,000         4,100,000         3,550,000         200,000         50,000         1,300,000         1,050,000   
  (50,000 )       (200,000 )       (2,250,000 )       (2,300,000 )       (100,000 )       (100,000 )       (700,000 )       (350,000 ) 
  100,001         250,001         10,550,000         9,300,000         100,001         150,001         2,900,000         2,200,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  150,001         100,001         12,400,000         10,550,000         200,001         100,001         3,500,000         2,900,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   47  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

    PowerShares KBW
Property & Casualty
Insurance Portfolio (KBWP)		     PowerShares KBW Regional
Banking Portfolio (KBWR)		     PowerShares
Russell 1000
Equal Weight
Portfolio  (EQAL)		  
    2015     2014     2015     2014     2015(b)  
Operations:          

Net investment income

   $ 313,880      $ 312,977      $ 763,023      $ 725,183      $ 1,623,108   

Net realized gain

     2,104,417        1,114,904        1,538,842        3,382,060        2,916,058   

Net change in unrealized appreciation (depreciation)

     1,568,196        (348,957 )      (37,364 )      (1,794,665 )      (9,607,862 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

     3,986,493        1,078,924        2,264,501        2,312,578        (5,068,696 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Distributions to Shareholders from:          

Net investment income

     (279,184 )      (388,389 )      (742,022 )      (715,569 )      (1,316,380 ) 

Net realized gains

     (25,369 )      (26,197 )      —        —        —   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total distributions to shareholders

     (304,553 )      (414,586 )      (742,022 )      (715,569 )      (1,316,380 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Shareholder Transactions:          

Proceeds from shares sold

     93,296,692        —        32,777,095        32,995,065        203,035,132   

Value of shares repurchased

     (20,469,263 )      (11,282,725 )      (16,595,453 )      (32,525,977 )      (47,566,284 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     72,827,429        (11,282,725 )      16,181,642        469,088        155,468,848   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets

     76,509,369        (10,618,387 )      17,704,121        2,066,097        149,083,772   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Net Assets:          

Beginning of year

     10,318,652        20,937,039        35,291,596        33,225,499        —   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

End of year

   $ 86,828,021      $ 10,318,652      $ 52,995,717      $ 35,291,596      $ 149,083,772   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Undistributed net investment income at end of year

   $ 67,677      $ 32,981      $ 139,515      $ 118,514      $ 306,782   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Changes in Shares Outstanding:          

Shares sold

     2,000,000        —        750,000        850,000        8,000,001   

Shares repurchased

     (450,000 )      (300,000 )      (400,000 )      (850,001 )      (1,900,000 ) 

Shares outstanding, beginning of year

     250,000        550,000        900,000        900,001        —   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Shares outstanding, end of year

     1,800,000        250,000        1,250,000        900,000        6,100,001   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(b)  For the period December 22, 2014 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   48  

 

 

Financial Highlights

 

PowerShares Contrarian Opportunities Portfolio (CNTR)

 

    Year Ended
October 31,
2015		     For the Period
January 13,  2014(a)
Through
October 31, 2014		  
Per Share Operating Performance:    

Net asset value at beginning of period

   $ 26.31      $ 24.70  

Net investment income(b)

     0.30        0.33   

Net realized and unrealized gain (loss) on investments

     (0.96 )      1.53   

Total from investment operations

     (0.66 )      1.86  

Distributions to shareholders from:

    

Net investment income

     (0.32 )      (0.25 )

Net realized gains

     (0.03 )      —   

Total distributions

     (0.35 )      (0.25 ) 

Net asset value at end of period

   $ 25.30      $ 26.31  

Market price at end of period(c)

   $ 25.31      $ 26.30  
Net Asset Value Total Return(d)     (2.59 )%      7.56 %(e) 
Market Price Total Return(d)     (2.52 )%      7.52 %(e) 
Ratios/Supplemental Data:    

Net assets at end of period (000’s omitted)

   $ 2,530      $ 3,946   

Ratio to average net assets of:

    

Expenses

     0.44 %      0.50 %(f) 

Net investment income

     1.15 %      1.61 %(f) 

Portfolio turnover rate(g)

     128 %      2 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (January 15, 2014, the first day of trading on the exchange) to October 31, 2014 was 6.06%. The market price total return from Fund Inception to October 31, 2014 was 6.02%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions. For the fiscal year ended October 31, 2015, the portfolio turnover calculation includes the value of securities purchased and sold in the effort to realign the Fund’s portfolio holdings due to the underlying index change.

PowerShares KBW Bank Portfolio (KBWB)

 

          Year Ended October 31,            For the Period
November 1,  2011(a)
through
October 31, 2012		  
    2015      2014      2013     
Per Share Operating Performance:           

Net asset value at beginning of period

   $ 37.12       $ 33.00      $ 25.44       $ 20.68   

Net investment income(b)

     0.66         0.55         0.45         0.43   

Net realized and unrealized gain on investments

     0.22         4.11         7.52         4.84   

Total from investment operations

     0.88         4.66        7.97         5.27   

Distributions to shareholders from:

           

Net investment income

     (0.55 )       (0.54 )       (0.41 )       (0.50 ) 

Net realized gains

     (0.02 )       —         —         —   

Return of capital

     —         —         —         (0.01 ) 

Total distributions

     (0.57 )       (0.54 )      (0.41 )       (0.51 ) 

Net asset value at end of period

   $ 37.43       $ 37.12      $ 33.00       $ 25.44   

Market price at end of period(c)

   $ 37.49       $ 37.13      $ 33.03       $ 25.46   
Net Asset Value Total Return(d)     2.35 %       14.16 %       31.51 %       25.97 % 
Market Price Total Return(d)     2.49 %       14.09 %       31.52 %       26.07 % 
Ratios/Supplemental Data:           

Net assets at end of period (000’s omitted)

   $ 559,632       $ 289,536       $ 150,169       $ 164,072   

Ratio to average net assets of:

           

Expenses, after Waivers

     0.35 %       0.35 %       0.35 %       0.27 %(e) 

Expenses, prior to Waivers

     0.35 %       0.35 %       0.35 %       0.35 %(e) 

Net investment income, after Waivers

     1.74 %       1.55 %       1.51 %       1.84 %(e) 

Portfolio turnover rate(f)

     17 %       5 %       8 %       4 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Annualized.
(f)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   49  

 

 

Financial Highlights (continued)

 

PowerShares KBW Capital Markets Portfolio (KBWC)

 

          Year Ended October 31,            For the Period
November 1,  2011(a)
Through
October 31, 2012		  
    2015      2014      2013     
Per Share Operating Performance:           

Net asset value at beginning of period

   $ 52.92       $ 45.12      $ 31.64       $ 30.49   

Net investment income(b)

     0.81         0.70         0.52         0.61   

Net realized and unrealized gain on investments

     1.06         7.80         13.70         1.73   

Total from investment operations

     1.87         8.50        14.22         2.34   

Distributions to shareholders from:

           

Net investment income

     (0.82 )       (0.70 )      (0.74 )       (1.19 ) 

Net realized gains

     (0.32 )       —         —         —   

Total distributions

     (1.14 )       (0.70 )       (0.74 )       (1.19 ) 

Net asset value at end of period

   $ 53.65       $ 52.92      $ 45.12       $ 31.64   

Market price at end of period(c)

   $ 53.78       $ 52.91      $ 45.17       $ 31.62   
Net Asset Value Total Return(d)     3.48 %       18.95 %       45.55 %       7.79 % 
Market Price Total Return(d)     3.75 %       18.79 %       45.89 %       7.72 % 
Ratios/Supplemental Data:           

Net assets at end of period (000’s omitted)

   $ 8,048       $ 5,292       $ 11,279       $ 1,582   

Ratio to average net assets of:

           

Expenses, after Waivers

     0.35 %       0.35 %       0.36 %       0.16 %(e) 

Expenses, prior to Waivers

     0.35 %       0.35 %       0.36 %       0.35 %(e) 

Net investment income, after Waivers

     1.48 %       1.44 %       1.30 %       1.98 %(e) 

Portfolio turnover rate(f)

     20 %       16 %       38 %       6 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Annualized.
(f)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)

 

    Year Ended October 31,      For the Period
November 29,  2010(a)
Through
October 31, 2011		  
    2015     2014     2013      2012     
Per Share Operating Performance:            

Net asset value at beginning of period

   $ 25.81      $ 25.20     $ 23.91      $ 22.37      $ 23.51  

Net investment income(b)

     1.75        2.04 (c)      1.90        2.01        1.91  

Net realized and unrealized gain (loss) on investments

     (3.22 )      0.62        1.37        1.88        (0.82 )

Total from investment operations

     (1.47 )      2.66       3.27        3.89        1.09  

Distributions to shareholders from:

            

Net investment income

     (1.87 )      (2.05 )     (1.98 )      (2.35 )       (2.23 )

Return of capital

     (0.08 )      —        —         —         —   

Total distributions

     (1.95 )      (2.05 )      (1.98 )       (2.35 )       (2.23 ) 

Net asset value at end of period

   $ 22.39      $ 25.81     $ 25.20      $ 23.91      $ 22.37  

Market price at end of period(d)

   $ 22.39      $ 25.82     $ 25.24      $ 23.86      $ 22.43  
Net Asset Value Total Return(e)     (6.08 )%      11.05 %      14.21 %       18.32 %       4.64 %(f) 
Market Price Total Return(e)     (6.12 )%      10.91 %      14.62 %       17.75 %       4.92 %(f) 
Ratios/Supplemental Data:            

Net assets at end of period (000’s omitted)

   $ 277,692      $ 272,257      $ 234,348      $ 170,976      $ 26,843  

Ratio to average net assets of:

            

Expenses(g)

     0.35 %      0.35 %      0.37 %       0.35 %       0.37 %(h) 

Net investment income

     7.15 %      8.00 %(c)      7.64 %       8.56 %       9.14 %(h) 

Portfolio turnover rate(i)

     49 %      30 %      37 %       19 %       33 %

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  Net investment income per share and the ratio of net investment income to average net assets include a significant dividend during the year. Net investment income per share and the ratio of net investment income to average net excluding the significant dividend are $1.90 and 7.47%, respectively.
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (December 2, 2010, the first day of trading on the exchange) to October 31, 2011 was 2.97%. The market price total return from Fund Inception to October 31, 2011 was 3.38%.
(g)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(h)  Annualized.
(i)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   50  

 

 

Financial Highlights (continued)

 

PowerShares KBW Insurance Portfolio (KBWI)

 

          Year Ended October 31,            For the Period
November 1,  2011(a)
Through
October 31, 2012		  
    2015      2014      2013     
Per Share Operating Performance:           

Net asset value at beginning of period

   $ 68.09       $ 61.66      $ 42.96      $ 38.33  

Net investment income(b)

     1.14         1.14         0.94        1.42  

Net realized and unrealized gain on investments

     3.23         6.38         18.73        4.54  

Total from investment operations

     4.37         7.52        19.67        5.96  

Distributions to shareholders from:

           

Net investment income

     (1.14 )       (1.09 )      (0.97 )      (1.33 )

Net asset value at end of period

   $ 71.32       $ 68.09      $ 61.66      $ 42.96  

Market price at end of period(c)

   $ 71.44       $ 68.03      $ 61.76      $ 42.95  
Net Asset Value Total Return(d)     6.46 %       12.25 %       46.44 %       15.91 %
Market Price Total Return(d)     6.75 %       11.96 %       46.72 %       15.89 %
Ratios/Supplemental Data:           

Net assets at end of period (000’s omitted)

   $ 14,265       $ 6,809       $ 9,250      $ 2,148  

Ratio to average net assets of:

           

Expenses, after Waivers

     0.35 %       0.35 %       0.36 %       0.11 %(e) 

Expense, prior to Waivers

     0.35 %       0.35 %       0.36 %       0.35 %(e) 

Net investment income, after Waivers

     1.64 %       1.76 %       1.74 %       3.61 %(e) 

Portfolio turnover rate(f)

     13 %       14 %       3 %       5 %

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Annualized.
(f)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)

 

    Year Ended October 31,      For the Period
November 29,  2010(a)
Through
October 31, 2011		  
    2015     2014      2013      2012     
Per Share Operating Performance:             

Net asset value at beginning of period

   $ 33.83      $ 31.32      $ 27.13      $ 23.37      $ 24.96  

Net investment income(b)

     1.19        1.07         0.89        0.91        1.01  

Net realized and unrealized gain (loss) on investments

     (1.80 )      3.01        4.76        4.22        (1.27 )

Total from investment operations

     (0.61 )      4.08        5.65        5.13        (0.26 )

Distributions to shareholders from:

             

Net investment income

     (1.71 )      (1.57 )       (1.46 )      (1.11 )       (1.03 )

Return of capital

     —        —         —        (0.26 )       (0.30 )

Total distributions

     (1.71 )      (1.57 )      (1.46 )      (1.37 )       (1.33 )

Net asset value at end of period

   $ 31.51      $ 33.83      $ 31.32      $ 27.13      $ 23.37  

Market price at end of period(c)

   $ 31.52      $ 33.82      $ 31.38      $ 27.11      $ 23.40  
Net Asset Value Total Return(d)     (1.94 )%      13.51 %       21.11 %       22.54 %       (1.20 )%(e) 
Market Price Total Return(d)     (1.88 )%      13.27 %       21.42 %       22.30 %       (1.08 )%(e) 
Ratios/Supplemental Data:             

Net assets at end of period (000’s omitted)

   $ 110,279      $ 98,103       $ 68,908      $ 25,769      $ 7,012  

Ratio to average net assets of:

             

Expenses

     0.35 %      0.35 %       0.36 %       0.35 %       0.36 %(f) 

Net investment income

     3.58 %      3.39 %       2.85 %       3.58 %       4.54 %(f) 

Portfolio turnover rate(g)

     25 %      27 %       21 %       40 %       36 %

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (December 2, 2010, the first day of trading on the exchange) to October 31, 2011 was (1.87)%. The market price total return from Fund Inception to October 31, 2011 was (1.55)%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   51  

 

 

Financial Highlights (continued)

 

PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)

 

    Year Ended October 31,      For the Period
November 29, 2010(a)
Through
October 31, 2011		  
    2015      2014      2013      2012     
Per Share Operating Performance:              

Net asset value at beginning of period

   $ 41.27       $ 38.07      $ 30.25      $ 24.83      $ 24.75  

Net investment income(b)

     0.75         0.88         0.59        0.53        0.54  

Net realized and unrealized gain on investments

     7.10         3.29        8.09        5.41        0.04  

Total from investment operations

     7.85         4.17        8.68        5.94        0.58  

Distributions to shareholders from:

              

Net investment income

     (0.78 )       (0.92 )       (0.86 )      (0.52 )       (0.50 ) 

Net realized gains

     (0.10 )       (0.05 )      —        —        —  

Total distributions

     (0.88 )       (0.97 )      (0.86 )      (0.52 )      (0.50 )

Net asset value at end of period

   $ 48.24       $ 41.27      $ 38.07      $ 30.25      $ 24.83  

Market price at end of period(c)

   $ 48.36       $ 41.27      $ 38.09      $ 30.24      $ 24.84  
Net Asset Value Total Return(d)     19.31 %       11.17 %       29.33 %       24.21 %       2.36 %(e) 
Market Price Total Return(d)     19.60 %       11.12 %       29.44 %       24.12 %       2.41 %(e) 
Ratios/Supplemental Data:              

Net assets at end of period (000’s omitted)

   $ 86,828       $ 10,319       $ 20,937      $ 3,025      $ 3,725  

Ratio to average net assets of:

              

Expenses

     0.35 %       0.35 %       0.36 %       0.35 %       0.37 %(f) 

Net investment income

     1.69 %       2.30 %       1.69 %       1.94 %       2.38 %(f) 

Portfolio turnover rate(g)

     35 %       4 %       12 %       2 %       4 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (December 2, 2010, the first day of trading on the exchange) to October 31, 2011 was 0.38%. The market price total return from Fund Inception to October 31, 2011 was 0.45%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares KBW Regional Banking Portfolio (KBWR)

 

          Year Ended October 31,            For the Period
November 1,  2011(a)
Through
October 31, 2012		  
    2015      2014      2013     
Per Share Operating Performance:           

Net asset value at beginning of period

   $ 39.21       $ 36.92      $ 27.67      $ 23.85  

Net investment income(b)

     0.80         0.68         0.66        0.63  

Net realized and unrealized gain on investments

     3.17         2.28         9.12        3.94  

Total from investment operations

     3.97         2.96        9.78        4.57  

Distributions to shareholders from:

           

Net investment income

     (0.78 )       (0.67 )      (0.53 )      (0.75 ) 

Net asset value at end of period

   $ 42.40       $ 39.21      $ 36.92      $ 27.67  

Market price at end of period(c)

   $ 42.42       $ 39.21      $ 36.96      $ 27.67  
Net Asset Value Total Return(d)     10.24 %       8.03 %       35.80 %       19.20 % 
Market Price Total Return(d)     10.29 %       7.91 %       35.94 %       19.20 % 
Ratios/Supplemental Data:           

Net assets at end of period (000’s omitted)

   $ 52,996       $ 35,292       $ 33,225      $ 17,987  

Ratio to average net assets of:

           

Expenses, after Waivers

     0.35 %       0.35 %       0.35 %       0.11 %(e) 

Expenses, prior to Waivers

     0.35 %       0.35 %       0.35 %       0.35 %(e) 

Net investment income, after Waivers

     1.97 %       1.80 %       2.05 %       2.44 %(e) 

Portfolio turnover rate(f)

     25 %       13 %       7 %       3 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  Annualized.
(f)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   52  

 

 

Financial Highlights (continued)

 

PowerShares Russell 1000 Equal Weight Portfolio (EQAL)

 

    For the Period
December 22, 2014(a)
Through
October 31, 2015 		 
Per Share Operating Performance:  

Net asset value at beginning of period

   $ 25.05   

Net investment income(b)

     0.32   

Net realized and unrealized gain (loss) on investments

     (0.71 ) 

Total from investment operations

     (0.39 ) 

Distributions to shareholders from:

  

Net investment income

     (0.22 ) 

Net asset value at end of period

   $ 24.44   

Market price at end of period(c)

   $ 24.48   
Net Asset Value Total Return(d)     (1.58 )%(e) 
Market Price Total Return(d)     (1.42 )%(e) 
Ratios/Supplemental Data:  

Net assets at end of period (000’s omitted)

   $ 149,084   

Ratio to average net assets of:

  

Expenses

     0.20 %(f) 

Net investment income

     1.49 %(f) 

Portfolio turnover rate(g)

     24 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (December 23, 2014, the first day of trading on the exchange) to October 31, 2015 was (2.01)%. The market price total return from Fund Inception to October 31, 2015 was (1.93)%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   53  

 

 

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust II

October 31, 2015

 

Note 1. Organization

PowerShares Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust on October 10, 2006 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of October 31, 2015, the Trust offered sixty-six portfolios. This report includes the following portfolios:

 

Full Name

   

Short Name

PowerShares Contrarian Opportunities Portfolio (CNTR) (formerly, PowerShares NSYE Century Portfolio)    “Contrarian Opportunities Portfolio”
PowerShares KBW Bank Portfolio (KBWB)    “KBW Bank Portfolio”
PowerShares KBW Capital Markets Portfolio (KBWC)    “KBW Capital Markets Portfolio”
PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)    “KBW High Dividend Yield Financial Portfolio”
PowerShares KBW Insurance Portfolio (KBWI)    “KBW Insurance Portfolio”
PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)    “KBW Premium Yield Equity REIT Portfolio”
PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)    “KBW Property & Casualty Insurance Portfolio”
PowerShares KBW Regional Banking Portfolio (KBWR)    “KBW Regional Banking Portfolio”
PowerShares Russell 1000 Equal Weight Portfolio (EQAL)*    “Russell 1000 Equal Weight Portfolio”

 

* Commenced operations on December 22, 2014.

Each portfolio (each, a “Fund,” and collectively, the “Funds”) represents a separate series of the Trust. The shares of the Funds are referred to herein as “Shares” or “Fund’s Shares.” Each Fund’s Shares are listed and traded on NYSE Arca, Inc.

The market price of each Share may differ to some degree from the Fund’s net asset value (“NAV”). Unlike conventional mutual funds, each Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units are issued and redeemed principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”). Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Funds.

The investment objective of each Fund is to seek investment results that generally correspond (before fees and expenses) to the price and yield of its respective index listed below (each, an “Underlying Index”):

 

Fund

   

Underlying Index

Contrarian Opportunities Portfolio    Dow Jones U.S. Contrarian Opportunities Index
KBW Bank Portfolio    KBW Nasdaq Bank Index
KBW Capital Markets Portfolio    KBW Nasdaq Capital Markets Index
KBW High Dividend Yield Financial Portfolio    KBW Nasdaq Financial Sector Dividend Yield Index
KBW Insurance Portfolio    KBW Nasdaq Insurance Index
KBW Premium Yield Equity REIT Portfolio    KBW Nasdaq Premium Yield Equity REIT Index
KBW Property & Casualty Insurance Portfolio    KBW Nasdaq Property & Casualty Index
KBW Regional Banking Portfolio    KBW Nasdaq Regional Banking Index
Russell 1000 Equal Weight Portfolio    Russell 1000® Equal Weight 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 (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. In addition, the Funds monitor for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. The following is a summary of the significant accounting policies followed by the Funds in preparation of the financial statements.

 

 

   54  

 

 

 

A. Security Valuation

Securities, including restricted securities, are valued according to the following policies:

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco PowerShares Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

Each Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

 

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B. Other Risks

Index Risk. Unlike many investment companies, the Funds do not utilize investing strategies that seek returns in excess of their Underlying Indexes. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its respective Underlying Index, even if that security generally is underperforming.

Equity Risk. Equity risk is the risk that the value of the securities that each Fund holds will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities that a Fund holds participate or factors relating to specific companies in which the Fund invests. For example, an adverse event, such as an unfavorable earnings report, may depress the value of securities a Fund holds; the price of securities may be particularly sensitive to general movements in the stock market; or a drop in the stock market may depress the price of most or all of the securities a Fund holds. In addition, securities of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition.

Industry Concentration Risk. In following its methodology, each Fund’s Underlying Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or a sector. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry or sector, each Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or sector, a Fund may face more risks than if it were diversified broadly over numerous industries or sectors. In addition, at times, an industry or sector may be out of favor and underperform other industries or the market as a whole. Any factors detrimental to the performance of such industry or sector will disproportionately impact a Fund’s NAV.

Non-Diversified Fund Risk. Each Fund (except for KBW Premium Yield Equity REIT Portfolio and Contrarian Opportunities Portfolio) is non-diversified and can invest a greater portion of its assets in securities of individual issuers than diversified funds. As a result, changes in the market value of a single investment could cause greater fluctuations in Share price than would occur in a diversified fund. This may increase a Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on a Fund’s performance.

Non-Correlation Risk. Each Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, each Fund incurs operating expenses not applicable to its Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. In addition, the performance of each Fund and its Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.

High Dividend Paying Securities Risk. KBW High Dividend Yield Financial Portfolio and KBW Premium Yield Equity REIT Portfolio invest in securities that pay high dividends. As a group, these securities can fall out of favor with the market, causing such companies to underperform companies that do not pay high dividends. Also, changes in the dividend policies of the companies in an Underlying Index and the capital resources available for such companies’ dividend payments may affect a Fund.

REIT Risk. For KBW Premium Yield Equity REIT Portfolio and KBW High Dividend Yield Financial Portfolio, although the Funds will not invest in real estate directly, the REITs in which the Funds invest are subject to risks inherent in the direct ownership of real estate. These risks include, but are not limited to, a possible lack of mortgage funds and associated interest rate risks, overbuilding, property vacancies, increases in property taxes and operating expenses, changes in zoning laws, losses due to environmental damages and changes in neighborhood values and appeal to purchasers.

C. Federal Income Taxes

Each Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

Each Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed each Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, and passive foreign investment company adjustments, if any.

The Funds file U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, a Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

 

 

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D. Investment Transactions and Investment Income

Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Interest income is recorded on the accrual basis. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by a Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

Corporate actions (including cash dividends) are recorded net of non-reclaimable foreign tax withholdings on the ex-date.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statements of Operations and the Statements of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of each Fund’s net asset value and, accordingly, they reduce each Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statements of Operations and the Statements of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between each Fund and the Adviser.

E. Country Determination

For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

F. Expenses

Each Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Expenses of the Trust that are excluded from a Fund’s unitary management fee and are directly identifiable to a specific Fund are applied to that Fund. Expenses of the Trust that are excluded from each Fund’s unitary management fee and that 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.

To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

G. Dividends and Distributions to Shareholders

Each Fund (except for KBW High Dividend Yield Financial Portfolio and KBW Premium Yield Equity REIT Portfolio) declares and pays dividends from net investment income, if any, to its shareholders quarterly and records such dividends on ex-dividend date. KBW High Dividend Yield Financial Portfolio and KBW Premium Yield Equity REIT Portfolio each declares and pays dividends from net investment income, if any, to its shareholders monthly and records such dividends on ex-dividend date. Generally, each Fund distributes net realized taxable capital gains, if any, annually in cash and records them on ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in such Fund’s financial statements as a tax return of capital at fiscal year-end.

H. Foreign Currency Translations

Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Funds do not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statements of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign

 

 

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currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on each Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period-end, resulting from changes in exchange rates.

The Funds may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which each Fund invests.

Note 3. Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of each Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Funds’ investments, managing the Funds’ business affairs and providing certain clerical, bookkeeping and other administrative services.

As compensation for its services, each Fund (except for Russell 1000 Equal Weight Portfolio) has agreed to pay the Adviser an annual unitary management fee of 0.35% of each Fund’s average daily net assets (prior to May 22, 2015, Contrarian Opportunities Portfolio paid 0.50% of the Fund’s average daily net assets). The Russell 1000 Equal Weight Portfolio has agreed to pay the Adviser an annual unitary management fee of 0.20% of the Fund’s average daily net assets. Out of the unitary management fee, the Adviser has agreed to pay substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Further, through August 31, 2017, the Adviser has contractually agreed to waive a portion of each Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

For the fiscal year ended October 31, 2015, the Adviser waived fees for each Fund in the following amounts:

 

Contrarian Opportunities Portfolio    $ 2   
KBW Bank Portfolio      160   
KBW Capital Markets Portfolio      5   
KBW High Dividend Yield Financial Portfolio      786   
KBW Insurance Portfolio      4   
KBW Premium Yield Equity REIT Portfolio      266   
KBW Property & Casualty Insurance Portfolio      42   
KBW Regional Banking Portfolio      25   
Russell 1000 Equal Weight Portfolio      34   

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for each Fund. The Distributor does not maintain a secondary market in the Shares. The Funds are not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into a licensing agreement for each Fund with the following entities (each, a “Licensor”).

 

Fund

   

Licensor

Contrarian Opportunities Portfolio    S&P Dow Jones Indices, LLC
KBW Bank Portfolio    Keefe, Bruyette & Woods, Inc.
KBW Capital Markets Portfolio    Keefe, Bruyette & Woods, Inc.
KBW High Dividend Yield Financial Portfolio    Keefe, Bruyette & Woods, Inc.
KBW Insurance Portfolio    Keefe, Bruyette & Woods, Inc.
KBW Premium Yield Equity REIT Portfolio    Keefe, Bruyette & Woods, Inc.
KBW Property & Casualty Insurance Portfolio    Keefe, Bruyette & Woods, Inc.
KBW Regional Banking Portfolio    Keefe, Bruyette & Woods, Inc.
Russell 1000 Equal Weight Portfolio    Frank Russell Company

Each Underlying Index name trademark is owned by its respective Licensor. These trademarks have been licensed to the Adviser for use by the Funds. Each Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. The

 

 

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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 the Funds.

The Trust has entered into service agreements whereby The Bank of New York Mellon, a wholly owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for each Fund.

Note 4. Investments in Affiliates

The Adviser and Invesco Mortgage Capital, Inc. REIT are wholly-owned subsidiaries of Invesco Ltd. and therefore, Invesco Ltd. and Invesco Mortgage Capital, Inc. REIT are considered to be affiliated with the Funds. The table below shows certain Funds’ transactions in, and earnings from, investments in affiliates for the fiscal period ended October 31, 2015.

KBW Capital Markets Portfolio

 

     Value
October 31, 2014		      Purchases
at Cost		      Proceeds
from Sales		      Change in
Unrealized
Appreciation
(Depreciation)		      Realized
Gain		      Value
October 31, 2015		      Dividend
Income		  
Invesco Ltd.    $ 220,723       $ 234,745       $ (110,013 )     $ (79,287 )     $ 20,885       $ 287,053       $ 6,561   

KBW High Dividend Yield Financial Portfolio

 

    Value
October 31, 2014		     Purchases
at Cost		     Proceeds
from Sales		     Change in
Unrealized
Appreciation
(Depreciation)		     Realized
Gain (Loss)		     Value
October 31, 2015		     Dividend
Income		  
Invesco Mortgage Capital, Inc. REIT   $ 12,280,404      $ 5,751,339      $ (6,562,603 )    $ (2,182,246 )    $ (1,284,573 )    $ 8,002,321      $ 1,408,013   

Russell 1000 Equal Weight Portfolio

 

     Value
December 22, 2014		      Purchases
at Cost		      Proceeds
from Sales		      Change in
Unrealized
Appreciation
(Depreciation)		      Realized
Gain		      Value
October 31, 2015		      Dividend
Income		  
Invesco Ltd.    $ —       $ 96,241       $ (17,169 )     $ (11,804 )     $ 731       $ 67,999       $ 1,247   

Note 5. Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

 

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.

 

  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect a Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

As of October 31, 2015, all of the securities in each Fund were valued based on Level 1 inputs (see the Schedules of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

 

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Note 6. Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2015 and 2014:

 

     2015      2014  
     Ordinary
Income		      Long-Term
Capital Gains		      Return of
Capital		      Ordinary
Income		      Long-Term
Capital Gains		      Return of
Capital		  
Contrarian Opportunities Portfolio    $ 43,417       $ 492       $ —       $ 38,120       $ —       $ —   
KBW Bank Portfolio      5,166,214         —         —         2,878,223         —         —   
KBW Capital Markets Portfolio      130,742         3,707         —         116,518         —         —   
KBW High Dividend Yield Financial Portfolio      22,592,480         —         929,525         19,988,348         —         —   
KBW Insurance Portfolio      148,278         —         —         165,394         —         —   
KBW Premium Yield Equity REIT Portfolio      6,050,718         —         —         3,898,608         —         —   
KBW Property & Casualty Insurance Portfolio      295,777         8,776         —         388,389         26,197         —   
KBW Regional Banking Portfolio      742,022         —         —         715,415         154         —   
Russell 1000 Equal Weight Portfolio      1,316,380         —         —         —         —         —   

Tax Components of Net Assets at Fiscal Year-End:

 

     Undistributed
Ordinary
Income		      Undistributed
Long-Term
Capital Gains		      Net
Unrealized
Appreciation
(Depreciation)		      Capital Loss
Carryforwards		      Shares of
Beneficial
Interest		      Total Net
Assets		  
Contrarian Opportunities Portfolio    $ 2,450       $ —       $ (87,988 )     $ (191,894 )     $ 2,807,011       $ 2,529,579   
KBW Bank Portfolio      1,363,059         —         (21,599,561 )       (271,487 )       580,139,599         559,631,610   
KBW Capital Markets Portfolio      16,923         —         (56,793 )       (12,760 )       8,100,710         8,048,080   
KBW High Dividend Yield Financial Portfolio      —         —         (26,678,798 )       (26,671,051 )       331,042,255         277,692,406   
KBW Insurance Portfolio      68,985         2,295         227,206         —         13,966,439         14,264,925   
KBW Premium Yield Equity REIT Portfolio      —         —         (7,906,560 )       (1,169,321 )       119,355,130         110,279,249   
KBW Property & Casualty Insurance Portfolio      119,308         33,223         2,703,410         —         83,972,080         86,828,021   
KBW Regional Banking Portfolio      139,515         —         390,341         (103,478 )       52,569,339         52,995,717   
Russell 1000 Equal Weight Portfolio      306,782         —         (10,223,294 )       (1,068,834 )       160,069,118         149,083,772   

Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Funds to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The following table presents available capital loss carryforwards for each Fund as of October 31, 2015.

 

     Post-effective/no expiration         
     Short-Term      Long-Term      Total*  
Contrarian Opportunities Portfolio    $ 66,606       $ 125,288       $ 191,894   
KBW Bank Portfolio      7,921         263,566         271,487   
KBW Capital Markets Portfolio      12,760         —         12,760   
KBW High Dividend Yield Financial Portfolio      4,610,616         22,060,435         26,671,051   
KBW Insurance Portfolio      —         —         —   
KBW Premium Yield Equity REIT Portfolio      780,385         388,936         1,169,321   
KBW Property & Casualty Insurance Portfolio      —         —         —   
KBW Regional Banking Portfolio      87,154         16,324         103,478   
Russell 1000 Equal Weight Portfolio      1,068,834         —         1,068,834   

 

* Capital loss carry forwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

 

 

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Note 7. Investment Transactions

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations, money market funds and in-kind transactions, if any) were as follows:

 

     Purchases      Sales  
Contrarian Opportunities Portfolio    $ 4,231,736       $ 3,727,181   
KBW Bank Portfolio      58,741,916         56,622,179   
KBW Capital Markets Portfolio      1,326,554         1,319,563   
KBW High Dividend Yield Financial Portfolio      149,937,587         145,914,815   
KBW Insurance Portfolio      1,214,101         4,596,113   
KBW Premium Yield Equity REIT Portfolio      29,807,951         29,236,700   
KBW Property & Casualty Insurance Portfolio      7,550,622         12,430,796   
KBW Regional Banking Portfolio      9,733,805         10,060,422   
Russell 1000 Equal Weight Portfolio      31,756,291         30,705,305   

For the fiscal year ended October 31, 2015, in-kind transactions associated with creation and redemptions were as follows:

 

     Cost of
Securities
Received		      Value of
Securities
Delivered		  
Contrarian Opportunities Portfolio    $ 2,727,435       $ 4,525,768   
KBW Bank Portfolio      495,014,428         215,345,657   
KBW Capital Markets Portfolio      5,614,662         2,776,978   
KBW High Dividend Yield Financial Portfolio      98,132,747         51,185,358   
KBW Insurance Portfolio      14,168,794         3,684,771   
KBW Premium Yield Equity REIT Portfolio      45,298,634         23,783,410   
KBW Property & Casualty Insurance Portfolio      93,278,097         15,490,235   
KBW Regional Banking Portfolio      32,766,808         16,259,377   
Russell 1000 Equal Weight Portfolio      203,067,704         48,279,609   

Gains (losses) on in-kind transactions are generally not considered taxable gains (losses) for federal income tax purposes.

At October 31, 2015, the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes were as follows:

 

     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
Contrarian Opportunities Portfolio    $ 141,823       $ (229,811 )     $ (87,988 )     $ 2,618,307   
KBW Bank Portfolio      1,275,811         (22,875,372 )       (21,599,561 )       580,881,319   
KBW Capital Markets Portfolio      372,715         (429,508 )       (56,793 )       8,100,118   
KBW High Dividend Yield Financial Portfolio      8,970,989         (35,649,787 )       (26,678,798 )       304,430,943   
KBW Insurance Portfolio      615,888         (388,682 )       227,206         14,029,843   
KBW Premium Yield Equity REIT Portfolio      3,129,909         (11,036,469 )       (7,906,560 )       118,185,894   
KBW Property & Casualty Insurance Portfolio      2,896,942         (193,532 )       2,703,410         84,196,425   
KBW Regional Banking Portfolio      1,962,422         (1,572,081 )       390,341         52,594,980   
Russell 1000 Equal Weight Portfolio      5,714,013         (15,937,307 )       (10,223,294 )       159,239,971   

 

 

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Note 8. Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of in-kind transactions on October 31, 2015, amounts were reclassified between undistributed net investment income, undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended October 31, 2015, the reclassifications were as follows:

 

     Undistributed
Net Investment
Income		      Undistributed
Net Realized
Gain (Loss)		      Shares of
Beneficial
Interest		  
Contrarian Opportunities Portfolio    $ (146 )     $ (404,848 )     $ 404,994   
KBW Bank Portfolio      (26 )       (17,500,205 )       17,500,231   
KBW Capital Markets Portfolio      672         (551,234 )       550,562   
KBW High Dividend Yield Financial Portfolio      1,260,170         (6,131,721 )       4,871,551   
KBW Insurance Portfolio      —         (727,644 )       727,644   
KBW Premium Yield Equity REIT Portfolio      1,833,541         (3,692,029 )       1,858,488   
KBW Property & Casualty Insurance Portfolio      —         (2,359,389 )       2,359,389   
KBW Regional Banking Portfolio      —         (1,660,371 )       1,660,371   
Russell 1000 Equal Weight Portfolio      54         (4,600,324 )       4,600,270   

Note 9. Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Funds to pay remuneration to each Trustee who is not an “interested person” as defined in the 1940 Act (an “Independent Trustee”) and an Officer of the Trust. The Adviser, as a result of each Fund’s unitary management fee, pays for such compensation. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, an Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of his compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select PowerShares Funds. The Deferral Fees payable to the Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Funds.

Note 10. Capital

Shares are created and redeemed by each Fund only in Creation Units of 50,000 Shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Funds. Such transactions are principally permitted in exchange for Deposit Securities, with a balancing cash component to equate the transaction to the NAV per Share of a Fund of the Trust on the transaction date. However, for all Funds, cash in an amount equivalent to the value of certain securities may be substituted, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances.

To the extent that the Funds permit transactions in exchange for Deposit Securities, each Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

Transactions in each Fund’s Shares are disclosed in detail in the Statements of Changes in Net Assets.

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. Each Independent Trustee is also indemnified against certain liabilities arising out of the performance of his duties to the Trust pursuant to an Indemnification Agreement between the Independent Trustee and 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.

 

 

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Note 12. Subsequent Event

At a meeting held on December 17, 2015, the Board of Trustees of the Trust approved the termination and winding down of KBW Capital Markets Portfolio and KBW Insurance Portfolio, with the liquidation payment to shareholders expected to take place on or about March 25, 2016. Investors, who have elected not to sell their shares before March 18, 2016, will receive cash equal to the amount of the net asset value of their shares, which will include any capital gains and dividends, on or about March 25, 2016.

 

 

   63  

 

 

Report of Independent Registered Public Accounting Firm

 

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

 

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of PowerShares Contrarian Opportunities Portfolio (formerly PowerShares NYSE Century Portfolio), PowerShares KBW Bank Portfolio, PowerShares KBW Capital Markets Portfolio, PowerShares KBW High Dividend Yield Financial Portfolio, PowerShares KBW Insurance Portfolio, PowerShares KBW Premium Yield Equity REIT Portfolio, PowerShares KBW Property & Casualty Insurance Portfolio, PowerShares KBW Regional Banking Portfolio, and Russell 1000 Equal Weight Portfolio (each an individual portfolio of PowerShares Exchange-Traded Fund Trust II, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion. As disclosed in Note 12 to the financial statements, the PowerShares KBW Capital Markets Portfolio and the PowerShares KBW Insurance Portfolio will liquidate after the close of business on March 18, 2016.

PricewaterhouseCoopers LLP

Chicago, IL

December 23, 2015

 

 

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Fees and Expenses

 

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). 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 funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month (or shorter) period ended October 31, 2015.

In addition to the fees and expenses which the PowerShares KBW High Dividend Yield Financial Portfolio (the “Portfolio”) bears directly, the Portfolio indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Portfolio invests. The amount of fees and expenses incurred indirectly by the Portfolio will vary because the investment companies have varied expenses and fee levels and the Portfolio may own different proportions of the investment companies at different times. Estimated investment companies’ expenses are not expenses that are incurred directly by the Portfolio. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Portfolio invests in. The effect of the estimated investment companies’ expenses that the Portfolio bears indirectly are included in the Portfolio’s total returns.

Actual Expenses

The first line in the following table 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 table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s 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 table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as sales charges and brokerage commissions. 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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by a Fund. If transaction costs and indirect expenses were included, your costs would have been higher.

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month  Period(1)		  
PowerShares Contrarian Opportunities Portfolio (CNTR)        

Actual

   $ 1,000.00      $ 948.70        0.37 %    $ 1.82   

Hypothetical (5% return before expenses)

     1,000.00        1,023.34        0.37        1.89   
PowerShares KBW Bank Portfolio (KBWB)        

Actual

     1,000.00        993.92        0.35        1.76   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares KBW Capital Markets Portfolio (KBWC)        

Actual

     1,000.00        960.82        0.35        1.73   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)        

Actual

     1,000.00        918.28        0.35        1.69   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   

 

 

   65  

 

 

Fees and Expenses (continued)

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month  Period(1)		  
PowerShares KBW Insurance Portfolio (KBWI)        

Actual

   $ 1,000.00      $ 1,041.49        0.35 %    $ 1.80   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)        

Actual

     1,000.00        969.72        0.35        1.74   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)        

Actual

     1,000.00        1,129.49        0.35        1.88   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares KBW Regional Banking Portfolio (KBWR)        

Actual

     1,000.00        1,056.40        0.35        1.81   

Hypothetical (5% return before expenses)

     1,000.00        1,023.44        0.35        1.79   
PowerShares Russell 1000 Equal Weight Portfolio (EQAL)        

Actual

     1,000.00        950.91        0.20        0.98   

Hypothetical (5% return before expenses)

     1,000.00        1,024.20        0.20        1.02   

 

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expenses based on annualized data in the Financial Highlights.

 

 

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Tax Information

 

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

Each Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2015:

 

     Qualified Dividend
Income*		   Corporate
Dividends Received
Deduction*		   Long-Term
Capital Gains
PowerShares Contrarian Opportunities Portfolio        100 %       100 %     $ 492  
PowerShares KBW Bank Portfolio        100 %       100 %       —  
PowerShares KBW Capital Markets Portfolio        100 %       97 %       3,707  
PowerShares KBW High Dividend Yield Financial Portfolio        76 %       75 %       —  
PowerShares KBW Insurance Portfolio        100 %       88 %       —  
PowerShares KBW Premium Yield Equity REIT Portfolio        0 %       0 %       —  
PowerShares KBW Property & Casualty Insurance Portfolio        100 %       64 %       8,776  
PowerShares KBW Regional Banking Portfolio        100 %       100 %       —  
PowerShares Russell 1000 Equal Weight Portfolio        100 %       100 %       —  

 

* The above percentages are based on ordinary income dividends paid to shareholders during the fiscal year.

 

 

   67  

 

 

Trustees and Officers

 

The Independent Trustees, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below.

The Trustees and officers information is current as of October 31, 2015.

 

Name, Address and Year of Birth
of Independent Trustees		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustees		    Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years
Ronn R. Bagge (1958)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Chairman of the Nominating and Governance Committee and Trustee    Chairman of the Nominating and Governance Committee and Trustee since 2007    Founder and Principal, YQA Capital Management LLC (1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).    125    None
Todd J. Barre (1957)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Trustee    Since 2010    Assistant Professor of Business, Trinity Christian College (2010-Present); formerly Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.    125    None
Marc M. Kole (1960)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Chairman of the Audit Committee and Trustee    Chairman of the Audit Committee since 2008; Trustee since 2007    Senior Director of Finance, By The Hand Club for Kids (2015-Present); formerly: Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Senior Vice President of Finance, United Healthcare (2004-2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).    125    None
Yung Bong Lim (1964)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Chairman of the Investment Oversight Committee and Trustee    Chairman of the Investment Oversight Committee since 2014; Trustee since 2013    Managing Partner, Residential Dynamics Group LLC (2008-Present); formerly, Managing Director, Citadel Investment Group, L.L.C. (1999-2007).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   68  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of Birth
of Independent Trustees		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustees		    Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years
Philip M. Nussbaum (1961)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Trustee    Since 2007    Chairman, Performance Trust Capital Partners (2004-Present).    125    None
Gary R. Wicker (1961)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Trustee    Since 2013    Senior Vice President of Global Finance and Chief Financial Officer at RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (A division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005-2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider).    125    None
Donald H. Wilson (1959)
c/o Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Chairman of the Board and Trustee    Chairman since 2012; Trustee since 2007    Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank—Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   69  

 

 

Trustees and Officers (continued)

 

The Trustee who is an “interested person” (the “Non-Independent Trustee”) and the 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 the Non-Independent Trustee and the other directorships, if any, held by the Non-Independent Trustee are shown below.

 

Name, Address and Year of Birth
of Non-Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Non-Independent
Trustee		    Other
Directorships
Held by
Non-Independent
Trustee During
the Past 5 Years
Kevin M. Carome (1956)
Invesco Ltd.
Two Peachtree Pointe,
1555 Peachtree St., N.E.,
Suite 1800
Atlanta, GA 30309		    Trustee    Since 2010    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2006-Present); Director, Invesco Advisers, Inc. (2009-Present); Director, Invesco Finance PLC, INVESCO Funds Group, Inc., and Invesco Holding Company Limited; Director and Executive Vice President, Invesco Finance, Inc., Invesco Group Services, Inc., Invesco Investments (Bermuda) Ltd., Invesco North American Holdings, Inc., and IVZ, Inc. and Invesco Asset Management (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary, IVZ Bahamas Private Limited; formerly, Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2005); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    125    None

 

* This is the date the Non-Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   70  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years
Andrew Schlossberg (1974)
Invesco Management Group, Inc.
11 Greenway Plaza, Suite 1000
Houston, TX 77046		    President    Since 2009    President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—U.S. Strategy and Marketing (2010-Present) and Principal Executive Officer (2015-Present), Invesco PowerShares Capital Management LLC; Managing Director, Head of U.S. Retail Distribution (2012-Present) and Global ETFs (2010-Present) for Invesco Ltd.; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present); formerly, Mr. Schlossberg served in multiple roles within Invesco, including head of corporate development, as well as global leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions (2002-2007), Managing Director, U.S. head of business strategy and chief marketing officer for Invesco Ltd. in the United States (2008-2012) and Director, Invesco Distributors, Inc. (2012-2015).
Peter Hubbard (1981)
Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Vice President and Director of Portfolio Management—Invesco PowerShares Capital Management LLC (2008-Present); formerly, Portfolio Manager, Invesco PowerShares Capital Management LLC (2007-2008); Research Analyst, Invesco PowerShares Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

David Warren (1957)
Invesco Canada Ltd.
5140 Yonge Street, Suite 800

Toronto, Ontario M2N 6X7

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—Chief Administrative Officer, Americas, Invesco PowerShares Capital Management LLC; Senior Vice President, Invesco Advisers, Inc. (2009–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Inc. (2009–Present); Senior Vice President, Invesco Management Group, Inc. (2007–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) and Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Canada Holdings Inc. (2002–Present), Invesco Corporate Class Inc., and Invesco Canada Fund Inc.; Director, Invesco Financial Services Ltd. and Trimark Investments Ltd. (2014-Present); formerly, Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2006).
Sheri Morris (1964)
Invesco Management Group, Inc.
11 Greenway Plaza, Suite 1000
Houston, TX 77046		    Vice President    Since 2012    Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   71  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years
Rudolf E. Reitmann (1971)
Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Vice President    Since 2013    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global Exchange Traded Funds Operations, Invesco PowerShares Capital Management LLC (2013-Present).
Daniel E. Draper (1968)
Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Vice President    Since 2013    Senior Vice President, Invesco Distributors, Inc. (2014-Present); Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director, Invesco PowerShares Capital Management LLC (2013-Present); formerly, Managing Director, Credit Suisse Asset Management (2010–2013) and Lyxor Asset Management/Societe Generale (2007–2010).
Steven M. Hill (1964)
Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Vice President and Treasurer    Since 2013    Vice President and Treasurer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global ETF Administration, Invesco PowerShares Capital Management LLC (2011-Present); Principal Financial and Accounting Officer—Investment Pools, Invesco PowerShares Capital Management LLC (2015-Present); formerly, Senior Managing Director and Chief Financial Officer, Destra Capital Management LLC and its subsidiaries (2010-2011); Chief Financial Officer, Destra Investment Trust and Destra Investment Trust II (2010-2011); Senior Managing Director, Claymore Securities, Inc. (2003-2010); and Chief Financial Officer, Claymore sponsored mutual funds (2003-2010).
Christopher Joe (1969)
Invesco PowerShares
Capital Management LLC
11 Greenway Plaza, Suite 1000
Houston, TX 77046		    Chief Compliance Officer    Since 2012    Chief Compliance Officer of Invesco PowerShares Capital Management LLC (2015-Present); Chief Compliance Officer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Chief Compliance Officer, Invesco Investment Advisers, LLC (registered investment adviser) (2010–2013), U.S. Compliance Director, Invesco, Ltd. (2006-2014) and Deputy Chief Compliance Officer of Invesco Advisers, Inc. (2014-2015).
Anna Paglia (1974)
Invesco PowerShares
Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		    Secretary    Since 2011    Secretary, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2011-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco PowerShares Capital Management LLC; formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   72  

 

 

 

(This Page Intentionally Left Blank)

 

 

(This Page Intentionally Left Blank)

Proxy Voting Policies and Procedures

A description of the Trust’s 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) 983-0903. This information is also available on the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov.

Information regarding how each Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is available, without charge and upon request, by (i) calling (800) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Form N-Qs will be available on the Commission’s website at www.sec.gov. The Trust’s Form N-Qs may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of each Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net assets value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invescopowershares.com.

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©2015 Invesco PowerShares Capital Management LLC    P-KBW-AR-1
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   
invescopowershares.com    800.983.0903   LOGO   @PowerShares   

LOGO

 

     October 31, 2015

2015 Annual Report to Shareholders

 

BKLN    PowerShares Senior Loan Portfolio

 

LOGO

 

Table of Contents

 

The Market Environment      3   
Manager’s Analysis      4   
Schedule of Investments      7   
Statement of Assets and Liabilities      12   
Statement of Operations      13   
Statement of Changes in Net Assets      14   
Statement of Cash Flows      15   
Financial Highlights      16   
Notes to Financial Statements      17   
Report of Independent Registered Public Accounting Firm      24   
Fees and Expenses      25   
Tax Information      26   
Trustees and Officers      27   

 

 

   2  

 

 

The Market Environment

 

 

 

Bank Loans

The senior secured loan market was generally steady in terms of price volatility with the vast majority of loans trading at or near par. At the same time, credit specific weakness in a number of names caused the average price of loans to drop towards the end of the year to end October at an average of $94.04.1 At the current price, senior secured loans are providing a 6.14% yield.1 At the same time, while loans continued to show correlation with equities and other high-risk assets (such as high-yield corporate bonds), loans experienced meaningfully lower levels of volatility. Some of the lack of loan volatility was a function of a generally benign credit environment and a low default rate. Additionally, loan prices were supported by strong technicals as loan demand remained robust throughout the year. This demand principally came from institutional investors, namely through collateralized loan obligations (CLOs).

Loans had started 2015 with positive results in each of the first five months of the year accruing 3.26% in total return. However, the recent string of five consecutive monthly declines (totaling to (1.94)%), is the longest streak of negative monthly performance since the second half of 2008. The 1.94% five month loss ranks as the third steepest five month loss on record—a credit to the asset class’ relatively low volatility.1

While direct exposure to China and commodities is muted for the loan asset class, the recent softness in loans was in part the result of contagion- concerns regarding global growth induced volatility in “risk” based assets, declining oil/commodity prices further pressured high yield bond prices, and redemptions in high yield bonds and loan retail funds pushed prices lower. In “risk-off” environments, loans typically perform in sympathy with broader capital markets but the senior position in the capital structure and secured status can help lower volatility as the structural features serve as a form of protection.

Corporate issuers in the senior secured loan market have benefited from robust capital markets since 2009, and issuers have generally maintained good credit performance, strengthened their balance sheets, improved liquidity and addressed near-term maturities. The trailing 12 month default rate by principal amounted to 1.32% through October 31, 2015.1 The trailing 12 month default rate is well below the long term average of 3.19% and the calendar year 2015 outlook for defaults remains benign as there are few near term catalysts.2

The economic backdrop in the US remains supportive of fundamentals as US GDP grew at a seasonally adjusted annual rate of 1.5% in the third quarter of 2015.

Despite loans’ negative performance during the last several months, the asset class continued to be an effective diversifier, providing relatively lower volatility than other “risk” based assets (such as equities and high-yield corporate bonds) and posting

relatively strong performance on a 2015 calendar year-to-date basis.3

Global Fixed Income

Global divergence with respect to growth, inflation and economic policy dominated global bond markets during the fiscal year ended October 31, 2015. Moderate growth in the US and UK led to the beginnings of tighter monetary policy, starting with the end of the US Federal Reserve’s quantitative easing program, in addition to speculation on whether both regions’ central banks would lift short-term interest rates for the first time since before the onset of the 2007-2011 financial crisis. In the rest of the world, particularly in the eurozone and Asia, slowing growth and deflationary trends kept economic policies accommodative in an effort to foster growth. Tepid global growth, together with deflationary concerns, weighed on long-term interest rates and supported government bond prices. Even in the US and UK, a bias toward central bank tightening had the effect of only flattening yield curves, with short-term government yields rising, while long-dated yields declined, weighed down by slower growth and strong investor demand for high quality yields that both countries offered.

Within global credit markets, the investment-grade corporate credit, high yield and emerging market (EM) debt sectors were weighed down by slower global growth, increased risk aversion stemming from broader financial market volatility, and credit markets’ fundamental relationship to oil—the price of which declined significantly during the reporting period. Credit spreads across these sectors widened relative to their respective government counterparts over the reporting period, while valuations weakened. Falling oil prices brought into question the credit quality and even the long-term solvency of many high yield issuers, while bonds of oil-producing emerging market countries also experienced market stress. As the reporting period drew to a close, global equity market volatility stemming from concerns over China’s economic slowdown sent credit market spreads and yields to their highest levels since 2012, creating investing opportunities in some segments of the credit markets.

 

1  Standard & Poor’s, Loan Market Commentary and Data (LCD) as of October 31, 2015
2  Standard & Poor’s LSTA Index Loans in Payment Default or Bankruptcy, periods cover October 31, 1998 through July 31, 2015.
3  Credit Suisse as of October 31, 2015. The senior secured loan asset class is represented by S&P/LSTA Leveraged Loan Index.
 

 

 

   3  

 

 

 

BKLN    Manager’s Analysis
   PowerShares Senior Loan Portfolio (BKLN)

 

As an index fund, the PowerShares Senior Loan Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P/LSTA U.S. Leveraged Loan 100 Index (the “Index”). The Fund generally will invest at least 80% of its net assets (plus any borrowings for investment purposes) in senior loans that comprise the Index. The Fund’s adviser, Invesco PowerShares Capital Management LLC (the “Adviser”) and the Fund’s sub-adviser, Invesco Senior Secured Management, Inc., define senior loans to include leveraged loans, bank loans and/or floating rate loans. Banks and other lending institutions generally issue senior loans to corporations, partnerships or other entities (“borrowers”). These borrowers operate in a variety of industries and geographic regions, including foreign countries.

Standard & Poor’s, the Index provider, compiles, maintains and calculates the Index, which tracks the market-weighted performance of the largest institutional leveraged loans based on market weightings, spreads and interest payments. A leveraged loan is rated below investment grade quality or is unrated but deemed to be of comparable quality. The Fund will invest in loans that are expected to be below investment grade quality and to bear interest at a floating rate that periodically resets. The Index may include, and the Fund may acquire and retain, loans of borrowers that have filed for bankruptcy protection. The Fund does not purchase all of the securities in the Index; instead, the Fund utilizes a “sampling” methodology to seek to achieve its investment objective.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (1.89)%. On a net asset value (“NAV”) basis, the Fund returned (1.92)%. During the same time period, the Index returned (1.57)%. The Fund’s performance differed from the return of the Index primarily due to fees and operating expenses incurred by the Fund offset by positive impacts due to slight variations in position weights and the Fund maintaining a cash position for liquidity purposes.

During this same time period, the Barclays U.S. Aggregate Index (the “Benchmark Index”) returned 1.96%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 9,620 securities. The Adviser provided this comparative benchmark to help investors better understand how the investment results of the Fund compare to the performance of a benchmark representative of the U.S. investment-grade, fixed-rate bond market. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can again be attributed to the Fund’s concentration in the bank loan sector in general, coupled with the Benchmark Index’s investment grade focus versus the Fund’s below investment grade focus.

For the fiscal year ended October 31, 2015, the IT services industry contributed most significantly to the Fund’s return, followed by the media and trading companies and distributors industries, respectively. The REITs industry was the only detracting industry.

Positions that contributed most significantly to the Fund’s return included Scientific Games International, an entertainment company (portfolio average weight of 1.54%), and Hilton Worldwide Finance LLC, a lodging company (portfolio average weight of 2.14%). Positions that detracted most significantly from the Fund’s return included Texas Competitive Electric Holdings Co. LLC, an electric company (portfolio average weight of 1.67%), and Fieldwood Energy LLC, an oil & gas company (portfolio average weight of 0.74%).

 

Credit Quality Rating Breakdown*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Baa2      1.4   
Baa3      1.6   
Ba1      18.7   
Ba2      10.9   
Ba3      18.0   
B1      17.5   
B2      14.0   
B3      1.8   
Caa1      3.3   
Ca      0.3   
Not Rated      3.6   
Money Market Fund Plus Other Assets Less Liabilities      8.9   

 

* Source: Moody’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from Aaa (highest) to C (lowest); ratings are subject to change without notice. “Non-Rated” indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Moody’s rating methodology, please visit moodys.com and select “Rating Methodologies” under Research and Ratings on the homepage.
 

 

 

   4  

 

 

 

BKLN    Manager’s Analysis
   PowerShares Senior Loan Portfolio (BKLN) (continued)

 

Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
New Red Finance, Inc., Term Loan B2, 3.750%, 12/12/21      1.8   
Energy Future Intermediate Holding Co. LLC, DIP Term Loan, 4.250%, 06/19/16      1.8   
PetSmart, Inc., Term Loan B1, 4.250%, 03/11/22      1.8   
Hilton Worldwide Finance LLC, Term Loan, 3.500%, 10/26/20      1.7   
Avago Technologies Cayman Ltd., Term Loan, 3.750%, 05/06/21      1.6   
Fortescue Metals Group Ltd., Term Loan, 3.750%, 06/30/19      1.6   
Albertson’s LLC, Term Loan B4, 5.500%, 08/25/21      1.6   
Valeant Pharmaceuticals International, Inc., Term Loan B, Series F-1, 4.000%, 04/01/22      1.5   
RPI Finance Trust, Term Loan B4, 3.500%, 11/09/20      1.4   
DaVita HealthCare Partners Inc., Term Loan B, 3.500%, 06/24/21      1.4   
Total      16.2   

 

* Excluding money market fund holdings.
 

 

 

   5  

 

 

PowerShares Senior Loan Portfolio (BKLN) (continued)

 

Growth of a $10,000 Investment Since Inception†

 

LOGO

Fund Performance History as of October 31, 2015

 

            1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index                 Average
Annualized		     Cumulative  
S&P/LSTA U.S. Leveraged Loan 100 Index         (1.57 )%      2.20 %      6.75 %        2.95 %      14.51 % 
Barclays U.S. Aggregate Index         1.96        1.65        5.02          3.68        18.33   
Fund                                          
NAV Return         (1.92 )      1.78        5.43          2.62        12.83   
Market Price Return         (1.89 )      1.61        4.90          2.44        11.91   

 

Fund Inception: March 3, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s total gross expense ratio of 0.66% (0.65% after fee waiver) includes the unitary management fee of 0.65% and acquired fund fees and expenses of 0.01%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   6  

 

 

Schedule of Investments

PowerShares Senior Loan Portfolio (BKLN)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Variable Rate Senior Loan Interests—83.2%(a)(b)        
   Advertising—2.2%        
$ 39,931,722       Acosta, Inc., Term Loan B1      4.250 %      09/26/21       $ 39,073,190   
  39,136,138       Getty Images, Inc., Term Loan      4.750        10/18/19         26,504,950   
  41,457,998       Karman Buyer Corp., Term Loan      4.250        07/25/21         40,639,824   
          

 

 

  
             106,217,964  
          

 

 

  
   Aerospace/Defense—1.7%        
  41,555,699       BE Aerospace Inc., Term Loan      4.000        12/16/21         41,845,758   
  40,455,430       TransDigm, Inc., Term Loan C      3.750        02/28/20         39,988,979   
          

 

 

  
             81,834,737  
          

 

 

  
   Airlines—0.8%        
  38,759,632       American Airlines, Inc., Term Loan      3.250        06/27/20         38,481,144   
          

 

 

  
   Auto Manufacturers—1.9%        
   FCA US LLC        
  65,949,735      

Term Loan

      3.500        05/24/17         65,975,456   
  26,479,713      

Term Loan

      3.250        12/31/18         26,430,063   
          

 

 

  
             92,405,519  
          

 

 

  
   Auto Parts & Equipment—1.7%        
  45,006,096       Allison Transmission, Inc., Term Loan B3      3.500        08/23/19         45,118,611   
  39,986,542       Federal-Mogul Corp., Term Loan C      4.750        04/15/21         36,594,883   
          

 

 

  
             81,713,494  
          

 

 

  
   Chemicals—0.8%        
  38,666,953       Axalta Coating Systems Dutch Holding B.V., Term Loan B      3.750        02/01/20         38,666,953   
          

 

 

  
   Coal—0.7%        
  39,991,518       Arch Coal, Inc., Term Loan      6.250        05/16/18         20,983,149   
  19,950,000       Murray Energy Corp., Term Loan B2      7.500        04/16/20         12,986,253   
          

 

 

  
             33,969,402  
          

 

 

  
   Commercial Services—3.9%        
  37,754,736       Interactive Data Corp., Term Loan      4.750        05/02/21         37,805,893   
  38,295,652       Laureate Education, Inc., Extended Term Loan      5.000        06/15/18         33,061,785   
  46,076,573       ServiceMaster Co. (The), Term Loan      4.250        07/01/21         46,155,825   
  33,983,404       Trans Union LLC, Term Loan B2      3.500        04/09/21         33,586,987   
  45,365,572       Weight Watchers International, Inc., Term Loan B2      4.000        04/02/20         35,364,505   
          

 

 

  
             185,974,995  
          

 

 

  
   Computers—1.1%        
  15,085,980       Kronos, Inc., Term Loan      4.500        10/30/19         15,078,437   
  37,334,473       SunGard Data Systems, Inc., Term Loan E      4.000        03/08/20         37,357,807   
          

 

 

  
             52,436,244  
          

 

 

  
   Distribution/Wholesale—0.8%        
  37,000,000       Univar, Inc., Term Loan      4.250        07/01/22         36,567,285   
          

 

 

  
   Electric—4.8%        
  84,859,416       Energy Future Intermediate Holding Co. LLC, DIP Term Loan      4.250        06/19/16         84,952,337   
  41,948,785       NRG Energy, Inc., Term Loan      2.750        07/01/18         40,891,256   
   Texas Competitive Electric Holdings Co. LLC(c)        
  189,924,092      

Extended Term Loan

      4.677        10/10/17         64,811,596   
  119,406,693      

Term Loan

      4.677        10/10/14         38,632,842   
          

 

 

  
             229,288,031  
          

 

 

  
   Entertainment—4.2%        
  60,345,004       Alpha Topco Ltd., Term Loan B3 (United Kingdom)      4.750        07/30/21         59,343,277   
  41,896,399       Amaya (US) Co-Borrower LLC, Term Loan B (Netherlands)      5.000        08/01/21         41,066,013   
   Scientific Games International, Inc.        
  37,224,209      

Term Loan

      6.000        10/18/20         36,450,690   
  33,262,733      

Term Loan B2

      6.000        10/01/21         32,562,885   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   7  

 

 

PowerShares Senior Loan Portfolio (BKLN) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Variable Rate Senior Loan Interests (continued)        
   Entertainment (continued)        
$   35,002,819       William Morris Endeavor Entertainment LLC, Term Loan      5.250 %      05/06/21       $ 35,013,844   
          

 

 

  
             204,436,709  
          

 

 

  
   Environmental Control—0.5%        
  26,278,317       ADS Waste Holdings, Inc., Term Loan B2      3.750        10/09/19         26,007,388   
          

 

 

  
   Food—2.4%        
  78,502,818       Albertson’s LLC, Term Loan B4      5.500        08/25/21         78,605,264   
  37,704,757       US Foods, Inc., Term Loan      4.500        03/31/19         37,760,749   
          

 

 

  
             116,366,013   
          

 

 

  
   Food Service—0.8%        
   Aramark Corp.        
  20,660      

Synthetic LOC 3

      3.688        07/26/16         20,544   
  38,841,202      

Term Loan F

      3.250        02/24/21         38,825,082   
          

 

 

  
             38,845,626   
          

 

 

  
   Healthcare-Products—1.6%        
  38,449,662       Kinetic Concepts, Inc., Term Loan E1      4.500        05/04/18         38,490,995   
  40,003,603       Ortho-Clinical Diagnostics, Inc., Term Loan      4.750        06/30/21         39,503,558   
          

 

 

  
             77,994,553   
          

 

 

  
   Healthcare-Services—3.8%        
  18,681,656       CHS/Community Health Systems, Inc., Term Loan H      4.000        01/27/21         18,654,474   
  65,875,722       DaVita HealthCare Partners Inc., Term Loan B      3.500        06/24/21         66,163,928   
   HCA, Inc.        
  24,958,753      

Term Loan B4

      3.077        05/01/18         24,995,567   
  21,679,984      

Term Loan B5

      2.938        03/31/17         21,705,783   
  38,611,947       Millennium Laboratories LLC, Term Loan B*      5.250        04/16/21         14,189,891   
  36,797,644       MPH Acquisition Holdings LLC, Term Loan      3.750        03/31/21         36,379,991   
          

 

 

  
             182,089,634   
          

 

 

  
   Holding Companies-Diversified—0.9%        
  45,588,440       Travelport LLC, Term Loan (Luxembourg)      5.750        09/02/21         45,303,512   
          

 

 

  
   Household Products/Wares—1.1%        
  48,058,425       Dell International LLC, Term Loan B2      4.000        04/29/20         48,128,350   
  3,000,000       Reynolds Group Holdings, Inc., Term Loan (New Zealand)      4.500        12/01/18         3,009,375   
          

 

 

  
             51,137,725   
          

 

 

  
   Insurance—3.0%        
   Asurion LLC        
  39,270,440      

Term Loan

      8.500        03/03/21         35,539,748   
  31,998,838      

Term Loan B1

      5.000        05/24/19         30,595,529   
  38,379,841      

Term Loan B4

      5.000        08/04/22         36,364,899   
  40,534,165       HUB International Ltd., Term Loan      4.000        10/02/20         39,571,479   
          

 

 

  
             142,071,655   
          

 

 

  
   Investment Companies—1.4%        
  66,456,091       RPI Finance Trust, Term Loan B4      3.500        11/09/20         66,381,328   
          

 

 

  
   Leisure Time—0.6%        
  31,215,834       Sabre, Inc., Term Loan B      4.000        02/19/19         31,254,854   
          

 

 

  
   Lodging—5.8%        
  46,509,617       Caesars Entertainment Resort Properties LLC, Term Loan B      7.000        10/11/20         44,213,204   
   Harrah’s Operating Co., Inc.(c)        
  43,924,203      

Term Loan B6

      1.500        03/01/17         40,483,401   
  35,885,319      

Term Loan B7

      1.500        03/01/17         32,192,182   
  81,440,241       Hilton Worldwide Finance LLC, Term Loan      3.500        10/26/20         81,703,293   
  35,550,054       La Quinta Intermediate Holdings LLC, Term Loan      3.750        04/14/21         35,283,428   
  40,583,433       Las Vegas Sands LLC, Term Loan B      3.250        12/19/20         40,115,506   

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   8  

 

 

PowerShares Senior Loan Portfolio (BKLN) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Variable Rate Senior Loan Interests (continued)        
   Lodging (continued)        
$ 4,289,386       MGM Resorts International, Term Loan B      3.500 %       12/20/19       $ 4,288,057   
          

 

 

  
             278,279,071   
          

 

 

  
   Machinery-Diversified—2.4%        
    40,557,514       Gardner Denver, Inc., Term Loan      4.250        07/30/20         38,140,489   
  37,662,891       Rexnord LLC, Term Loan B      4.000        08/21/20         37,286,262   
  41,513,953       Zebra Technologies Corp., Term Loan      4.750        10/27/21         41,839,215   
          

 

 

  
             117,265,966   
          

 

 

  
   Media—5.0%        
  39,078,252       Cengage Learning Acquisitions, Inc., Term Loan      7.000        03/31/20         38,907,285   
  47,681,027       Cequel Communications LLC, Term Loan      3.500        02/14/19         47,169,409   
  39,679,418       Cumulus Media Holdings Inc., Term Loan      4.250        12/23/20         33,901,301   
  31,500,000       iHeartCommunications, Inc., Term Loan D      6.938        01/30/19         26,462,520   
  49,280,954       Tribune Media Co., Term Loan B      3.750        12/28/20         49,234,877   
  11,652,827       Univision Communications, Inc., Term Loan      4.000        03/01/20         11,597,476   
  35,613,554       Virgin Media Investment Holdings Ltd., Term Loan F (United Kingdom)      3.500        06/30/23         35,467,360   
          

 

 

  
             242,740,228  
          

 

 

  
   Mining—1.7%        
  93,825,115       Fortescue Metals Group Ltd., Term Loan (Australia)      3.750        06/30/19         79,701,152   
          

 

 

  
   Miscellaneous Manufacturing—1.0%        
  51,026,099       Gates Global LLC, Term Loan      4.250        07/05/21         48,042,348   
          

 

 

  
   Oil & Gas—1.5%        
  35,390,031       Drillships Financing Holding Inc., Term Loan B1 (Cyprus)      6.000        03/31/21         20,526,218   
  45,354,814       Fieldwood Energy LLC, Term Loan      8.375        09/30/20         17,008,055   
  58,973,729       Seadrill Operating LP, Term Loan (United Kingdom)      4.000        02/21/21         34,628,784   
          

 

 

  
             72,163,057  
          

 

 

  
   Packaging & Containers—0.7%        
  34,928,010       Novelis Inc., Term Loan      4.000        06/02/22         34,342,966   
          

 

 

  
   Pharmaceuticals—3.9%        
  65,530,769       Grifols Worldwide Operations USA, Inc., Term Loan B (Spain)      3.188        02/27/21         65,521,595   
   Valeant Pharmaceuticals International, Inc.        
  54,102,188      

Term Loan B, Series E-1

      3.750        08/05/20         50,442,716   
  76,612,506      

Term Loan B, Series F-1

      4.000        04/01/22         71,465,295   
          

 

 

  
             187,429,606  
          

 

 

  
   Real Estate—0.8%        
   Realogy Corp.        
  652,724      

Extended Synthetic LOC

      4.443        10/10/16         646,588   
  36,062,924      

Term Loan B

      3.750        03/05/20         36,103,495   
          

 

 

  
             36,750,083  
          

 

 

  
   REITs—1.7%        
  41,695,500       Communications Sales & Leasing, Inc., Term Loan      5.000        10/24/22         39,471,670   
  41,915,993       Crown Castle Operating Co., Term Loan B2      3.000        01/31/21         41,970,484   
          

 

 

  
             81,442,154  
          

 

 

  
   Retail—7.0%        
  64,432,584       Dollar Tree, Inc., Term Loan B1      3.500        07/06/22         64,642,957   
  44,668,442       J.C. Penney Corp., Inc., Term Loan      6.000        05/22/18         44,584,689   
  56,587,692       Neiman Marcus Group, Inc., Term Loan      4.250        10/25/20         55,373,603   
  85,063,226       New Red Finance, Inc., Term Loan B2 (Canada)      3.750        12/10/21         85,337,980   
  84,555,050       PetSmart, Inc., Term Loan B1      4.250        03/11/22         84,679,346   
          

 

 

  
             334,618,575  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   9  

 

 

PowerShares Senior Loan Portfolio (BKLN) (continued)

October 31, 2015

 

Principal
Amount		           Interest
Rate		     Maturity
Date		      Value  
   Variable Rate Senior Loan Interests (continued)        
   Semiconductors—2.7%        
$   79,654,057       Avago Technologies Cayman Ltd., Term Loan (Singapore)      3.750 %       05/06/21       $ 79,748,049   
  49,067,804       Freescale Semiconductor, Inc., Term Loan B4      4.250        02/28/20         49,087,431   
          

 

 

  
             128,835,480  
          

 

 

  
   Software—3.9%        
  38,417,143       Activision Blizzard Inc., Term Loan      3.250        10/12/20         38,566,394   
  55,231,520       BMC Software Finance, Inc., Term Loan      5.000        09/10/20         49,941,445   
  22,750,000       First Data Corp., Term Loan      3.697        03/23/18         22,609,860   
  28,036,292       IMS Health Incorporated, Term Loan B      3.500        03/17/21         28,003,770   
  52,268,473       Infor US, Inc., Term Loan B5      3.750        06/03/20         50,978,225   
          

 

 

  
             190,099,694  
          

 

 

  
   Telecommunications—4.4%        
  17,594,462       Avaya Inc., Term Loan B7      6.250        05/29/20         13,606,413   
  61,711,936       Intelsat Jackson Holdings SA, Term Loan B2 (Luxembourg)      3.750        06/30/19         59,932,164   
   Level 3 Communications, Inc.        
  36,000,000      

Term Loan B

      4.000        01/15/20         36,126,000   
  38,000,000      

Term Loan B2

      3.500        05/31/22         37,976,250   
  26,704,771       Telesat Canada, Term Loan B2 (Canada)      3.500        03/28/19         26,554,557   
  36,498,273       West Corp., Term Loan B10      3.250        06/30/18         36,222,163   
          

 

 

  
             210,417,547  
          

 

 

  
   Total Variable Rate Senior Loan Interests
(Cost $4,361,849,479)		           4,001,572,692  
          

 

 

  
   Corporate Bonds—7.9%        
   Diversified Financial Services—0.9%        
  38,500,000       Denali Borrower LLC(d)      5.625        10/15/20         41,050,625   
          

 

 

  
   Entertainment—0.3%        
  14,500,000       Scientific Games International, Inc.(d)      7.000        01/01/22         14,645,000   
          

 

 

  
   Healthcare-Services—1.9%        
  49,151,000       CHS/Community Health Systems, Inc.      5.125        08/15/18         50,318,336   
  5,000,000       CHS/Community Health Systems, Inc.      5.125        08/01/21         5,187,500   
  8,000,000       HCA, Inc.      3.750        03/15/19         8,160,000   
  1,111,000       HCA, Inc.      6.500        02/15/20         1,245,709   
  27,500,000       HCA, Inc.      4.750        05/01/23         28,256,250   
          

 

 

  
             93,167,795  
          

 

 

  
   Media—2.3%        
  65,174,000       iHeartCommunications, Inc.      9.000        12/15/19         55,397,900   
  5,802,000       Univision Communications, Inc.(d)      6.750        09/15/22         6,150,120   
  48,000,000       Univision Communications, Inc.(d)      5.125        05/15/23         47,760,000   
          

 

 

  
             109,308,020  
          

 

 

  
   Packaging & Containers—0.7%        
  34,500,000       Reynolds Group Holdings, Inc. (New Zealand)      5.750        10/15/20         35,966,250   
          

 

 

  
   Semiconductors—0.1%        
  5,000,000       Freescale Semiconductor, Inc.(d)      5.000        05/15/21         5,187,500   
          

 

 

  
   Software—1.3%        
  60,015,000       First Data Corp.(d)      6.750        11/01/20         63,390,844   
          

 

 

  
   Telecommunications—0.4%        
  21,986,000       Avaya, Inc.(d)      7.000        04/01/19         17,973,555   
          

 

 

  
   Total Corporate Bonds
(Cost $386,622,673)		           380,689,589  
          

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   10  

 

 

PowerShares Senior Loan Portfolio (BKLN) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Money Market Fund—4.8%   
  231,807,251       Invesco Premier Portfolio—Institutional Class, 0.12%(e)
(Cost $231,807,251)		    $ 231,807,251   
     

 

 

  
     
   Total Investments
(Cost $4,980,279,403)—95.9%		      4,614,069,532   
   Other assets less liabilities—4.1%      194,908,959   
     

 

 

  
   Net Assets—100.0%    $ 4,808,978,491  
     

 

 

  

Investment Abbreviations:

DIP—Debtor-in-Possession

LOC—Line of Credit

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with any accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the senior secured floating rate loans will have an expected average life of three to five years.
(b)  Variable rate senior loan interests are, at present, not readily marketable, not registered under the Securities Act of 1933, as amended (the “1933 Act”) and may be subject to contractual and legal restrictions on sale. Senior secured corporate loans and senior secured debt securities in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Interbank Offered Rate (“LIBOR”), on set dates, typically every 30 days, but not greater than one year, and/or have interest rates that float at margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank.
(c)  The borrower has filed for protection in federal bankruptcy court.
(d)  Security purchased or received in a transaction exempt from registration under the 1933 Act. The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $196,157,644, which represented 4.08% of the Fund’s Net Assets.
(e)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
* The borrower filed for protection in federal bankruptcy court on November 10, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   11  

 

 

Statement of Assets and Liabilities

October 31, 2015

 

    PowerShares
Senior Loan
Portfolio (BKLN)		  
Assets:  

Unaffiliated investments, at value

   $ 4,382,262,281   

Affiliated investments, at value

     231,807,251   
 

 

 

  

Total investments, at value

     4,614,069,532   

Cash

     303,722,632   

Receivables:

  

Investments sold

     47,159,151   

Interest

     22,795,298   
 

 

 

  

Total Assets

     4,987,746,613   
 

 

 

  
Liabilities:  

Payables:

  

Investments purchased

     106,961,545   

Shares repurchased

     69,169,478   

Accrued unitary management fees

     2,637,099   
 

 

 

  

Total Liabilities

     178,768,122   
 

 

 

  
Net Assets   $ 4,808,978,491   
 

 

 

  
Net Assets Consist of:  

Shares of beneficial interest

   $ 5,273,502,863   

Undistributed net realized gain (loss)

     (98,314,501 ) 

Net unrealized appreciation (depreciation)

     (366,209,871 ) 
 

 

 

  
Net Assets   $ 4,808,978,491   
 

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     208,600,000   

Net asset value

   $ 23.05   
 

 

 

  

Market price

   $ 23.01   
 

 

 

  

Unaffiliated investments, at cost

   $ 4,748,472,152   
 

 

 

  

Affiliated investments, at cost

   $ 231,807,251   
 

 

 

  

Total investments, at cost

   $ 4,980,279,403   
 

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   12  

 

 

Statement of Operations

For the year ended October 31, 2015

 

    PowerShares
Senior Loan
Portfolio (BKLN)		  
Investment Income:  

Interest income

   $ 247,021,754   

Affiliated dividend income

     70,735   
 

 

 

  

Total Income

     247,092,489   
 

 

 

  
Expenses:  

Unitary management fees

     35,925,929   

Less: Waivers

     (188,377 ) 
 

 

 

  

Net Expenses

     35,737,552   
 

 

 

  

Net Investment Income

     211,354,937   
 

 

 

  
Realized and Unrealized Gain (Loss):  

Net realized gain (loss) from investment securities

     (70,375,887 ) 

Net change in unrealized appreciation (depreciation) on investment securities

     (249,175,964 ) 
 

 

 

  

Net realized and unrealized gain (loss)

     (319,551,851 ) 
 

 

 

  

Net increase (decrease) in net assets resulting from operations

   $ (108,196,914 ) 
 

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   13  

 

 

Statement of Changes in Net Assets

For the years ended October 31, 2015 and 2014

 

         PowerShares Senior Loan
Portfolio (BKLN)    		  
     2015      2014  
Operations:      

Net investment income

    $ 211,354,937       $ 277,184,924   

Net realized gain (loss)

      (70,375,887 )       (21,948,898 ) 

Net change in unrealized appreciation (depreciation)

      (249,175,964 )       (85,364,461 ) 
  

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

      (108,196,914 )       169,871,565   
  

 

 

     

 

 

  
Distributions to Shareholders from:      

Net investment income

      (211,354,937 )       (277,184,924 ) 

Return of capital

      (655,582 )       (1,383,016 ) 
  

 

 

     

 

 

  

Total distributions to shareholders

      (212,010,519 )       (278,567,940 ) 
  

 

 

     

 

 

  
Shareholder Transactions:      

Proceeds from shares sold

      638,379,563         1,484,719,904   

Value of shares repurchased

      (1,783,328,111 )       (1,173,461,191 ) 

Transaction fees

      3,214,983         3,646,259   
  

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

      (1,141,733,565 )       314,904,972   
  

 

 

     

 

 

  

Increase (Decrease) in Net Assets

      (1,461,940,998 )       206,208,597   
  

 

 

     

 

 

  
Net Assets:      

Beginning of year

      6,270,919,489         6,064,710,892   
  

 

 

     

 

 

  

End of year

    $ 4,808,978,491       $ 6,270,919,489   
  

 

 

     

 

 

  

Undistributed net investment income at end of year

    $ —       $ —   
  

 

 

     

 

 

  
Changes in Shares Outstanding:      

Shares sold

      26,800,000         59,800,000   

Shares repurchased

      (74,900,000 )       (47,800,100 ) 

Shares outstanding, beginning of year

      256,700,000         244,700,100   
  

 

 

     

 

 

  

Shares outstanding, end of year

      208,600,000         256,700,000   
  

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   14  

 

 

Statement of Cash Flows

For the year ended October 31, 2015

 

    PowerShares
Senior Loan
Portfolio (BKLN)		  
Cash Provided by (Used In) Operating Activities:  

Net increase (decrease) in net assets resulting from operations

   $ (108,196,914 ) 
 

 

 

  
Adjustments to Reconcile the Change in Net Assets from Operations to Net Cash Provided by (Used In) Operating Activities:  

Purchases of investments

     (2,159,580,926 ) 

Proceeds from disposition of investments sold

     3,189,227,282   

Amortization of premiums and accretion of discounts on investments

     (8,289,488 ) 

Net cash paid for purchases, sales, and maturities of short-term investments

     (3,003,765 ) 

Decrease in receivable for investments sold

     154,416,453   

Decrease in interest receivable

     6,096,841   

Increase in payable for investments purchased

     73,749,604   

Decrease in payable for accrued unitary management fees

     (851,926 ) 

Net realized loss on investments

     70,375,887   

Net change in unrealized depreciation on investments

     249,175,964   
 

 

 

  

Net cash provided by operating activities

     1,463,119,012   
Cash Provided by (Used In) Financing Activities:  

Distributions paid to shareholders

     (212,010,519 ) 

Proceeds from shares of beneficial interest sold

     638,401,755   

Disbursements for shares of beneficial interest repurchased

     (1,738,544,017 ) 

Net proceeds from transaction fees

     3,214,983   
 

 

 

  

Net cash used in financing activities

     (1,308,937,798 ) 
 

 

 

  
Net increase in cash and cash equivalents     154,181,214   
 

 

 

  
Cash and cash equivalents at beginning of year     381,348,669   
 

 

 

  
Cash and cash equivalents at end of year   $ 535,529,883   
 

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   15  

 

 

Financial Highlights

 

PowerShares Senior Loan Portfolio (BKLN)

 

    Year Ended October 31,     For the Period
March 1,  2011(a)
Through
October 31, 2011		  
    2015     2014     2013     2012    
Per Share Operating Performance:          

Net asset value at beginning of period

   $ 24.43     $ 24.78     $ 24.76     $ 24.05     $ 25.00  

Net investment income(b)

     0.92       1.00       1.06        1.21        0.69   

Net realized and unrealized gain (loss) on investments

     (1.39 )     (0.36 )     0.04        0.58        (1.05 ) 

Total from investment operations

     (0.47 )     0.64       1.10        1.79       (0.36 ) 

Distributions to shareholders from:

          

Net investment income

     (0.92 )     (1.00 )     (1.10 )      (1.22 )      (0.59 ) 

Return of capital

     (0.00 )(c)      (0.00 )(c)      (0.02 )      (0.00 )(c)      —   

Total distributions

     (0.92 )     (1.00 )     (1.12 )      (1.22 )      (0.59 ) 

Transaction fees(b)

     0.01       0.01       0.04        0.14        —   

Net asset value at end of period

   $ 23.05     $ 24.43     $ 24.78      $ 24.76     $ 24.05  

Market price at end of period(d)

   $ 23.01     $ 24.37     $ 24.83      $ 24.83     $ 24.02  
Net Asset Value Total Return(e)     (1.96 )%     2.66 %     4.70 %      8.26 %      (1.44 )%(f) 
Market Price Total Return(e)     (1.89 )%     2.21 %     4.61 %      8.67 %      (1.57 )%(f) 
Ratios/Supplemental Data:          

Net assets at end of period (000’s omitted)

   $ 4,808,978     $ 6,270,919     $ 6,064,711      $ 1,195,811      $ 165,937   

Ratio to average net assets of:

          

Expenses, after Waivers

     0.65 %(g)      0.64 %     0.65 %(g)      0.65 %(g)      0.65 %(g)(h) 

Expenses, prior to Waivers

     0.65 %(g)      0.65 %     0.65 %(g)      0.67 %(g)      0.75 %(g)(h) 

Net investment income, after Waivers and Interest Expenses

     3.82 %     4.03 %     4.30 %      5.00 %      4.30 %(h) 

Portfolio turnover rate(i)

     43 %      61 %     47 %      49 %      49 % 

 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  Amount represents less than $0.005.
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (March 3, 2011, the first day of trading on the exchange) to October 31, 2011 was (1.16)%. The market price total return from Fund Inception to October 31, 2011 was (1.84)%.
(g)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(h)  Annualized.
(i)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   16  

 

 

Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust II

October 31, 2015

 

Note 1. Organization

PowerShares Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust on October 10, 2006 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of October 31, 2015, the Trust offered sixty-six portfolios. This report includes the following portfolio:

 

Full Name

   

Short Name

PowerShares Senior Loan Portfolio (BKLN)    “Senior Loan Portfolio”

The portfolio (the “Fund”) represents a separate series of the Trust. The shares of the Fund are referred to herein as “Shares” or “Fund’s Shares.” The Fund’s Shares are listed and traded on NYSE Arca, Inc.

The market price of a Share may differ to some degree from the Fund’s net asset value (“NAV”). Unlike conventional mutual funds, the Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units are issued and redeemed principally in exchange for the deposit or delivery of cash. Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Fund.

The investment objective of the Fund is to seek investment results that generally correspond (before fees and expenses) to the price and yield of the S&P/LSTA U.S. Leveraged Loan 100 Index (the “Underlying 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 (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. The following is a summary of the significant accounting policies followed by the Fund in preparation of the financial statements.

A. Security Valuation

Securities, including restricted securities, are valued according to the following policies:

Variable rate senior loan interests are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

 

 

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Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco PowerShares Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Other Risks

Index Risk. Unlike many investment companies, the Fund does not utilize an investing strategy that seeks returns in excess of its Underlying Index. Therefore, the Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its Underlying Index, even if that security generally is underperforming.

Fixed-Income Securities Risk. Fixed-income securities are subject to interest rate risk and credit risk. Interest rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. Fixed-income securities with longer maturities typically are more sensitive to changes in interest rates, making them more volatile than securities with shorter maturities. Credit risk refers to the possibility that the issuer of a security will be unable and/or unwilling to make timely interest payments and/or repay the principal on its debt. Debt instruments are subject to varying degrees of credit risk, which may be reflected in credit ratings. There is a possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security.

Changing Fixed-Income Market Conditions. The current historically low interest rate environment was created in part by the Federal Reserve Board (“FRB”) and certain foreign central banks keeping the federal funds and equivalent foreign rates at or near zero. There is a risk that interest rates will rise when the FRB and central banks raise these rates. This risk is heightened due to the “tapering” of the FRB’s quantitative easing program and other similar foreign central bank actions, which involve purchasing large quantities of securities issued or guaranteed by the government, its agencies or instrumentalities on the open market. This tapering and eventual increase in the federal funds and equivalent foreign rates may expose fixed-income markets to heightened volatility and reduced liquidity for certain fixed-income investments, particularly those with longer maturities. In addition, decreases in fixed-income dealer market-making capacity may persist in the future, potentially leading to heightened volatility and reduced liquidity in the fixed-income markets. As a result, the value of the Fund’s investments and share price may decline. In addition, because of changing central bank policies, the Fund may experience higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Fund’s transaction costs and potentially lower the Fund’s returns.

 

 

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Non-Diversified Fund Risk. The Fund is non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in Share price than would occur in a diversified fund. This may increase the Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on the Fund’s performance.

Non-Correlation Risk. The Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, the Fund incurs operating expenses not applicable to its Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. Because the Fund issues and redeems Creation Units principally for cash, it will incur higher costs in buying and selling securities than if it issued and redeemed Creation Units principally in-kind. In addition, the performance of the Fund and its Underlying Index may vary due to asset valuation differences and differences between the Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.

Sampling Risk. The Fund’s use of a representative sampling approach will result in the Fund holding a smaller number of securities than are in its Underlying Index. As a result, an adverse development respecting to an issuer of securities held by the Fund could result in a greater decline in NAV than would be the case if the Fund held all of the securities in its Underlying Index. To the extent the assets in the Fund are smaller, these risks will be greater.

Cash Transaction Risk. Unlike most exchange-traded funds (“ETFs”), the Fund currently effects creations and redemptions principally for cash, rather than primarily in-kind because of the nature of the Fund’s investments. As such, investments in the Fund’s Shares may be less tax efficient than investments in conventional ETFs.

High Yield Securities Risk. High yield securities typically involve greater risk and are less liquid than higher grade issues. Changes in general economic conditions, changes in the financial condition of the issuers and changes in interest rates may adversely impact the ability of issuers of high yield securities to make timely payments of interest and principal.

Risk of Investing in Loans. Investments in loans are subject to interest rate risk and credit risk. Interest rate risk refers to fluctuations in the value of a loan resulting from changes in the general level of interest rates. Credit risk refers to the possibility that the borrower of a loan will be unable and/or unwilling to make timely interest payments and/or repay the principal on its obligation. Default in the payment of interest or principal on a loan will result in a reduction in the value of the loan and consequently a reduction in the value of the Fund’s investments and a potential decrease in the NAV of the Fund. Although the loans in which the Fund will invest generally will be secured by specific collateral, there can be no assurance that such collateral would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal or that such collateral could be readily liquidated. In the event of the bankruptcy of a borrower, the Fund’s access to the collateral may be limited by bankruptcy or other insolvency loans and, therefore, the Fund could experience delays or limitations with respect to its ability to realize the benefits of the collateral securing a loan.

There is no organized exchange on which loans are traded and reliable market quotations may not be readily available. Therefore, elements of judgment may play a greater role in valuation of loans than for securities with a more developed secondary market and the Fund may not realize full value in the event of the need to sell a loan. To the extent that a secondary market does exist for certain loans, the market may be subject to volatility, irregular trading activity, wide bid/asked spreads, decreased liquidity and extended trade settlement periods. Some loans are subject to the risk that a court, pursuant to fraudulent conveyance or other similar laws, could subordinate the loans to presently existing or future indebtedness of the borrower or take other action detrimental to lenders, including the Fund, such as invalidation of loans or causing interest previously paid to be refunded to the borrower. Investments in loans also are subject to the risk of changes in legislation or state or federal regulations. If such legislation or regulations impose additional requirements or restrictions on the ability of financial institutions to make loans, the availability of loans for investment by the Fund may be adversely affected. Many loans are not registered with the Securities and Exchange Commission (the “SEC”) or any state securities commission and often are not rated by any nationally recognized rating service. Generally, there is less readily available, reliable information about most loans than is the case for many other types of securities. Although a loan may be senior to equity and other debt securities in a borrower’s capital structure, such obligations may be structurally subordinated to obligations of the borrower’s subsidiaries.

C. Cash and Cash Equivalents

For the purposes of the Statement of Cash Flows, the Fund defines Cash and Cash Equivalents as cash (including foreign currency), money market funds and other investments held in lieu of cash and excludes investments made with cash collateral received.

D. Securities Purchased on a When-Issued and Delayed Delivery Basis

The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value of the interests or securities at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, it may sell such securities prior to the settlement date.

 

 

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E. Federal Income Taxes

The Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for losses deferred due to wash sales and passive foreign investment company adjustments, if any.

The Fund files U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F. Investment Transactions and Investment Income

Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. Interest income is recorded on the accrual basis. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by the Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

Other income is comprised primarily of amendment fees which are recorded when received. Amendment fees are received in return for changes in the terms of a loan or note.

Corporate actions (including cash dividends) are recorded net of non-reclaimable foreign tax withholdings on the ex-date.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the Adviser.

G. Country Determination

For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

H. Expenses

The Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Fund, including the payments to Invesco Senior Secured Management, Inc. (the “Sub-Adviser”), set-up fees and commitment fees associated with the line of credit and the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest (including interest expenses associated with the line of credit), litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Expenses of the Trust that are excluded from the Fund’s unitary management fee and are directly identifiable to the Fund are applied to the Fund. Expenses of the Trust that are excluded from the Fund’s unitary management fee and that are not readily identifiable to the 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 the Fund.

 

 

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To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

I. Dividends and Distributions to Shareholders

The Fund declares and pays dividends from net investment income, if any, to its shareholders monthly and records such dividends on ex-dividend date. Generally, the Fund distributes net realized taxable capital gains, if any, annually in cash and records them on ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund’s financial statements as a tax return of capital at fiscal year-end.

Note 3. Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of the Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Fund’s investments, managing the Fund’s business affairs and providing certain clerical, bookkeeping and other administrative services, and oversight of the Sub-Adviser.

As compensation for its services, the Fund has agreed to pay the Adviser an annual unitary management fee of 0.65% of the Fund’s average daily net assets. Out of the unitary management fee, the Adviser has agreed to pay substantially all expenses of the Fund, including payments to the Sub-Adviser, set-up fees and commitment fees associated with the Fund’s line of credit and the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest (including interest expenses associated with the line of credit), litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

The Adviser has entered into a sub-advisory agreement with the Sub-Adviser. The sub-advisory fee is paid by the Adviser to the Sub-Adviser at the annual rate of 40% of compensation paid to the Adviser from the Fund.

Further, through August 31, 2017, the Adviser has contractually agreed to waive a portion of the Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

For the fiscal year ended October 31, 2015, the Adviser waived fees of $188,377.

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for the Fund. The Distributor does not maintain a secondary market in the Shares. The Fund is not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into a licensing agreement for the Fund with Standard & Poor’s (the “Licensor”). The Underlying Index name trademark is owned by the Licensor. This trademark has been licensed to the Adviser for use by the Fund. The Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. The Fund is not sponsored, endorsed, sold or promoted by the Licensor, and the Licensor makes no representation regarding the advisability of investing in the Fund.

The Trust has entered into service agreements whereby The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for the Fund.

Note 4. Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

 

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.

 

  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

 

 

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The following is a summary of the tiered valuation input levels, as of October 31, 2015. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

     Investments in Securities  
     Level 1      Level 2      Level 3      Total  

Variable Rate Senior Loan Interests

    $ —       $ 4,001,572,692       $ —       $ 4,001,572,692   
Corporate Bonds      —         380,689,589         —         380,689,589   
Money Market Fund      231,807,251         —         —         231,807,251   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Investments

    $ 231,807,251       $ 4,382,262,281       $ —       $ 4,614,069,532   
  

 

 

     

 

 

     

 

 

     

 

 

  

Note 5. Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2015 and 2014:

 

     2015      2014  
Ordinary Income      211,354,937         277,184,924   
Return of Capital      655,582         1,383,016   

Tax Components of Net Assets at Fiscal Year-End:

 

Undistributed Ordinary Income    $ —   
Net Unrealized Appreciation (Depreciation) Investments      (366,209,871 ) 
Capital Loss Carryforward      (98,314,501 ) 
Shares of Beneficial Interest      5,273,502,863   
  

 

 

  
Total Net Assets    $ 4,808,978,491   
  

 

 

  

Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The following table presents available capital loss carryforwards for the Fund as of October 31, 2015.

 

     Post-effective/no expiration         
     Short-Term      Long-Term      Total*  
   $ 45,738,994       $ 52,575,507       $ 98,314,501   

 

* Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

Note 6. Investment Transactions

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) was $2,159,580,926 and $3,189,227,282 respectively.

At October 31, 2015, the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes were as follows:

 

Aggregate unrealized appreciation of investment securities    $ 11,198,687   
Aggregate unrealized (depreciation) of investment securities      (377,408,558 ) 
  

 

 

  
Net unrealized appreciation (depreciation) of investment securities    $ (366,209,871 ) 
  

 

 

  
Cost of investments for tax and financial reporting purposes is the same.   

Note 7. Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Fund to pay remuneration to each Trustee who is not an “interested person” as defined in the 1940 Act (an “Independent Trustee”) and an Officer of the Trust. The Adviser, as a result of the unitary management fee, pays for such compensation. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

 

 

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The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, an Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of his compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select PowerShares Funds. The Deferral Fees payable to the Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Fund.

Note 8. Senior Loan Participation Commitments

The Fund may invest in participations, assignments, or act as a party to the primary lending syndicate of a Senior Loan interest to corporations, partnerships, and other entities. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the borrower, selling participant or other persons interpositioned between the Fund and the borrower.

During the fiscal year ended October 31, 2015, there were no interests in Senior Loans purchased by the Fund on a participation basis.

Note 9. Borrowing

The Fund is a party to a committed line of credit facility with a syndicate administered by State Street Bank and Trust Company. Effective June 2, 1015, the Fund may borrow up to the lesser of (1) $600,000,000 or (2) the limits set by its prospectus for borrowings. The Adviser, on behalf of the Fund, pays a commitment fee of 0.15% and an upfront fee of 0.05% on the amount of the commitment that has not been utilized. Prior to June 2, 2015, the Fund could borrow up to the lesser of (1) $650,000,000 or (2) the limits set by its prospectus for borrowings, and the Adviser paid a commitment fee of 0.125% and an upfront fee of 0.05% on the committed amount. In case of borrowings from the line of credit, the Fund pays the associated interest expenses.

During the fiscal year ended October 31, 2015, there were no outstanding borrowings from the line of credit.

Note 10. Capital

Shares are created and redeemed by the Fund only in Creation Units of 100,000 Shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Fund. Unlike most ETFs, the Fund currently effects creations and redemptions principally in exchange for the deposit or delivery of cash, rather than principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”) because of the nature of the Fund’s investments.

To the extent that the Fund permits transactions in exchange for Deposit Securities, the Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

The Fund charges certain transaction fees for creations and redemptions, which are treated as increases in capital, which are shown in the Statement of Changes in Net Assets as Transaction fees.

Transactions in the Fund’s Shares are disclosed in detail in the Statement of Changes in Net Assets.

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. Each Independent Trustee is also indemnified against certain liabilities arising out of the performance of his duties to the Trust pursuant to an Indemnification Agreement between the Independent Trustee and 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.

 

 

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Report of Independent Registered Public Accounting Firm

 

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

 

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets, and of cash flows and the financial highlights present fairly, in all material respects, the financial position of PowerShares Senior Loan Portfolio (a portfolio of PowerShares Exchange-Traded Fund Trust II, hereafter referred to as the “Fund”) at October 31, 2015, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Chicago, IL

December 23, 2015

 

 

   24  

 

 

Fees and Expenses

 

As a shareholder of the PowerShares Senior Loan Portfolio (the “Fund”), a series of the PowerShares Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest (including interest expenses associated with the line of credit), litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other 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, 2015.

In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. The amount of fees and expenses incurred indirectly by the Fund will vary because the investment companies have varied expenses and fee levels and the Fund may own different proportions of the investment companies at different times. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.

Actual Expenses

The first line in the following table 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 table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s 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 Fund 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 table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as sales charges and brokerage commissions. 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, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares Senior Loan Portfolio (BKLN)        

Actual

   $ 1,000.00      $ 970.94        0.65 %    $ 3.23   

Hypothetical (5% return before expenses)

     1,000.00        1,021.93        0.65        3.31   

 

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expense ratios based on the annualized data in the Financial Highlights.

 

 

   25  

 

 

Tax Information

 

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different the maximum amount allowable for the fiscal year ended October 31, 2015:

 

Qualified Dividend Income*        0 %
Corporate Dividends Received Deduction*        0 %
Qualified Interest Income*        100 %

 

* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

 

   26  

 

 

Trustees and Officers

 

The Independent Trustees, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below.

The Trustees and officers information is current as of October 31, 2015.

 

Name, Address and Year of Birth
of Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		    Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years

Ronn R. Bagge - 1958

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Nominating and Governance Committee and Trustee    Chairman of the Nominating and Governance Committee and Trustee since 2007    Founder and Principal, YQA Capital Management LLC (1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).    125    None

Todd J. Barre - 1957

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since 2010    Assistant Professor of Business, Trinity Christian College (2010-Present); formerly Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.    125    None

Marc M. Kole - 1960

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Audit Committee and Trustee    Chairman of the Audit Committee since 2008; Trustee since 2007    Senior Director of Finance, By The Hand Club for Kids (2015-Present); Formerly: Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Senior Vice President of Finance, United Healthcare (2004-2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).    125    None

Yung Bong Lim - 1964

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Investment Oversight Committee and Trustee    Chairman of the Investment Oversight Committee since 2014; Trustee since 2013    Managing Partner, Residential Dynamics Group LLC (2008-Present); formerly, Managing Director, Citadel Investment Group, L.L.C. (1999-2007).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   27  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of Birth
of Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Independent
Trustee		    Other
Directorships
Held by
Independent
Trustee During
the Past 5 Years

Philip M. Nussbaum - 1961

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since 2007    Chairman, Performance Trust Capital Partners (2004-Present).    125    None

Gary R. Wicker - 1961

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since 2013    Senior Vice President of Global Finance and Chief Financial Officer at RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (A division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005-2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider).    125    None

Donald H. Wilson - 1959

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Chairman of the Board and Trustee    Chairman since 2012; Trustee since 2007    Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank – Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   28  

 

 

Trustees and Officers (continued)

 

The Trustee who is an “interested person” (the “Non-Independent Trustee”) and the 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 the Non-Independent Trustee and the other directorships, if any, held by the Non-Independent Trustee are shown below.

 

Name, Address and Year of Birth
of Non-Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		    Principal
Occupation(s) During
Past 5 Years		    Number of
Portfolios
in Fund
Complex**
Overseen by
Non-Independent
Trustee		    Other
Directorships
Held by
Non-Independent
Trustee During
the Past 5 Years

Kevin M. Carome - 1956

Invesco Ltd.

Two Peachtree Pointe,

1555 Peachtree St., N.E.,

Suite 1800

Atlanta, GA 30309

    Trustee    Since 2010    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2006-Present); Director, Invesco Advisers, Inc. (2009-Present); Director, Invesco Finance PLC, INVESCO Funds Group, Inc., and Invesco Holding Company Limited; Director and Executive Vice President, Invesco Finance, Inc., Invesco Group Services, Inc., Invesco Investments (Bermuda) Ltd., Invesco North American Holdings, Inc., and IVZ, Inc. and Invesco Asset Management (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary, IVZ Bahamas Private Limited; formerly, Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2005); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    125    None

 

* This is the date the Non-Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   29  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Andrew Schlossberg - 1974

Invesco Management

Group, Inc.

11 Greenway Plaza,

Suite 1000

Houston, TX 77046

    President    Since 2009    President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director – U.S. Strategy and Marketing (2010-Present) and Principal Executive Officer (2015-Present), Invesco PowerShares Capital Management LLC; Managing Director, Head of U.S. Retail Distribution (2012-Present) and Global ETFs (2010-Present) for Invesco Ltd.; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present); formerly, Mr. Schlossberg served in multiple roles within Invesco, including head of corporate development, as well as global leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions (2002-2007), Managing Director, U.S. head of business strategy and chief marketing officer for Invesco Ltd. in the United States (2008-2012) and Director, Invesco Distributors, Inc. (2012-2015).

Peter Hubbard - 1981

Invesco PowerShares

Capital Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Vice President and Director of Portfolio Management—Invesco PowerShares Capital Management LLC (2008-Present); formerly, Portfolio Manager, Invesco PowerShares Capital Management LLC (2007-2008); Research Analyst, Invesco PowerShares Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

David Warren - 1957

Invesco Canada Ltd.

5140 Yonge Street

Suite 800 Toronto, Ontario M2N 6X7

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director – Chief Administrative Officer, Americas, Invesco PowerShares Capital Management LLC; Senior Vice President, Invesco Advisers, Inc. (2009–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Inc. (2009–Present); Senior Vice President, Invesco Management Group, Inc. (2007–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) and Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Canada Holdings Inc. (2002–Present), Invesco Corporate Class Inc., and Invesco Canada Fund Inc.; Director, Invesco Financial Services Ltd. and Trimark Investments Ltd. (2014-Present); formerly, Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2006).

Sheri Morris - 1964

Invesco Management

Group, Inc.

11 Greenway Plaza,

Suite 1000

Houston, TX 77046

    Vice President    Since 2012    Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

 

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   30  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Rudolf E. Reitmann - 1971

Invesco PowerShares

Capital Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

    Vice President    Since 2013    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global Exchange Traded Funds Operations, Invesco PowerShares Capital Management LLC (2013-Present).

Daniel E. Draper - 1968

Invesco PowerShares

Capital Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

    Vice President    Since 2013    Senior Vice President, Invesco Distributors, Inc. (2014-Present); Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director, Invesco PowerShares Capital Management LLC (2013-Present); formerly, Managing Director, Credit Suisse Asset Management (2010–2013) and Lyxor Asset Management/Societe Generale (2007–2010).

Steven M. Hill -1964

Invesco PowerShares

Capital Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

    Vice President and Treasurer    Since 2013    Vice President and Treasurer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global ETF Administration, Invesco PowerShares Capital Management LLC (2011-Present); Principal Financial and Accounting Officer – Investment Pools, Invesco PowerShares Capital Management LLC (2015-Present); formerly, Senior Managing Director and Chief Financial Officer, Destra Capital Management LLC and its subsidiaries (2010-2011); Chief Financial Officer, Destra Investment Trust and Destra Investment Trust II (2010-2011); Senior Managing Director, Claymore Securities, Inc. (2003-2010); and Chief Financial Officer, Claymore sponsored mutual funds (2003-2010).

Christopher Joe - 1969 Invesco PowerShares

Capital Management LLC

11 Greenway Plaza,

Suite 1000

Houston, TX 77046

    Chief Compliance Officer    Since 2012    Chief Compliance Officer of Invesco PowerShares Capital Management LLC (2015-Present); Chief Compliance Officer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Chief Compliance Officer, Invesco Investment Advisers, LLC (registered investment adviser) (2010–2013), U.S. Compliance Director, Invesco, Ltd. (2006-2014) and Deputy Chief Compliance Officer of Invesco Advisers, Inc. (2014-2015).

Anna Paglia - 1974

Invesco PowerShares

Capital Management LLC

3500 Lacey Road,

Suite 700

Downers Grove, IL 60515

    Secretary    Since 2011    Secretary, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2011-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco PowerShares Capital Management LLC; formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   31  

 

 

 

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(This Page Intentionally Left Blank)

 

 

(This Page Intentionally Left Blank)

Proxy Voting Policies and Procedures

A description of the Trust’s proxy voting policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge and upon request, by calling (800) 983-0903. This information is also available on the Securities and Exchange Commission’s (“Commission”) website at www.sec.gov.

Information regarding how the Fund 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) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Trust files its complete schedule of portfolio holdings for the Fund with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Trust’s 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.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of the Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net asset value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invescopowershares.com.

 

LOGO

©2015 Invesco PowerShares Capital Management LLC    P-BKLN-AR-1
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   
invescopowershares.com    800.983.0903   LOGO   @PowerShares   

LOGO

 

     October 31, 2015

2015 Annual Report to Shareholders

 

XRLV    PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio
SPHB    PowerShares S&P 500® High Beta Portfolio
SPHD   

PowerShares S&P 500® High Dividend Low Volatility Portfolio

(formerly, PowerShares S&P 500® High Dividend Portfolio)

SPLV    PowerShares S&P 500® Low Volatility Portfolio
SPMO    PowerShares S&P 500 Momentum Portfolio
SPVU    PowerShares S&P 500 Value Portfolio
EEHB    PowerShares S&P Emerging Markets High Beta Portfolio
EELV    PowerShares S&P Emerging Markets Low Volatility Portfolio
IDHB    PowerShares S&P International Developed High Beta Portfolio
IDLV    PowerShares S&P International Developed Low Volatility Portfolio
XMLV    PowerShares S&P MidCap Low Volatility Portfolio
XSLV    PowerShares S&P SmallCap Low Volatility Portfolio

 

LOGO

 

Table of Contents

 

The Market Environment      3   
Manager’s Analysis      4   
S&P 500® Portfolios   
Schedules of Investments   

PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV)

      28   

PowerShares S&P 500® High Beta Portfolio (SPHB)

      30   

PowerShares S&P 500® High Dividend Low Volatility Portfolio (SPHD)
(formerly, PowerShares S&P 500® High Dividend Portfolio)

      32   

PowerShares S&P 500® Low Volatility Portfolio (SPLV)

      33   

PowerShares S&P 500 Momentum Portfolio (SPMO)

      35   

PowerShares S&P 500 Value Portfolio (SPVU)

      37   

PowerShares S&P Emerging Markets High Beta Portfolio (EEHB)

      39   

PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV)

      42   

PowerShares S&P International Developed High Beta Portfolio (IDHB)

      45   

PowerShares S&P International Developed Low Volatility Portfolio (IDLV)

      48   

PowerShares S&P MidCap Low Volatility Portfolio (XMLV)

      51   

PowerShares S&P SmallCap Low Volatility Portfolio (XSLV)

      53   
Statements of Assets and Liabilities      56   
Statements of Operations      58   
Statements of Changes in Net Assets      60   
Financial Highlights      64   
Notes to Financial Statements      72   
Report of Independent Registered Public Accounting Firm      82   
Fees and Expenses      83   
Tax Information      85   
Trustees and Officers      86   

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares S&P 500 Momentum Portfolio and PowerShares S&P 500 Value Portfolio

     91   
Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio     
 92
   

 

 

   2  

 

 

The Market Environment

 

 

 

US Equity

The US economy improved slowly, but steadily, during the fiscal year ended October 31, 2015—although the health of individual economic sectors varied dramatically. The headline story was the continued slowdown in energy markets, as oil prices plummeted when too much supply overwhelmed slowing global demand. However, the more subtle story, which drove the economy forward during the fiscal year, was the improved position of the US consumer.

As the reporting period began in late 2014, economic growth appeared to be stronger in the US than in the rest of the world. US equity markets were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US. The continued strengthening of the US consumer led US equity markets higher through the spring. Continued low interest rates, the increasing availability of credit from lenders and an improving employment picture all contributed to higher consumer confidence. This strength also helped the markets overcome fears that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. In the summer of 2015, however, US equity markets moved sharply lower. A significant downturn in China’s financial markets and weak global economic growth led the US Federal Reserve to delay raising interest rates, which, in turn, increased investor uncertainty and market volatility. In October, however, US markets rallied, recovering from their earlier decline and finishing higher for the fiscal year.

Global Equity

International markets experienced increased volatility during the fiscal year ended October 31, 2015, driven largely by the continued slowdown in energy markets and the economic downturn in China. Developed markets were generally able to withstand these headwinds, even as more fragile emerging markets began to falter.

As the reporting period began in late 2014, international equity markets moved higher, although economic growth appeared to be somewhat stronger in the US than in the rest of the world. Equity markets globally were recovering from the initial crash of oil prices when OPEC added additional uncertainty by deciding to maintain high production despite low prices and slowing global growth. In this environment, commodity-based economies and most currencies underperformed those of the US.

Global markets were rattled again amid growing concerns that Greece and the eurozone would fail to reach an agreement on a financial bailout plan. However, those fears subsided when a bailout was ultimately approved. The eurozone also benefited

from generally positive economic data, which helped markets weather subsequent economic volatility.

In the summer of 2015, fears of a potential economic slowdown in China dominated headlines. The combination of a slowing Chinese economy, a sharp sell-off in domestic Chinese equities and the devaluation of China’s currency, the renminbi, contributed to a strong correction in global equity markets. Emerging markets, in particular, were hard hit by events in China and by continued weak commodity prices—as well as by the US Federal Reserve’s decision to delay raising interest rates, which increased investor uncertainty and market volatility.

 

 

 

   3  

 

 

 

XRLV    Manager’s Analysis
   PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV)

 

As an index fund, the PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500® Low Volatility Rate Response Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index. Strictly in accordance with its guidelines and mandated procedures, S&P DJI identifies from the S&P 500® Index (the “Benchmark Index”) the 400 securities with the highest interest rate sensitivity to changes in the 10 year U.S. treasury rate over the past 60 months. From those securities, S&P DJI selects for inclusion in the Index the 100 securities with the lowest volatility over the past 12 months. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. S&P DJI weights the 100 securities within the Index based upon the inverse of each security’s volatility, with the least volatile securities receiving the highest weights in the Index. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the index.

The Fund commenced investment operations on April 6, 2015 and began trading on April 9, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 1.78%. On a net asset value (“NAV”) basis, the Fund returned 1.62%. During the same time period, the Index returned 1.79%. During the fiscal period, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Benchmark Index returned 0.55%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market. The performance of the Fund differed from the Benchmark Index in part because the Fund attempts to track an Index that is a subset of the Benchmark Index, consisting of the 100 securities within the Benchmark Index that historically have had the highest sensitivity to interest rate movements and the lowest volatility.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the information technology sector during the fiscal period ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to a smaller allocation to the energy sector than the Benchmark Index, as well as stock selection within and allocation to the financials sector.

For the fiscal period ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the financials and information technology sectors, respectively. The materials sector detracted most significantly from the Fund’s return, followed by the health care sector.

Positions that contributed most significantly to the Fund’s return included Assurant, Inc., a financials company (portfolio average weight of 0.98%), and Progressive Corp. (The), a financials company (portfolio average weight of 1.16%). Positions that detracted most significantly from the Fund’s return included McKesson Corp., a health care company (portfolio average weight of 0.70%), and Monsanto Co., a materials company (portfolio average weight of 0.87%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Financials

      32.3   

Industrials

      20.6   

Consumer Staples

      15.8   

Health Care

      14.4   

Consumer Discretionary

      5.8   

Information Technology

      5.4   

Materials

      3.6   

Telecommunication Services

      1.1   

Energy

      0.9   

Other Assets Less Liabilities

      0.1   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Security

   

PepsiCo, Inc.

      1.3   

Plum Creek Timber Co., Inc. REIT

      1.2   

ACE Ltd.

      1.2   

Paychex, Inc.

      1.2   

Procter & Gamble Co. (The)

      1.2   

Republic Services, Inc.

      1.2   

Progressive Corp. (The)

      1.2   

Marsh & McLennan Cos., Inc.

      1.2   

Waste Management, Inc.

      1.2   

Travelers Cos., Inc. (The)

      1.1   

Total

      12.0   
 

 

 

   4  

 

 

PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
S&P 500® Low Volatility Rate Response Index     1.79 % 
S&P 500® Index     0.55   
Fund  
NAV Return     1.62   
Market Price Return     1.78   

 

Fund Inception: April 9, 2015

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   5  

 

 

 

SPHB    Manager’s Analysis
   PowerShares S&P 500® High Beta Portfolio (SPHB)

 

As an index fund, the PowerShares S&P 500® High Beta Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500® High Beta Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index. Strictly in accordance with its existing guidelines and mandated procedures, S&P DJI selects 100 securities from the S&P 500® Index (the “Benchmark Index”) for inclusion in the Index that have the highest sensitivity to market movements, or “beta,” over the past 12 months as determined by the Index Provider. Beta is a measure of relative risk and is the rate of change of a security’s price. S&P DJI weights the 100 securities within the Index based upon each security’s beta, with the highest beta securities receiving the highest weights in the Index. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (6.47)%. On a net asset value (“NAV”) basis, the Fund returned (6.56)%. During the same time period, the Index returned (6.30)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Benchmark Index returned 5.20%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market.

Relative to the Benchmark Index, the Fund was most overweight in the industrials sector and most underweight in the consumer staples sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to stock selection within and allocation to the industrials sector and a higher allocation to the energy sector than the Benchmark Index, as well as stock selection within the energy sector.

For the fiscal year ended October 31, 2015, the consumer discretionary sector contributed most significantly to the Fund’s return, followed by the information technology sector. The energy sector detracted most significantly from the Fund’s return, followed by the industrials and financials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Expedia, Inc., Class A, a consumer discretionary company (portfolio average weight of 1.08%), and Southwest Airlines Co., an industrials company (portfolio average weight of 0.73%). Positions that detracted most significantly from the Fund’s return included Chesapeake Energy Corp., an energy company (portfolio average weight of 0.6%), and Micron Technology, Inc., an information technology company (portfolio average weight of 1.18%).

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Energy

      22.4   

Information Technology

      19.0   

Industrials

      16.6   

Consumer Discretionary

      13.5   

Financials

      12.6   

Health Care

      8.1   

Materials

      7.8   

Money Market Fund Plus Other Assets Less Liabilities

      (0.0)   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Security

   

Freeport-McMoRan, Inc.

      1.5   

Newfield Exploration Co.

      1.5   

First Solar, Inc.

      1.5   

United Rentals, Inc.

      1.5   

TripAdvisor, Inc., Class A

      1.4   

Harman International Industries, Inc.

      1.4   

LyondellBasell Industries NV, Class A

      1.3   

Cameron International Corp.

      1.3   

Micron Technology, Inc.

      1.3   

SanDisk Corp.

      1.3   

Total

      14.0   

 

* Excluding money market fund holdings.
 

 

 

   6  

 

 

PowerShares S&P 500® High Beta Portfolio (SPHB) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P 500® High Beta Index     (6.30 )%      16.98 %      60.09 %        7.32 %      37.29 % 
S&P 500® Index     5.20        16.20        56.89          12.77        71.44   
Fund            
NAV Return     (6.56 )      16.64        58.69          7.01        35.56   
Market Price Return     (6.47 )      16.71        58.98          7.05        35.79   

 

Fund Inception: May 5, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   7  

 

 

 

SPHD    Manager’s Analysis
   PowerShares S&P 500® High Dividend Low Volatility Portfolio (SPHD)

 

Effective after the close of markets on September 24, 2015, the Fund’s name changed from PowerShares S&P 500® High Dividend Portfolio to PowerShares S&P 500® High Dividend Low Volatility Portfolio. There was no change to its investment objective and investment policies.

As an index fund, the PowerShares S&P 500® High Dividend Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500® Low Volatility High Dividend Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index, which is composed of 50 securities in the S&P 500® Index (the “Benchmark Index”) that historically have provided high dividend yields with lower volatility. Strictly in accordance with its guidelines and mandated procedures, S&P DJI identifies from the Benchmark Index the 75 securities with the highest dividend yields over the past 12 months, with no one sector within the Benchmark Index allowed to contribute more than 10 securities. From those securities, S&P DJI selects for inclusion in the Index the 50 securities with the lowest volatility over the past 12 months. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. The Index Provider weights each of the constituent securities in the Index by its dividend yield, with the highest dividend yielding securities receiving the highest weights. The Fund generally invests in all of the securities comprising its Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 7.20%. On a net asset value (“NAV”) basis, the Fund returned 7.07%. During the same time period, the Index returned 7.42%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during that period.

During this same time period, the Benchmark Index returned 5.20%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market.

The performance of the Fund differed from the Benchmark Index in part because the Fund attempts to track an Index that is a subset of the Benchmark Index, consisting of the 50 securities within the Benchmark Index that historically have provided high dividend yields with lower volatility.

Relative to the Benchmark Index, the Fund was most overweight in the utilities sector and most underweight in the information

technology sector during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to stock selection within and allocation to the consumer staples sector, as well as stock selection within the industrials sector.

For the fiscal year ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the consumer discretionary and utilities sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the telecommunication services and materials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Kraft Heinz Co., a consumer staples company (no longer held at fiscal year-end), and Reynolds American, Inc., a consumer staples company (portfolio average weight of 2.38%). Positions that detracted most significantly from the Fund’s return included CenturyLink, Inc., a telecommunication services company (portfolio average weight of 2.79%), and Ensco PLC, Class A, an energy company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Utilities

      24.3   

Financials

      19.5   

Consumer Staples

      16.4   

Industrials

      9.8   

Telecommunication Services

      7.6   

Health Care

      6.9   

Consumer Discretionary

      5.0   

Energy

      4.1   

Information Technology

      3.3   

Materials

      3.0   

Other Assets Less Liabilities

      0.1   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

TECO Energy, Inc.

      3.0   

CenturyLink, Inc.

      2.9   

HCP, Inc. REIT

      2.8   

AGL Resources, Inc.

      2.7   

PPL Corp.

      2.7   

Baxter International, Inc.

      2.6   

Southern Co. (The)

      2.5   

Realty Income Corp. REIT

      2.5   

Philip Morris International, Inc.

      2.5   

CenterPoint Energy, Inc.

      2.4   

Total

      26.6   
 

 

 

   8  

 

 

PowerShares S&P 500® High Dividend Low Volatility Portfolio (SPHD) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		    

3 Years
Cumulative

         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P 500® Low Volatility High Dividend Index     7.42 %      14.46 %      49.96 %        13.39 %      46.44 % 
S&P 500® Index     5.20        16.20        56.89          14.81        52.06   
Fund            
NAV Return     7.07        14.09        48.49          13.02        45.01   
Market Price Return     7.20        14.13        48.65          13.06        45.17   

 

Fund Inception: October 18, 2012

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.30% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   9  

 

 

 

SPLV    Manager’s Analysis
   PowerShares S&P 500® Low Volatility Portfolio (SPLV)

 

As an index fund, the PowerShares S&P 500® Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500® Low Volatility Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index. Strictly in accordance with its existing guidelines and mandated procedures, S&P DJI selects 100 securities from the S&P 500® Index (the “Benchmark Index”) for inclusion in the Index that have the lowest realized volatility over the past 12 months as determined by the Index Provider. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. S&P DJI weights the 100 securities within the Index based upon the inverse of each security’s volatility, with the least volatile securities receiving the highest weights in the Index. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 7.39%. On a net asset value (“NAV”) basis, the Fund returned 7.28%. During the same time period, the Index returned 7.56%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Benchmark Index returned 5.20%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market.

The performance of the Fund differed from the Benchmark Index in part because the Fund attempts to track an Index that is a subset of the Benchmark Index, consisting of the 100 securities within the Benchmark Index that have the lowest realized volatility over the past 12 months.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the information technology sector during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to a smaller allocation to the energy sector and stock selection within the financials sector.

For the fiscal year ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the consumer staples and industrials sectors, respectively. The materials sector detracted most significantly from the Fund’s return, followed by the energy and telecommunication services sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Chubb Corp., a financials company (no longer held at fiscal year-end), and Progressive Corp. (The), a financials company (portfolio average weight of 1.04%). Positions that detracted most significantly from the Fund’s return included Monsanto Co., a materials company (no longer held at fiscal year-end), and Wal-Mart Stores, Inc., a consumer staples company (portfolio average weight of 1.03%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Financials

      34.9   

Consumer Staples

      21.7   

Industrials

      14.8   

Health Care

      10.6   

Consumer Discretionary

      5.2   

Utilities

      4.5   

Information Technology

      4.3   

Telecommunication Services

      2.2   

Materials

      1.8   

Other Assets Less Liabilities

      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

PepsiCo, Inc.

      1.2   

Plum Creek Timber Co., Inc. REIT

      1.2   

ACE Ltd.

      1.2   

Paychex, Inc.

      1.2   

Procter & Gamble Co. (The)

      1.2   

Republic Services, Inc.

      1.2   

Progressive Corp. (The)

      1.1   

Marsh & McLennan Cos., Inc.

      1.1   

Waste Management, Inc.

      1.1   

Travelers Cos., Inc. (The)

      1.1   

Total

      11.6   
 

 

 

   10  

 

 

PowerShares S&P 500® Low Volatility Portfolio (SPLV) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P 500® Low Volatility Index     7.56 %      14.17 %      48.84 %        13.61 %      77.25 % 
S&P 500® Index     5.20        16.20        56.89          12.77        71.44   
Fund            
NAV Return     7.28        13.88        47.69          13.30        75.17   
Market Price Return     7.39        13.93        47.86          13.34        75.45   

 

Fund Inception: May 5, 2011

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   11  

 

 

 

SPMO    Manager’s Analysis
   PowerShares S&P 500 Momentum Portfolio (SPMO)

 

As an index fund, the PowerShares S&P 500 Momentum Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500 Momentum Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (the “Index Provider”) compiles, maintains and calculates the Index. Strictly in accordance with its existing guidelines and mandated procedures, the Index Provider selects approximately 100 stocks from the S&P 500® Index (the “Benchmark Index”) that have the highest “momentum score.” In general, momentum is the tendency of an investment to exhibit persistence in its relative performance; a “momentum style” of investing emphasizes investing in securities that have had better recent performance compared to other securities. The momentum score for each security included in the Index is based on upward price movements of the security as compared to other eligible securities within the Benchmark Index.

The Index Provider calculates the momentum score of each stock in the Benchmark Index by evaluating the percentage change in the stock’s price over the last 12 months, excluding the most recent month and then selects the 100 stocks with the highest momentum score for inclusion in the Index using a modified market capitalization-weighted strategy. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

The Fund commenced investment operations on October 6, 2015 and began trading on October 9, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 3.77%. On a net asset value (“NAV”) basis, the Fund returned 3.62%. During the same time period, the Index returned 3.65%. During the fiscal period, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred.

During this same time period, the Benchmark Index returned 3.26%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market. The performance of the Fund differed from the Benchmark Index primarily due to the Fund’s thematic objective and proprietary weighting methodology.

Relative to the Benchmark Index, the Fund was most overweight in the consumer discretionary sector and most underweight in the energy sector during the fiscal period ended October 31, 2015.

The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the stock selection in the health care and consumer discretionary sectors.

For the fiscal period ended October 31, 2015, the health care sector contributed most significantly to the Fund’s return, followed by the consumer discretionary and industrials sectors, respectively. The consumer staples sector detracted most significantly from the Fund’s return, followed by the financials sector.

Positions that contributed most significantly to the Fund’s return included Amazon.com, Inc., a consumer discretionary company (portfolio average weight of 4.29%), and Starbucks Corp., a consumer discretionary company (portfolio average weight of 2.41%). Positions that detracted most significantly from the Fund’s return included Mallinckrodt PLC, a health care company (portfolio average weight of 0.41%), and Amgen, Inc., a health care company (portfolio average weight of 2.58%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  

Consumer Discretionary

      33.2   

Health Care

      27.3   

Consumer Staples

      17.4   

Information Technology

      11.0   

Industrials

      4.9   

Financials

      4.7   

Materials

      1.2   

Energy

      0.3   

Other Assets Less Liabilities

      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   

Amazon.com, Inc.

      6.0   

Walt Disney Co. (The)

      4.8   

Pfizer, Inc.

      4.7   

Home Depot, Inc. (The)

      4.3   

CVS Health Corp.

      3.9   

Visa, Inc., Class A

      3.6   

Altria Group, Inc.

      3.2   

UnitedHealth Group, Inc.

      3.0   

Allergan PLC

      2.9   

Starbucks Corp.

      2.8   

Total

      39.2   
 

 

 

   12  

 

 

PowerShares S&P 500 Momentum Portfolio (SPMO) (continued)

 

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
S&P 500 Momentum Index     3.65 % 
S&P 500® Index     3.26   
Fund  
NAV Return     3.62   
Market Price Return     3.77   

 

Fund Inception: October 9, 2015

Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. See invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   13  

 

 

 

SPVU    Manager’s Analysis
   PowerShares S&P 500 Value Portfolio (SPVU)

 

As an index fund, the PowerShares S&P 500 Value Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500 Enhanced Value Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

Strictly in accordance with its existing guidelines and mandated procedures, S&P Dow Jones Indices LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is designed to track the performance of approximately 100 stocks in the S&P 500® Index (the “Benchmark Index”) that have the highest “value score.”

In selecting constituent securities for the Index, the Index Provider calculates the value score of each stock in the Benchmark Index by evaluating each stock’s: (i) book value-to-price ratio, (ii) earnings-to-price ratio, and (iii) sales-to-price ratio. The Index Provider selects the 100 stocks with the highest value score for inclusion in the Index. The Index uses a modified market capitalization-weighted strategy, as the Index Provider weights securities by multiplying their market capitalization and their value score. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

The Fund commenced investment operations on October 6, 2015 and began trading on October 9, 2015. During the period from inception to October 31, 2015, on a market price basis, the Fund returned 1.45%. On a net asset value (“NAV”) basis, the Fund returned 1.38%. During the same time period, the Index returned 1.36%. During the fiscal period, the Fund fully replicated the components of the Index.

During this same time period, the Benchmark Index returned 3.26%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 500 securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. stock market. The performance of the Fund differed from the Benchmark Index primarily due to the Fund’s thematic objective and proprietary weighting methodology.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the telecommunication services sector during the fiscal period ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the stock selection in the information technology, health care and consumer discretionary sectors.

For the fiscal period ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the energy and consumer discretionary sectors, respectively. The utilities sector detracted most significantly from the Fund’s return, followed by the consumer staples and consumer discretionary sectors, respectively.

Positions that contributed most significantly to the Fund’s return included American International Group, Inc., a financials company (portfolio average weight of 3.18%), and Valero Energy Corp., an energy company (portfolio average weight of 1.69%). Positions that detracted most significantly from the Fund’s return included Chevron Corp., an energy company (portfolio average weight of 5.01%), and Wal-Mart Stores, Inc., a consumer staples company (portfolio average weight of 4.27%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      40.9   
Energy      19.5   
Consumer Discretionary      8.8   
Consumer Staples      7.6   
Utilities      6.5   
Information Technology      5.8   
Health Care      4.8   
Industrials      3.6   
Materials      1.9   
Telecommunication Services      0.6   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Exxon Mobil Corp.      5.2   
JPMorgan Chase & Co.      5.1   
Chevron Corp.      4.8   
Bank of America Corp.      4.8   
Citigroup, Inc.      4.6   
American International Group, Inc.      3.6   
Wal-Mart Stores, Inc.      3.3   
MetLife, Inc.      2.6   
Phillips 66      2.5   
Goldman Sachs Group, Inc. (The)      2.3   
Total      38.8   
 

 

 

   14  

 

 

PowerShares S&P 500 Value Portfolio (SPVU) (continued)

 

Fund Performance History as of October 31, 2015

 

    Fund Inception†  
Index   Cumulative  
S&P 500 Enhanced Value Index     1.36 % 
S&P 500® Index     3.26   
Fund  
NAV Return     1.38   
Market Price Return     1.45   

 

Fund Inception: October 9, 2015

Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market Price, respectively. See invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   15  

 

 

 

EEHB    Manager’s Analysis
   PowerShares S&P Emerging Markets High Beta Portfolio (EEHB)

 

As an index fund, the PowerShares S&P Emerging Markets High Beta Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P BMI Emerging Markets High Beta IndexTM (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is designed to measure the performance of 200 stocks that are the most sensitive to market returns in the S&P Emerging BMI Plus LargeMidCap Index. Strictly in accordance with its existing guidelines and mandated procedures, the Index Provider determines which stocks are the most sensitive to changes in market returns over the past 12 months of companies in the S&P Emerging BMI Plus LargeMidCap Index for inclusion in the Index. Historically, the S&P Emerging BMI Plus LargeMidCap Index has included all publicly listed equity securities with float- adjusted market values of at least $100 million and annual dollar value traded of at least $50 million from the following countries: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Qatar, the Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, and the United Arab Emirates. Sensitivity is measured by the “beta” of the stock. Beta is a measure of relative risk and is the rate of change of a security’s price. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (24.18)%. On a net asset value (“NAV”) basis, the Fund returned (24.15)%. During the same time period, the Index returned (22.31)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to the trading costs associated with quarterly rebalances, differences in execution rates on foreign currencies and the fees and expenses that the Fund incurred during the period.

During this same time period, the MSCI Emerging Markets IndexSM (Net) (the “Benchmark Index”) returned (14.53)%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 834 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the emerging market equities market.

Relative to the Benchmark Index, the Fund was most overweight in the materials sector and most underweight in the information technology sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to a

significant underweight position in the information technology sector compared to the Benchmark Index, combined with the performance of the stocks that the Fund held in the information technology sector.

For the fiscal year ended October 31, 2015, there were no contributing sectors. The financials sector detracted most significantly from the Fund’s return, followed by the materials and energy sectors, respectively.

Positions that contributed most significantly to the Fund’s return included BYD Co. Ltd., Class H, an industrials company (portfolio average weight of 0.4%), and Sistema JSFC GDR, a telecommunication services company (portfolio average weight of 1.3%). Positions that detracted most significantly from the Fund’s return included Oi SA Pfd., a telecommunication services company (portfolio average weight of 0.61%), and Piraeus Bank S.A., a financials company (portfolio average weight of 0.4%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      28.9   
Industrials      16.0   
Energy      11.7   
Materials      9.9   
Information Technology      7.8   
Consumer Discretionary      6.5   
Telecommunication Services      6.3   
Utilities      5.8   
Consumer Staples      3.8   
Health Care      3.4   
Other Assets Less Liabilities      (0.1)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Sistema JSFC GDR      1.0   
Sinopec Shanghai Petrochemical Co. Ltd., H-Shares      0.9   
Sberbank of Russia ADR      0.9   
China Galaxy Securities Co. Ltd., H-Shares      0.9   
Shanghai Electric Group Co. Ltd., H-Shares      0.9   
Alibaba Pictures Group Ltd.      0.8   
Kingsoft Corp. Ltd.      0.8   
Tatneft PAO ADR      0.8   
BYD Co. Ltd., H-Shares      0.8   
Petroleo Brasileiro SA (Preference Shares)      0.7   
Total      8.5   
 

 

 

   16  

 

 

PowerShares S&P Emerging Markets High Beta Portfolio (EEHB) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P BMI Emerging Markets High Beta Index™ (Net)††     (22.31 )%      (6.61 )%      (18.55 )%        (8.64 )%      (28.30 )% 
MSCI Emerging Markets IndexSM (Net)††     (14.53 )      (2.87 )      (8.36 )        (3.59 )      (12.60 ) 
Fund            
NAV Return     (24.15 )      (7.71 )      (21.40 )        (9.65 )      (31.21 ) 
Market Price Return     (24.18 )      (7.99 )      (22.10 )        (10.03 )      (32.25 ) 

 

Fund Inception: February 24, 2012

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.45% (0.29% after fee waiver) is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   17  

 

 

 

EELV    Manager’s Analysis
   PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV)

 

As an index fund, the PowerShares S&P Emerging Markets Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P BMI Emerging Markets Low Volatility IndexTM (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is designed to measure the performance of 200 of the least volatile stocks of the S&P Emerging BMI Plus LargeMidCap Index. Strictly in accordance with its existing guidelines and mandated procedures, the Index Provider determines which securities are the least volatile over the past 12 months of companies in the S&P Emerging BMI Plus LargeMidCap Index for inclusion in the Index. Historically, the S&P Emerging BMI Plus LargeMidCap Index has included all publicly listed equity securities with float-adjusted market values of at least $100 million and annual dollar value traded of at least $50 million from the following countries: Brazil, Chile, China, Colombia, Cyprus, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Macau, Malaysia, Mexico, Morocco, Peru, Qatar, the Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, and the United Arab Emirates; however, this universe may change in accordance with the Index Provider’s determination of eligible countries and there is no assurance that a particular country will be represented in the Index at any given time. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (16.48)%. On a net asset value (“NAV”) basis, the Fund returned (16.21)%. During the same time period, the Index returned (15.23)%. For the fiscal year, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred as well as trading costs around the quarterly rebalances. Additionally, the Fund’s performance differed from that of the Index due to the timing of the removal from the portfolio of a security whose trading was halted.

During this same time period, the MSCI Emerging Markets IndexSM (Net) (the “Benchmark Index”) returned (14.53)%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 834 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the emerging equity market.

The performance of the Fund trailed that of the Benchmark Index in part because the Fund follows an Index that employs a volatility-driven weighting and stock selection methodology, whereas the Benchmark Index selects and weights stocks based on market capitalization.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the information technology sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to its allocation to the information technology sector.

For the fiscal year ended October 31, 2015, there were no contributing sectors. The financials sector detracted most significantly from the Fund’s return, followed by the industrials and telecommunication services sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Makalot Industrial Co., Ltd., a consumer discretionary company (no longer held at fiscal year-end), and El Puerto de Liverpool SAB de CV, a consumer discretionary company (portfolio average weight of 0.41%). Positions that detracted most significantly from the Fund’s return included Cia Brasileira de Distribuicao Pfd Class A, a consumer staples company (portfolio average weight of 0.36%), and AMMB Holdings Bhd., a financials company (portfolio average weight of 0.69%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      36.5   
Consumer Staples      14.0   
Telecommunication Services      9.2   
Industrials      8.3   
Consumer Discretionary      7.9   
Materials      7.5   
Utilities      5.6   
Information Technology      5.0   
Energy      3.3   
Health Care      2.8   
Other Assets Less Liabilities      (0.1)   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Chunghwa Telecom Co. Ltd.      1.2   
Public Bank Bhd      1.0   
Taiwan Cooperative Financial Holding Co. Ltd.      0.9   
Hong Leong Bank Bhd      0.9   
Banco de Chile      0.8   
First Financial Holding Co. Ltd.      0.8   
Manila Electric Co.      0.7   
Hua Nan Financial Holdings Co. Ltd.      0.7   
Empresas COPEC SA      0.7   
IJM Corp. Bhd      0.7   
Total      8.4   
 

 

 

   18  

 

 

PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P BMI Emerging Markets Low Volatility Index™ (Net)††     (15.23 )%      (3.50 )%      (10.13 )%        0.44 %      1.69 % 
MSCI Emerging Markets IndexSM (Net)††     (14.53 )      (2.87 )      (8.36 )        (0.52 )      (1.96 ) 
Fund            
NAV Return     (16.21 )      (4.07 )      (11.71 )        (0.48 )      (1.82 ) 
Market Price Return     (16.48 )      (4.18 )      (12.03 )        (0.90 )      (3.37 ) 

 

Fund Inception: January 13, 2012

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.45% (0.29% after fee waiver) is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   19  

 

 

 

IDHB    Manager’s Analysis
   PowerShares S&P International Developed High Beta Portfolio (IDHB)

 

As an index fund, the PowerShares S&P International Developed High Beta Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P BMI International Developed High Beta IndexTM (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“Index Provider”) compiles, maintains and calculates the Index, which is designed to measure the performance of 200 stocks in the S&P Developed ex US and South Korea LargeMidCap Index that are the most sensitive to changes in market returns. Strictly in accordance with its existing guidelines and mandated procedures, the Index Provider determines which stocks of companies from the S&P Developed ex US and South Korea LargeMidCap Index are the most sensitive to changes in market returns over the past 12 months for inclusion in the Index. Historically, the S&P Developed ex US and South Korea LargeMidCap Index has included all publicly listed equities with float-adjusted market values of at least $100 million and annual dollar value traded of at least $50 million from the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and United Kingdom; however, this universe may change in accordance with the Index Provider’s determination of eligible countries and there is no assurance that a particular country will be represented in the Index at any given time. Sensitivity is measured by the “beta” of the stock. Beta is a measure of relative risk and is the rate of change of a security’s price. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (6.99)%. On a net asset value (“NAV”) basis, the Fund returned (5.34)%. During the same time period, the Index returned (5.16)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI EAFE® Index (Net) (the “Benchmark Index”) returned (0.07)%. The Benchmark Index is an unmanaged index weighted by market capitalization and based on the average performance of approximately 910 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the international equity market.

Relative to the Benchmark Index, the Fund was most overweight in the energy sector and most underweight in the health care

sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the Fund’s allocation to the energy sector.

For the fiscal year ended October 31, 2015, the consumer discretionary sector contributed most significantly to the Fund’s return, followed by the industrials and information technology sectors, respectively. The energy sector detracted most significantly from the Fund’s return, followed by the materials and financials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Penn West Petroleum Ltd., an energy company (portfolio average weight of 0.5%), and Nippon Paint Holdings Co. Ltd., a materials company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Anglo American PLC, a materials company (portfolio average weight of 0.52%), and DNO ASA, Class A, an energy company (portfolio average weight of 0.67%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      24.8   
Energy      22.3   
Materials      14.1   
Industrials      11.5   
Consumer Discretionary      9.7   
Utilities      4.8   
Consumer Staples      4.7   
Information Technology      3.3   
Telecommunication Services      3.2   
Health Care      1.5   
Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Penn West Petroleum Ltd.      1.9   
Canadian Oil Sands Ltd.      1.0   
Alibaba Health Information Technology Ltd.      0.9   
MEG Energy Corp.      0.8   
Vedanta Resources PLC      0.8   
Det Norske Oljeselskap ASA      0.7   
Tullow Oil PLC      0.7   
DNO ASA      0.6   
Hargreaves Lansdown PLC      0.6   
Nokian Renkaat Oyj      0.6   
Total      8.6   
 

 

 

   20  

 

 

PowerShares S&P International Developed High Beta Portfolio (IDHB) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P BMI International Developed High Beta Index™ (Net)††     (5.16 )%      7.16 %      23.06 %        3.11 %      11.93 % 
MSCI EAFE® Index (Net)††     (0.07 )      8.02        26.03          6.31        25.26   
Fund            
NAV Return     (5.34 )      6.83        21.91          2.72        10.41   
Market Price Return     (6.99 )      6.45        20.63          2.38        9.06   

 

Fund Inception: February 24, 2012

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.36% (0.26% after fee waiver) includes the unitary management fee of 0.35% and other expenses of 0.01%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   21  

 

 

 

IDLV    Manager’s Analysis
   PowerShares S&P International Developed Low Volatility Portfolio (IDLV)

 

As an index fund, the PowerShares S&P International Developed Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P BMI International Developed Low Volatility IndexTM (Net) (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (the “Index Provider”) compiles, maintains and calculates the Index, which is designed to measure the performance of 200 of the least volatile stocks of the S&P Developed ex US and South Korea LargeMidCap Index. Strictly in accordance with its existing guidelines and mandated procedures, the Index Provider determines which securities are the least volatile over the past 12 months of companies in the S&P Developed ex US and South Korea LargeMidCap Index for inclusion in the Index. Historically, the S&P Developed ex US and South Korea LargeMidCap Index has included all publicly listed equity securities with float-adjusted market values of at least $100 million and annual dollar value traded of at least $50 million from the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned (3.78)%. On a net asset value (“NAV”) basis, the Fund returned (2.69)%. During the same time period, the Index returned (2.56)%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the MSCI EAFE® Index (Net) (the “Benchmark Index”) returned (0.07)%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 910 securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the international developed country equity markets.

The performance of the Fund differed from the Benchmark Index in part because the Fund employs a volatility driven weighting and stock selection methodology, whereas the Benchmark Index selects and weights stocks based on market capitalization.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the health care

sector during the fiscal year ended October 31, 2015. The majority of the Fund’s underperformance relative to the Benchmark Index during the period can be attributed to the financials sector. For the fiscal year ended October 31, 2015, the consumer staples sector contributed most significantly to the Fund’s return, followed by the health care and information technology sectors, respectively. The financials sector detracted most significantly from the Fund’s return, followed by the energy and industrials sectors, respectively.

Positions that contributed most significantly to the Fund’s return included Eisai Co., Ltd., a health care company (no longer held at fiscal year-end), and Dollarama Inc., a consumer discretionary company (portfolio average weight of 0.45%). Positions that detracted most significantly from the Fund’s return included Dream Office REIT, a financials company (portfolio average weight of 0.63%), and National Bank of Canada, a financials company (portfolio average weight of 0.54%).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      42.1   
Industrials      15.8   
Consumer Discretionary      11.1   
Consumer Staples      9.6   
Utilities      9.3   
Telecommunication Services      5.4   
Health Care      3.3   
Information Technology      1.5   
Materials      1.3   
Energy      0.5   
Money Market Fund Plus Other Assets Less Liabilities      0.1   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
MAN SE      1.2   
HK Electric Investments & HK Electric Investments Ltd.      0.9   
Singapore Press Holdings Ltd.      0.9   
StarHub Ltd.      0.7   
CLP Holdings Ltd.      0.7   
McDonald’s Holdings Co. Japan Ltd.      0.7   
Wilmar International Ltd.      0.7   
BCE, Inc.      0.6   
Shaw Communications, Inc., Class B      0.6   
Kagome Co. Ltd.      0.6   
Total      7.6   

 

* Excluding money market fund holdings.
 

 

 

   22  

 

 

PowerShares S&P International Developed Low Volatility Portfolio (IDLV) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

     3 Years
Average
Annualized		     3 Years
Cumulative		         Fund Inception†  
Index             Average
Annualized		     Cumulative  
S&P BMI International Developed Low Volatility Index™ (Net)††     (2.56 )%      5.70 %      18.08 %        8.20 %      34.92 % 
MSCI EAFE® Index (Net)††     (0.07 )      8.02        26.03          9.18        39.60   
Fund            
NAV Return     (2.69 )      5.51        17.47          8.04        34.17   
Market Price Return     (3.78 )      5.46        17.28          7.82        33.12   

 

Fund Inception: January 13, 2012

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently, or in the past, returns would have been lower. See current prospectus for more information. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.35% (0.25% after fee waiver) is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.

 

††  Reflects invested dividends net of withholding taxes.
 

 

 

   23  

 

 

 

XMLV    Manager’s Analysis
   PowerShares S&P MidCap Low Volatility Portfolio (XMLV)

 

As an index fund, the PowerShares S&P MidCap Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P MidCap 400® Low Volatility Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index. Strictly in accordance with its existing guidelines and mandated procedures, S&P DJI selects 80 securities from the S&P MidCap 400® Index (the “Benchmark Index”) for inclusion in the Index that have the lowest realized volatility over the past 12 months as determined by the Index Provider. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. S&P DJI weights the 80 securities within the Index based upon the inverse of each security’s volatility, with the least volatile securities receiving the highest weights in the Index. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the Index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 10.30%. On a net asset value (“NAV”) basis, the Fund returned 10.18%. During the same time period, the Index returned 10.46%. During the fiscal year, the Fund fully replicated the components of the Index; therefore, the Fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses incurred during the period.

During this same time period, the Benchmark Index returned 3.42%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 400 mid cap securities. The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. mid cap equity market.

The performance of the Fund differed from the Benchmark Index in part because the Fund attempts to track an Index that employs a different weighting methodology.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the consumer discretionary sector during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to the Fund not having an allocation to the energy sector and having a larger allocation than the Benchmark Index to the financials sector.

For the fiscal year ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the health care and information technology sectors, respectively. There were no detracting sectors.

Positions that contributed most significantly to the Fund’s return included HCC Insurance Holdings, Inc., a financials company (no longer held at fiscal year-end), and Omnicare, Inc., a health care company (no longer held at fiscal year-end). Positions that detracted most significantly from the Fund’s return included Potlatch Corp. REIT, a financials company (portfolio average weight of 1.1%), and Senior Housing Properties Trust REIT, a financials company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      50.8   
Industrials      10.4   
Materials      8.7   
Health Care      8.5   
Utilities      7.2   
Consumer Staples      5.3   
Information Technology      5.3   
Consumer Discretionary      3.8   
Money Market Fund Plus Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings*
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
American Financial Group, Inc.      1.6   
Church & Dwight Co., Inc.      1.6   
Brown & Brown, Inc.      1.5   
RenaissanceRe Holdings Ltd. (Bermuda)      1.5   
Jack Henry & Associates, Inc.      1.5   
Arthur J. Gallagher & Co.      1.5   
Lancaster Colony Corp.      1.5   
Sirona Dental Systems, Inc.      1.5   
Teleflex, Inc.      1.4   
Tanger Factory Outlet Centers, Inc. REIT      1.4   
Total      15.0   

 

* Excluding money market fund holdings.
 

 

 

   24  

 

 

PowerShares S&P MidCap Low Volatility Portfolio (XMLV) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

   

1 Year

         Fund Inception†  
Index         Average
Annualized		     Cumulative  
S&P MidCap 400® Low Volatility Index     10.46 %        14.52 %      44.30 % 
S&P MidCap 400® Index     3.42          11.67        34.80   
Fund        
NAV Return     10.18          14.20        43.24   
Market Price Return     10.30          14.25        43.40   

 

Fund Inception: February 15, 2013

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.25% is expressed as a unitary management fee to cover operating expenses and expenses incurred in connection with managing the portfolio. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   25  

 

 

 

XSLV    Manager’s Analysis
   PowerShares S&P SmallCap Low Volatility Portfolio (XSLV)

 

As an index fund, the PowerShares S&P SmallCap Low Volatility Portfolio (the “Fund”) is passively managed and attempts to track the returns of an underlying index. The Fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P SmallCap 600® Low Volatility Index (the “Index”). The Fund generally will invest at least 90% of its total assets in common stocks that comprise the Index.

S&P Dow Jones Indices LLC (“S&P DJI” or the “Index Provider”) compiles, maintains and calculates the Index. Strictly in accordance with its existing guidelines and mandated procedures, the Index Provider selects for inclusion in the Index the 120 securities from the S&P SmallCap 600® Index (the “Benchmark Index”) that it has determined have the lowest realized volatility over the past 12 months. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations (increases or decreases in a stock’s price) over time. S&P DJI weights the 120 securities within the Index based upon the inverse of each security’s volatility, with the least volatile securities receiving the highest weights in the Index. The Fund generally invests in all of the securities comprising the Index in proportion to their weightings in the index.

For the fiscal year ended October 31, 2015, on a market price basis, the Fund returned 6.70%. On a net asset value (“NAV”) basis, the Fund returned 6.63%. During the same time period, the Index returned 6.93%. During the fiscal year, the Fund fully replicated the component of the index; therefore, the fund’s performance (NAV basis) differed from the return of the Index primarily due to fees and operating expenses that the Fund incurred during the period.

During this same time period, the Benchmark Index returned 2.85%. The Benchmark Index is an unmanaged index weighted by market capitalization based on the average performance of approximately 600 small cap securities.

The Benchmark Index was selected for its recognition in the marketplace, and its performance comparison is a useful measure for investors as a broad representation of the overall U.S. small cap equity market. The performance of the Fund differed from the Benchmark Index in part because the Fund attempts to track an Index that employs a different weighting methodology.

Relative to the Benchmark Index, the Fund was most overweight in the financials sector and most underweight in the consumer discretionary sector during the fiscal year ended October 31, 2015. The majority of the Fund’s outperformance relative to the Benchmark Index during the period can be attributed to a lower allocation to the energy sector compared to the Benchmark, as well as stock selection within and allocation to the financials sector.

For the fiscal year ended October 31, 2015, the financials sector contributed most significantly to the Fund’s return, followed by the

utilities and consumer discretionary sectors, respectively. The energy sector was the only detracting sector.

Positions that contributed most significantly to the Fund’s return included Piedmont Natural Gas Co., Inc., a utilities company (portfolio average weight of 1.00%), and Selective Insurance Group, Inc., a financials company (portfolio average weight of 0.83%). Positions that detracted most significantly from the Fund’s return included Darling Ingredients, Inc., a consumer staples company (no longer held at fiscal year-end), and Actuant Corp., Class A, an industrials company (no longer held at fiscal year-end).

 

Sector Breakdown
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Financials      56.5   
Industrials      16.2   
Utilities      9.5   
Information Technology      7.3   
Consumer Discretionary      4.0   
Materials      2.6   
Health Care      2.3   
Consumer Staples      1.6   
Other Assets Less Liabilities      0.0   
Top Ten Fund Holdings
(% of the Fund’s Net Assets)
as of October 31, 2015		  
Security   
Piedmont Natural Gas Co., Inc.      1.3   
ProAssurance Corp.      1.1   
Laclede Group, Inc. (The)      1.1   
Northwest Bancshares, Inc.      1.1   
Capstead Mortgage Corp. REIT      1.1   
Healthcare Realty Trust, Inc. REIT      1.1   
Getty Realty Corp. REIT      1.1   
Northfield Bancorp, Inc.      1.1   
Navigators Group, Inc. (The)      1.0   
Agree Realty Corp. REIT      1.0   
Total      11.0   
 

 

 

   26  

 

 

PowerShares S&P SmallCap Low Volatility Portfolio (XSLV) (continued)

 

Growth of a $10,000 Investment Since Inception†

LOGO

Fund Performance History as of October 31, 2015

 

    1 Year         Fund Inception†  
Index         Average
Annualized		     Cumulative  
S&P SmallCap 600® Low Volatility Index     6.93 %        14.64 %      44.72 % 
S&P SmallCap 600® Index     2.85          12.68        38.14   
Fund        
NAV Return     6.63          14.27        43.50   
Market Price Return     6.70          14.22        43.32   

 

Fund Inception: February 15, 2013

Performance quoted above represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate, and shares of the Fund (“Fund Shares”), when redeemed or sold, may be worth more or less than their original cost. According to the Fund’s current prospectus, the Fund’s expense ratio of 0.28% includes the unitary management fee of 0.25% and acquired fund fees and expenses of 0.03%. NAV and Market Price returns assume that dividends and capital gain distributions have been reinvested in the Fund at NAV and Market 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 invescopowershares.com to find the most recent month-end performance numbers.

Index and Benchmark Index performance results are based upon a hypothetical investment in their respective constituent securities. Index and Benchmark Index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index and Benchmark Index do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical 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.

 

†  Fund, Index and Benchmark Index returns are based on the inception date of the Fund.
 

 

 

   27  

 

 

Schedule of Investments(a)

PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—99.9%   
   Consumer Discretionary—5.8%   
  11,926       Genuine Parts Co.    $ 1,082,404   
  22,415       Newell Rubbermaid, Inc.      951,068   
  15,608       Omnicom Group, Inc.      1,169,351   
  16,905       Starbucks Corp.      1,057,746   
  12,973       VF Corp.      875,937   
  9,782       Walt Disney Co. (The)      1,112,605   
     

 

 

  
        6,249,111  
     

 

 

  
   Consumer Staples—15.8%   
  9,748       Brown-Forman Corp., Class B      1,035,043   
  29,092       Coca-Cola Co. (The)      1,232,046   
  18,033       Colgate-Palmolive Co.      1,196,490   
  7,588       Constellation Brands, Inc., Class A      1,022,862   
  7,554       Costco Wholesale Corp.      1,194,438   
  11,248       CVS Health Corp.      1,111,077   
  10,892       Estee Lauder Cos., Inc. (The), Class A      876,370   
  16,155       Hormel Foods Corp.      1,091,270   
  9,948       JM Smucker Co. (The)      1,167,796   
  27,881       Kroger Co. (The)      1,053,902   
  14,631       McCormick & Co., Inc.      1,228,711   
  13,246       PepsiCo, Inc.      1,353,609   
  12,019       Philip Morris International, Inc.      1,062,480   
  16,828       Procter & Gamble Co. (The)      1,285,323   
  26,609       Sysco Corp.      1,097,621   
     

 

 

  
        17,009,038  
     

 

 

  
   Energy—0.9%   
  12,281       Exxon Mobil Corp.      1,016,130   
     

 

 

  
   Financials—32.3%   
  11,449       ACE Ltd.      1,299,919   
  18,877       Aflac, Inc.      1,203,409   
  19,196       Allstate Corp. (The)      1,187,848   
  16,426       American International Group, Inc.      1,035,824   
  11,341       Aon PLC      1,058,229   
  12,600       Assurant, Inc.      1,027,278   
  22,633       Bank of New York Mellon Corp. (The)      942,664   
  26,093       BB&T Corp.      969,355   
  8,544       Berkshire Hathaway, Inc., Class B(b)      1,162,155   
  20,742       Cincinnati Financial Corp.      1,249,291   
  10,212       CME Group, Inc., Class A      964,728   
  22,145       Franklin Resources, Inc.      902,630   
  4,833       Goldman Sachs Group, Inc. (The)      906,187   
  20,819       Hartford Financial Services Group, Inc. (The)      963,087   
  30,103       Loews Corp.      1,097,555   
  7,652       M&T Bank Corp.      917,092   
  22,679       Marsh & McLennan Cos., Inc.      1,264,127   
  8,648       Moody’s Corp.      831,592   
  18,683       Nasdaq, Inc.      1,081,559   
  74,028       People’s United Financial, Inc.      1,180,747   
  33,030       Plum Creek Timber Co., Inc. REIT      1,345,642   
  10,771       PNC Financial Services Group, Inc. (The)      972,190   
  38,674       Progressive Corp. (The)      1,281,270   
  25,082       Prologis, Inc. REIT      1,071,754   
  8,974       SL Green Realty Corp. REIT      1,064,496   
  15,086       T. Rowe Price Group, Inc.      1,140,803   
  18,905       Torchmark Corp.      1,096,679   
  11,157       Travelers Cos., Inc. (The)      1,259,514   
  24,317       U.S. Bancorp      1,025,691   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  19,755       Wells Fargo & Co.    $ 1,069,536   
  35,157       Weyerhaeuser Co. REIT      1,031,155   
  32,662       XL Group PLC      1,243,769   
     

 

 

  
        34,847,775  
     

 

 

  
   Health Care—14.4%   
  20,657       Abbott Laboratories      925,434   
  10,749       AmerisourceBergen Corp.      1,037,386   
  26,541       Baxter International, Inc.      992,368   
  6,634       Becton, Dickinson and Co.      945,478   
  5,165       C.R. Bard, Inc.      962,498   
  11,820       Cardinal Health, Inc.      971,604   
  15,305       DaVita HealthCare Partners, Inc.(b)      1,186,291   
  18,164       DENTSPLY International, Inc.      1,105,279   
  7,626       Henry Schein, Inc.(b)      1,156,940   
  11,713       Johnson & Johnson      1,183,364   
  4,478       McKesson Corp.      800,666   
  23,124       Patterson Cos., Inc.      1,096,078   
  19,534       PerkinElmer, Inc.      1,008,736   
  34,121       Pfizer, Inc.      1,153,972   
  10,524       Stryker Corp.      1,006,305   
     

 

 

  
        15,532,399  
     

 

 

  
   Industrials—20.6%   
  7,234       3M Co.      1,137,257   
  12,648       Danaher Corp.      1,180,185   
  11,045       Deere & Co.      861,510   
  10,048       Equifax, Inc.      1,070,815   
  5,906       FedEx Corp.      921,631   
  6,551       General Dynamics Corp.      973,348   
  9,735       Honeywell International, Inc.      1,005,431   
  12,530       Illinois Tool Works, Inc.      1,152,008   
  12,225       J.B. Hunt Transport Services, Inc.      933,623   
  5,183       Lockheed Martin Corp.      1,139,379   
  29,325       Republic Services, Inc.      1,282,676   
  13,361       Rockwell Collins, Inc.      1,158,666   
  5,965       Roper Technologies, Inc.      1,111,578   
  6,014       Snap-on, Inc.      997,662   
  10,326       Stanley Black & Decker, Inc.      1,094,349   
  8,638       Stericycle, Inc.(b)      1,048,394   
  25,407       Tyco International PLC      925,831   
  9,649       United Parcel Service, Inc., Class B      994,040   
  10,253       United Technologies Corp.      1,008,998   
  4,466       W.W. Grainger, Inc.      937,860   
  23,443       Waste Management, Inc.      1,260,296   
     

 

 

  
        22,195,537  
     

 

 

  
   Information Technology—5.4%   
  9,572       Accenture PLC, Class A      1,026,118   
  13,485       Automatic Data Processing, Inc.      1,173,060   
  15,143       Fidelity National Information Services, Inc.      1,104,228   
  12,637       Fiserv, Inc.(b)      1,219,597   
  25,051       Paychex, Inc.      1,292,131   
     

 

 

  
        5,815,134  
     

 

 

  
   Materials—3.6%   
  9,446       Airgas, Inc.      908,327   
  15,054       Avery Dennison Corp.      978,058   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   28  

 

 

PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Materials (continued)   
  9,493       Monsanto Co.    $ 884,938   
  9,975       Praxair, Inc.      1,108,123   
     

 

 

  
        3,879,446   
     

 

 

  
   Telecommunication Services—1.1%   
  35,206       AT&T, Inc.      1,179,753   
     

 

 

  
   Total Investments
(Cost $106,750,119)—99.9%		      107,724,323   
   Other assets less liabilities—0.1%      60,871  
     

 

 

  
   Net Assets—100.0%    $ 107,785,194  
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   29  

 

 

Schedule of Investments(a)

PowerShares S&P 500® High Beta Portfolio (SPHB)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Consumer Discretionary—13.5%   
  12,607       AutoNation, Inc.(b)    $ 796,636   
  17,675       BorgWarner, Inc.      756,843   
  28,470       Cablevision Systems Corp., Class A      927,837   
  12,709       CarMax, Inc.(b)      749,958   
  6,428       Expedia, Inc., Class A      876,136   
  23,127       Goodyear Tire & Rubber Co. (The)      759,491   
  9,802       Harman International Industries, Inc.      1,077,828   
  17,141       Johnson Controls, Inc.      774,430   
  8,730       Royal Caribbean Cruises Ltd.      858,596   
  9,523       Starwood Hotels & Resorts Worldwide, Inc.      760,602   
  8,064       Tractor Supply Co.      745,033   
  13,634       TripAdvisor, Inc., Class A(b)      1,142,257   
  7,825       Wynn Resorts Ltd.      547,359   
     

 

 

  
        10,773,006  
     

 

 

  
   Energy—22.4%   
  11,339       Anadarko Petroleum Corp.      758,352   
  17,291       Apache Corp.      814,925   
  15,414       Cameron International Corp.(b)      1,048,306   
  118,325       Chesapeake Energy Corp.      843,657   
  7,151       Cimarex Energy Co.      844,247   
  15,478       ConocoPhillips      825,751   
  18,118       Devon Energy Corp.      759,688   
  10,152       EOG Resources, Inc.      871,549   
  18,744       Halliburton Co.      719,395   
  14,663       Helmerich & Payne, Inc.      825,087   
  12,615       Hess Corp.      709,089   
  49,933       Marathon Oil Corp.      917,769   
  13,569       Marathon Petroleum Corp.      702,874   
  23,015       Murphy Oil Corp.      654,316   
  30,216       Newfield Exploration Co.(b)      1,214,381   
  25,934       Noble Energy, Inc.      929,475   
  24,194       ONEOK, Inc.      820,661   
  10,521       Phillips 66      936,895   
  5,924       Pioneer Natural Resources Co.      812,417   
  41,617       Southwestern Energy Co.(b)      459,452   
  54,989       Transocean Ltd.      870,476   
  15,869       Williams Cos., Inc. (The)      625,873   
     

 

 

  
        17,964,635  
     

 

 

  
   Financials—12.6%   
  3,880       Affiliated Managers Group, Inc.(b)      699,409   
  6,598       Ameriprise Financial, Inc.      761,145   
  2,306       BlackRock, Inc.      811,643   
  23,584       Charles Schwab Corp. (The)      719,784   
  12,967       Citigroup, Inc.      689,455   
  28,808       E*TRADE Financial Corp.(b)      821,316   
  16,801       Franklin Resources, Inc.      684,809   
  20,809       Invesco Ltd.(c)      690,235   
  15,205       Lincoln National Corp.      813,620   
  13,820       MetLife, Inc.      696,252   
  19,579       Morgan Stanley      645,520   
  13,739       Principal Financial Group, Inc.      689,148   
  8,213       Prudential Financial, Inc.      677,571   
  9,356       State Street Corp.      645,564   
     

 

 

  
        10,045,471  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks (continued)   
   Health Care—8.1%   
  10,670       AbbVie, Inc.    $ 635,399   
  19,386       Agilent Technologies, Inc.      732,015   
  5,075       Alexion Pharmaceuticals, Inc.(b)      893,200   
  4,736       Amgen, Inc.      749,140   
  2,545       Biogen, Inc.(b)      739,348   
  6,438       Celgene Corp.(b)      790,007   
  8,889       Endo International PLC(b)      533,251   
  13,942       Mylan NV(b)      614,703   
  6,436       Vertex Pharmaceuticals, Inc.(b)      802,827   
     

 

 

  
        6,489,890  
     

 

 

  
   Industrials—16.6%   
  22,420       ADT Corp. (The)      740,757   
  20,467       American Airlines Group, Inc.      945,985   
  12,955       AMETEK, Inc.      710,193   
  16,802       Delta Air Lines, Inc.      854,214   
  13,261       Eaton Corp. PLC      741,423   
  17,214       Fluor Corp.      823,001   
  16,958       Jacobs Engineering Group, Inc.(b)      680,694   
  7,615       Kansas City Southern      630,217   
  26,840       Masco Corp.      778,360   
  6,640       Parker-Hannifin Corp.      695,208   
  37,314       Quanta Services, Inc.(b)      750,385   
  6,340       Rockwell Automation, Inc.      692,074   
  9,257       Ryder System, Inc.      664,468   
  18,674       Southwest Airlines Co.      864,419   
  19,460       Textron, Inc.      820,628   
  8,364       Union Pacific Corp.      747,323   
  15,514       United Rentals, Inc.(b)      1,161,378   
     

 

 

  
        13,300,727  
     

 

 

  
   Information Technology—19.0%   
  10,265       Akamai Technologies, Inc.(b)      624,317   
  12,850       Analog Devices, Inc.      772,542   
  46,516       Applied Materials, Inc.      780,073   
  7,905       Avago Technologies Ltd. (Singapore)      973,343   
  21,254       First Solar, Inc.(b)      1,212,966   
  25,066       HP, Inc.      675,779   
  14,511       KLA-Tencor Corp.      973,978   
  10,395       Lam Research Corp.      796,153   
  17,663       Microchip Technology, Inc.      852,946   
  61,724       Micron Technology, Inc.(b)      1,022,150   
  30,661       NVIDIA Corp.      869,853   
  19,407       Qorvo, Inc.(b)      852,550   
  10,681       salesforce.com, inc.(b)      830,021   
  13,222       SanDisk Corp.      1,018,094   
  15,414       Seagate Technology PLC      586,657   
  11,675       Skyworks Solutions, Inc.      901,777   
  14,288       Texas Instruments, Inc.      810,415   
  67,201       Xerox Corp.      631,017   
     

 

 

  
        15,184,631  
     

 

 

  
   Materials—7.8%   
  84,872       Alcoa, Inc.      757,907   
  19,264       Dow Chemical Co. (The)      995,371   
  9,953       Eastman Chemical Co.      718,308   
  103,227       Freeport-McMoRan, Inc.      1,214,982   
  11,432       LyondellBasell Industries NV, Class A      1,062,147   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   30  

 

 

PowerShares S&P 500® High Beta Portfolio (SPHB) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Materials (continued)   
  4,687       Martin Marietta Materials, Inc.    $ 727,188   
  36,780       Owens-Illinois, Inc.(b)      792,609   
     

 

 

  
        6,268,512  
     

 

 

  
   Total Common Stocks
(Cost $92,954,409)		      80,026,872   
     

 

 

  
   Money Market Fund—0.0%   
  23,319       Invesco Premier Portfolio—Institutional Class, 0.12%(d)
(Cost $23,319)		      23,319   
     

 

 

  
   Total Investments
(Cost $92,977,728)—100.0%		      80,050,191   
   Other assets less liabilities—(0.0)%      (25,647 ) 
     

 

 

  
   Net Assets—100.0%    $ 80,024,544  
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  Affiliated company. The Fund’s Adviser is a wholly-owned subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated. See Note 4.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   31  

 

 

Schedule of Investments(a)

PowerShares S&P 500® High Dividend Low Volatility (SPHD)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—99.9%   
   Consumer Discretionary—5.0%   
  107,823       Darden Restaurants, Inc.    $ 6,673,166   
  648,142       Ford Motor Co.      9,598,983   
  93,613       McDonald’s Corp.      10,508,059   
     

 

 

  
        26,780,208  
     

 

 

  
   Consumer Staples—16.4%   
  201,240       Altria Group, Inc.      12,168,983   
  203,767       Coca-Cola Co. (The)      8,629,532   
  134,035       General Mills, Inc.      7,788,774   
  123,297       Kellogg Co.      8,694,904   
  73,881       Kimberly-Clark Corp.      8,844,295   
  150,028       Philip Morris International, Inc.      13,262,475   
  105,088       Procter & Gamble Co. (The)      8,026,621   
  229,716       Reynolds American, Inc.      11,099,877   
  233,066       Sysco Corp.      9,613,973   
     

 

 

  
        88,129,434  
     

 

 

  
   Energy—4.1%   
  124,652       Chevron Corp.      11,328,374   
  384,936       Spectra Energy Corp.      10,997,621   
     

 

 

  
        22,325,995  
     

 

 

  
   Financials—19.5%   
  111,489       CME Group, Inc., Class A      10,532,366   
  407,535       HCP, Inc. REIT      15,160,302   
  520,462       Host Hotels & Resorts, Inc. REIT      9,019,606   
  432,361       Kimco Realty Corp. REIT      11,574,304   
  644,146       People’s United Financial, Inc.      10,274,129   
  275,224       Plum Creek Timber Co., Inc. REIT      11,212,626   
  272,188       Realty Income Corp. REIT      13,462,418   
  221,565       Ventas, Inc. REIT      11,902,472   
  185,288       Welltower, Inc. REIT      12,019,633   
     

 

 

  
        105,157,856  
     

 

 

  
   Health Care—6.9%   
  370,259       Baxter International, Inc.      13,843,984   
  75,079       Johnson & Johnson      7,585,231   
  139,400       Merck & Co., Inc.      7,619,604   
  239,317       Pfizer, Inc.      8,093,701   
     

 

 

  
        37,142,520  
     

 

 

  
   Industrials—9.8%   
  110,420       Caterpillar, Inc.      8,059,556   
  166,731       Emerson Electric Co.      7,874,705   
  338,556       General Electric Co.      9,791,040   
  39,716       Lockheed Martin Corp.      8,730,768   
  451,682       Pitney Bowes, Inc.      9,327,233   
  170,956       Waste Management, Inc.      9,190,595   
     

 

 

  
        52,973,897  
     

 

 

  
   Information Technology—3.3%   
  298,835       CA, Inc.      8,280,718   
  178,976       Paychex, Inc.      9,231,582   
     

 

 

  
        17,512,300  
     

 

 

  
   Materials—3.0%   
  139,822       E.I. du Pont de Nemours & Co.      8,864,715   
  173,622       International Paper Co.      7,411,923   
     

 

 

  
        16,276,638  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Telecommunication Services—7.6%   
  388,718       AT&T, Inc.    $ 13,025,940   
  555,482       CenturyLink, Inc.      15,670,147   
  258,580       Verizon Communications, Inc.      12,122,231   
     

 

 

  
        40,818,318  
     

 

 

  
   Utilities—24.3%   
  231,262       AGL Resources, Inc.      14,453,875   
  285,780       Ameren Corp.      12,482,871   
  709,364       CenterPoint Energy, Inc.      13,158,702   
  184,872       Consolidated Edison, Inc.      12,155,334   
  159,871       Duke Energy Corp.      11,425,980   
  173,204       Entergy Corp.      11,805,585   
  348,730       FirstEnergy Corp.      10,880,376   
  419,205       PPL Corp.      14,420,652   
  299,994       Southern Co. (The)      13,529,729   
  605,653       TECO Energy, Inc.      16,352,631   
     

 

 

  
        130,665,735  
     

 

 

  
   Total Investments
(Cost $542,440,089)—99.9%		      537,782,901   
   Other assets less liabilities—0.1%      396,946  
     

 

 

  
   Net Assets—100.0%    $ 538,179,847  
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   32  

 

 

Schedule of Investments(a)

PowerShares S&P 500® Low Volatility Portfolio (SPLV)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Consumer Discretionary—5.2%   
  70,179       AutoZone, Inc.(b)    $ 55,049,109   
  540,725       Genuine Parts Co.      49,076,201   
  501,554       McDonald’s Corp.      56,299,437   
  706,696       Omnicom Group, Inc.      52,945,664   
  442,940       Walt Disney Co. (The)      50,379,996   
     

 

 

  
        263,750,407  
     

 

 

  
   Consumer Staples—21.7%   
  862,528       Altria Group, Inc.      52,157,068   
  440,585       Brown-Forman Corp., Class B      46,781,315   
  1,080,994       Campbell Soup Co.      54,903,685   
  442,197       Clorox Co. (The)      53,921,502   
  1,318,366       Coca-Cola Co. (The)      55,832,800   
  817,251       Colgate-Palmolive Co.      54,224,604   
  342,382       Costco Wholesale Corp.      54,137,442   
  509,821       CVS Health Corp.      50,360,118   
  590,182       Dr Pepper Snapple Group, Inc.      52,744,565   
  943,822       General Mills, Inc.      54,845,497   
  548,545       Hershey Co. (The)      48,650,456   
  449,768       JM Smucker Co. (The)      52,798,266   
  746,453       Kellogg Co.      52,639,866   
  442,813       Kimberly-Clark Corp.      53,009,144   
  1,260,800       Kroger Co. (The)      47,658,240   
  663,083       McCormick & Co., Inc.      55,685,710   
  600,312       PepsiCo, Inc.      61,345,883   
  543,266       Philip Morris International, Inc.      48,024,714   
  762,623       Procter & Gamble Co. (The)      58,249,145   
  1,204,818       Sysco Corp.      49,698,743   
  680,994       Wal-Mart Stores, Inc.      38,980,097   
     

 

 

  
        1,096,648,860  
     

 

 

  
   Financials—34.9%   
  518,772       ACE Ltd.      58,901,373   
  853,330       Aflac, Inc.      54,399,787   
  869,713       Allstate Corp. (The)      53,817,840   
  742,477       American International Group, Inc.      46,820,600   
  452,486       American Tower Corp. REIT      46,257,644   
  514,141       Aon PLC      47,974,497   
  262,519       AvalonBay Communities, Inc. REIT      45,896,197   
  1,179,409       BB&T Corp.      43,815,044   
  386,821       Berkshire Hathaway, Inc.,
Class B(b)		      52,615,392   
  379,873       Boston Properties, Inc. REIT      47,807,017   
  939,938       Cincinnati Financial Corp.      56,612,466   
  462,277       CME Group, Inc., Class A      43,671,308   
  550,980       Crown Castle International Corp. REIT      47,086,751   
  205,209       Essex Property Trust, Inc. REIT      45,236,272   
  1,646,350       General Growth Properties, Inc. REIT      47,661,832   
  942,471       Hartford Financial Services Group, Inc. (The)      43,598,708   
  1,364,480       Loews Corp.      49,748,941   
  1,027,733       Marsh & McLennan Cos., Inc.      57,285,837   
  844,443       Nasdaq, Inc.      48,884,805   
  3,355,068       People’s United Financial, Inc.      53,513,335   
  1,496,821       Plum Creek Timber Co., Inc. REIT      60,980,488   
  487,561       PNC Financial Services Group, Inc. (The)      44,007,256   
  1,752,474       Progressive Corp. (The)      58,059,464   
  1,135,488       Prologis, Inc. REIT      48,519,402   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  243,720       Public Storage REIT    $ 55,923,991   
  246,764       Simon Property Group, Inc. REIT      49,713,075   
  406,209       SL Green Realty Corp. REIT      48,184,512   
  683,093       T. Rowe Price Group, Inc.      51,655,493   
  854,821       Torchmark Corp.      49,588,166   
  505,677       Travelers Cos., Inc. (The)      57,085,877   
  1,101,073       U.S. Bancorp      46,443,259   
  508,658       Vornado Realty Trust REIT      51,145,562   
  895,661       Wells Fargo & Co.      48,491,087   
  1,589,077       Weyerhaeuser Co. REIT      46,607,628   
  1,480,144       XL Group PLC      56,363,884   
     

 

 

  
        1,764,374,790  
     

 

 

  
   Health Care—10.6%   
  935,133       Abbott Laboratories      41,893,958   
  485,743       AmerisourceBergen Corp.      46,879,057   
  1,199,651       Baxter International, Inc.      44,854,951   
  233,688       C.R. Bard, Inc.      43,547,759   
  692,967       DaVita HealthCare Partners, Inc.(b)      53,711,872   
  822,258       DENTSPLY International, Inc.      50,034,399   
  345,280       Henry Schein, Inc.(b)      52,382,429   
  530,916       Johnson & Johnson      53,638,443   
  1,048,222       Patterson Cos., Inc.      49,685,723   
  1,546,641       Pfizer, Inc.      52,307,399   
  476,774       Stryker Corp.      45,589,130   
     

 

 

  
        534,525,120  
     

 

 

  
   Industrials—14.8%   
  327,001       3M Co.      51,407,827   
  571,703       Danaher Corp.      53,345,607   
  500,007       Deere & Co.      39,000,546   
  454,171       Equifax, Inc.      48,401,004   
  440,635       Honeywell International, Inc.      45,508,783   
  566,417       Illinois Tool Works, Inc.      52,076,379   
  234,928       Lockheed Martin Corp.      51,644,222   
  1,328,929       Republic Services, Inc.      58,127,354   
  605,591       Rockwell Collins, Inc.      52,516,852   
  269,629       Roper Technologies, Inc.      50,245,364   
  272,223       Snap-on, Inc.      45,159,074   
  467,579       Stanley Black & Decker, Inc.      49,554,022   
  391,452       Stericycle, Inc.(b)      47,510,529   
  464,108       United Technologies Corp.      45,672,868   
  1,062,394       Waste Management, Inc.      57,114,301   
     

 

 

  
        747,284,732  
     

 

 

  
   Information Technology—4.3%   
  609,566       Automatic Data Processing, Inc.      53,026,146   
  685,689       Fidelity National Information Services, Inc.      50,000,442   
  571,263       Fiserv, Inc.(b)      55,132,592   
  1,135,351       Paychex, Inc.      58,561,405   
     

 

 

  
        216,720,585  
     

 

 

  
   Materials—1.8%   
  427,614       Airgas, Inc.      41,119,362   
  451,639       Praxair, Inc.      50,172,577   
     

 

 

  
        91,291,939  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   33  

 

 

PowerShares S&P 500® Low Volatility Portfolio (SPLV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Telecommunication Services—2.2%   
  1,595,624       AT&T, Inc.    $ 53,469,360   
  1,212,350       Verizon Communications, Inc.      56,834,968   
     

 

 

  
        110,304,328  
     

 

 

  
   Utilities—4.5%   
  690,623       Consolidated Edison, Inc.      45,408,462   
  605,832       Dominion Resources, Inc.      43,274,580   
  600,749       Duke Energy Corp.      42,935,531   
  417,135       NextEra Energy, Inc.      42,823,079   
  1,096,509       Southern Co. (The)      49,452,556   
     

 

 

  
        223,894,208  
     

 

 

  
   Total Investments
(Cost $4,768,446,422)—100.0%		      5,048,794,969   
   Other assets less liabilities—0.0%      2,437,630  
     

 

 

  
   Net Assets—100.0%    $ 5,051,232,599  
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   34  

 

 

Schedule of Investments(a)

PowerShares S&P 500 Momentum Portfolio (SPMO)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Consumer Discretionary—33.2%   
  44       Advance Auto Parts, Inc.    $ 8,731   
  249       Amazon.com, Inc.(b)      155,849   
  21       AutoZone, Inc.(b)      16,473   
  290       Carnival Corp.      15,683   
  165       D.R. Horton, Inc.      4,858   
  100       Darden Restaurants, Inc.      6,189   
  186       Dollar General Corp.      12,605   
  142       Dollar Tree, Inc.(b)      9,300   
  48       Expedia, Inc., Class A      6,542   
  80       Hasbro, Inc.      6,146   
  902       Home Depot, Inc. (The)      111,523   
  170       L Brands, Inc.      16,317   
  102       Leggett & Platt, Inc.      4,593   
  92       Lennar Corp., Class A      4,606   
  644       Lowe’s Cos., Inc.      47,547   
  50       Mohawk Industries, Inc.(b)      9,775   
  246       Netflix, Inc.(b)      26,662   
  154       Newell Rubbermaid, Inc.      6,534   
  481       NIKE, Inc., Class B      63,025   
  84       O’Reilly Automotive, Inc.(b)      23,206   
  356       Ross Stores, Inc.      18,006   
  86       Royal Caribbean Cruises Ltd.      8,458   
  1,170       Starbucks Corp.      73,207   
  389       Target Corp.      30,023   
  340       TJX Cos., Inc. (The)      24,885   
  76       Tractor Supply Co.      7,022   
  100       Under Armour, Inc., Class A(b)      9,508   
  164       VF Corp.      11,073   
  1,107       Walt Disney Co. (The)      125,910   
     

 

 

  
        864,256  
     

 

 

  
   Consumer Staples—17.4%   
  1,360       Altria Group, Inc.      82,239   
  60       Brown-Forman Corp., Class B      6,371   
  80       Clorox Co. (The)      9,755   
  306       ConAgra Foods, Inc.      12,408   
  120       Constellation Brands, Inc., Class A      16,176   
  246       Costco Wholesale Corp.      38,898   
  1,034       CVS Health Corp.      102,139   
  132       Dr Pepper Snapple Group, Inc.      11,797   
  74       Hormel Foods Corp.      4,999   
  462       Kraft Heinz Co. (The)      36,022   
  990       Kroger Co. (The)      37,422   
  66       McCormick & Co., Inc.      5,543   
  138       Monster Beverage Corp.(b)      18,812   
  726       Reynolds American, Inc.      35,080   
  428       Walgreens Boots Alliance, Inc.      36,243   
     

 

 

  
        453,904  
     

 

 

  
   Energy—0.3%   
  68       Tesoro Corp.      7,271   
     

 

 

  
   Financials—4.7%   
  176       Allstate Corp. (The)      10,891   
  112       Chubb Corp. (The)      14,487   
  74       Cincinnati Financial Corp.      4,457   
  194       CME Group, Inc., Class A      18,327   
  28       Equinix, Inc. REIT      8,307   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  288       Hartford Financial Services Group, Inc. (The)    $ 13,323   
  84       Moody’s Corp.      8,078   
  384       Progressive Corp. (The)      12,722   
  70       Public Storage REIT      16,062   
  142       Travelers Cos., Inc. (The)      16,030   
     

 

 

  
        122,684  
     

 

 

  
   Health Care—27.3%   
  207       Aetna, Inc.      23,760   
  247       Allergan PLC(b)      76,192   
  146       AmerisourceBergen Corp.      14,090   
  386       Amgen, Inc.      61,058   
  150       Anthem, Inc.      20,873   
  116       Becton, Dickinson and Co.      16,532   
  42       C.R. Bard, Inc.      7,827   
  423       Celgene Corp.(b)      51,906   
  178       Cigna Corp.      23,859   
  80       Edwards Lifesciences Corp.(b)      12,572   
  620       Eli Lilly & Co.      50,573   
  122       HCA Holdings, Inc.(b)      8,392   
  44       Henry Schein, Inc.(b)      6,675   
  78       Humana, Inc.      13,933   
  88       Mallinckrodt PLC(b)      5,779   
  672       Medtronic PLC      49,674   
  52       Patterson Cos., Inc.      2,465   
  3,623       Pfizer, Inc.      122,530   
  57       Regeneron Pharmaceuticals, Inc.(b)      31,771   
  176       Stryker Corp.      16,829   
  660       UnitedHealth Group, Inc.      77,735   
  40       Waters Corp.(b)      5,112   
  252       Zoetis, Inc.      10,839   
     

 

 

  
        710,976  
     

 

 

  
   Industrials—4.9%   
  56       Cintas Corp.      5,213   
  294       Danaher Corp.      27,433   
  74       Equifax, Inc.      7,886   
  156       General Dynamics Corp.      23,179   
  141       Lockheed Martin Corp.      30,996   
  188       Masco Corp.      5,452   
  120       Northrop Grumman Corp.      22,530   
  38       Snap-on, Inc.      6,304   
     

 

 

  
        128,993  
     

 

 

  
   Information Technology—11.0%   
  349       Accenture PLC, Class A      37,413   
  166       Avago Technologies Ltd. (Singapore)      20,440   
  540       eBay, Inc.(b)      15,066   
  322       Electronic Arts, Inc.(b)      23,206   
  174       Fiserv, Inc.(b)      16,793   
  135       Intuit, Inc.      13,153   
  477       MasterCard, Inc., Class A      47,218   
  134       Skyworks Solutions, Inc.      10,350   
  116       Total System Services, Inc.      6,084   
  50       VeriSign, Inc.(b)      4,030   
  1,200       Visa, Inc., Class A      93,096   
     

 

 

  
        286,849  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   35  

 

 

PowerShares S&P 500 Momentum Portfolio (SPMO) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Materials—1.2%   
  50       Avery Dennison Corp.    $ 3,248   
  158       Sealed Air Corp.      7,761   
  46       Sherwin-Williams Co. (The)      12,274   
  84       Vulcan Materials Co.      8,113   
     

 

 

  
        31,396  
     

 

 

  
   Total Investments
(Cost $2,465,569)—100.0%		      2,606,329   
   Other assets less liabilities—0.0%      66  
     

 

 

  
   Net Assets—100.0%    $ 2,606,395  
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   36  

 

 

Schedule of Investments(a)

PowerShares S&P 500 Value Portfolio (SPVU)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks—100.0%   
   Consumer Discretionary—8.8%   
  130       AutoNation, Inc.(b)    $ 8,215   
  475       Best Buy Co., Inc.      16,639   
  372       D.R. Horton, Inc.      10,952   
  3,969       Ford Motor Co.      58,781   
  88       Fossil Group, Inc.(b)      4,788   
  202       GameStop Corp., Class A      9,306   
  1,609       General Motors Co.      56,170   
  434       Goodyear Tire & Rubber Co. (The)      14,253   
  228       Kohl’s Corp.      10,515   
  680       News Corp., Class A      10,472   
  436       PulteGroup, Inc.      7,992   
  702       Staples, Inc.      9,119   
  352       TEGNA, Inc.      9,518   
     

 

 

  
        226,720  
     

 

 

  
   Consumer Staples—7.6%   
  792       Archer-Daniels-Midland Co.      36,163   
  914       Kroger Co. (The)      34,549   
  546       Sysco Corp.      22,522   
  412       Tyson Foods, Inc., Class A      18,276   
  1,490       Wal-Mart Stores, Inc.      85,288   
     

 

 

  
        196,798  
     

 

 

  
   Energy—19.5%   
  562       Chesapeake Energy Corp.      4,007   
  1,359       Chevron Corp.      123,506   
  1,624       Exxon Mobil Corp.      134,370   
  129       Helmerich & Payne, Inc.      7,259   
  246       Hess Corp.      13,828   
  565       Marathon Oil Corp.      10,385   
  750       Marathon Petroleum Corp.      38,850   
  270       Murphy Oil Corp.      7,676   
  529       National Oilwell Varco, Inc.      19,911   
  726       Phillips 66      64,650   
  192       Tesoro Corp.      20,531   
  409       Transocean Ltd.      6,474   
  780       Valero Energy Corp.      51,418   
     

 

 

  
        502,865  
     

 

 

  
   Financials—40.9%   
  264       ACE Ltd.      29,975   
  398       Aflac, Inc.      25,372   
  442       Allstate Corp. (The)      27,351   
  1,473       American International Group, Inc.      92,887   
  88       Assurant, Inc.      7,175   
  7,350       Bank of America Corp.      123,333   
  448       BB&T Corp.      16,643   
  490       Capital One Financial Corp.      38,661   
  186       Chubb Corp. (The)      24,059   
  98       Cincinnati Financial Corp.      5,903   
  2,256       Citigroup, Inc.      119,951   
  102       Comerica, Inc.      4,427   
  602       Fifth Third Bancorp      11,468   
  376       Genworth Financial, Inc., Class A(b)      1,760   
  320       Goldman Sachs Group, Inc. (The)      60,000   
  414       Hartford Financial Services Group, Inc. (The)      19,152   
  428       Huntington Bancshares, Inc.      4,695   
  2,028       JPMorgan Chase & Co.      130,299   
  536       KeyCorp      6,657   
Number
of Shares		           Value  
   Common Stocks (continued)   
   Financials (continued)   
  306       Leucadia National Corp.    $ 6,123   
  260       Lincoln National Corp.      13,913   
  260       Loews Corp.      9,480   
  1,325       MetLife, Inc.      66,753   
  986       Morgan Stanley      32,508   
  298       Navient Corp.      3,931   
  176       People’s United Financial, Inc.      2,807   
  354       PNC Financial Services Group, Inc. (The)      31,952   
  194       Principal Financial Group, Inc.      9,731   
  398       Progressive Corp. (The)      13,186   
  442       Prudential Financial, Inc.      36,465   
  1,092       Regions Financial Corp.      10,210   
  404       SunTrust Banks, Inc.      16,774   
  76       Torchmark Corp.      4,409   
  314       Travelers Cos., Inc. (The)      35,447   
  192       Unum Group      6,653   
  126       Zions Bancorporation      3,625   
     

 

 

  
        1,053,735  
     

 

 

  
   Health Care—4.8%   
  263       Aetna, Inc.      30,187   
  249       Anthem, Inc.      34,649   
  306       Cardinal Health, Inc.      25,153   
  184       McKesson Corp.      32,899   
     

 

 

  
        122,888  
     

 

 

  
   Industrials—3.6%   
  687       American Airlines Group, Inc.      31,753   
  283       Deere & Co.      22,074   
  233       Fluor Corp.      11,140   
  235       Jacobs Engineering Group, Inc.(b)      9,433   
  96       L-3 Communications Holdings, Inc.      12,134   
  292       Quanta Services, Inc.(b)      5,872   
     

 

 

  
        92,406  
     

 

 

  
   Information Technology—5.8%   
  1,120       Corning, Inc.      20,832   
  132       First Solar, Inc.(b)      7,533   
  1,840       HP, Inc.      49,607   
  981       Micron Technology, Inc.(b)      16,245   
  294       Seagate Technology PLC      11,190   
  1,446       Xerox Corp.      13,578   
  879       Yahoo!, Inc.(b)      31,310   
     

 

 

  
        150,295  
     

 

 

  
   Materials—1.9%   
  1,394       Alcoa, Inc.      12,448   
  270       LyondellBasell Industries NV, Class A      25,086   
  289       Nucor Corp.      12,225   
     

 

 

  
        49,759  
     

 

 

  
   Telecommunication Services—0.6%   
  526       CenturyLink, Inc.      14,838   
     

 

 

  
   Utilities—6.5%   
  1,032       AES Corp. (The)      11,301   
  178       AGL Resources, Inc.      11,125   
  508       CenterPoint Energy, Inc.      9,423   
  281       Consolidated Edison, Inc.      18,476   
  308       Edison International      18,640   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   37  

 

 

PowerShares S&P 500 Value Portfolio (SPVU) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks (continued)   
   Utilities (continued)   
  202       Entergy Corp.    $ 13,768   
  872       Exelon Corp.      24,346   
  476       NRG Energy, Inc.      6,136   
  682       PPL Corp.      23,461   
  453       Public Service Enterprise Group, Inc.      18,704   
  208       SCANA Corp.      12,318   
     

 

 

  
        167,698  
     

 

 

  
   Total Investments
(Cost $2,505,162)—100.0%		      2,578,002   
   Other assets less liabilities—0.0%      44  
     

 

 

  
   Net Assets—100.0%    $ 2,578,046  
     

 

 

  

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   38  

 

 

Schedule of Investments

PowerShares S&P Emerging Markets High Beta Portfolio (EEHB)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests—100.1%		    
   Brazil—18.9%   
  1,200       Ambev SA    $ 5,960   
  1,412       Banco Bradesco SA (Preference Shares)      7,714   
  2,200       Banco do Brasil SA      9,141   
  1,600       Banco Santander Brasil SA      5,757   
  1,000       BB Seguridade Participacoes SA      6,920   
  3,100       BM&FBOVESPA SA      9,194   
  3,000       BR Malls Participacoes SA      8,742   
  2,600       CCR SA      8,198   
  7,600       Centrais Eletricas Brasileiras SA(a)      9,926   
  1,700       CESP—Companhia Energetica de Sao Paulo (Preference Shares), Class B      7,165   
  400       Cia Brasileira de Distribuicao (Preference Shares), Class A      5,280   
  1,700       Cia de Saneamento Basico do Estado de Sao Paulo—SABESP      7,404   
  7,400       Cia Siderurgica Nacional SA      8,356   
  660       Cielo SA      6,286   
  4,100       Companhia Energetica de Minas Gerais (Preference Shares)—CEMIG      7,637   
  1,000       Copel—Companhia Paranaense de Energia (Preference Shares), Class B      8,455   
  1,700       Cosan SA Industria e Comercio      10,929   
  2,037       CPFL Energia SA(a)      8,209   
  4,200       EcoRodovias Infraestrutura e Logistica SA      6,502   
  4,100       Gerdau SA (Preference Shares)      5,792   
  1,100       Grupo BTG Pactual      8,214   
  1,700       Hypermarcas SA(a)      7,740   
  1,165       Itau Unibanco Holding SA (Preference Shares)      8,023   
  4,255       Itausa—Investimentos Itau SA (Preference Shares)      7,971   
  1,500       JBS SA      5,561   
  3,900       Kroton Educacional SA      10,005   
  1,800       Lojas Americanas SA (Preference Shares)      7,825   
  400       M Dias Branco SA      7,274   
  800       Multiplan Empreendimentos Imobiliarios SA      8,756   
  1,100       Natura Cosmeticos SA      6,554   
  17,370       Oi SA (Preference Shares)(a)      9,581   
  6,100       Petroleo Brasileiro SA (Preference Shares)(a)      12,236   
  800       Porto Seguro SA      6,729   
  700       Telefonica Brasil SA (Preference Shares)      7,276   
  3,100       Tim Participacoes SA      6,815   
  800       Tractebel Energia SA      7,050   
  400       Ultrapar Participacoes SA      6,973   
  6,900       Usinas Siderurgicas de Minas Gerais SA (Preference Shares), Class A      4,991   
  2,000       Vale SA (Preference Shares)      7,300   
  5,200       Via Varejo SA      5,750   
     

 

 

  
        306,191  
     

 

 

  
   Chile—0.4%   
  1,225       LATAM Airlines Group SA(a)      6,549   
     

 

 

  
   China—48.2%   
  14,000       Agile Property Holdings Ltd.      7,641   
  25,570       Aluminum Corp. of China Ltd., H-Shares(a)      8,281   
  16,000       Angang Steel Co. Ltd., H-Shares      6,689   
  2,000       Anhui Conch Cement Co. Ltd., H-Shares      6,129   
  14,945       BBMG Corp. H-Shares      10,548   
Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests (continued)		    
   China (continued)   
  8,000       Beijing Enterprises Water Group Ltd.    $ 6,390   
  7,479       Brilliance China Automotive Holdings Ltd.      10,403   
  1,971       BYD Co. Ltd., H-Shares(a)      12,309   
  25,000       China Agri-Industries Holdings Ltd.(a)      9,226   
  17,218       China Cinda Asset Management Co. Ltd., H-Shares      6,732   
  13,000       China Coal Energy Co. Ltd., H-Shares      5,586   
  7,809       China Communications Construction Co. Ltd., H-Shares      10,801   
  18,000       China Communications Services Corp. Ltd., H-Shares      7,246   
  3,000       China Conch Venture Holdings Ltd.      6,851   
  15,618       China COSCO Holdings Co. Ltd., H-Shares(a)      9,955   
  14,000       China Eastern Airlines Corp. Ltd., H-Shares(a)      9,050   
  5,000       China Everbright International Ltd.      8,090   
  4,899       China Everbright Ltd.      11,593   
  16,500       China Galaxy Securities Co. Ltd., H-Shares      14,392   
  15,809       China Hongqiao Group Ltd.      8,261   
  16,645       China Huishan Dairy Holdings Co. Ltd.      6,336   
  5,500       China International Marine Containers Group Co. Ltd., H-Shares      9,808   
  2,184       China Life Insurance Co. Ltd., H-Shares      7,905   
  5,809       China Longyuan Power Group Corp., H-Shares      5,337   
  11,609       China Machinery Engineering Corp., H-Shares      10,126   
  5,000       China Medical System Holdings Ltd.      6,903   
  3,103       China Merchants Bank Co. Ltd., H-Shares      8,148   
  2,000       China Merchants Holdings International Co. Ltd.      6,671   
  7,000       China Minsheng Banking Corp. Ltd., H-Shares      7,054   
  701       China Mobile Ltd.      8,394   
  21,018       China Molybdenum Co. Ltd., H-Shares      11,743   
  7,145       China Oilfield Services Ltd., H-Shares      7,984   
  2,215       China Overseas Land & Investment Ltd.      7,202   
  2,175       China Pacific Insurance (Group) Co. Ltd., H-Shares      8,700   
  7,409       China Railway Construction Corp. Ltd., H-Shares      11,147   
  8,954       China Railway Group Ltd., H-Shares      8,526   
  2,593       China Resources Land Ltd.      6,775   
  3,006       China Resources Power Holdings Co. Ltd.      6,834   
  23,627       China Shipping Container Lines Co. Ltd., H-Shares(a)      9,481   
  33,630       China South City Holdings Ltd.      8,071   
  14,000       China Southern Airlines Co. Ltd., H-Shares      11,904   
  4,000       China State Construction International Holdings Ltd.      6,090   
  3,645       China Taiping Insurance Holdings Co. Ltd.(a)      11,523   
  3,606       China Unicom (Hong Kong) Ltd.      4,453   
  13,000       Chongqing Rural Commercial Bank Co. Ltd., H-Shares      8,202   
  4,896       CITIC Securities Co. Ltd., H-Shares      10,626   
  6,112       CNOOC Ltd.      6,853   
  8,206       CRRC Corp. Ltd., H-Shares      10,514   
  18,000       Datang International Power Generation Co. Ltd., H-Shares      6,666   
  8,606       Dongfang Electric Corp. Ltd., H-Shares      10,338   
  11,000       Evergrande Real Estate Group Ltd.      8,459   
  53,645       GCL-Poly Energy Holdings Ltd.(a)      11,144   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   39  

 

 

PowerShares S&P Emerging Markets High Beta Portfolio (EEHB) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests (continued)		    
   China (continued)   
  15,000       Geely Automobile Holdings Ltd.    $ 8,071   
  11,000       Greentown China Holdings Ltd.(a)      9,666   
  18,000       Guangshen Railway Co. Ltd., H-Shares      9,337   
  8,000       Guangzhou Automobile Group Co. Ltd., H-Shares      7,040   
  4,000       Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., H-Shares      11,303   
  6,000       Guangzhou R&F Properties Co. Ltd., H-Shares      5,977   
  6,483       Haitong Securities Co. Ltd., H-Shares      11,360   
  8,000       Huadian Power International Corp. Ltd., H-Shares      5,884   
  5,310       Jiangxi Copper Co. Ltd., H-Shares      7,030   
  5,803       Kingsoft Corp. Ltd.      13,223   
  12,009       Kunlun Energy Co. Ltd.      9,824   
  6,000       Lenovo Group Ltd.      5,605   
  22,027       Metallurgical Corp. of China Ltd., H-Shares      8,129   
  2,100       New China Life Insurance Co. Ltd., H-Shares      9,267   
  17,321       People’s Insurance Co. Group of China Ltd. (The), H-Shares      9,297   
  6,482       PetroChina Co. Ltd., H-Shares      5,068   
  2,473       PICC Property & Casualty Co. Ltd., H-Shares      5,648   
  1,500       Ping An Insurance (Group) Co. of China Ltd., H-Shares      8,448   
  7,886       Shandong Weigao Group Medical Polymer Co. Ltd., H-Shares      5,474   
  22,363       Shanghai Electric Group Co. Ltd., H-Shares      13,879   
  2,500       Shanghai Fosun Pharmaceutical Group Co. Ltd., H-Shares      8,145   
  3,000       Shanghai Industrial Holdings Ltd.      7,935   
  4,000       Shanghai Pharmaceuticals Holding Co. Ltd., H-Shares      9,270   
  4,000       Shimao Property Holdings Ltd.      7,061   
  35,500       Shui On Land Ltd.      9,802   
  4,000       Sino Biopharmaceutical Ltd.      5,001   
  13,000       Sino-Ocean Land Holdings Ltd.      7,599   
  38,000       Sinopec Oilfield Service Corp., H-Shares(a)      12,062   
  36,519       Sinopec Shanghai Petrochemical Co. Ltd., H-Shares(a)      15,267   
  2,000       Sinopharm Group Co. Ltd., H-Shares      8,284   
  16,000       SOHO China Ltd.      8,258   
  417       Tencent Holdings Ltd.      7,888   
  7,000       Weichai Power Co. Ltd., H-Shares      7,479   
  5,806       Xinjiang Goldwind Science & Technology Co. Ltd., H-Shares      10,953   
  19,212       Yanzhou Coal Mining Co. Ltd., H-Shares      9,271   
  1,033       Zhuzhou CSR Times Electric Co. Ltd., H-Shares      6,738   
  25,627       Zijin Mining Group Co. Ltd., H-Shares      6,911   
  21,412       Zoomlion Heavy Industry Science and Technology Co. Ltd., H-Shares      8,205   
  3,600       ZTE Corp. H-Shares      8,705   
     

 

 

  
        780,454  
     

 

 

  
   Colombia—0.4%   
  15,041       Ecopetrol SA      7,023   
     

 

 

  
   Greece—3.4%   
  58,773       Alpha Bank AE(a)      7,466   
  169,526       Eurobank Ergasias SA(a)      5,805   
  306       FF Group      6,189   
Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests (continued)		    
   Greece (continued)   
  774       Hellenic Telecommunications Organization SA    $ 7,242   
  15,525       National Bank of Greece SA(a)      11,628   
  93,880       Piraeus Bank SA(a)      9,645   
  1,162       Public Power Corp. SA      6,726   
     

 

 

  
        54,701  
     

 

 

  
   Hong Kong—1.4%   
  50,000       Alibaba Pictures Group Ltd.(a)      13,419   
  14,000       Nine Dragons Paper Holdings Ltd.      9,303   
     

 

 

  
        22,722  
     

 

 

  
   India—0.5%   
  251       Tata Motors Ltd. ADR(a)      7,422   
     

 

 

  
   Malaysia—1.0%   
  4,500       Petronas Chemicals Group Bhd      6,652   
  18,900       SapuraKencana Petroleum Bhd      9,283   
     

 

 

  
        15,935  
     

 

 

  
   Mexico—0.3%   
  7,938       Cemex SAB de CV(a)      5,028   
     

 

 

  
   Monaco—0.4%   
  2,857       Navios Maritime Holdings, Inc.      6,028   
     

 

 

  
   Netherlands—0.5%   
  2,167       VimpelCom Ltd. ADR      8,191   
     

 

 

  
   Poland—0.4%   
  282       KGHM Polska Miedz SA      6,578   
     

 

 

  
   Qatar—0.4%   
  363       Gulf International Services QSC      6,392   
     

 

 

  
   Russia—8.3%   
  2,203       Gazprom PAO ADR      9,275   
  236       LUKOIL PJSC ADR      8,567   
  173       Magnit PJSC GDR(b)      7,875   
  652       MegaFon PJSC GDR(b)      8,444   
  1,576       Mobile TeleSystems PJSC (MBT) ADR      11,079   
  83       Novatek OAO GDR(b)      7,590   
  2,762       Rosneft OAO GDR(b)      11,048   
  2,482       Sberbank of Russia ADR      15,222   
  2,317       Sistema JSFC GDR(b)      16,103   
  1,948       Surgutneftegas OAO ADR      10,665   
  399       Tatneft PAO ADR      12,349   
  410       Uralkali PJSC GDR(a)(b)      4,928   
  726       Yandex NV, Class A(a)      11,689   
     

 

 

  
        134,834  
     

 

 

  
   South Africa—5.2%   
  1,335       African Rainbow Minerals Ltd.      5,113   
  640       Brait SE(a)      7,362   
  1,170       Coronation Fund Managers Ltd.      6,186   
  1,423       Exxaro Resources Ltd.      5,923   
  1,582       FirstRand Ltd.      5,820   
  1,754       Impala Platinum Holdings Ltd.(a)      4,805   
  475       Imperial Holdings Ltd.      6,201   
  1,083       Kumba Iron Ore Ltd.      4,700   
  613       MTN Group Ltd.      7,006   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   40  

 

 

PowerShares S&P Emerging Markets High Beta Portfolio (EEHB) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity
Interests (continued)		    
   South Africa (continued)   
  70       Naspers Ltd., Class N    $ 10,277   
  1,370       RMB Holdings Ltd.      6,696   
  1,465       Sanlam Ltd.      6,632   
  223       Sasol Ltd.      7,158   
     

 

 

  
        83,879  
     

 

 

  
   Taiwan—4.2%   
  1,000       AirTac International Group      5,206   
  1,000       Catcher Technology Co. Ltd.      9,857   
  10,000       Compal Electronics, Inc.      6,253   
  2,000       Flexium Interconnect, Inc.      5,619   
  5,000       Merry Electronics Co. Ltd.      9,626   
  3,000       TPK Holding Co. Ltd.      7,485   
  16,000       Unimicron Technology Corp.      7,048   
  3,000       Wistron NeWeb Corp.      7,929   
  3,000       Zhen Ding Technology Holding Ltd.      8,576   
     

 

 

  
        67,599  
     

 

 

  
   Thailand—0.8%   
  10,300       Indorama Ventures PCL NVDR      6,690   
  3,365       PTT Exploration & Production PCL NVDR      6,906   
     

 

 

  
        13,596  
     

 

 

  
   Turkey—1.8%   
  2,884       Akbank TAS      7,419   
  2,569       Turkiye Garanti Bankasi AS      6,679   
  1,946       Turkiye Halk Bankasi AS      7,319   
  7,353       Turkiye Sise Ve Cam Fabrikalari AS      8,435   
     

 

 

  
        29,852  
     

 

 

  
   United Arab Emirates—3.6%   
  3,603       Abu Dhabi Commercial Bank PJSC      7,357   
  12,231       Aldar Properties PJSC      7,593   
  15,852       Arabtec Holding PJSC(a)      7,035   
  48,497       Deyaar Development PJSC(a)      7,830   
  18,568       Dubai Financial Market PJSC      7,229   
  13,207       Dubai Investments PJSC      8,127   
  3,299       Dubai Islamic Bank PJSC      5,811   
  3,972       Emaar Properties PJSC      6,975   
     

 

 

  
        57,957  
     

 

 

  
   Total Investments
(Cost $2,028,655)—100.1%		      1,620,931   
   Other assets less liabilities—(0.1)%      (989 ) 
     

 

 

  
   Net Assets—100.0%    $ 1,619,942  
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

GDR—Global Depositary Receipt

NVDR—Non-voting Depositary Receipt

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $55,988, which represented 3.46% of the Fund’s Net Assets.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   41  

 

 

Schedule of Investments

PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.1%    
   Brazil—3.8%   
  166,900       Ambev SA    $ 828,931   
  39,100       BRF SA      611,375   
  41,700       Cia Brasileira de Distribuicao (Preference Shares), Class A      550,481   
  174,200       Hypermarcas SA(a)      793,126   
  144,000       Klabin SA      821,594   
  42,100       M Dias Branco SA      765,624   
  150,300       Transmissora Alianca de Energia Eletrica SA      778,159   
  41,200       Ultrapar Participacoes SA      718,171   
  212,100       WEG SA      794,620   
     

 

 

  
        6,662,081  
     

 

 

  
   Chile—5.1%   
  14,059,334       Banco de Chile      1,489,216   
  21,383,303       Banco Santander Chile      1,016,123   
  334,406       Cencosud SA      734,907   
  95,776,150       Corpbanca SA      873,093   
  869,149       Empresa Nacional de Electricidad SA      1,089,941   
  328,711       Empresas CMPC SA      812,172   
  127,172       Empresas COPEC SA      1,192,541   
  3,434,847       Enersis SA      906,994   
  134,364       S.A.C.I. Falabella      901,763   
     

 

 

  
        9,016,750  
     

 

 

  
   China—3.7%   
  2,108,178       Agricultural Bank of China Ltd., H-Shares      865,022   
  1,019,240       China Construction Bank Corp., H-Shares      740,419   
  1,010,177       China Petroleum & Chemical Corp. (Sinopec), H-Shares      723,408   
  388,015       CITIC Ltd.      725,954   
  791,522       COSCO Pacific Ltd.      1,024,063   
  78,239       Hengan International Group Co. Ltd.      847,494   
  1,172,172       Industrial & Commercial Bank of China Ltd., H-Shares      748,668   
  163,595       Tsingtao Brewery Co. Ltd., H-Shares      784,190   
     

 

 

  
        6,459,218  
     

 

 

  
   Colombia—1.0%   
  98,131       Bancolombia SA (Preference Shares)      852,516   
  67,132       Grupo de Inversiones Suramericana SA      853,922   
     

 

 

  
        1,706,438  
     

 

 

  
   Czech Republic—0.9%   
  38,196       CEZ AS      767,731   
  3,652       Komercni banka AS      759,355   
     

 

 

  
        1,527,086  
     

 

 

  
   Egypt—0.5%   
  126,862       Commercial International Bank Egypt SAE      834,156   
     

 

 

  
   Hungary—0.9%   
  16,282       MOL Hungarian Oil & Gas PLC, Class A      739,060   
  49,777       Richter Gedeon Nyrt      834,091   
     

 

 

  
        1,573,151  
     

 

 

  
   India—2.2%   
  11,458       Dr Reddy’s Laboratories Ltd. ADR      742,364   
  13,078       HDFC Bank Ltd. ADR      799,589   
  44,444       Infosys Ltd. ADR      807,103   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   India (continued)   
  26,370       Reliance Industries Ltd. GDR(b)    $ 756,819   
  61,738       Wipro Ltd. ADR      764,316   
     

 

 

  
        3,870,191  
     

 

 

  
   Indonesia—1.8%   
  986,236       PT Bank Central Asia Tbk      929,493   
  1,180,850       PT Bank Mandiri Persero Tbk      750,568   
  6,587,487       PT Kalbe Farma Tbk      688,227   
  4,430,254       PT Telekomunikasi Indonesia Persero Tbk      867,440   
     

 

 

  
        3,235,728  
     

 

 

  
   Malaysia—12.7%   
  953,300       AMMB Holdings Bhd      1,060,702   
  803,100       Axiata Group Bhd      1,153,428   
  58,700       British American Tobacco Malaysia Bhd      844,701   
  896,400       DiGi.Com Bhd      1,097,547   
  905,900       Gamuda Bhd      948,918   
  465,900       Genting Bhd      804,697   
  804,000       Genting Malaysia Bhd      804,749   
  483,800       Hong Leong Bank Bhd      1,574,377   
  762,900       IHH Healthcare Bhd      1,120,554   
  1,527,200       IJM Corp. Bhd      1,180,238   
  1,131,200       IOI Corp. Bhd      1,121,721   
  157,200       Kuala Lumpur Kepong Bhd      833,570   
  578,700       Malayan Banking Bhd      1,112,677   
  614,800       Maxis Bhd      943,094   
  397,600       MISC Bhd      835,737   
  190,700       Petronas Gas Bhd      1,020,085   
  399,000       Public Bank Bhd      1,679,218   
  600,800       Sime Darby Bhd      1,169,154   
  672,100       Telekom Malaysia Bhd      1,041,943   
  363,200       Tenaga Nasional Bhd      1,070,324   
  520,700       UMW Holdings Bhd      996,311   
     

 

 

  
        22,413,745  
     

 

 

  
   Mexico—8.7%   
  1,000,274       America Movil SAB de CV, Series L      892,629   
  173,433       Arca Continental SAB de CV      1,109,615   
  130,359       Coca-Cola Femsa SAB de CV, Series L      1,001,387   
  64,354       El Puerto de Liverpool SAB de CV      893,120   
  475,785       Fibra Uno Administracion SA de CV REIT      1,044,331   
  109,466       Fomento Economico Mexicano SAB de CV      1,080,636   
  315,016       Grupo Bimbo SAB de CV, Series A(a)      893,280   
  172,144       Grupo Financiero Banorte SAB de CV, Class O      926,399   
  370,287       Grupo Financiero Inbursa SAB de CV, Class O      743,990   
  468,794       Grupo Financiero Santander Mexico SAB de CV, Series B      860,797   
  340,716       Grupo Lala SAB de CV      870,097   
  316,433       Grupo Mexico SAB de CV, Series B      770,371   
  142,331       Grupo Televisa SAB, Series CPO      827,615   
  177,532       Infraestructura Energetica Nova SAB de CV      855,505   
  321,034       Kimberly-Clark de Mexico SAB de CV, Class A      774,191   
  72,834       Promotora y Operadora de Infraestructura SAB de CV(a)      912,631   
  317,985       Wal-Mart de Mexico SAB de CV      838,405   
     

 

 

  
        15,294,999  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   42  

 

 

PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Philippines—5.2%   
  58,685       Ayala Corp.    $ 977,666   
  946,967       Ayala Land, Inc.      725,091   
  524,409       Bank of the Philippine Islands      947,565   
  408,323       BDO Unibank, Inc.      886,938   
  6,104,495       Energy Development Corp.      865,738   
  190,512       Jollibee Foods Corp.      838,220   
  179,875       Manila Electric Co.      1,248,598   
  509,735       Metropolitan Bank & Trust Co.      925,950   
  17,090       Philippine Long Distance Telephone Co.      803,033   
  49,589       SM Investments Corp.      926,749   
     

 

 

  
        9,145,548  
     

 

 

  
   Poland—2.2%   
  30,062       Alior Bank SA(a)      633,993   
  18,563       Bank Pekao SA      724,035   
  171,058       PGE Polska Grupa Energetyczna SA      639,000   
  94,917       Powszechna Kasa Oszczednosci Bank Polski SA(a)      705,690   
  7,447       Powszechny Zaklad Ubezpieczen SA      726,402   
  714,335       Tauron Polska Energia SA      561,877   
     

 

 

  
        3,990,997  
     

 

 

  
   Qatar—0.9%   
  55,429       Commercial Bank QSC (The)      810,060   
  15,298       Qatar National Bank SAQ      766,949   
     

 

 

  
        1,577,009  
     

 

 

  
   South Africa—10.4%   
  29,774       Aspen Pharmacare Holdings Ltd.      670,261   
  60,031       Barclays Africa Group Ltd.      772,201   
  120,005       Barloworld Ltd.      679,527   
  35,196       Bidvest Group Ltd. (The)      902,419   
  72,573       Discovery Ltd.      777,944   
  196,418       FirstRand Ltd.      722,555   
  499,512       Growthpoint Properties Ltd. REIT      917,863   
  100,455       Investec Ltd.      834,030   
  93,293       Liberty Holdings Ltd.      915,858   
  408,065       MMI Holdings Ltd.      741,848   
  32,189       Mondi Ltd.      750,552   
  46,506       Nedbank Group Ltd.      776,377   
  166,781       Pick n Pay Stores Ltd.      808,136   
  1,067,707       Redefine Properties Ltd. REIT      893,967   
  41,912       Remgro Ltd.      841,661   
  145,218       RMB Holdings Ltd.      709,753   
  249,964       RMI Holdings      776,507   
  58,397       SPAR Group Ltd. (The)      841,019   
  75,314       Standard Bank Group Ltd.      785,125   
  140,757       Steinhoff International Holdings Ltd.      863,607   
  34,669       Tiger Brands Ltd.      795,095   
  83,430       Vodacom Group Ltd.      905,142   
  98,594       Woolworths Holdings Ltd.      732,101   
     

 

 

  
        18,413,548  
     

 

 

  
   South Korea—4.7%   
  21,445       GS Holdings Corp.      944,291   
  30,225       Hana Financial Group, Inc.      737,033   
  32,304       Hyundai Marine & Fire Insurance Co. Ltd.      961,994   
  23,073       KB Financial Group, Inc.      731,625   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   South Korea (continued)   
  1,665       Korea Zinc Co. Ltd.    $ 692,259   
  38,162       KT Corp.(a)      989,156   
  18,050       LG Electronics, Inc.      777,383   
  397       Lotte Confectionery Co. Ltd.      692,630   
  24,671       LS Corp.      837,479   
  718       Samsung Electronics Co. Ltd.      864,081   
     

 

 

  
        8,227,931  
     

 

 

  
   Taiwan—23.3%   
  1,131,582       Asia Cement Corp.      1,176,426   
  546,023       Cathay Financial Holding Co. Ltd.      780,429   
  454,600       Chailease Holding Co. Ltd.      872,413   
  2,165,868       Chang Hwa Commercial Bank      1,127,518   
  634,738       Cheng Shin Rubber Industry Co. Ltd.      1,151,634   
  2,380,000       China Development Financial Holding Corp.      641,490   
  268,000       China Steel Chemical Corp.      1,015,417   
  1,937,230       China Steel Corp.      1,172,596   
  679,000       Chunghwa Telecom Co. Ltd.      2,085,305   
  1,364,093       CTBC Financial Holding Co. Ltd.      750,044   
  1,525,973       E.Sun Financial Holding Co. Ltd.      918,963   
  1,428,000       Far Eastern Department Stores Co. Ltd.      866,561   
  1,009,440       Far Eastern New Century Corp.      920,401   
  410,000       Far EasTone Telecommunications Co. Ltd.      889,122   
  2,976,866       First Financial Holding Co. Ltd.      1,444,257   
  364,090       Formosa Chemicals & Fibre Corp.      835,545   
  318,000       Formosa Petrochemical Corp.      774,833   
  396,400       Formosa Plastics Corp.      921,903   
  418,000       Fubon Financial Holding Co. Ltd.      678,565   
  314,578       Hon Hai Precision Industry Co. Ltd.      839,172   
  2,514,468       Hua Nan Financial Holdings Co. Ltd.      1,212,174   
  658,308       Kenda Rubber Industrial Co. Ltd.      1,062,588   
  773,435       Lite-On Technology Corp.      805,277   
  1,276,000       Mega Financial Holding Co. Ltd.      931,545   
  413,000       Nan Ya Plastics Corp.      823,112   
  107,000       President Chain Store Corp.      711,938   
  408,000       Quanta Computer, Inc.      697,522   
  421,000       Ruentex Industries Ltd.      778,105   
  4,234,331       Shin Kong Financial Holding Co. Ltd.      1,016,078   
  211,000       Simplo Technology Co. Ltd.      750,705   
  2,912,194       SinoPac Financial Holdings Co. Ltd.      964,347   
  306,000       Standard Foods Corp.      740,881   
  769,000       Synnex Technology International Corp.      813,688   
  1,791,000       Ta Chong Bank Ltd.(a)      761,341   
  2,495,978       Taishin Financial Holding Co. Ltd.      980,292   
  814,000       Taiwan Cement Corp.      907,690   
  3,691,012       Taiwan Cooperative Financial Holding Co. Ltd.      1,654,296   
  672,000       Taiwan Fertilizer Co. Ltd.      860,092   
  304,000       Taiwan Mobile Co. Ltd.      959,847   
  177,000       Taiwan Semiconductor Manufacturing Co. Ltd.      744,236   
  414,523       Uni-President Enterprises Corp.      702,289   
  2,102,000       United Microelectronics Corp.      770,521   
  901,000       WPG Holdings Ltd.      943,644   
  1,819,592       Yuanta Financial Holding Co. Ltd.      717,445   
     

 

 

  
        41,172,247  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   43  

 

 

PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Thailand—7.7%   
  140,410       Advanced Info Service PCL NVDR    $ 919,815   
  239,525       Bangkok Bank PCL NVDR      1,128,008   
  1,549,559       Bangkok Dusit Medical Services PCL NVDR      827,767   
  3,719,379       BTS Group Holdings PCL NVDR      1,009,124   
  608,971       Central Pattana PCL NVDR      787,592   
  586,387       CP ALL PCL NVDR      824,330   
  3,933,365       Home Product Center PCL NVDR      774,121   
  548,224       Intouch Holdings PCL NVDR      1,156,022   
  149,428       Kasikornbank PCL NVDR      724,716   
  1,535,129       Krung Thai Bank PCL NVDR      738,053   
  3,315,373       Land and Houses PCL NVDR      796,976   
  65,990       Siam Cement PCL (The) NVDR      842,327   
  214,567       Siam Commercial Bank PCL (The) NVDR      805,361   
  1,498,711       Thai Beverage PCL NVDR      722,335   
  10,557,167       TMB Bank PCL NVDR      789,543   
  363,933       Total Access Communication PCL NVDR      695,788   
     

 

 

  
        13,541,878  
     

 

 

  
   Turkey—4.4%   
  171,352       Arcelik AS      935,739   
  49,237       BIM Birlesik Magazalar AS      1,002,800   
  62,707       Coca-Cola Icecek AS      795,790   
  487,262       Enka Insaat ve Sanayi AS      865,210   
  254,987       Haci Omer Sabanci Holding AS      810,956   
  219,743       KOC Holding AS      996,224   
  133,053       Migros Ticaret AS(a)      785,998   
  570,171       Petkim Petrokimya Holding AS(a)      842,058   
  357,717       Turk Telekomunikasyon AS      772,785   
     

 

 

  
        7,807,560  
     

 

 

  
   Total Investments
(Cost $196,871,626)—100.1%		      176,470,261   
   Other assets less liabilities—(0.1)%      (226,014 ) 
     

 

 

  
   Net Assets—100.0%    $ 176,244,247  
     

 

 

  

Investment Abbreviations:

ADR—American Depositary Receipt

GDR—Global Depositary Receipt

NVDR—Non-voting Depositary Receipt

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $756,819, which represented 0.43% of the Fund’s Net Assets.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   44  

 

 

Schedule of Investments

PowerShares S&P International Developed High Beta Portfolio (IDHB)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—99.9%   
   Australia—1.0%   
  1,361       BHP Billiton PLC    $ 21,870   
  11,101       Fortescue Metals Group Ltd.      16,553   
     

 

 

  
        38,423  
     

 

 

  
   Austria—2.7%   
  626       Erste Group Bank AG(a)      18,443   
  7,452       IMMOFINANZ AG(a)      19,197   
  776       OMV AG      20,744   
  1,569       Raiffeisen Bank International AG(a)      24,923   
  556       voestalpine AG      20,228   
     

 

 

  
        103,535  
     

 

 

  
   Belgium—2.1%   
  174       Delhaize Group SA      16,224   
  205       Groupe Bruxelles Lambert SA      16,737   
  273       KBC Groep NV      16,707   
  146       Solvay SA      16,580   
  378       Umicore SA      16,139   
     

 

 

  
        82,387  
     

 

 

  
   Canada—11.8%   
  4,553       Baytex Energy Corp.      18,513   
  7,982       Bonavista Energy Corp.      17,814   
  1,143       Cameco Corp.      16,179   
  796       Canadian Natural Resources Ltd.      18,447   
  4,897       Canadian Oil Sands Ltd.      36,942   
  1,175       Cenovus Energy, Inc.      17,495   
  1,530       Crescent Point Energy Corp.      20,839   
  2,806       Encana Corp.      21,340   
  4,456       Enerplus Corp.      21,014   
  4,637       First Quantum Minerals Ltd.      24,738   
  1,324       Gibson Energy, Inc.      17,639   
  6,256       Lundin Mining Corp.(a)      21,087   
  3,751       MEG Energy Corp.(a)      31,193   
  447       Methanex Corp.      17,824   
  2,418       Paramount Resources Ltd.,
Class A(a)		      24,451   
  17,472       Pengrowth Energy Corp.      17,093   
  63,803       Penn West Petroleum Ltd.      74,124   
  4,852       Precision Drilling Corp.      19,284   
  3,828       Teck Resources Ltd., Class B      22,412   
     

 

 

  
        458,428  
     

 

 

  
   Chile—0.4%   
  2,112       Antofagasta PLC      17,173   
     

 

 

  
   China—1.4%   
  42,000       Alibaba Health Information Technology Ltd.(a)      33,600   
  10,500       Fosun International Ltd.      19,211   
     

 

 

  
        52,811  
     

 

 

  
   Colombia—0.6%   
  10,954       Pacific Exploration and Production Corp.      21,350   
     

 

 

  
   Cyprus—0.4%   
  6,708       Ocean Rig UDW, Inc.      14,355   
     

 

 

  
   Denmark—0.5%   
  332       Vestas Wind Systems A/S      19,439   
     

 

 

  
   Finland—3.8%   
  558       Cargotec Oyj, Class B      19,983   
  713       Metso Oyj      17,540   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Finland (continued)   
  2,751       Nokia Oyj    $ 20,573   
  658       Nokian Renkaat Oyj      24,953   
  7,278       Outokumpu Oyj(a)      24,891   
  2,059       Stora Enso Oyj, Class R      19,208   
  1,089       UPM-Kymmene Oyj      20,511   
     

 

 

  
        147,659  
     

 

 

  
   France—13.9%   
  330       Accor SA      16,492   
  152       Air Liquide SA      19,796   
  274       Airbus Group SE      19,177   
  744       AXA SA      19,992   
  346       BNP Paribas SA      21,121   
  3,081       Bollore SA      15,322   
  412       Bouygues SA      15,686   
  179       Cap Gemini SA      16,022   
  542       Carrefour SA      17,764   
  262       Casino Guichard Perrachon SA      15,148   
  94       Christian Dior SE      18,597   
  432       Cie de Saint-Gobain      18,220   
  1,507       Credit Agricole SA      19,177   
  783       Electricite de France SA      14,648   
  1,113       Engie SA      19,616   
  144       Essilor International SA      19,025   
  112       LVMH Moet Hennessy Louis Vuitton SE      20,983   
  3,196       Natixis SA      19,700   
  359       Numericable-SFR SAS(a)      16,339   
  1,253       Orange SA      22,195   
  243       Renault SA      23,013   
  171       Sanofi      17,350   
  292       Schneider Electric SE      17,767   
  457       Societe Generale SA      21,359   
  1,068       Suez Environnement Co.      20,422   
  320       Technip SA      16,792   
  483       Total SA      23,553   
  64       Unibail-Rodamco SE REIT      17,964   
  257       Vinci SA      17,425   
     

 

 

  
        540,665  
     

 

 

  
   Germany—9.4%   
  104       Allianz SE      18,307   
  257       BASF SE      21,159   
  153       Bayer AG      20,510   
  181       Bayerische Motoren Werke AG      18,667   
  1,642       Commerzbank AG(a)      18,156   
  82       Continental AG      19,810   
  218       Daimler AG      19,017   
  692       Deutsche Bank AG      19,470   
  585       Deutsche Post AG      17,493   
  1,143       Deutsche Telekom AG      21,471   
  1,817       E.ON SE      19,263   
  238       HeidelbergCement AG      17,820   
  1,474       Infineon Technologies AG      18,228   
  94       Linde AG      16,380   
  603       METRO AG      18,671   
  229       Porsche Automobil Holding SE (Preference Shares)      10,776   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   45  

 

 

PowerShares S&P International Developed High Beta Portfolio (IDHB) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Germany (continued)   
  1,403       RWE AG    $ 19,613   
  179       Siemens AG      18,092   
  943       ThyssenKrupp AG      19,110   
  86       Volkswagen AG (Preference Shares)      10,383   
     

 

 

  
        362,396  
     

 

 

  
   Hong Kong—0.5%   
  6,000       Galaxy Entertainment Group Ltd.      20,632   
     

 

 

  
   India—0.8%   
  3,965       Vedanta Resources PLC      30,281   
     

 

 

  
   Ireland—1.4%   
  48,857       Bank of Ireland(a)      18,296   
  688       CRH PLC      18,894   
  597       Smurfit Kappa Group PLC      17,100   
     

 

 

  
        54,290  
     

 

 

  
   Italy—10.4%   
  873       Assicurazioni Generali SpA      16,626   
  604       Atlantia SpA      16,814   
  13,059       Banca Monte dei Paschi di Siena SpA(a)      24,120   
  1,346       Banco Popolare SC(a)      20,236   
  9,148       Enel Green Power SpA      19,453   
  4,505       Enel SpA      20,881   
  1,405       Eni SpA      23,063   
  397       EXOR SpA      19,800   
  1,288       Finmeccanica SpA(a)      16,931   
  6,646       Intesa Sanpaolo SpA      23,258   
  3,777       Mediaset SpA      19,276   
  2,185       Mediobanca SpA      22,085   
  2,785       Mediolanum SpA      22,812   
  1,047       Moncler SpA      16,944   
  878       Prysmian SpA      19,058   
  1,838       Saipem SpA(a)      17,349   
  683       Salvatore Ferragamo SpA      18,636   
  3,763       Snam SpA      19,578   
  3,640       UniCredit SpA      23,643   
  3,036       Unione di Banche Italiane SpA      22,839   
     

 

 

  
        403,402  
     

 

 

  
   Luxembourg—1.0%   
  3,173       ArcelorMittal SA      17,781   
  1,567       Tenaris SA      19,768   
     

 

 

  
        37,549  
     

 

 

  
   Macau—0.4%   
  10,000       MGM China Holdings Ltd.      14,658   
     

 

 

  
   Netherlands—3.0%   
  2,666       Aegon NV      16,504   
  625       Altice NV, Class A(a)      10,874   
  178       ASML Holding NV      16,637   
  1,379       ING Groep NV CVA      20,161   
  561       OCI NV(a)      15,942   
  288       Randstad Holding NV      17,284   
  724       Royal Dutch Shell PLC, Class A      18,897   
     

 

 

  
        116,299  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Norway—5.0%   
  4,440       Det Norske Oljeselskap ASA(a)    $ 27,364   
  1,171       DNB ASA      14,973   
  24,877       DNO ASA(a)      25,048   
  4,950       Norsk Hydro ASA      17,819   
  3,379       Opera Software ASA      21,184   
  3,844       Petroleum Geo-Services ASA      16,072   
  528       Schibsted ASA, Class A      17,783   
  1,261       Statoil ASA      20,297   
  5,057       Storebrand ASA(a)      17,767   
  795       Telenor ASA      15,061   
     

 

 

  
        193,368  
     

 

 

  
   Portugal—2.7%   
  407,200       Banco Comercial Portugues SA(a)      23,525   
  4,859       EDP-Energias de Portugal SA      18,078   
  2,256       Galp Energia SGPS SA      24,514   
  1,269       Jeronimo Martins SGPS SA      17,922   
  16,778       Sonae SGPS SA      20,165   
     

 

 

  
        104,204  
     

 

 

  
   Singapore—0.5%   
  527       InterOil Corp.(a)      20,163   
     

 

 

  
   Spain—4.8%   
  589       ACS Actividades de Construccion y Servicios SA      20,134   
  2,148       Banco Bilbao Vizcaya Argentaria SA      18,603   
  4,711       Banco Popular Espanol SA      18,037   
  3,700       Banco Santander SA      20,845   
  13,876       Bankia SA      17,965   
  3,917       CaixaBank SA      15,110   
  585       Industria de Diseno Texil SA      22,039   
  5,938       Mapfre SA      17,743   
  1,609       Repsol SA      20,395   
  1,253       Telefonica SA      16,651   
     

 

 

  
        187,522  
     

 

 

  
   Sweden—5.8%   
  655       Atlas Copco AB, Class A      17,202   
  508       Hexagon AB, Class B      17,757   
  848       Industrivarden AB, Class C      15,530   
  674       Investment AB Kinnevik, Class B      21,670   
  490       Investor AB, Class B      18,317   
  1,459       Lundin Petroleum AB(a)      21,221   
  1,340       Nordea Bank AB      14,914   
  1,716       Sandvik AB      16,148   
  820       Skanska AB, Class B      16,079   
  858       SKF AB, Class B      15,198   
  5,392       SSAB AB, Class A(a)      19,629   
  947       Trelleborg AB, Class B      16,105   
  1,546       Volvo AB, Class B      16,159   
     

 

 

  
        225,929  
     

 

 

  
   Switzerland—0.9%   
  10,978       Glencore PLC      19,074   
  2,477       STMicroelectronics NV      17,183   
     

 

 

  
        36,257  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   46  

 

 

PowerShares S&P International Developed High Beta Portfolio (IDHB) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom—14.7%   
  3,342       Aberdeen Asset Management PLC    $ 17,895   
  1,535       Amec Foster Wheeler PLC      16,855   
  2,130       Anglo American PLC      17,981   
  2,258       Aviva PLC      16,948   
  5,189       Barclays PLC      18,592   
  1,301       BG Group PLC      20,595   
  3,351       BP PLC      19,997   
  4,586       Centrica PLC      16,014   
  2,206       CNH Industrial NV, Class A      14,987   
  1,288       Fiat Chrysler Automobiles NV(a)      19,094   
  3,770       GKN PLC      16,722   
  1,120       Hargreaves Lansdown PLC      24,977   
  1,774       International Consolidated Airlines Group SA(a)      15,959   
  4,620       J Sainsbury PLC      19,008   
  431       London Stock Exchange Group PLC      16,940   
  6,744       Old Mutual PLC      22,112   
  1,628       Petrofac Ltd.      21,195   
  728       Prudential PLC      17,078   
  499       Rio Tinto PLC      18,176   
  3,695       Royal Bank of Scotland Group
PLC(a)		      18,124   
  351       SABMiller PLC      21,656   
  440       Schroders PLC      20,271   
  2,714       Seadrill Ltd.(a)      17,063   
  916       Smiths Group PLC      13,609   
  1,503       Standard Chartered PLC      16,745   
  2,548       Standard Life PLC      16,563   
  2,145       Subsea 7 SA(a)      16,794   
  6,606       Tesco PLC(a)      18,701   
  8,500       Tullow Oil PLC(a)      26,636   
  4,530       Vodafone Group PLC      14,989   
  6,539       WM Morrison Supermarkets PLC      17,017   
     

 

 

  
        569,293  
     

 

 

  
   Total Investments
(Cost $4,541,696)—99.9%		      3,872,468   
   Other assets less liabilities—0.1%      4,504  
     

 

 

  
   Net Assets—100.0%    $ 3,876,972  
     

 

 

  

Investment Abbreviations:

CVA—Dutch Certificates

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   47  

 

 

Schedule of Investments

PowerShares S&P International Developed Low Volatility Portfolio (IDLV)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—99.9%   
   Australia—11.8%   
  122,368       AGL Energy Ltd.    $ 1,460,587   
  138,220       Amcor Ltd.      1,346,068   
  59,467       ASX Ltd.      1,748,830   
  1,385,302       AusNet Services      1,428,157   
  68,510       Australia & New Zealand Banking Group Ltd.      1,329,983   
  185,489       Bendigo & Adelaide Bank Ltd.      1,416,007   
  335,357       Boral Ltd.      1,289,614   
  203,973       Brambles Ltd.      1,510,545   
  229,903       Coca-Cola Amatil Ltd.      1,494,261   
  26,888       Commonwealth Bank of Australia      1,471,930   
  21,080       CSL Ltd.      1,410,557   
  444,623       GPT Group (The) REIT      1,513,121   
  1,072,953       Mirvac Group REIT      1,381,724   
  66,754       National Australia Bank Ltd.      1,435,913   
  491,401       Scentre Group REIT      1,451,443   
  96,149       Sonic Healthcare Ltd.      1,322,560   
  538,763       Stockland REIT      1,556,741   
  168,147       Suncorp Group Ltd.      1,572,734   
  353,149       Sydney Airport      1,625,104   
  503,578       Tatts Group Ltd.      1,422,740   
  444,126       Telstra Corp. Ltd.      1,711,053   
  229,860       Transurban Group      1,712,093   
  646,253       Vicinity Centres REIT(a)      1,341,711   
  57,911       Wesfarmers Ltd.      1,628,287   
  59,629       Westpac Banking Corp.      1,334,978   
     

 

 

  
        36,916,741  
     

 

 

  
   Austria—0.9%   
  67,680       BUWOG AG      1,446,659   
  39,057       Oesterreichische Post AG      1,428,077   
     

 

 

  
        2,874,736  
     

 

 

  
   Belgium—2.3%   
  8,914       Ackermans & van Haaren NV      1,363,789   
  36,615       Ageas      1,625,353   
  29,074       Colruyt SA      1,446,371   
  19,501       Groupe Bruxelles Lambert SA      1,592,153   
  22,107       Telenet Group Holding NV(a)      1,292,333   
     

 

 

  
        7,319,999  
     

 

 

  
   Canada—18.5%   
  34,038       Bank of Montreal(b)      1,978,255   
  39,185       Bank of Nova Scotia      1,841,622   
  46,189       BCE, Inc.      1,995,339   
  44,541       Brookfield Asset Management, Inc., Class A      1,555,114   
  133,057       CAE, Inc.      1,501,067   
  23,579       Canadian Imperial Bank of Commerce(b)      1,807,240   
  23,156       Canadian National Railway Co.      1,413,589   
  14,879       Canadian Tire Corp. Ltd., Class A(b)      1,308,046   
  50,543       Canadian Utilities Ltd., Class A      1,328,910   
  77,155       CI Financial Corp.      1,839,902   
  25,090       Dollarama, Inc.      1,693,889   
  103,636       Dream Office Real Estate Investment Trust REIT(b)      1,662,643   
  46,069       Emera, Inc.(b)      1,508,462   
  69,669       Empire Co. Ltd., Class A      1,458,504   
  132,310       First Capital Realty, Inc.      1,958,837   
  53,271       Fortis, Inc.      1,541,107   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Canada (continued)   
  18,393       George Weston Ltd.    $ 1,548,085   
  68,987       Great-West Lifeco, Inc.      1,827,561   
  110,638       H&R Real Estate Investment Trust REIT(b)      1,774,132   
  49,295       IGM Financial, Inc.      1,424,199   
  26,313       Intact Financial Corp.      1,878,221   
  29,933       Loblaw Cos. Ltd.      1,576,324   
  88,248       Manulife Financial Corp.      1,462,313   
  51,275       Metro, Inc.      1,465,336   
  44,169       National Bank of Canada      1,462,116   
  23,548       Onex Corp.      1,426,901   
  69,057       Power Corp. of Canada      1,551,256   
  66,119       Power Financial Corp.      1,634,845   
  93,607       RioCan Real Estate Investment Trust REIT(b)      1,824,419   
  47,854       Rogers Communications, Inc., Class B      1,903,041   
  34,153       Royal Bank of Canada      1,951,786   
  57,059       Saputo, Inc.      1,359,804   
  95,975       Shaw Communications, Inc., Class B      1,991,609   
  51,615       TELUS Corp.      1,721,618   
  43,300       Toronto-Dominion Bank (The)      1,776,546   
     

 

 

  
        57,952,638  
     

 

 

  
   Denmark—0.5%   
  35,153       DSV A/S      1,431,905   
     

 

 

  
   Finland—0.4%   
  27,038       Sampo Oyj, Class A      1,328,508   
     

 

 

  
   France—3.2%   
  12,143       Aeroports de Paris      1,533,864   
  41,151       Alstom SA(a)      1,348,268   
  58,534       Bureau Veritas SA      1,330,048   
  83,632       CNP Assurances      1,200,070   
  22,834       Danone SA      1,599,427   
  18,865       Sodexo SA      1,687,352   
  55,294       Vivendi SA      1,338,580   
     

 

 

  
        10,037,609  
     

 

 

  
   Germany—1.7%   
  35,157       MAN SE      3,683,224   
  8,212       Muenchener Rueckversicherungs-Gesellschaft AG      1,646,456   
     

 

 

  
        5,329,680  
     

 

 

  
   Hong Kong—8.1%   
  425,599       Bank of East Asia Ltd. (The)      1,595,289   
  174,453       Cheung Kong Infrastructure Holdings Ltd.      1,624,080   
  250,213       CLP Holdings Ltd.      2,179,246   
  87,016       Hang Seng Bank Ltd.      1,601,074   
  3,798,445       HK Electric Investments & HK Electric Investments Ltd.(c)      2,916,188   
  973,218       Hong Kong & China Gas Co. Ltd.      1,976,549   
  323,816       Hysan Development Co. Ltd.      1,439,396   
  26,959       Jardine Matheson Holdings Ltd.      1,471,692   
  48,873       Jardine Strategic Holdings Ltd.      1,474,498   
  465,232       Kerry Properties Ltd.      1,380,671   
  253,228       Link REIT      1,517,715   
  324,677       MTR Corp. Ltd.      1,474,643   
  152,037       Power Assets Holdings Ltd.      1,517,408   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   48  

 

 

PowerShares S&P International Developed Low Volatility Portfolio (IDLV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Hong Kong (continued)   
  109,382       Sun Hung Kai Properties Ltd.    $ 1,466,405   
  141,093       Swire Pacific Ltd., Class A      1,638,478   
     

 

 

  
        25,273,332  
     

 

 

  
   Ireland—0.9%   
  77,630       Experian PLC      1,328,400   
  19,255       Kerry Group PLC, Class A      1,572,919   
     

 

 

  
        2,901,319  
     

 

 

  
   Israel—2.1%   
  263,115       Bank Hapoalim BM      1,372,679   
  346,768       Bank Leumi Le-Israel(a)      1,317,994   
  16,938       Check Point Software Technologies Ltd.(a)      1,438,714   
  725,661       Israel Discount Bank Ltd., Class A(a)      1,326,062   
  105,503       Mizrahi Tefahot Bank Ltd.      1,282,201   
     

 

 

  
        6,737,650  
     

 

 

  
   Italy—0.9%   
  80,482       Pirelli & C. SpA      1,329,122   
  274,101       Terna-Rete Elettrica Nationale SpA(b)      1,401,292   
     

 

 

  
        2,730,414  
     

 

 

  
   Japan—6.9%   
  741       Advance Residence Investment Corp. REIT      1,587,309   
  359,411       Aozora Bank Ltd.      1,319,404   
  43,970       Canon, Inc.      1,326,296   
  375       Frontier Real Estate Investment Corp. REIT      1,522,685   
  1,521       GLP J-REIT REIT      1,517,534   
  116,441       Kagome Co. Ltd.(b)      1,986,758   
  91,927       McDonald’s Holdings Co. Japan
Ltd.(b)		      2,177,910   
  98,588       Mitsui & Co. Ltd.      1,258,544   
  844       Nippon Prologis REIT, Inc. REIT      1,491,819   
  1,087       ORIX JREIT Inc. REIT      1,468,250   
  346,067       Osaka Gas Co. Ltd.      1,371,363   
  28,907       Takeda Pharmaceutical Co. Ltd.      1,420,497   
  138,387       TonenGeneral Sekiyu K.K.      1,443,789   
  1,154       United Urban Investment Corp. REIT      1,607,519   
     

 

 

  
        21,499,677  
     

 

 

  
   Luxembourg—0.4%   
  42,892       SES SA FDR, Class A      1,273,829   
     

 

 

  
   Netherlands—1.0%   
  19,820       Heineken Holding NV, Class A      1,596,741   
  50,309       NN Group NV      1,587,745   
     

 

 

  
        3,184,486  
     

 

 

  
   New Zealand—2.6%   
  476,327       Auckland International Airport Ltd.      1,695,208   
  304,992       Fisher & Paykel Healthcare Corp. Ltd.      1,605,462   
  297,988       Fletcher Building Ltd.      1,504,076   
  351,729       Ryman Healthcare Ltd.      1,877,661   
  462,680       Sky Network Television Ltd.      1,421,244   
     

 

 

  
        8,103,651  
     

 

 

  
   Norway—0.5%   
  94,684       Gjensidige Forsikring ASA      1,445,694   
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Singapore—14.0%   
  839,509       Ascendas Real Estate Investment Trust REIT    $ 1,432,650   
  1,651,261       CapitaLand Commercial Trust Ltd. REIT      1,662,462   
  643,839       CapitaLand Ltd.      1,425,135   
  1,123,552       CapitaLand Mall Trust REIT      1,588,456   
  255,741       City Developments Ltd.      1,449,899   
  132,723       DBS Group Holdings Ltd.      1,636,649   
  2,523,180       Hutchison Port Holdings Trust      1,400,365   
  2,801,811       Keppel REIT      1,930,559   
  268,458       Keppel Corp. Ltd.      1,357,146   
  739,241       M1 Ltd.      1,499,068   
  2,267,089       Mapletree Greater China Commercial Trust REIT(c)      1,610,677   
  2,520,068       Mapletree Logistics Trust REIT      1,835,394   
  270,217       Oversea-Chinese Banking Corp. Ltd.      1,742,277   
  637,176       SATS Ltd.      1,724,311   
  195,245       Singapore Airlines Ltd.      1,505,638   
  264,089       Singapore Exchange Ltd.      1,391,629   
  1,329,742       Singapore Post Ltd.      1,799,258   
  949,176       Singapore Press Holdings Ltd.      2,704,186   
  650,757       Singapore Technologies Engineering Ltd.      1,538,026   
  598,083       Singapore Telecommunications Ltd.      1,699,658   
  849,862       StarHub Ltd.      2,184,579   
  1,610,805       Suntec REIT      1,897,771   
  118,038       United Overseas Bank Ltd.      1,713,468   
  310,242       UOL Group Ltd.      1,453,186   
  313,406       Venture Corp. Ltd.      1,850,673   
  903,863       Wilmar International Ltd.      2,020,058   
     

 

 

  
        44,053,178  
     

 

 

  
   Spain—1.8%   
  78,792       Abertis Infraestructuras SA      1,315,138   
  53,092       Ferrovial SA      1,346,560   
  65,969       Gas Natural SDG SA      1,436,320   
  213,511       Iberdrola SA      1,532,350   
     

 

 

  
        5,630,368  
     

 

 

  
   Sweden—2.1%   
  34,741       Hennes & Mauritz AB, Class B      1,359,616   
  27,063       L E Lundbergforetagen AB, Class B      1,388,696   
  56,519       Swedbank AB, Class A      1,305,316   
  43,488       Swedish Match AB      1,376,198   
  242,921       TeliaSonera AB      1,251,089   
     

 

 

  
        6,680,915  
     

 

 

  
   Switzerland—3.3%   
  11,369       Kuehne + Nagel International AG      1,581,222   
  20,678       Nestle SA      1,585,855   
  8,854       Schindler Holding AG-PC      1,442,508   
  19,515       Swiss Re AG      1,819,354   
  2,699       Swisscom AG      1,396,389   
  21,723       Wolseley PLC      1,280,565   
  5,080       Zurich Insurance Group AG      1,346,593   
     

 

 

  
        10,452,486  
     

 

 

  
   United Kingdom—15.4%   
  20,331       AstraZeneca PLC      1,303,223   
  216,891       BAE Systems PLC      1,474,856   
  26,352       British American Tobacco PLC      1,570,740   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   49  

 

 

PowerShares S&P International Developed Low Volatility Portfolio (IDLV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   United Kingdom (continued)   
  118,201       British Land Co. PLC (The) REIT    $ 1,589,094   
  200,999       BT Group PLC      1,443,465   
  59,417       Bunzl PLC      1,705,885   
  67,449       Capita PLC      1,328,144   
  97,922       Compass Group PLC      1,692,271   
  51,994       Diageo PLC      1,508,426   
  300,745       Direct Line Insurance Group PLC      1,831,871   
  401,216       G4S PLC      1,503,861   
  69,256       GlaxoSmithKline PLC      1,502,773   
  154,859       Hammerson PLC REIT      1,522,280   
  170,398       HSBC Holdings PLC      1,335,813   
  265,649       Intu Properties PLC REIT      1,419,938   
  76,392       Land Securities Group PLC REIT      1,579,749   
  378,279       Legal & General Group PLC      1,528,303   
  1,179,095       Lloyds Banking Group PLC      1,342,618   
  118,010       National Grid PLC      1,685,490   
  12,826       Next PLC      1,584,677   
  72,712       Pearson PLC      967,433   
  58,467       Prudential PLC      1,371,602   
  16,953       Reckitt Benckiser Group PLC      1,660,999   
  86,647       RELX NV      1,488,362   
  92,593       RELX PLC      1,661,666   
  44,492       Severn Trent PLC      1,541,242   
  91,802       Sky PLC      1,553,897   
  58,169       SSE PLC      1,361,018   
  36,100       Unilever PLC      1,612,929   
  97,288       United Utilities Group PLC      1,485,236   
  21,068       Whitbread PLC      1,615,807   
  64,223       WPP PLC      1,446,131   
     

 

 

  
        48,219,799  
     

 

 

  
   United States—0.6%   
  43,041       Thomson Reuters Corp.      1,765,919   
     

 

 

  
   Total Investments
(excluding investments purchased with cash collateral from securities on loan)
(Cost $325,753,220)—99.9%		      313,144,533  
     

 

 

  
     
   Investments Purchased with Cash Collateral from Securities on Loan    
     
   Money Market Fund—3.7%   
  11,616,836       Invesco Liquid Assets Portfolio—Institutional Class, 0.16%(d)(e)
(Cost $11,616,836)		      11,616,836  
     

 

 

  
   Total Investments
(Cost $337,370,056)—103.6%		      324,761,369   
   Other assets less liabilities—(3.6)%      (11,333,309 ) 
     

 

 

  
   Net Assets—100.0%    $ 313,428,060  
     

 

 

  

Investment Abbreviations:

FDR—Fiduciary Depositary Receipt

PC—Participation Certificate

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Non-income producing security.
(b)  All or a portion of this security was out on loan at October 31, 2015.
(c)  Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2015 was $4,526,865, which represented 1.44% of the Fund’s Net Assets.
(d)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
(e)  The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 2H.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   50  

 

 

Schedule of Investments(a)

PowerShares S&P MidCap Low Volatility Portfolio (XMLV)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Consumer Discretionary—3.8%   
  27,865       John Wiley & Sons, Inc., Class A    $ 1,458,176   
  816       NVR, Inc.(b)      1,336,412   
  43,867       Service Corp. International      1,239,681   
     

 

 

  
        4,034,269  
     

 

 

  
   Consumer Staples—5.3%   
  19,049       Church & Dwight Co., Inc.      1,639,929   
  13,541       Edgewell Personal Care Co.      1,147,058   
  13,452       Ingredion, Inc.      1,278,747   
  13,832       Lancaster Colony Corp.      1,572,975   
     

 

 

  
        5,638,709  
     

 

 

  
   Financials—50.8%   
  14,271       Alexandria Real Estate Equities, Inc. REIT      1,280,680   
  2,720       Alleghany Corp.(b)      1,349,854   
  36,536       American Campus Communities, Inc. REIT      1,482,265   
  23,772       American Financial Group, Inc.      1,716,101   
  36,751       Arthur J. Gallagher & Co.      1,607,121   
  29,798       Aspen Insurance Holdings Ltd. (Bermuda)      1,448,481   
  19,484       Bank of Hawaii Corp.      1,275,812   
  50,765       Brown & Brown, Inc.      1,638,187   
  16,282       Camden Property Trust REIT      1,201,449   
  19,089       CBOE Holdings, Inc.      1,279,727   
  29,416       Commerce Bancshares, Inc.      1,339,899   
  52,845       Corporate Office Properties Trust REIT      1,215,435   
  38,364       Corrections Corp. of America REIT      1,093,374   
  42,410       Douglas Emmett, Inc. REIT      1,295,625   
  60,922       Duke Realty Corp. REIT      1,261,085   
  21,204       Endurance Specialty Holdings Ltd.      1,338,608   
  49,690       Equity One, Inc. REIT      1,320,760   
  8,229       Everest Re Group Ltd.      1,464,515   
  16,092       Extra Space Storage, Inc. REIT      1,275,130   
  8,423       FactSet Research Systems, Inc.      1,475,036   
  9,722       Federal Realty Investment Trust REIT      1,395,010   
  14,868       Hanover Insurance Group, Inc. (The)      1,252,629   
  32,429       Highwoods Properties, Inc. REIT      1,409,040   
  17,431       Kilroy Realty Corp. REIT      1,147,657   
  26,626       Lamar Advertising Co., Class A REIT      1,502,505   
  38,236       Liberty Property Trust REIT      1,300,789   
  15,265       Mid-America Apartment Communities, Inc. REIT      1,300,425   
  18,861       MSCI, Inc.      1,263,687   
  32,287       National Retail Properties, Inc. REIT      1,226,906   
  81,427       New York Community Bancorp, Inc.      1,345,174   
  76,641       Old Republic International Corp.      1,382,604   
  39,795       Potlatch Corp. REIT      1,243,196   
  19,378       Regency Centers Corp. REIT      1,316,929   
  14,814       Reinsurance Group of America, Inc.      1,336,815   
  14,827       RenaissanceRe Holdings Ltd. (Bermuda)      1,625,484   
  23,766       SEI Investments Co.      1,231,554   
  43,404       Tanger Factory Outlet Centers, Inc. REIT      1,516,970   
  36,632       UDR, Inc. REIT      1,262,339   
  133,280       Valley National Bancorp      1,399,440   
  23,870       W.R. Berkley Corp.      1,332,662   
     

 

 

  
        54,150,959  
     

 

 

  
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Health Care—8.5%   
  8,393       Bio-Rad Laboratories, Inc., Class A(b)    $ 1,170,656   
  12,956       Bio-Techne Corp.      1,142,719   
  25,429       Hill-Rom Holdings, Inc.      1,339,854   
  14,720       MEDNAX, Inc.(b)      1,037,318   
  37,023       Owens & Minor, Inc.      1,327,275   
  14,277       Sirona Dental Systems, Inc.(b)      1,558,049   
  11,443       Teleflex, Inc.      1,521,919   
     

 

 

  
        9,097,790  
     

 

 

  
   Industrials—10.4%   
  37,766       Copart, Inc.(b)      1,367,507   
  17,669       IDEX Corp.      1,356,272   
  17,002       MSC Industrial Direct Co., Inc., Class A      1,067,216   
  16,993       Nordson Corp.      1,210,581   
  17,408       Regal Beloit Corp.      1,110,456   
  44,812       Rollins, Inc.      1,201,858   
  11,994       Teledyne Technologies, Inc.(b)      1,070,225   
  27,625       Waste Connections, Inc.      1,505,010   
  9,727       Watsco, Inc.      1,196,713   
     

 

 

  
        11,085,838  
     

 

 

  
   Information Technology—5.3%   
  14,245       ANSYS, Inc.(b)      1,357,691   
  22,740       Broadridge Financial Solutions, Inc.      1,354,849   
  20,958       Jack Henry & Associates, Inc.      1,620,892   
  25,521       Synopsys, Inc.(b)      1,275,539   
     

 

 

  
        5,608,971  
     

 

 

  
   Materials—8.7%   
  19,683       AptarGroup, Inc.      1,447,882   
  10,803       Ashland, Inc.      1,185,305   
  29,394       Bemis Co., Inc.      1,345,657   
  19,257       Scotts Miracle-Gro Co. (The), Class A      1,274,043   
  24,607       Silgan Holdings, Inc.      1,251,758   
  34,110       Sonoco Products Co.      1,456,156   
  15,925       Valspar Corp. (The)      1,289,129   
     

 

 

  
        9,249,930  
     

 

 

  
   Utilities—7.2%   
  20,520       Alliant Energy Corp.      1,211,091   
  47,177       Aqua America, Inc.      1,349,262   
  21,123       Atmos Energy Corp.      1,330,749   
  45,759       Great Plains Energy, Inc.      1,258,373   
  59,297       Questar Corp.      1,224,483   
  32,079       Westar Energy, Inc.      1,273,536   
     

 

 

  
        7,647,494  
     

 

 

  
   Total Common Stocks and Other Equity Interests
(Cost $100,907,871)		      106,513,960  
     

 

 

  
     
   Money Market Fund—0.0%   
  25,577       Invesco Premier Portfolio—Institutional Class, 0.12%(c)
(Cost $25,577)		      25,577   
     

 

 

  
   Total Investments
(Cost $100,933,448)—100.0%		      106,539,537   
   Other assets less liabilities—0.0%      25,867  
     

 

 

  
   Net Assets—100.0%    $ 106,565,404  
     

 

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   51  

 

 

PowerShares S&P MidCap Low Volatility Portfolio (XMLV) (continued)

October 31, 2015

 

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
(c)  The security and the Fund are advised by wholly-owned subsidiaries of Invesco Ltd. and are therefore considered to be affiliated. The rate shown is the 7-day SEC standardized yield as of October 31, 2015.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   52  

 

 

Schedule of Investments(a)

PowerShares S&P SmallCap Low Volatility Portfolio (XSLV)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests—100.0%    
   Consumer Discretionary—4.0%   
  10,979       DineEquity, Inc.    $ 916,198   
  14,979       Monro Muffler Brake, Inc.      1,110,993   
  14,647       Pool Corp.      1,194,316   
  48,071       Superior Industries International, Inc.      946,037   
  24,669       Texas Roadhouse, Inc.      847,380   
     

 

 

  
        5,014,924  
     

 

 

  
   Consumer Staples—1.6%   
  28,699       Snyder’s-Lance, Inc.      1,019,963   
  11,033       WD-40 Co.      1,054,534   
     

 

 

  
        2,074,497  
     

 

 

  
   Financials—56.5%   
  38,339       Acadia Realty Trust REIT      1,260,970   
  40,423       Agree Realty Corp. REIT      1,308,897   
  28,813       American Assets Trust, Inc. REIT      1,214,756   
  18,928       AMERISAFE, Inc.      1,035,930   
  69,467       Astoria Financial Corp.      1,108,693   
  128,050       Bank Mutual Corp.      927,082   
  101,214       Brookline Bancorp, Inc.      1,148,779   
  146,125       Capstead Mortgage Corp. REIT      1,410,106   
  43,287       Cardinal Financial Corp.      983,914   
  156,759       Cedar Realty Trust, Inc. REIT      1,095,745   
  31,894       Chesapeake Lodging Trust REIT      878,361   
  21,075       City Holding Co.      1,008,017   
  30,183       Columbia Banking System, Inc.      1,005,698   
  28,645       Community Bank System, Inc.      1,167,570   
  19,779       CoreSite Realty Corp. REIT      1,086,856   
  54,494       CVB Financial Corp.      950,920   
  81,266       DiamondRock Hospitality Co. REIT      949,187   
  72,072       Dime Community Bancshares, Inc.      1,250,449   
  21,094       EastGroup Properties, Inc. REIT      1,184,639   
  34,398       Education Realty Trust, Inc. REIT      1,235,232   
  23,327       Encore Capital Group, Inc.(b)      949,409   
  21,149       EPR Properties REIT      1,201,475   
  77,115       F.N.B. Corp.      1,038,739   
  54,197       First Midwest Bancorp, Inc.      965,791   
  112,493       Franklin Street Properties Corp. REIT      1,172,177   
  30,005       Geo Group, Inc. (The) REIT      968,261   
  79,239       Getty Realty Corp. REIT      1,337,554   
  77,198       Government Properties Income Trust REIT      1,256,783   
  51,244       Healthcare Realty Trust, Inc. REIT      1,350,792   
  30,194       Horace Mann Educators Corp.      1,033,843   
  21,526       Independent Bank Corp./MA      1,006,125   
  13,790       Infinity Property & Casualty Corp.      1,110,371   
  138,058       Inland Real Estate Corp. REIT      1,221,813   
  43,902       Kite Realty Group Trust REIT      1,159,452   
  119,005       Lexington Realty Trust REIT      1,052,004   
  28,453       LTC Properties, Inc. REIT      1,219,211   
  91,049       Medical Properties Trust, Inc. REIT      1,028,854   
  95,883       National Penn Bancshares, Inc.      1,154,431   
  15,341       Navigators Group, Inc. (The)(b)      1,309,354   
  36,916       NBT Bancorp, Inc.      1,037,709   
  86,984       Northfield Bancorp, Inc.      1,332,595   
  105,133       Northwest Bancshares, Inc.      1,415,090   
  73,245       Oritani Financial Corp.      1,166,060   
  62,597       Parkway Properties, Inc. REIT      1,047,248   
Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Financials (continued)   
  27,374       ProAssurance Corp.    $ 1,449,727   
  57,439       Provident Financial Services, Inc.      1,167,161   
  14,783       PS Business Parks, Inc. REIT      1,268,234   
  68,576       Retail Opportunity Investments Corp. REIT      1,243,283   
  17,306       RLI Corp.      1,053,070   
  38,646       Sabra Health Care REIT, Inc. REIT      876,491   
  20,047       Safety Insurance Group, Inc.      1,161,724   
  19,892       Saul Centers, Inc. REIT      1,115,344   
  33,761       Selective Insurance Group, Inc.      1,231,939   
  21,543       Simmons First National Corp., Class A      1,110,326   
  70,247       Sterling Bancorp      1,081,101   
  75,785       Summit Hotel Properties, Inc. REIT      991,268   
  69,662       Talmer Bancorp, Inc., Class A      1,171,715   
  18,270       Tompkins Financial Corp.      991,696   
  151,245       TrustCo Bank Corp. NY      942,256   
  23,473       United Bankshares, Inc.      928,357   
  21,126       Universal Health Realty Income Trust REIT      1,049,751   
  61,685       Urstadt Biddle Properties, Inc., Class A REIT      1,239,869   
  21,158       Westamerica Bancorp.      935,395   
  19,990       Wintrust Financial Corp.      1,009,295   
     

 

 

  
        71,764,944  
     

 

 

  
   Health Care—2.3%   
  7,751       Chemed Corp.      1,219,155   
  16,942       CONMED Corp.      687,167   
  19,119       Greatbatch, Inc.(b)      1,021,911   
     

 

 

  
        2,928,233  
     

 

 

  
   Industrials—16.2%   
  33,459       ABM Industries, Inc.      950,236   
  28,611       Albany International Corp., Class A      1,074,915   
  23,070       Barnes Group, Inc.      867,201   
  23,778       Cubic Corp.      1,066,443   
  14,542       Curtiss-Wright Corp.      1,011,542   
  20,222       EMCOR Group, Inc.      976,318   
  18,264       EnPro Industries, Inc.      896,945   
  29,866       ESCO Technologies, Inc.      1,107,730   
  21,307       Exponent, Inc.      1,095,393   
  13,925       G&K Services, Inc., Class A      916,544   
  31,650       Healthcare Services Group, Inc.      1,179,279   
  31,337       Kaman Corp.      1,218,696   
  20,689       Matthews International Corp., Class A      1,194,376   
  15,352       Moog, Inc., Class A(b)      948,140   
  31,599       Mueller Industries, Inc.      996,000   
  11,586       National Presto Industries, Inc.      1,020,147   
  26,652       Simpson Manufacturing Co., Inc.      1,012,243   
  12,352       Standex International Corp.      1,108,221   
  35,301       Tetra Tech, Inc.      949,597   
  9,012       UniFirst Corp.      946,891   
     

 

 

  
        20,536,857  
     

 

 

  
   Information Technology—7.3%   
  44,697       Benchmark Electronics, Inc.(b)      884,107   
  13,242       CACI International, Inc., Class A(b)      1,285,004   
  31,926       CSG Systems International, Inc.      1,070,159   
  31,156       Forrester Research, Inc.      1,005,404   
  32,879       ManTech International Corp., Class A      950,203   
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   53  

 

 

PowerShares S&P SmallCap Low Volatility Portfolio (XSLV) (continued)

October 31, 2015

 

Number
of Shares		           Value  
   Common Stocks and Other Equity Interests (continued)    
   Information Technology (continued)   
  28,371       MKS Instruments, Inc.    $ 999,794   
  15,016       MTS Systems Corp.      991,506   
  14,198       OSI Systems, Inc.(b)      1,223,584   
  34,213       Progress Software Corp.(b)      830,692   
     

 

 

  
        9,240,453  
     

 

 

  
   Materials—2.6%   
  15,980       Deltic Timber Corp.      990,121   
  15,009       Kaiser Aluminum Corp.      1,220,081   
  15,522       Neenah Paper, Inc.      1,046,338   
     

 

 

  
        3,256,540  
     

 

 

  
   Utilities—9.5%   
  21,988       ALLETE, Inc.      1,104,017   
  31,953       Avista Corp.      1,081,609   
  28,930       El Paso Electric Co.      1,118,723   
  24,323       Laclede Group, Inc. (The)      1,424,598   
  33,174       New Jersey Resources Corp.      1,050,952   
  24,193       Northwest Natural Gas Co.      1,155,700   
  19,795       NorthWestern Corp.      1,072,691   
  28,481       Piedmont Natural Gas Co., Inc.      1,632,246   
  46,215       South Jersey Industries, Inc.      1,225,160   
  19,239       Southwest Gas Corp.      1,182,429   
     

 

 

  
        12,048,125  
     

 

 

  
   Total Investments
(Cost $120,482,290)—100.0%		      126,864,573   
   Other assets less liabilities—0.0%      60,945  
     

 

 

  
   Net Assets—100.0%    $ 126,925,518  
     

 

 

  

Investment Abbreviations:

REIT—Real Estate Investment Trust

Notes to Schedule of Investments:

(a)  Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.
(b)  Non-income producing security.
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   54  

 

 

 

(This Page Intentionally Left Blank)

 

Statements of Assets and Liabilities

October 31, 2015

 

    PowerShares
S&P 500®
ex-Rate Sensitive
Low Volatility
Portfolio (XRLV)		      PowerShares
S&P 500®
High Beta
Portfolio  (SPHB)		      PowerShares
S&P 500®
High Dividend
Low  Volatility
Portfolio (SPHD)		      PowerShares
S&P 500®
Low Volatility
Portfolio (SPLV)		  
Assets:           

Unaffiliated investments, at value(a)

   $ 107,724,323       $ 79,336,637       $ 537,782,901       $ 5,048,794,969   

Affiliated investments, at value

     —         713,554         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at value

     107,724,323         80,050,191         537,782,901         5,048,794,969   

Foreign currencies, at value

     —         —         —         —   

Receivables:

           

Dividends

     134,959         70,910         884,181         6,247,648   

Shares sold

     —         —         6,665,452         7,667,852   

Investments sold

     —         —         —         15,326,299   

Foreign tax reclaims

     —         —         —         —   

Securities lending

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

     107,859,282         80,121,101         545,332,534         5,078,036,768   
 

 

 

     

 

 

     

 

 

     

 

 

  
Liabilities:           

Due to custodian

     51,963         —         363,685         2,777,778   

Payables:

           

Investments purchased

     —         79,844         6,662,103         7,663,149   

Shares repurchased

     —         —         —         15,335,705   

Collateral upon return of securities loaned

     —         —         —         —   

Accrued unitary management fees

     22,125         16,713         126,899         1,027,537   

Accrued expenses

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities

     74,088         96,557         7,152,687         26,804,169   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 107,785,194       $ 80,024,544       $ 538,179,847       $ 5,051,232,599   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets Consist of:           

Shares of beneficial interest

   $ 107,883,020       $ 113,002,058       $ 554,640,547       $ 4,906,934,057   

Undistributed net investment income

     —         160,495         —         —   

Undistributed net realized gain (loss)

     (1,072,030 )       (20,210,472 )       (11,803,512 )       (136,050,005 ) 

Net unrealized appreciation (depreciation)

     974,204         (12,927,537 )       (4,657,188 )       280,348,547   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets   $ 107,785,194       $ 80,024,544       $ 538,179,847       $ 5,051,232,599   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding (unlimited amount authorized, $0.01 par value)

     4,250,001         2,550,000         16,200,000         131,750,000   

Net asset value

   $ 25.36       $ 31.38       $ 33.22       $ 38.34   
 

 

 

     

 

 

     

 

 

     

 

 

  

Market price

   $ 25.42       $ 31.42       $ 33.27       $ 38.40   
 

 

 

     

 

 

     

 

 

     

 

 

  

Unaffiliated investments, at cost

   $ 106,750,119       $ 92,116,063       $ 542,440,089       $ 4,768,446,422   
 

 

 

     

 

 

     

 

 

     

 

 

  

Affiliated investments, at cost

   $ —       $ 861,665       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total investments, at cost

   $ 106,750,119       $ 92,977,728       $ 542,440,089       $ 4,768,446,422   
 

 

 

     

 

 

     

 

 

     

 

 

  

Foreign currencies, at cost

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

(a) Includes securities on loan with an aggregate value of:

   $ —       $ —       $ —       $ —   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   56  

 

 

 

PowerShares
S&P 500
Momentum
Portfolio
(SPMO)		     PowerShares
S&P 500 Value
Portfolio (SPVU)		     PowerShares
S&P Emerging
Markets
High Beta
Portfolio
(EEHB)		     PowerShares
S&P Emerging
Markets
Low Volatility
Portfolio (EELV)		     PowerShares
S&P
International
Developed
High Beta
Portfolio (IDHB)		     PowerShares
S&P
International
Developed
Low Volatility
Portfolio (IDLV)		     PowerShares
S&P MidCap
Low Volatility
Portfolio (XMLV)		     PowerShares
S&P SmallCap
Low Volatility
Portfolio (XSLV)		  
             
$ 2,606,329      $ 2,578,002      $ 1,620,931      $ 176,470,261      $ 3,872,468      $ 313,144,533      $ 106,513,960      $ 126,864,573   
  —        —        —        —        —        11,616,836        25,577        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  2,606,329        2,578,002        1,620,931        176,470,261        3,872,468        324,761,369        106,539,537        126,864,573   
  —        —        907        185,171        3,319        103,486        —        —   
             
  1,372        1,356        3,184        101,076        1,846        556,991        47,527        129,642   
  —        —        —        —        —        —        —        —   
  2,753        1,072        —        17,846        512        89,394        —        —   
  —        —        —        29,586        8,687        225,324        —        —   
  —        —        —        —        —        12,808        —        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  2,610,454        2,580,430        1,625,022        176,803,940        3,886,832        325,749,372        106,587,064        126,994,215   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
             
  852        50        4,678        487,166        7,480        548,344        —        43,877   
             
  2,805        1,932        —        17,890        516        89,946        —        —   
  —        —        —        —        —        —        —        —   
  —        —        —        —        —        11,616,836        —        —   
  402        402        402        48,805        820        65,769        21,660        24,820   
  —        —        —        5,832        1,044        417        —        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  4,059        2,384        5,080        559,693        9,860        12,321,312        21,660        68,697   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 2,606,395      $ 2,578,046      $ 1,619,942      $ 176,244,247      $ 3,876,972      $ 313,428,060      $ 106,565,404      $ 126,925,518   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
             
$ 2,464,719      $ 2,504,269      $ 3,293,516      $ 227,758,234      $ 5,180,810      $ 338,241,577      $ 103,295,932      $ 123,478,161   
  1,101        1,021        24,089        362,848        19,495        1,654,038        246,836        400,879   
  (185 )      (84 )      (1,289,413 )      (31,468,955 )      (654,074 )      (13,845,405 )      (2,583,453 )      (3,335,805 ) 
  140,760        72,840        (408,250 )      (20,407,880 )      (669,259 )      (12,622,150 )      5,606,089        6,382,283   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 2,606,395      $ 2,578,046      $ 1,619,942      $ 176,244,247      $ 3,876,972      $ 313,428,060      $ 106,565,404      $ 126,925,518   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  100,001        100,001        100,000        7,900,000        150,000        10,450,000        3,100,000        3,700,000   
$ 26.06      $ 25.78      $ 16.20      $ 22.31      $ 25.85      $ 29.99      $ 34.38      $ 34.30   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 26.12      $ 25.83      $ 16.09      $ 22.13      $ 25.74      $ 29.90      $ 34.42      $ 34.30   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 2,465,569      $ 2,505,162      $ 2,028,655      $ 196,871,626      $ 4,541,696      $ 325,753,220      $ 100,907,871      $ 120,482,290   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ —      $ —      $ —      $ —      $ —      $ 11,616,836      $ 25,577      $ —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 2,465,569      $ 2,505,162      $ 2,028,655      $ 196,871,626      $ 4,541,696      $ 337,370,056      $ 100,933,448      $ 120,482,290   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ —      $ —      $ 830      $ 185,303      $ 3,287      $ 101,057      $ —      $ —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ —      $ —      $ —      $ —      $ —      $ 11,021,024      $ —      $ —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

 

   57  

 

 

Statements of Operations

For the year ended October 31, 2015

 

    PowerShares
S&P 500®
ex-Rate Sensitive
Low Volatility
Portfolio (XRLV)(a)		      PowerShares
S&P 500®
High Beta
Portfolio (SPHB)		      PowerShares
S&P 500®
High Dividend
Low Volatility
Portfolio (SPHD)		      PowerShares
S&P 500®
Low Volatility
Portfolio (SPLV)		  
Investment Income:           

Unaffiliated dividend income

   $ 674,225       $ 2,921,545       $ 17,092,399       $ 125,943,348   

Affiliated dividend income

     10         62,588         135         807   

Securities lending income

     —         —         —         —   

Foreign withholding tax

     —         (4,534 )       —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Income

     674,235         2,979,599         17,092,534         125,944,155   
 

 

 

     

 

 

     

 

 

     

 

 

  
Expenses:           

Unitary management fees

     88,832         554,884         1,393,359         12,537,586   

Tax expenses

     —         —         —         —   

Professional fees

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Total Expenses

     88,832         554,884         1,393,359         12,537,586   
 

 

 

     

 

 

     

 

 

     

 

 

  

Less: Waivers

     (44 )       (119 )       (373 )       (2,510 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Expenses

     88,788         554,765         1,392,986         12,535,076   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income

     585,447         2,424,834         15,699,548         113,409,079   
 

 

 

     

 

 

     

 

 

     

 

 

  
Realized and Unrealized Gain (Loss):           

Net realized gain (loss) from:

           

Investment securities

     (1,096,098 )       (15,073,000 )       (9,733,630 )       (78,378,668 ) 

In-kind redemptions

     389,848         25,580,637         39,731,591         468,914,443   

Foreign currencies

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized gain (loss)

     (706,250 )       10,507,637         29,997,961         390,535,775   
 

 

 

     

 

 

     

 

 

     

 

 

  

Change in net unrealized appreciation (depreciation) on:

           

Investment securities

     974,204         (23,077,407 )       (21,770,244 )       (187,322,549 ) 

Foreign currencies

     —         —         —         —   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net change in unrealized appreciation (depreciation)

     974,204         (23,077,407 )       (21,770,244 )       (187,322,549 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net realized and unrealized gain (loss)

     267,954         (12,569,770 )       8,227,717         203,213,226   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations.

   $ 853,401       $ (10,144,936 )     $ 23,927,265       $ 316,622,305   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)  For the period April 6, 2015 (commencement of investment operations) through October 31, 2015.
(b)  For the period October 6, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   58  

 

 

 

PowerShares
S&P 500
Momentum
Portfolio
(SPMO)(b)		     PowerShares
S&P 500
Value
Portfolio
(SPVU)(b)		     PowerShares
S&P Emerging
Markets
High Beta
Portfolio
(EEHB)		     PowerShares
S&P Emerging
Markets
Low Volatility
Portfolio
(EELV)		     PowerShares
S&P
International
Developed
High Beta
Portfolio (IDHB)		     PowerShares
S&P
International
Developed
Low Volatility
Portfolio (IDLV)		     PowerShares
S&P MidCap
Low Volatility
Portfolio (XMLV)		     PowerShares
S&P SmallCap
Low Volatility
Portfolio (XSLV)		  
             
$ 1,503      $ 1,423      $ 130,140      $ 8,027,842      $ 232,643      $ 11,906,663      $ 1,903,411      $ 2,167,018   
  —        —        6        151        3        53        34        20   
  —        —        —        —        —        196,538        —        —   
  —        —        (9,638 )      (1,196,929 )      (29,685 )      (927,664 )      —        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  1,503        1,423        120,508        6,831,064        202,961        11,175,590        1,903,445        2,167,038   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
             
  402        402        19,314        998,262        26,499        1,095,582        213,889        209,717   
  —        —        —        10,103        —        —        —        —   
  —        —        —        —        811        324        —        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  402        402        19,314        1,008,365        27,310        1,095,906        213,889        209,717   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  —        —        (6,886 )      (354,295 )      (7,582 )      (313,291 )      (80 )      (61 ) 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  402        402        12,428        654,070        19,728        782,615        213,809        209,656   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  1,101        1,021        108,080        6,176,994        183,233        10,392,975        1,689,636        1,957,382   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
             
             
  (185 )      (84 )      (984,086 )      (24,839,772 )      (453,575 )      (10,880,473 )      (1,804,986 )      (2,448,023 ) 
  —        —        (86,553 )      150,460        (139,743 )      3,126,503        4,546,488        3,659,850   
  —        —        (30,479 )      (639,024 )      (499 )      (111,801 )      —        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  (185 )      (84 )      (1,101,118 )      (25,328,336 )      (593,817 )      (7,865,771 )      2,741,502        1,211,827   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
             
  140,760        72,840        (114,455 )      (21,372,796 )      (333,709 )      (13,963,043 )      2,324,716        2,581,765   
  —        —        (354 )      (503 )      289        2,976        —        —   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  140,760        72,840        (114,809 )      (21,373,299 )      (333,420 )      (13,960,067 )      2,324,716        2,581,765   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  140,575        72,756        (1,215,927 )      (46,701,635 )      (927,237 )      (21,825,838 )      5,066,218        3,793,592   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
$ 141,676      $ 73,777      $ (1,107,847 )    $ (40,524,641 )    $ (744,004 )    $ (11,432,863 )    $ 6,755,854      $ 5,750,974   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

 

   59  

 

 

Statements of Changes in Net Assets

For the years ended October 31, 2015 and 2014

 

    PowerShares
S&P  500®
ex-Rate Sensitive
Low Volatility
Portfolio (XRLV)		      PowerShares S&P 500®
High Beta Portfolio (SPHB)		  
    2015(a)      2015      2014  
Operations:        

Net investment income

   $ 585,447       $ 2,424,834       $ 3,298,157   

Net realized gain (loss)

     (706,250 )       10,507,637         107,405,881   

Net change in unrealized appreciation (depreciation)

     974,204         (23,077,407 )       (46,311,499 ) 
 

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     853,401         (10,144,936 )       64,392,539   
 

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:        

Net investment income

     (585,447 )       (2,644,196 )       (3,365,476 ) 

Net realized gains

     —         —         —   

Return of capital

     (10,253 )       —         —   
 

 

 

     

 

 

     

 

 

  

Total distributions to shareholders

     (595,700 )       (2,644,196 )       (3,365,476 ) 
 

 

 

     

 

 

     

 

 

  
Shareholder Transactions:        

Proceeds from shares sold

     118,619,572         332,013,112         439,545,025   

Value of shares repurchased

     (11,092,079 )       (472,366,099 )       (797,614,005 ) 
 

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     107,527,493         (140,352,987 )       (358,068,980 ) 
 

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     107,785,194         (153,142,119 )       (297,041,917 ) 
 

 

 

     

 

 

     

 

 

  
Net Assets:        

Beginning of year

     —         233,166,663         530,208,580   
 

 

 

     

 

 

     

 

 

  

End of year

   $ 107,785,194       $ 80,024,544       $ 233,166,663   
 

 

 

     

 

 

     

 

 

  

Undistributed net investment income at end of year

   $ —       $ 160,495       $ 379,857   
 

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:        

Shares sold

     4,700,001         9,600,000         14,050,000   

Shares repurchased

     (450,000 )       (13,900,000 )       (25,800,100 ) 

Shares outstanding, beginning of year

     —         6,850,000         18,600,100   
 

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     4,250,001         2,550,000         6,850,000   
 

 

 

     

 

 

     

 

 

  

 

(a)  For the period April 6, 2015 (commencement of investment operations) through October 31, 2015.
(b)  For the period October 6, 2015 (commencement of investment operations) through October 31, 2015.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   60  

 

 

 

PowerShares S&P 500®
High Dividend Low Volatility
Portfolio (SPHD)		      PowerShares S&P 500®
Low Volatility
Portfolio (SPLV)		      PowerShares
S&P 500 Momentum
Portfolio (SPMO)		      PowerShares
S&P 500 Value
Portfolio (SPVU)		  
2015      2014      2015      2014      2015(b)      2015(b)  
              
$ 15,699,548       $ 5,337,701       $ 113,409,079       $ 99,104,703       $ 1,101       $ 1,021   
  29,997,961         7,814,913         390,535,775         297,456,642         (185 )       (84 ) 
  (21,770,244 )       13,127,058         (187,322,549 )       173,393,438         140,760         72,840   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  23,927,265         26,279,672         316,622,305         569,954,783         141,676         73,777   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  (16,582,835 )       (5,647,446 )       (121,208,205 )       (99,488,091 )       —         —   
  —         (90,900 )       —         —         —         —   
  —         —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (16,582,835 )       (5,738,346 )       (121,208,205 )       (99,488,091 )       —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  675,772,284         145,057,982         4,162,771,118         2,092,836,250         2,464,719         2,504,269   
  (355,459,484 )       (94,042,121 )       (3,805,469,077 )       (2,040,443,235 )       —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  320,312,800         51,015,861         357,302,041         52,393,015         2,464,719         2,504,269   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  327,657,230         71,557,187         552,716,141         522,859,707         2,606,395         2,578,046   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  210,522,617         138,965,430         4,498,516,458         3,975,656,751         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 538,179,847       $ 210,522,617       $ 5,051,232,599       $ 4,498,516,458       $ 2,606,395       $ 2,578,046   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ —       $ —       $ —       $ 5,205       $ 1,101       $ 1,021   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
              
  20,600,000         4,850,000         110,250,000         60,800,000         100,001         100,001   
  (10,950,000 )       (3,200,001 )       (101,400,000 )       (60,000,100 )       —         —   
  6,550,000         4,900,001         122,900,000         122,100,100         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  16,200,000         6,550,000         131,750,000         122,900,000         100,001         100,001   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   61  

 

 

Statements of Changes in Net Assets (continued)

For the years ended October 31, 2015 and 2014

 

        
PowerShares S&P Emerging
Markets High Beta
Portfolio (EEHB)		      PowerShares S&P Emerging
Markets Low Volatility
Portfolio (EELV)		  
    2015      2014      2015      2014  
Operations:           

Net investment income

   $ 108,080       $ 120,933       $ 6,176,994       $ 6,104,718   

Net realized gain (loss)

     (1,101,118 )       472,287         (25,328,336 )       (1,769,768 ) 

Net change in unrealized appreciation (depreciation)

     (114,809 )       (401,577 )       (21,373,299 )       (8,688,880 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     (1,107,847 )       191,643         (40,524,641 )       (4,353,930 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Distributions to Shareholders from:           

Net investment income

     (94,542 )       (115,465 )       (5,829,953 )       (5,964,040 ) 
 

 

 

     

 

 

     

 

 

     

 

 

  
Shareholder Transactions:           

Proceeds from shares sold

     2,119,862         8,704,017         33,644,866         36,581,186   

Value of shares repurchased

     (5,807,510 )       (6,691,859 )       (49,293,311 )       (5,467,411 ) 

Transaction fees

     —         —         151,175         46,054   
 

 

 

     

 

 

     

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from shares transactions

     (3,687,648 )       2,012,158         (15,497,270 )       31,159,829   
 

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets

     (4,890,037 )       2,088,336         (61,851,864 )       20,841,859   
 

 

 

     

 

 

     

 

 

     

 

 

  
Net Assets:           

Beginning of year

     6,509,979         4,421,643         238,096,111         217,254,252   
 

 

 

     

 

 

     

 

 

     

 

 

  

End of year

   $ 1,619,942       $ 6,509,979       $ 176,244,247       $ 238,096,111   
 

 

 

     

 

 

     

 

 

     

 

 

  

Undistributed net investment income (loss) at end of year

   $ 24,089       $ 21,421       $ 362,848       $ 574,276   
 

 

 

     

 

 

     

 

 

     

 

 

  
Changes in Shares Outstanding:           

Shares sold

     100,000         400,000         1,300,000         1,300,000   

Shares repurchased

     (300,000 )       (300,001 )       (2,100,000 )       (200,001 ) 

Shares outstanding, beginning of year

     300,000         200,001         8,700,000         7,600,001   
 

 

 

     

 

 

     

 

 

     

 

 

  

Shares outstanding, end of year

     100,000         300,000         7,900,000         8,700,000   
 

 

 

     

 

 

     

 

 

     

 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   62  

 

 

 

    
PowerShares S&P International
Developed High Beta
Portfolio (IDHB)		      PowerShares S&P International
Developed Low Volatility
Portfolio (IDLV)		      PowerShares S&P MidCap
Low Volatility
Portfolio (XMLV)		      PowerShares S&P SmallCap
Low Volatility
Portfolio (XSLV)		  
2015      2014      2015      2014      2015      2014      2015      2014  
                    
$ 183,233       $ 82,525       $ 10,392,975       $ 6,817,294       $ 1,689,636       $ 599,888       $ 1,957,382       $ 1,114,805   
  (593,817 )       823,999         (7,865,771 )       3,921,853         2,741,502         1,106,863         1,211,827         2,697,557   
  (333,420 )       (834,091 )       (13,960,067 )       (6,175,586 )       2,324,716         2,590,744         2,581,765         1,323,766   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (744,004 )       72,433         (11,432,863 )       4,563,561         6,755,854         4,297,495         5,750,974         5,136,128   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  (166,413 )       (158,816 )       (9,605,676 )       (6,794,143 )       (1,549,096 )       (533,848 )       (1,805,010 )       (965,942 ) 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  8,879,956         13,222,352         132,799,559         169,720,371         93,686,053         33,131,405         101,767,030         52,626,319   
  (11,028,998 )       (11,998,891 )       (61,879,387 )       (39,560,619 )       (36,873,605 )       (13,537,992 )       (34,772,156 )       (32,222,805 ) 
  —         —         —         —         —         —         —         —   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (2,149,042 )       1,223,461         70,920,172         130,159,752         56,812,448         19,593,413         66,994,874         20,403,514   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  (3,059,459 )       1,137,078         49,881,633         127,929,170         62,019,206         23,357,060         70,940,838         24,573,700   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  6,936,431         5,799,353         263,546,427         135,617,257         44,546,198         21,189,138         55,984,680         31,410,980   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 3,876,972       $ 6,936,431       $ 313,428,060       $ 263,546,427       $ 106,565,404       $ 44,546,198       $ 126,925,518       $ 55,984,680   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
$ 19,495       $ (6,555 )     $ 1,654,038       $ 383,823       $ 246,836       $ 106,296       $ 400,879       $ 248,507   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
                    
  300,000         450,000         4,200,000         5,200,000         2,800,000         1,100,000         3,050,000         1,700,000   
  (400,001 )       (400,000 )       (2,050,000 )       (1,200,001 )       (1,100,000 )       (450,001 )       (1,050,000 )       (1,050,001 ) 
  250,001         200,001         8,300,000         4,300,001         1,400,000         750,001         1,700,000         1,050,001   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
  150,000         250,001         10,450,000         8,300,000         3,100,000         1,400,000         3,700,000         1,700,000   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

 

   63  

 

 

Financial Highlights

 

PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV)

 

    For the Period
April 6,  2015(a)
Through
October 31, 2015
  
   
Per Share Operating Performance:  

Net asset value at beginning of period

   $ 25.14   

Net investment income(b)

     0.23   

Net realized and unrealized gain on investments

     0.18   

Total from investment operations

     0.41   

Distributions to shareholders from:

  

Net investment income

     (0.19 ) 

Return of capital

     (0.00 )(c) 

Total distributions

     (0.19 ) 

Net asset value at end of period

   $ 25.36  

Market price at end of period(d)

   $ 25.42  
Net Asset Value Total Return(e)     1.62 %(f) 
Market Price Total Return(e)     1.86 %(f) 
Ratios/Supplemental Data:  

Net assets at end of period (000’s omitted)

   $ 107,785   

Ratio to average net assets of:

  

Expenses

     0.25 %(g) 

Net investment income

     1.65 %(g) 

Portfolio turnover rate(h)

     32 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  Amount represents less than $(0.005).
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (April 9, 2015, the first day of trading on the exchange) to October 31, 2015 was 1.62%. The market price total return from Fund Inception to October 31, 2015 was 1.78%.
(g)  Annualized.
(h)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   64  

 

 

Financial Highlights (continued)

 

PowerShares S&P 500® High Beta Portfolio (SPHB)

 

    Year Ended October 31,      For the Period
May 2,  2011(a)
Through
October 31, 2011		  
    2015     2014      2013      2012     
Per Share Operating Performance:             

Net asset value at beginning of period

   $ 34.04      $ 28.51      $ 20.42      $ 19.56      $ 25.00  

Net investment income(b)

     0.37        0.29         0.22         0.19         0.07   

Net realized and unrealized gain (loss) on investments

     (2.58 )      5.54         8.08         0.81 (c)       (5.42 ) 

Total from investment operations

     (2.21 )      5.83         8.30        1.00        (5.35 ) 

Distributions to shareholders from:

             

Net investment income

     (0.45 )      (0.30 )       (0.21 )       (0.14 )       (0.09 ) 

Net asset value at end of period

   $ 31.38      $ 34.04       $ 28.51      $ 20.42      $ 19.56  

Market price at end of period(d)

   $ 31.42      $ 34.05       $ 28.54      $ 20.41      $ 19.58  
Net Asset Value Total Return(e)     (6.56 )%      20.55 %       40.88 %       5.17 %       (21.41 )%(f) 
Market Price Total Return(e)     (6.47 )%      20.47 %       41.10 %       5.01 %       (21.33 )%(f) 
Ratios/Supplemental Data:             

Net assets at end of period (000’s omitted)

   $ 80,025      $ 233,167       $ 530,209       $ 108,208       $ 11,740   

Ratio to average net assets of:

             

Expenses

     0.25 %      0.25 %       0.25 %       0.25 %       0.25 %(g) 

Net investment income

     1.09 %      0.93 %       0.89 %       0.93 %       0.75 %(g) 

Portfolio turnover rate(h)

     90 %      78 %       65 %       31 %       16 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  Due to timing of creations and redemptions of capital shares, the net realized and unrealized gain (loss) per share is not in accord with the Fund’s change in net realized and unrealized gain (loss) on investment securities and in-kind transactions for the period.
(d)  The mean between the last bid and ask prices.
(e)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(f)  The net asset value total return from Fund Inception (May 5, 2011, the first day of trading on the exchange) to October 31, 2011 was (18.78)%. The market price total return from Fund Inception to October 31, 2011 was (18.66)%.
(g)  Annualized.
(h)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   65  

 

 

Financial Highlights (continued)

 

PowerShares S&P 500® High Dividend Low Volatility Portfolio (SPHD)

 

    Year Ended October 31,      For the Period
October 12,  2012(a)
Through
October 31, 2012		  
    2015      2014      2013     
Per Share Operating Performance:           

Net asset value at beginning of period

   $ 32.14       $ 28.36      $ 25.03      $ 25.00  

Net investment income(b)

     1.10         1.01         0.98         0.04   

Net realized and unrealized gain (loss) on investments

     1.13         3.86         3.41        (0.01 ) 

Total from investment operations

     2.23         4.87         4.39        0.03  

Distributions to shareholders from:

           

Net investment income

     (1.15 )       (1.07 )       (1.06 )       —   

Net realized gains

     —         (0.02 )       —        —  

Total distributions

     (1.15 )       (1.09 )       (1.06 )       —  

Net asset value at end of period

   $ 33.22       $ 32.14       $ 28.36      $ 25.03  

Market price at end of period(c)

   $ 33.27       $ 32.15       $ 28.39      $ 25.04  
Net Asset Value Total Return(d)     7.07 %       17.59 %       17.95 %       0.12 %(e) 
Market Price Total Return(d)     7.20 %       17.50 %       18.03 %       0.16 %(e) 
Ratios/Supplemental Data:           

Net assets at end of period (000’s omitted)

   $ 538,180       $ 210,523       $ 138,965       $ 7,508   

Ratio to average net assets of:

           

Expenses

     0.30 %       0.30 %       0.30 %       0.30 %(f) 

Net investment income

     3.38 %       3.39 %       3.59 %       5.03 %(f) 

Portfolio turnover rate(g)

     48 %       53 %       47 %       — % 

 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (October 18, 2012, the first day of trading on the exchange) to October 31, 2012 was (2.34)%. The market price total return from Fund Inception to October 31, 2012 was (2.34)%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   66  

 

 

Financial Highlights (continued)

 

PowerShares S&P 500® Low Volatility Portfolio (SPLV)

 

    Year Ended October 31,      For the Period
May 2,  2011(a)
Through
October 31, 2011		  
    2015      2014      2013      2012     
Per Share Operating Performance:              

Net asset value at beginning of period

   $ 36.60       $ 32.56      $ 28.07      $ 25.01      $ 25.00  

Net investment income(b)

     0.85         0.83         0.88         0.80         0.33   

Net realized and unrealized gain on investments

     1.78         4.04         4.51         3.07         0.07   

Total from investment operations

     2.63         4.87         5.39        3.87        0.40  

Distributions to shareholders from:

              

Net investment income

     (0.89 )       (0.83 )       (0.90 )       (0.81 )       (0.32 ) 

Return of capital

     —         —        —        —        (0.07 ) 

Total distribution

     (0.89 )       (0.83 )       (0.90 )       (0.81 )       (0.39 ) 

Net asset value at end of period

   $ 38.34       $ 36.60       $ 32.56      $ 28.07      $ 25.01  

Market price at end of period(c)

   $ 38.40       $ 36.62       $ 32.59      $ 28.08      $ 25.04  
Net Asset Value Total Return(d)     7.28 %       15.18 %       19.51 %       15.70 %       1.66 %(e) 
Market Price Total Return(d)     7.39 %       15.14 %       19.58 %       15.60 %       1.78 %(e) 
Ratios/Supplemental Data:              

Net assets at end of period (000’s omitted)

   $ 5,051,233       $ 4,498,516       $ 3,975,657       $ 2,749,115       $ 572,633   

Ratio to average net assets of:

              

Expenses

     0.25 %       0.25 %       0.25 %       0.25 %       0.25 %(f) 

Net investment income

     2.26 %       2.44 %       2.87 %       2.95 %       2.83 %(f) 

Portfolio turnover rate(g)

     65 %       51 %       50 %       17 %       12 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (May 5, 2011, the first day of trading on the exchange) to October 31, 2011 was 2.52%. The market price total return from Fund Inception to October 31, 2011 was 2.65%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P 500 Momentum Portfolio (SPMO)

 

    For the Period
October 6,  2015(a)
Through
October 31, 2015
  
Per Share Operating Performance:  

Net asset value at beginning of period

   $ 24.65   

Net investment income(b)

     0.01   

Net realized and unrealized gain on investments

     1.40   

Total from investment operations

     1.41   

Net asset value at end of period

   $ 26.06  

Market price at end of period(c)

   $ 26.12  
Net Asset Value Total Return(d)     5.72 %(e) 
Market Price Total Return(d)     5.96 %(e) 
Ratios/Supplemental Data:  

Net assets at end of period (000’s omitted)

   $ 2,606   

Ratio to average net assets of:

  

Expenses

     0.25 %(f) 

Net investment income

     0.69 %(f) 

Portfolio turnover rate(g)

     1 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (October 9, 2015, the first day of trading on the exchange) to October 31, 2015 was 3.62%. The market price total return from Fund Inception to October 31, 2015 was 3.77%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   67  

 

 

Financial Highlights (continued)

 

PowerShares S&P 500 Value Portfolio (SPVU)

 

    For the Period
October 6,  2015(a)
Through
October 31, 2015		  
   
Per Share Operating Performance:  

Net asset value at beginning of period

   $ 25.04   

Net investment income(b)

     0.01   

Net realized and unrealized gain on investments

     0.73   

Total from investment operations

     0.74   

Net asset value at end of period

   $ 25.78  

Market price at end of period(c)

   $ 25.83  
Net Asset Value Total Return(d)     2.96 %(e) 
Market Price Total Return(d)     3.15 %(e) 
Ratios/Supplemental Data:  

Net assets at end of period (000’s omitted)

   $ 2,578   

Ratio to average net assets of:

  

Expenses

     0.25 %(f) 

Net investment income

     0.63 %(f) 

Portfolio turnover rate(g)

     0 %(h) 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (October 9, 2015, the first day of trading on the exchange) to October 31, 2015 was 1.38%. The market price total return from Fund Inception to October 31, 2015 was 1.45%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.
(h)  Amount represents less than 0.5%.

PowerShares S&P Emerging Markets High Beta Portfolio (EEHB)

 

    Year Ended October 31,      For the Period
February 22, 2012(a)
Through
October 31, 2012		  
    2015     2014      2013     
Per Share Operating Performance:          

Net asset value at beginning of period

   $ 21.70      $ 22.11      $ 21.74      $ 25.00  

Net investment income(b)

     0.52        0.47         0.34         0.29   

Net realized and unrealized gain (loss) on investments

     (5.69 )      (0.43 )       0.38        (3.40 ) 

Total from investment operations

     (5.17 )      0.04         0.72        (3.11 ) 

Distributions to shareholders from:

          

Net investment income

     (0.33 )      (0.45 )       (0.35 )       (0.15 ) 

Net asset value at end of period

   $ 16.20      $ 21.70       $ 22.11      $ 21.74  

Market price at end of period(c)

   $ 16.09      $ 21.56       $ 21.90      $ 21.78  
Net Asset Value Total Return(d)     (24.15 )%      0.22 %       3.38 %       (12.44 )%(e) 
Market Price Total Return(d)     (24.18 )%      0.52 %       2.21 %       (12.27 )%(e) 
Ratios/Supplemental Data:          

Net assets at end of period (000’s omitted)

   $ 1,620      $ 6,510       $ 4,422       $ 2,174   

Ratio to average net assets of:

          

Expenses, after Waivers

     0.29 %      0.29 %       0.31 %       0.29 %(f) 

Expenses, prior to Waivers

     0.45 %      0.45 %       0.47 %       0.45 %(f) 

Net investment income, after Waivers

     2.52 %      2.21 %       1.60 %       1.97 %(f) 

Portfolio turnover rate(g)

     134 %      127 %       117 %       47 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (February 24, 2012, the first day of trading on the exchange) to October 31, 2012 was (12.47)%. The market price total return from Fund Inception to October 31, 2012 was (13.04)%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   68  

 

 

Financial Highlights (continued)

 

PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV)

 

    Year Ended October 31,      For the Period
January 11,  2012(a)
Through
October 31, 2012		  
    2015     2014     2013     
Per Share Operating Performance:         

Net asset value at beginning of period

   $ 27.37      $ 28.59     $ 27.15      $ 25.00  

Net investment income(b)

     0.69        0.75        0.75         0.65   

Net realized and unrealized gain (loss) on investments

     (5.11 )      (1.26 )      1.17        1.64  

Total from investment operations

     (4.42 )      (0.51 )      1.92        2.29  

Distributions to shareholders from:

         

Net investment income

     (0.66 )      (0.72 )      (0.50 )       (0.19 ) 

Transaction fees(b)

     0.02        0.01        0.02        0.05  

Net asset value at end of period

   $ 22.31      $ 27.37      $ 28.59      $ 27.15  

Market price at end of period(c)

   $ 22.13      $ 27.24      $ 28.56      $ 27.03  
Net Asset Value Total Return(d)     (16.21 )%      (1.74 )%      7.24 %       9.37 %(e) 
Market Price Total Return(d)     (16.48 )%      (2.11 )%      7.60 %       8.88 %(e) 
Ratios/Supplemental Data:         

Net assets at end of period (000’s omitted)

   $ 176,244      $ 238,096      $ 217,254       $ 13,575   

Ratio to average net assets of:

         

Expenses, after Waivers

     0.29 %      0.29 %      0.29 %       0.29 %(f) 

Expenses, prior to Waivers

     0.45 %      0.45 %      0.45 %       0.45 %(f) 

Net investment income, after Waivers

     2.78 %      2.72 %      2.70 %       3.09 %(f) 

Portfolio turnover rate(g)

     89 %      82 %      101 %       50 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (January 13, 2012, the first day of trading on the exchange) to October 31, 2012 was 11.19%. The market price total return from Fund Inception to October 31, 2012 was 9.85%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P International Developed High Beta Portfolio (IDHB)

 

     Year Ended October 31,      For the Period
February 22,  2012(a)
Through
October 31, 2012		  
     2015     2014     2013     
Per Share Operating Performance:          

Net asset value at beginning of period

    $ 27.75      $ 29.00     $ 22.60      $ 25.00  

Net investment income(b)

      0.69        0.49        0.51         0.54   

Net realized and unrealized gain (loss) on investments

      (2.13 )      (1.02 )      6.50        (2.65 ) 

Total from investment operations

      (1.44 )      (0.53 )      7.01        (2.11 ) 

Distributions to shareholders from:

          

Net investment income

      (0.46 )      (0.72 )      (0.61 )       (0.29 ) 

Net asset value at end of period

    $ 25.85      $ 27.75      $ 29.00      $ 22.60  

Market price at end of period(c)

    $ 25.74      $ 28.12      $ 29.11      $ 22.73  
Net Asset Value Total Return(d)      (5.34 )%      (2.06 )%      31.49 %       (8.30 )%(e) 
Market Price Total Return(d)      (6.99 )%      (1.15 )%      31.19 %       (7.78 )%(e) 
Ratios/Supplemental Data:          

Net assets at end of period (000’s omitted)

    $ 3,877      $ 6,936      $ 5,799       $ 2,260   

Ratio to average net assets of:

          

Expenses, after Waivers

      0.26 %      0.26 %      0.26 %       0.25 %(f) 

Expenses, prior to Waivers

      0.36 %      0.36 %      0.36 %       0.35 %(f) 

Net investment income, after Waivers

      2.42 %      1.68 %      2.00 %       3.60 %(f) 

Portfolio turnover rate(g)

      98 %      109 %      74 %       35 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (February 24, 2012, the first day of trading on the exchange) to October 31, 2012 was (9.43)%. The market price total return from Fund Inception to October 31, 2012 was (9.59)%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

   69  

 

 

Financial Highlights (continued)

 

PowerShares S&P International Developed Low Volatility Portfolio (IDLV)

 

    Year Ended October 31,      For the Period
January 11, 2012(a)
Through
October 31, 2012		  
    2015     2014      2013     
Per Share Operating Performance:          

Net asset value at beginning of period

   $ 31.75      $ 31.54      $ 27.93      $ 25.00  

Net investment income(b)

     1.02        1.09         0.90         0.73   

Net realized and unrealized gain (loss) on investments

     (1.86 )      0.13         3.53        2.55  

Total from investment operations

     (0.84 )      1.22         4.43        3.28  

Distributions to shareholders from:

          

Net investment income

     (0.92 )      (1.01 )       (0.82 )       (0.35 ) 

Net asset value at end of period

   $ 29.99      $ 31.75       $ 31.54      $ 27.93  

Market price at end of period(c)

   $ 29.90      $ 32.01       $ 31.67      $ 27.88  
Net Asset Value Total Return(d)     (2.69 )%      3.89 %       16.19 %       13.22 %(e) 
Market Price Total Return(d)     (3.78 )%      4.29 %       16.87 %       13.01 %(e) 
Ratios/Supplemental Data:          

Net assets at end of period (000’s omitted)

   $ 313,428      $ 263,546       $ 135,617       $ 19,553   

Ratio to average net assets of:

          

Expenses, after Waivers

     0.25 %      0.25 %       0.25 %       0.25 %(f) 

Expenses, prior to Waivers

     0.35 %      0.35 %       0.35 %       0.35 %(f) 

Net investment income, after Waivers

     3.32 %      3.41 %       3.03 %       3.40 %(f) 

Portfolio turnover rate(g)

     66 %      61 %       84 %       41 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (January 13, 2012, the first day of trading on the exchange) to October 31, 2012 was 14.23%. The market price total return from Fund Inception to October 31, 2012 was 13.51%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

PowerShares S&P MidCap Low Volatility Portfolio (XMLV)

 

      Year Ended October 31,        For the Period
February 12, 2013(a)
Through
October 31, 2013		  
    2015      2014     
Per Share Operating Performance:        

Net asset value at beginning of period

   $ 31.82       $ 28.25      $ 25.12  

Net investment income(b)

     0.66         0.62         0.38   

Net realized and unrealized gain on investments

     2.55         3.52         3.02   

Total from investment operations

     3.21         4.14         3.40  

Distributions to shareholders from:

        

Net investment income

     (0.65 )       (0.57 )       (0.27 ) 

Net asset value at end of period

   $ 34.38       $ 31.82       $ 28.25  

Market price at end of period(c)

   $ 34.42       $ 31.82       $ 28.28  
Net Asset Value Total Return(d)     10.18 %       14.84 %       13.62 %(e) 
Market Price Total Return(d)     10.30 %       14.72 %       13.77 %(e) 
Ratios/Supplemental Data:        

Net assets at end of period (000’s omitted)

   $ 106,565       $ 44,546       $ 21,189   

Ratio to average net assets of:

        

Expenses

     0.25 %       0.25 %       0.26 %(f) 

Net investment income

     1.97 %       2.09 %       1.98 %(f) 

Portfolio turnover rate(g)

     57 %       58 %       29 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (February 15, 2013, the first day of trading on the exchange) to October 31, 2013 was 13.21%. The market price total return from Fund Inception to October 31, 2013 was 13.37%.
(f)  Annualized.
(g)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Financial Highlights (continued)

 

PowerShares S&P SmallCap Low Volatility Portfolio (XSLV)

 

    Year Ended October 31,     For the Period
February 12,  2013(a)
Through
October 31, 2013		  
    2015     2014    
Per Share Operating Performance:      

Net asset value at beginning of period

   $ 32.93      $ 29.92      $ 25.10  

Net investment income(b)

     0.77        0.75        0.43   

Net realized and unrealized gain on investments

     1.38        2.95        4.63   

Total from investment operations

     2.15        3.70        5.06  

Distributions to shareholders from:

      

Net investment income

     (0.78 )      (0.69 )      (0.24 ) 

Net asset value at end of period

   $ 34.30      $ 32.93      $ 29.92  

Market price at end of period(c)

   $ 34.30      $ 32.91      $ 29.96  
Net Asset Value Total Return(d)     6.63 %      12.50 %      20.28 %(e) 
Market Price Total Return(d)     6.70 %      12.29 %      20.45 %(e) 
Ratios/Supplemental Data:      

Net assets at end of period (000’s omitted)

   $ 126,926      $ 55,985      $ 31,411   

Ratio to average net assets of:

      

Expenses

     0.25 %(f)      0.25 %(f)      0.26 %(g) 

Net investment income

     2.33 %      2.41 %      2.17 %(g) 

Portfolio turnover rate(h)

     57 %      68 %      35 % 

 

(a)  Commencement of investment operations.
(b)  Based on average shares outstanding.
(c)  The mean between the last bid and ask prices.
(d)  Net asset value total 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. Net asset value total return includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Market price total return is calculated assuming an initial investment made at the market price at the beginning of the period, reinvestment of all dividends and distributions at market price during the period, and the sale at the market price on the last day of the period. Total investment returns calculated for a period of less than one year are not annualized.
(e)  The net asset value total return from Fund Inception (February 15, 2013, the first day of trading on the exchange) to October 31, 2013 was 19.62%. The market price total return from Fund Inception to October 31, 2013 was 19.63%.
(f)  In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Fund invests. Estimated investment companies’ expenses are not expenses that are incurred directly by the Fund. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Fund invests in. The effect of the estimated investment companies’ expenses that the Fund bears indirectly is included in the Fund’s total return.
(g)  Annualized.
(h)  Portfolio turnover rate is not annualized for periods less than one year, if applicable, and does not include securities received or delivered from processing creations or redemptions.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

 

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Notes to Financial Statements

PowerShares Exchange-Traded Fund Trust II

October 31, 2015

 

Note 1. Organization

PowerShares Exchange-Traded Fund Trust II (the “Trust”) was organized as a Massachusetts business trust on October 10, 2006 and is authorized to have multiple series of portfolios. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of October 31, 2015, the Trust offered sixty-six portfolios. This report includes the following portfolios:

 

Full Name

   

Short Name

PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV)*    “S&P 500® ex-Rate Sensitive Low Volatility Portfolio”
PowerShares S&P 500® High Beta Portfolio (SPHB)    “S&P 500® High Beta Portfolio”

PowerShares S&P 500® High Dividend Low Volatility Portfolio (SPHD)

(formerly, PowerShares S&P 500® High Dividend Portfolio)

    “S&P 500® High Dividend Low Volatility Portfolio”
PowerShares S&P 500® Low Volatility Portfolio (SPLV)    “S&P 500® Low Volatility Portfolio”
PowerShares S&P 500 Momentum Portfolio (SPMO)**    “S&P 500 Momentum Portfolio”
PowerShares S&P 500 Value Portfolio (SPVU)**    “S&P 500 Value Portfolio”
PowerShares S&P Emerging Markets High Beta Portfolio (EEHB)    “S&P Emerging Markets High Beta Portfolio”
PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV)    “S&P Emerging Markets Low Volatility Portfolio”
PowerShares S&P International Developed High Beta Portfolio (IDHB)    “S&P International Developed High Beta Portfolio”
PowerShares S&P International Developed Low Volatility Portfolio (IDLV)    “S&P International Developed Low Volatility Portfolio”
PowerShares S&P MidCap Low Volatility Portfolio (XMLV)    “S&P MidCap Low Volatility Portfolio”
PowerShares S&P SmallCap Low Volatility Portfolio (XSLV)    “S&P SmallCap Low Volatility Portfolio”

 

* Commenced operations on April 6, 2015.
** Commenced operations on October 6, 2015.

Each portfolio (each, a “Fund”, and collectively, the “Funds”) represents a separate series of the Trust. The shares of the Funds are referred to herein as “Shares” or “Fund’s Shares.” Each Fund’s Shares are listed and traded on NYSE Arca, Inc.

The market price of each Share may differ to some degree from the Fund’s net asset value (“NAV”). Unlike conventional mutual funds, each Fund issues and redeems Shares on a continuous basis, at NAV, only in a large specified number of Shares, each called a “Creation Unit.” Creation Units are issued and redeemed principally in exchange for the deposit or delivery of a basket of securities (“Deposit Securities”). Except when aggregated in Creation Units by Authorized Participants, the Shares are not individually redeemable securities of the Funds.

The investment objective of each Fund is to seek investment results that generally correspond (before fees and expenses) to the price and yield of its respective index listed below (each, an “Underlying Index”):

 

Fund

   

Underlying Index

S&P 500® ex-Rate Sensitive Low Volatility Portfolio    S&P 500® Low Volatility Interest Rate Response Index
S&P 500® High Beta Portfolio    S&P 500® High Beta Index
S&P 500® High Dividend Low Volatility Portfolio    S&P 500® Low Volatility High Dividend Index
S&P 500® Low Volatility Portfolio    S&P 500® Low Volatility Index
S&P 500 Momentum Portfolio    S&P 500 Momentum Index
S&P 500 Value Portfolio    S&P 500 Enhanced Value Index
S&P Emerging Markets High Beta Portfolio    S&P BMI Emerging Markets High Beta IndexTM
S&P Emerging Markets Low Volatility Portfolio    S&P BMI Emerging Markets Low Volatility IndexTM
S&P International Developed High Beta Portfolio    S&P BMI International Developed High Beta IndexTM
S&P International Developed Low Volatility Portfolio    S&P BMI International Developed Low Volatility IndexTM
S&P MidCap Low Volatility Portfolio    S&P MidCap 400® Low Volatility Index
S&P SmallCap Low Volatility Portfolio    S&P SmallCap 600® Low Volatility 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 (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial

 

 

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statements, including estimates and assumptions related to taxation. Actual results could differ from these estimates. In addition, the Funds monitor for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. The following is a summary of the significant accounting policies followed by the Funds in preparation of the financial statements.

A. Security Valuation

Securities, including restricted securities, are valued according to the following policies:

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining NAV per Share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Securities with a demand feature exercisable within one to seven days are valued at par. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts’) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the London world markets. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that Invesco PowerShares Capital Management LLC (the “Adviser”) determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith following procedures approved by the Board of Trustees. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

Each Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.

 

 

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Valuations change in response to many factors, including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Other Risks

Index Risk. Unlike many investment companies, the Funds do not utilize investing strategies that seek returns in excess of their Underlying Indexes. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its respective Underlying Index, even if that security generally is underperforming.

Equity Risk. Equity risk is the risk that the value of the securities that each Fund holds will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities that a Fund holds participate or factors relating to specific companies in which the Fund invests. For example, an adverse event, such as an unfavorable earnings report, may depress the value of securities a Fund holds; the price of securities may be particularly sensitive to general movements in the stock market; or a drop in the stock market may depress the price of most or all of the securities a Fund holds. In addition, securities of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition.

Industry Concentration Risk. In following its methodology, each Fund’s Underlying Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or a sector. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry or sector, each Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or sector, a Fund may face more risks than if it were diversified broadly over numerous industries or sectors. In addition, at times, an industry or sector may be out of favor and underperform other industries or the market as a whole. Any factors detrimental to the performance of such industry or sector will disproportionately impact a Fund’s NAV.

Non-Diversified Fund Risk. Each Fund is non-diversified and can invest a greater portion of its assets in securities of individual issuers than diversified funds. As a result, changes in the market value of a single investment could cause greater fluctuations in Share price than would occur in a diversified fund. This may increase a Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on a Fund’s performance.

Non-Correlation Risk. Each Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, each Fund incurs operating expenses not applicable to its Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. In addition, the performance of each Fund and its Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.

Small and Medium Capitalization Company Risk. For S&P Emerging Markets High Beta Portfolio, S&P Emerging Markets Low Volatility Portfolio, S&P International Developed High Beta Portfolio, S&P International Developed Low Volatility Portfolio, S&P MidCap Low Volatility Portfolio and S&P SmallCap Low Volatility Portfolio, investing in securities of small and medium capitalization companies involves greater risk than customarily is associated with investing in larger, more established companies. These companies’ securities may be more volatile and less liquid than those of more established companies. These securities may have returns that vary, sometimes significantly, from the overall securities market. Often small and medium capitalization companies and the industries in which they focus are still evolving and, as a result, they may be more sensitive to changing market conditions.

Foreign Investment Risk. For S&P Emerging Markets High Beta Portfolio, S&P Emerging Markets Low Volatility Portfolio, S&P International Developed High Beta Portfolio and S&P International Developed Low Volatility Portfolio, investments in the securities of non-U.S. issuers involve risks beyond those associated with investments in U.S. securities. Foreign securities may have relatively low market liquidity, greater market volatility, decreased publicly available information and less reliable financial information about issuers, and inconsistent and potentially less stringent accounting, auditing and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Foreign securities also are subject to the risks of expropriation, nationalization, political instability or other adverse political or economic developments and the difficulty of enforcing obligations in other countries. As the Funds may invest in securities denominated in foreign currencies, fluctuations in the value of the U.S. dollar relative to the values of other currencies may adversely affect investments in foreign securities and may negatively impact the Funds’ returns. Such risks may be exacerbated in emerging markets, where securities laws are relatively new and unsettled.

C. Federal Income Taxes

Each Fund intends to comply with the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), applicable to regulated investment companies and to distribute substantially all of the Fund’s taxable earnings to its shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized gains) that is distributed to the shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

 

 

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Each Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed each Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing book and tax treatments for in-kind transactions, losses deferred due to wash sales, and passive foreign investment company adjustments, if any.

The Funds file U.S. federal tax returns and tax returns in certain other jurisdictions. Generally, a Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

D. Investment Transactions and Investment Income

Investment transactions are accounted for on a trade date basis. Realized gains and losses from the sale or disposition of securities are computed on the specific identified cost basis. Interest income is recorded on the accrual basis. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Realized gains, dividends and interest received by a Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

Corporate actions (including cash dividends) are recorded net of non-reclaimable foreign tax withholdings on the ex-date.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statements of Operations and the Statements of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of each Fund’s net asset value and, accordingly, they reduce each Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statements of Operations and the Statements of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between each Fund and the Adviser.

E. Country Determination

For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the Adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

F. Expenses

Each Fund has agreed to pay an annual unitary management fee to the Adviser. Out of the unitary management fee, the Adviser has agreed to pay for substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any).

Expenses of the Trust that are excluded from a Fund’s unitary management fee and are directly identifiable to a specific Fund are applied to that Fund. Expenses of the Trust that are excluded from each Fund’s unitary management fee and that 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.

To the extent a Fund invests in other investment companies, the expenses shown in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the investment companies in which it invests. The effects of such investment companies’ expenses are included in the realized and unrealized gain or loss on the investments in the investment companies.

G. Dividends and Distributions to Shareholders

Each Fund (except for S&P 500® High Dividend Low Volatility Portfolio and S&P 500® Low Volatility Portfolio) declares and pays dividends from net investment income, if any, to its shareholders quarterly and records such dividends on ex-dividend date. S&P 500® High Dividend Low Volatility Portfolio and S&P 500® Low Volatility Portfolio each declares and pays dividends from net investment income, if any, to its shareholders monthly and records such dividends on ex-dividend date. Generally, each Fund distributes net realized taxable capital gains, if any, annually in cash and records them on ex-dividend date. Such distributions on a tax basis are determined in conformity with federal income tax regulations, which may differ from GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in such Fund’s financial statements as a tax return of capital at fiscal year-end.

 

 

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H. Securities Lending

During the fiscal year ended October 31, 2015, S&P International Developed Low Volatility Portfolio participated in securities lending. The Fund loaned portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by cash collateral equal to no less than 102% (105% for international securities) of the market value of the loaned securities determined daily by the securities lending provider. Cash collateral received in connection with these loans is invested in an affiliated money market fund and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the policy of the Fund to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase, and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Securities lending income on the Statements of Operations. The aggregate value of securities out on loan, if any, is shown on the Statements of Assets and Liabilities.

Note 3. Investment Advisory Agreement and Other Agreements

The Trust has entered into an Investment Advisory Agreement with the Adviser on behalf of each Fund, pursuant to which the Adviser has overall responsibility for the selection and ongoing monitoring of the Funds’ investments, managing the Funds’ business affairs and providing certain clerical, bookkeeping and other administrative services.

As compensation for its services, each Fund has agreed to pay the Adviser an annual unitary management fee. Out of the unitary management fee, the Adviser has agreed to pay substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except for advisory fees, distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). The unitary management fee is paid by each Fund to the Adviser at the following annual rates:

 

     % of Average
Daily Net Assets		  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio      0.25 % 
S&P 500® High Beta Portfolio      0.25 % 
S&P 500® High Dividend Low Volatility Portfolio      0.30 % 
S&P 500® Low Volatility Portfolio      0.25 % 
S&P 500 Momentum Portfolio      0.25 % 
S&P 500 Value Portfolio      0.25 % 
S&P Emerging Markets High Beta Portfolio      0.45 %* 
S&P Emerging Markets Low Volatility Portfolio      0.45 %* 
S&P International Developed High Beta Portfolio      0.35 %** 
S&P International Developed Low Volatility Portfolio      0.35 %** 
S&P MidCap Low Volatility Portfolio      0.25 % 
S&P SmallCap Low Volatility Portfolio      0.25 % 

 

* The Adviser has agreed to waive a portion of its unitary management fee through February 28, 2017. After giving effect to such waiver, the Fund’s net unitary management fee is 0.29% of its average daily net assets. Unless the Adviser continues the fee waiver agreement, it will terminate on February 28, 2017. The fee waiver agreement cannot be terminated during its term.
** The Adviser has agreed to waive a portion of its unitary management fee through February 28, 2017. After giving effect to such waiver, the Fund’s net unitary management fee is 0.25% of its average daily net assets. Unless the Adviser continues the fee waiver agreement, it will terminate on February 28, 2017. The fee waiver agreement cannot be terminated during its term.

Further, through August 31, 2017, the Adviser has contractually agreed to waive a portion of each Fund’s management fee in an amount equal to 100% of the net advisory fees an affiliate of the Adviser receives that are attributable to certain of the Fund’s investments in money market funds managed by that affiliate (excluding investments of cash collateral from securities lending). The Adviser cannot discontinue this waiver prior to its expiration.

 

 

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For the fiscal year ended October 31, 2015, the Adviser waived fees for each Fund in the following amounts:

 

S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ 44   
S&P 500® High Beta Portfolio      119   
S&P 500® High Dividend Low Volatility Portfolio      373   
S&P 500® Low Volatility Portfolio      2,510   
S&P 500 Momentum Portfolio      —   
S&P 500 Value Portfolio      —   
S&P Emerging Markets High Beta Portfolio      6,886   
S&P Emerging Markets Low Volatility Portfolio      354,295   
S&P International Developed High Beta Portfolio      7,582   
S&P International Developed Low Volatility Portfolio      313,291   
S&P MidCap Low Volatility Portfolio      80   
S&P SmallCap Low Volatility Portfolio      61   

The Trust has entered into a Distribution Agreement with Invesco Distributors, Inc. (the “Distributor”), which serves as the distributor of Creation Units for each Fund. The Distributor does not maintain a secondary market in the Shares. The Funds are not charged any fees pursuant to the Distribution Agreement. The Distributor is an affiliate of the Adviser.

The Adviser has entered into a licensing agreement for each Fund with Standard & Poor’s Financial Services LLC (the “Licensor”). Each Underlying Index name trademark is owned by the Licensor. These trademarks have been licensed to the Adviser for use by the Funds. Each Fund is entitled to use its Underlying Index pursuant to the Trust’s sub-licensing agreement with the Adviser. 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 the Funds.

The Trust has entered into service agreements whereby The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as the administrator, custodian, fund accountant and transfer agent for each Fund.

Note 4. Investments in Affiliates

The Adviser is a wholly-owned subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Funds. The table below shows S&P 500® High Beta Portfolio’s transactions in, and earnings from, its investment in affiliates for the fiscal year ended October 31, 2015.

S&P 500® High Beta Portfolio

 

     Value
October 31, 2014		      Purchases
at Cost		      Proceeds
from Sales		      Change in
Unrealized
Appreciation
(Depreciation)		      Realized
Gain		      Value
October 31, 2015		      Dividend
Income		  
Invesco Ltd.    $ 2,587,004       $ 3,532,931       $ (5,156,853 )     $ (392,782 )     $ 119,935       $ 690,235       $ 62,561   

Note 5. Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

 

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.

 

  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.

 

  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect a Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

 

 

   77  

 

 

 

Except for the Fund listed below, as of October 31, 2015, all of the securities in each Fund were valued based on Level 1 inputs (see the Schedules of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

 

     Investments in Securities  
     Level 1      Level 2      Level 3      Total  
S&P Emerging Markets High Beta Portfolio            

Equity Securities

    $ 1,579,487       $ —       $ 41,444       $ 1,620,931   
  

 

 

     

 

 

     

 

 

     

 

 

  
S&P Emerging Markets Low Volatility Portfolio            

Equity Securities

    $ 175,446,198       $ —       $ 1,024,063       $ 176,470,261   
  

 

 

     

 

 

     

 

 

     

 

 

  

A reconciliation of Level 3 investments is presented when a Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets.

The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for S&P Emerging Markets High Beta Portfolio during the fiscal year end October 31, 2015.

 

     Beginning Balance,
as of
October 31, 2014		      Purchases      Sales      Net
Realized
Gain
(Loss)		      Net Change in
Unrealized
Appreciation
(Depreciation)		      Transfers into
Level 3		      Transfers out
of Level 3		      Ending Balance,
as of
October 31, 2015		  
Equity Securities    $ —       $ 220,992       $ (161,667 )     $ (13,144 )     $ (4,737 )     $ —       $ —       $ 41,444   

Shares of common stocks determined to be Level 3 at the end of the reporting period halted trading during the period and the fair value measurement was determined using a recent transaction price. A change in information which affects the security’s trading activity or liquidity could result in a significant increase or decrease in fair value.

Note 6. Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2015 and 2014:

 

     2015      2014  
     Ordinary
Income		      Long-Term
Capital Gains		      Return of
Capital		      Ordinary
Income		      Long-Term
Capital Gains		      Return of
Capital		  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ 585,447       $ —       $ 10,253       $ —       $ —       $ —   
S&P 500® High Beta Portfolio      2,644,196         —         —         3,365,476         —         —   
S&P 500® High Dividend Low Volatility Portfolio      16,582,835         —         —         5,674,771         63,575         —   
S&P 500® Low Volatility Portfolio      121,208,205         —         —         99,488,091         —         —   
S&P 500 Momentum Portfolio      —         —         —         —         —         —   
S&P 500 Value Portfolio      —         —         —         —         —         —   
S&P Emerging Markets High Beta Portfolio      94,542         —         —         115,465         —         —   
S&P Emerging Markets Low Volatility Portfolio      5,829,953         —         —         5,964,040         —         —   
S&P International Developed High Beta Portfolio      166,413         —         —         158,816         —         —   
S&P International Developed Low Volatility Portfolio      9,605,676         —         —         6,794,143         —         —   
S&P MidCap Low Volatility Portfolio      1,549,096         —         —         533,848         —         —   
S&P SmallCap Low Volatility Portfolio      1,805,010         —         —         965,942         —         —   

Tax Components of Net Assets at Fiscal Year-End:

 

    Undistributed
Ordinary
Income		     Net
Unrealized
Appreciation
(Depreciation)—
Investment
Securities		     Net Unrealized
Appreciation
(Depreciation)—
Other Investments		     Capital Loss
Carryforwards		     Shares of
Beneficial
Interest		     Total Net
Assets		  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio   $ —      $ 444,119      $ —      $ (541,945 )    $ 107,883,020      $ 107,785,194   
S&P 500® High Beta Portfolio     160,495        (13,552,305 )      —        (19,585,704 )      113,002,058        80,024,544   
S&P 500® High Dividend Low Volatility Portfolio     —        (8,060,394 )      —        (8,400,306 )      554,640,547        538,179,847   
S&P 500® Low Volatility Portfolio     —        253,078,260        —        (108,779,718 )      4,906,934,057        5,051,232,599   

 

 

   78  

 

 

 

    Undistributed
Ordinary
Income		     Net
Unrealized
Appreciation
(Depreciation)—
Investment
Securities		     Net Unrealized
Appreciation
(Depreciation)—
Other Investments		     Capital Loss
Carryforwards		     Shares of
Beneficial
Interest		     Total Net
Assets		  
S&P 500 Momentum Portfolio   $ 1,101      $ 140,760      $ —      $ (185 )    $ 2,464,719      $ 2,606,395   
S&P 500 Value Portfolio     1,021        72,840        —        (84 )      2,504,269        2,578,046   
S&P Emerging Markets High Beta Portfolio     27,215        (415,907 )      (526 )      (1,284,356 )      3,293,516        1,619,942   
S&P Emerging Markets Low Volatility Portfolio     426,084        (22,424,091 )      (6,515 )      (29,509,465 )      227,758,234        176,244,247   
S&P International Developed High Beta Portfolio     19,524        (739,311 )      (31 )      (584,020 )      5,180,810        3,876,972   
S&P International Developed Low Volatility Portfolio     1,953,997        (15,283,666 )      (13,463 )      (11,470,385 )      338,241,577        313,428,060   
S&P MidCap Low Volatility Portfolio     246,836        4,796,265        —        (1,773,629 )      103,295,932        106,565,404   
S&P SmallCap Low Volatility Portfolio     400,879        4,737,417        —        (1,690,939 )      123,478,161        126,925,518   

Capital loss carryforwards are calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforwards actually available for the Funds to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The following table presents available capital loss carryforwards for each Fund as of October 31, 2015.

 

     Post-effective/no expiration         
     Short-Term      Long-Term      Total*  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ 541,945       $ —       $ 541,945   
S&P 500® High Beta Portfolio      13,897,513         5,688,191         19,585,704   
S&P 500® High Dividend Low Volatility Portfolio      6,689,139         1,711,167         8,400,306   
S&P 500® Low Volatility Portfolio      108,779,718         —         108,779,718   
S&P 500 Momentum Portfolio      185         —         185   
S&P 500 Value Portfolio      84         —         84   
S&P Emerging Markets High Beta Portfolio      869,771         414,585         1,284,356   
S&P Emerging Markets Low Volatility Portfolio      19,192,689         10,316,776         29,509,465   
S&P International Developed High Beta Portfolio      384,309         199,711         584,020   
S&P International Developed Low Volatility Portfolio      9,616,972         1,853,413         11,470,385   
S&P MidCap Low Volatility Portfolio      1,773,629         —         1,773,629   
S&P SmallCap Low Volatility Portfolio      1,629,823         61,116         1,690,939   

 

* Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

Note 7. Investment Transactions

For the fiscal year ended October 31, 2015, the cost of securities purchased and proceeds from sales of securities (other than short-term securities, U.S. Treasury obligations, money market funds and in-kind transactions, if any) were as follows:

 

     Purchases      Sales  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ 20,726,061       $ 21,032,171   
S&P 500® High Beta Portfolio      195,053,137         195,088,042   
S&P 500® High Dividend Low Volatility Portfolio      219,998,316         218,520,038   
S&P 500® Low Volatility Portfolio      3,241,620,628         3,239,673,271   
S&P 500 Momentum Portfolio      14,214         13,154   
S&P 500 Value Portfolio      11,167         10,165   
S&P Emerging Markets High Beta Portfolio      5,909,043         7,261,102   
S&P Emerging Markets Low Volatility Portfolio      194,921,875         204,258,301   
S&P International Developed High Beta Portfolio      7,368,914         7,844,403   
S&P International Developed Low Volatility Portfolio      208,961,057         205,998,070   
S&P MidCap Low Volatility Portfolio      47,909,339         50,497,977   
S&P SmallCap Low Volatility Portfolio      47,914,275         49,203,860   

 

 

   79  

 

 

 

For the fiscal year ended October 31, 2015, in-kind transactions associated with creations and redemptions were as follows:

 

     Cost of
Securities
Received		      Value of
Securities
Delivered		  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ 118,230,291       $ 10,417,409   
S&P 500® High Beta Portfolio      330,213,666         470,773,917   
S&P 500® High Dividend Low Volatility Portfolio      675,596,195         354,531,760   
S&P 500® Low Volatility Portfolio      4,162,490,639         3,809,225,431   
S&P 500 Momentum Portfolio      2,464,694         —   
S&P 500 Value Portfolio      2,504,244         —   
S&P Emerging Markets High Beta Portfolio      1,347,344         3,691,026   
S&P Emerging Markets Low Volatility Portfolio      14,579,620         20,866,047   
S&P International Developed High Beta Portfolio      8,720,288         10,376,553   
S&P International Developed Low Volatility Portfolio      130,126,706         61,341,859   
S&P MidCap Low Volatility Portfolio      93,660,891         33,851,179   
S&P SmallCap Low Volatility Portfolio      101,578,747         32,806,950   

Gains (losses) on in-kind transactions are generally not considered taxable gains (losses) for federal income tax purposes.

At October 31, 2015, the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes were as follows:

 

     Gross
Unrealized
Appreciation		      Gross
Unrealized
(Depreciation)		      Net
Unrealized
Appreciation
(Depreciation)		      Cost  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ 3,225,533       $ (2,781,414 )     $ 444,119       $ 107,280,204   
S&P 500® High Beta Portfolio      2,660,781         (16,213,086 )       (13,552,305 )       93,602,496   
S&P 500® High Dividend Low Volatility Portfolio      21,310,426         (29,370,820 )       (8,060,394 )       545,843,295   
S&P 500® Low Volatility Portfolio      347,431,222         (94,352,962 )       253,078,260         4,795,716,709   
S&P 500 Momentum Portfolio      148,394         (7,634 )       140,760         2,465,569   
S&P 500 Value Portfolio      109,359         (36,519 )       72,840         2,505,162   
S&P Emerging Markets High Beta Portfolio      56,327         (472,234 )       (415,907 )       2,036,838   
S&P Emerging Markets Low Volatility Portfolio      4,492,406         (26,916,497 )       (22,424,091 )       198,894,352   
S&P International Developed High Beta Portfolio      90,481         (829,792 )       (739,311 )       4,611,779   
S&P International Developed Low Volatility Portfolio      10,939,849         (26,223,515 )       (15,283,666 )       340,045,035   
S&P MidCap Low Volatility Portfolio      7,485,009         (2,688,744 )       4,796,265         101,743,272   
S&P SmallCap Low Volatility Portfolio      8,245,807         (3,508,390 )       4,737,417         122,127,156   

Note 8. Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of in-kind transactions, foreign currency transactions and passive foreign investment companies on October 31, 2015, amounts were reclassified between undistributed net investment income, undistributed net realized gain (loss) and Shares of beneficial interest. These reclassifications had no effect on the net assets of each Fund. For the fiscal year ended October 31, 2015, the reclassifications were as follows:

 

     Undistributed
Net Investment
Income (Loss)		      Undistributed
Net Realized
Gain (Loss)		      Shares of
Beneficial
Interest		  
S&P 500® ex-Rate Sensitive Low Volatility Portfolio    $ —       $ (365,780 )     $ 365,780   
S&P 500® High Beta Portfolio      —         (19,851,441 )       19,851,441   
S&P 500® High Dividend Low Volatility Portfolio      883,287         (37,344,748 )       36,461,461   
S&P 500® Low Volatility Portfolio      7,793,921         (443,323,365 )       435,529,444   
S&P 500 Momentum Portfolio      —         —         —   
S&P 500 Value Portfolio      —         —         —   
S&P Emerging Markets High Beta Portfolio      (10,870 )       124,593         (113,723 ) 
S&P Emerging Markets Low Volatility Portfolio      (558,469 )       568,857         (10,388 ) 
S&P International Developed High Beta Portfolio      9,230         252,825         (262,055 ) 
S&P International Developed Low Volatility Portfolio      482,916         (3,211,465 )       2,728,549   
S&P MidCap Low Volatility Portfolio      —         (4,343,058 )       4,343,058   
S&P SmallCap Low Volatility Portfolio      —         (3,307,318 )       3,307,318   

 

 

   80  

 

 

 

Note 9. Trustees’ and Officer’s Fees

Trustees’ and Officer’s Fees include amounts accrued by the Funds to pay remuneration to each Trustee who is not an “interested person” as defined in the 1940 Act (an “Independent Trustee”) and an Officer of the Trust. The Adviser, as a result of each Fund’s unitary management fee, pays for such compensation. The Trustee who is an “interested person” of the Trust does not receive any Trustees’ fees.

The Trust has adopted a deferred compensation plan (the “Plan”). Under the Plan, an Independent Trustee who has executed a Deferred Fee Agreement (a “Participating Trustee”) may defer receipt of all or a portion of his compensation (“Deferral Fees”). Such Deferral Fees are deemed to be invested in select PowerShares Funds. The Deferral Fees payable to the Participating Trustee are valued as of the date such Deferral Fees would have been paid to the Participating Trustee. The value increases with contributions or with increases in the value of the Shares selected, and the value decreases with distributions or with declines in the value of the Shares selected. Obligations under the Plan represent unsecured claims against the general assets of the Funds.

Note 10. Capital

Shares are created and redeemed by each Fund only in Creation Units of 50,000 Shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Funds. Such transactions are principally permitted in exchange for Deposit Securities, with a balancing cash component to equate the transaction to the NAV per Share of a Fund of the Trust on the transaction date. However, for all Funds, cash in an amount equivalent to the value of certain securities may be substituted, generally when the securities are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances.

To the extent that the Funds permit transactions in exchange for Deposit Securities, each Fund may issue Shares in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 105% of the market value of the missing Deposit Securities. In accordance with the Trust’s Participant Agreement, Creation Units will be issued to an Authorized Participant, notwithstanding the fact that the corresponding Deposit Securities have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by the Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked-to-market daily) at least equal to 105%, which the Adviser may change from time to time, of the value of the missing Deposit Securities.

S&P Emerging Markets Low Volatility Portfolio charges certain transaction fees for creations and redemptions, which are treated as increases in capital, which are shown in the Statements of Changes in Net Assets as Transaction fees.

Transactions in each Fund’s Shares are disclosed in detail in the Statements of Changes in Net Assets.

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. Each Independent Trustee is also indemnified against certain liabilities arising out of the performance of his duties to the Trust pursuant to an Indemnification Agreement between the Independent Trustee and 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. Subsequent Event

At a meeting held on December 17, 2015, the Board of Trustees of the Trust approved changes to the name, investment objective, principal investment strategy, underlying index and ticker symbol for each of the Funds listed below. These changes will go into effect as of the close of markets on March 18, 2016.

 

Current Fund Name    New Fund Name    Current Underlying Index    New Underlying Index    Current
Ticker		    New
Ticker
PowerShares S&P Emerging Markets High Beta Portfolio   

PowerShares S&P Emerging Markets Momentum

Portfolio

    S&P BMI Emerging Markets High Beta IndexTM    S&P Momentum Emerging
Plus LargeMidCap Index		    EEHB    EEMO
PowerShares S&P International Developed High Beta Portfolio    PowerShares S&P International Developed Momentum Portfolio    S&P BMI International Developed High Beta IndexTM    S&P Momentum
Developed ex-U.S. & South Korea LargeMidCap Index		    IDHB    IDMO

 

 

   81  

 

 

Report of Independent Registered Public Accounting Firm

 

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

 

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of S&P 500® ex-Rate Sensitive Low Volatility Portfolio, PowerShares S&P 500® High Beta Portfolio, PowerShares S&P 500® High Dividend Low Volatility Portfolio (formerly PowerShares S&P 500® High Dividend Portfolio), PowerShares S&P 500® Low Volatility Portfolio, PowerShares S&P 500 Momentum Portfolio, PowerShares S&P 500 Value Portfolio, PowerShares S&P Emerging Markets High Beta Portfolio, PowerShares S&P Emerging Markets Low Volatility Portfolio, PowerShares S&P International Developed High Beta Portfolio, PowerShares S&P International Developed Low Volatility Portfolio, PowerShares S&P MidCap Low Volatility Portfolio, and PowerShares S&P SmallCap Low Volatility Portfolio (each an individual portfolio of PowerShares Exchange-Traded Fund Trust II, hereafter referred to as the “Funds”) at October 31, 2015, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Chicago, IL

December 23, 2015

 

 

   82  

 

 

Fees and Expenses

 

As a shareholder of a Fund of the PowerShares Exchange-Traded Fund Trust II, you incur a unitary management fee. In addition to the unitary management fee, a shareholder may pay distribution fees, if any, brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses (including acquired fund fees and expenses, if any). 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 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, 2015.

In addition to the fees and expenses which the PowerShares S&P SmallCap Low Volatility Portfolio (the “Portfolio”) bears directly, the Portfolio indirectly bears a pro rata share of the fees and expenses of the investment companies in which the Portfolio invests. The amount of fees and expenses incurred indirectly by the Portfolio will vary because the investment companies have varied expenses and fee levels and the Portfolio may own different proportions of the investment companies at different times. Estimated investment companies’ expenses are not expenses that are incurred directly by the Portfolio. They are expenses that are incurred directly by the investment companies and are deducted from the value of the investment companies the Portfolio invests in. The effect of the estimated investment companies’ expenses that the Portfolio bears indirectly is included in the Portfolio’s total return.

Actual Expenses

The first line in the following table 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 table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annualized rate of return of 5% per year before expenses, which is not the Fund’s 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 table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as sales charges and brokerage commissions. 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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by a Fund. If transaction costs and indirect expenses were included, your costs would have been higher.

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio (XRLV)        

Actual

   $ 1,000.00      $ 1,036.44        0.25 %    $ 1.28   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P 500® High Beta Portfolio (SPHB)        

Actual

     1,000.00        898.25        0.25        1.20   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P 500® High Dividend Low Volatility Portfolio (SPHD)        

Actual

     1,000.00        1,031.78        0.30        1.54   

Hypothetical (5% return before expenses)

     1,000.00        1,023.69        0.30        1.53   
PowerShares S&P 500® Low Volatility Portfolio (SPLV)        

Actual

     1,000.00        1,045.19        0.25        1.29   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   

 

 

   83  

 

 

Fees and Expenses (continued)

 

    Beginning
Account Value
May 1, 2015		     Ending
Account Value
October 31, 2015		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period(1)		  
PowerShares S&P 500 Momentum Portfolio (SPMO)(2)        

Actual

   $ 1,000.00      $ 1,057.20        0.25 %    $ 0.18   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P 500 Value Portfolio (SPVU)(2)        

Actual

     1,000.00        1,029.60        0.25        0.18   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P Emerging Markets High Beta Portfolio (EEHB)        

Actual

     1,000.00        709.04        0.29        1.25   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV)        

Actual

     1,000.00        844.32        0.29        1.35   

Hypothetical (5% return before expenses)

     1,000.00        1,023.74        0.29        1.48   
PowerShares S&P International Developed High Beta Portfolio (IDHB)        

Actual

     1,000.00        838.16        0.25        1.16   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P International Developed Low Volatility Portfolio (IDLV)        

Actual

     1,000.00        942.71        0.25        1.22   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P MidCap Low Volatility Portfolio (XMLV)        

Actual

     1,000.00        1,047.21        0.25        1.29   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   
PowerShares S&P SmallCap Low Volatility Portfolio (XSLV)        

Actual

     1,000.00        1,052.56        0.25        1.29   

Hypothetical (5% return before expenses)

     1,000.00        1,023.95        0.25        1.28   

 

(1)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six-month period ended October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365. Expense ratios for the most recent six-month period may differ from expense ratios based on annualized data in the Financial Highlights.

 

(2)  Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period October 6, 2015. (commencement of investment operations) to October 31, 2015. Expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 26/365. Hypothetical expenses are calculated by multiplying the Fund’s annualized expense ratio by the average account value for the period, then multiplying the result by 184/365.

 

 

   84  

 

 

Tax Information

 

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

Each Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2015:

 

     Qualified Dividend
Income*		   Corporate
Dividends
Received
Deduction*
PowerShares S&P 500® ex-Rate Sensitive Low Volatility Portfolio        100 %       100 %
PowerShares S&P 500® High Beta Portfolio        100 %       100 %
PowerShares S&P 500® High Dividend Low Volatility Portfolio        92 %       92 %
PowerShares S&P 500® Low Volatility Portfolio        100 %       100 %
PowerShares S&P 500 Momentum Portfolio        0 %       0 %
PowerShares S&P 500 Value Portfolio        0 %       0 %
PowerShares S&P Emerging Markets High Beta Portfolio        66 %       0 %
PowerShares S&P Emerging Markets Low Volatility Portfolio        100 %       0 %
PowerShares S&P International Developed High Beta Portfolio        100 %       0 %
PowerShares S&P International Developed Low Volatility Portfolio        71 %       0 %
PowerShares S&P MidCap Low Volatility Portfolio        67 %       64 %
PowerShares S&P SmallCap Low Volatility Portfolio        76 %       76 %

 

* The above percentages are based on ordinary income dividends paid to shareholders during the fiscal year.

The Funds intend to elect to pass through to shareholders the credit for taxes paid to foreign countries. The gross foreign source income and foreign taxes paid are as follows:

 

     Gross Foreign
Income		    Foreign Taxes
Paid
PowerShares S&P Emerging Markets High Beta Portfolio      $ 130,141        $ 9,621  
PowerShares S&P Emerging Markets Low Volatility Portfolio        8,027,842          1,196,906  
PowerShares S&P International Developed High Beta Portfolio        232,643          29,502  
PowerShares S&P International Developed Low Volatility Portfolio        10,285,882          500,677  

 

 

   85  

 

 

Trustees and Officers

 

The Independent Trustees, their term of office and length of time served, their principal business occupations during at least the past five years, the number of portfolios in the Fund Complex overseen by each Independent Trustee and the other directorships, if any, held by each Independent Trustee are shown below.

The Trustees and officers information is current as of October 31, 2015.

 

Name, Address and Year of Birth
of Independent Trustees		   

Position(s)
Held

with Trust

   

Term of
Office

and
Length of
Time
Served*

   

Principal

Occupation(s) During

Past 5 Years

   

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

    Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years

Ronn R. Bagge (1958)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   

Chairman

of the Nominating and Governance Committee and Trustee

   

Chairman

of the Nominating and Governance Committee and Trustee since 2007

    Founder and Principal, YQA Capital Management LLC (1998-Present); formerly Owner/CEO of Electronic Dynamic Balancing Co., Inc. (high-speed rotating equipment service provider).    125    None

Todd J. Barre (1957)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since 2010    Assistant Professor of Business, Trinity Christian College (2010-Present); formerly Vice President and Senior Investment Strategist (2001-2008), Director of Open Architecture and Trading (2007-2008), Head of Fundamental Research (2004-2007) and Vice President and Senior Fixed Income Strategist (1994-2001), BMO Financial Group/Harris Private Bank.    125    None

Marc M. Kole (1960)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   

Chairman

of the Audit Committee and Trustee

   

Chairman

of the Audit Committee since 2008; Trustee since 2007

    Senior Director of Finance, By The Hand Club for Kids (2015-Present); formerly: Chief Financial Officer, Hope Network (social services) (2008-2012); Assistant Vice President and Controller, Priority Health (health insurance) (2005-2008); Senior Vice President of Finance, United Healthcare (2004-2005); Chief Accounting Officer, Senior Vice President of Finance, Oxford Health Plans (2000-2004); Audit Partner, Arthur Andersen LLP (1996-2000).    125    None

Yung Bong Lim (1964)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   

Chairman

of the Investment Oversight Committee and Trustee

   

Chairman

of the Investment Oversight Committee since 2014; Trustee since 2013

    Managing Partner, Residential Dynamics Group LLC (2008-Present); formerly, Managing Director, Citadel Investment Group, L.L.C. (1999-2007).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   86  

 

 

Trustees and Officers (continued)

 

Name, Address and Year of Birth
of Independent Trustees		   

Position(s)
Held

with Trust

   

Term of
Office

and
Length of
Time
Served*

   

Principal

Occupation(s) During

Past 5 Years

   

Number of
Portfolios

in Fund
Complex**
Overseen by
Independent
Trustees

    Other
Directorships
Held by
Independent
Trustees During
the Past 5 Years

Philip M. Nussbaum (1961)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since 2007    Chairman, Performance Trust Capital Partners (2004-Present).    125    None

Gary R. Wicker (1961)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Trustee    Since 2013    Senior Vice President of Global Finance and Chief Financial Officer at RBC Ministries (publishing company) (2013-Present); formerly, Executive Vice President and Chief Financial Officer, Zondervan Publishing (A division of Harper Collins/NewsCorp) (2007-2012); Senior Vice President and Group Controller (2005-2006), Senior Vice President and Chief Financial Officer (2003-2004), Chief Financial Officer (2001-2003), Vice President, Finance and Controller (1999-2001) and Assistant Controller (1997-1999), divisions of The Thomson Corporation (information services provider).    125    None

Donald H. Wilson (1959)

c/o Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

   

Chairman

of the Board and Trustee

   

Chairman

since 2012; Trustee since 2007

    Chairman and Chief Executive Officer, Stone Pillar Advisors, Ltd. (2010-Present); formerly, Chairman, President and Chief Executive Officer, Community Financial Shares, Inc. and Community Bank—Wheaton/Glen Ellyn (subsidiary) (2013-2015); Chief Operating Officer, AMCORE Financial, Inc. (bank holding company) (2007-2009); Executive Vice President and Chief Financial Officer, AMCORE Financial, Inc. (2006-2007); Senior Vice President and Treasurer, Marshall & Ilsley Corp. (bank holding company) (1995-2006).    125    None

 

* This is the date the Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   87  

 

 

Trustees and Officers (continued)

 

The Trustee who is an “interested person” (the “Non-Independent Trustee”) and the 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 the Non-Independent Trustee and the other directorships, if any, held by the Non-Independent Trustee are shown below.

 

Name, Address and Year of Birth
of Non-Independent Trustee		    Position(s)
Held
with Trust		    Term of
Office
and
Length of
Time
Served*		   

Principal

Occupation(s) During

Past 5 Years

   

Number of
Portfolios

in Fund
Complex**
Overseen by
Non-Independent
Trustee

   

Other
Directorships
Held by

Non-Independent
Trustee During
the Past 5 Years

Kevin M. Carome (1956)

Invesco Ltd.

Two Peachtree Pointe,

1555 Peachtree St., N.E.,

Suite 1800

Atlanta, GA 30309

    Trustee    Since 2010    Senior Managing Director, Secretary and General Counsel, Invesco Ltd. (2006-Present); Director, Invesco Advisers, Inc. (2009-Present); Director, Invesco Finance PLC, INVESCO Funds Group, Inc., and Invesco Holding Company Limited; Director and Executive Vice President, Invesco Finance, Inc., Invesco Group Services, Inc., Invesco Investments (Bermuda) Ltd., Invesco North American Holdings, Inc., and IVZ, Inc. and Invesco Asset Management (Bermuda) Ltd.; Manager, Horizon Flight Works LLC; Director and Secretary, IVZ Bahamas Private Limited; formerly, Senior Vice President, Secretary and General Counsel, Invesco Advisers, Inc. (2003-2005); Senior Vice President and General Counsel, Liberty Financial Companies, Inc. (2000-2001); General Counsel of certain investment management subsidiaries of Liberty Financial Companies, Inc. (1998-2000); Associate General Counsel, Liberty Financial Companies, Inc. (1993-1998); Associate, Ropes & Gray LLP.    125    None

 

* This is the date the Non-Independent Trustee began serving the Trust. Each Trustee serves an indefinite term, until his successor is elected.
** Fund Complex includes all exchange-traded fund trusts (including all of their portfolios) advised by the Adviser. At October 31, 2015, the “Fund Family” consisted of the Trust’s 66 portfolios and four other exchange-traded fund trusts with 59 portfolios advised by the Adviser.

 

 

   88  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Andrew Schlossberg (1974)

Invesco Management Group, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046

    President    Since 2009    President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—U.S. Strategy and Marketing (2010-Present) and Principal Executive Officer (2015-Present), Invesco PowerShares Capital Management LLC; Managing Director, Head of U.S. Retail Distribution (2012-Present) and Global ETFs (2010-Present) for Invesco Ltd.; and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present); formerly, Mr. Schlossberg served in multiple roles within Invesco, including head of corporate development, as well as global leadership roles in strategy and product development in the company’s North American Institutional and Retirement divisions (2002-2007), Managing Director, U.S. head of business strategy and chief marketing officer for Invesco Ltd. in the United States (2008-2012) and Director, Invesco Distributors, Inc. (2012-2015).

Peter Hubbard (1981)

Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Vice President and Director of Portfolio Management—Invesco PowerShares Capital Management LLC (2008-Present); formerly, Portfolio Manager, Invesco PowerShares Capital Management LLC (2007-2008); Research Analyst, Invesco PowerShares Capital Management LLC (2005-2007); Research Analyst and Trader, Ritchie Capital, a hedge fund operator (2003-2005).

David Warren (1957)

Invesco Canada Ltd.

5140 Yonge Street, Suite 800

Toronto, Ontario M2N 6X7

    Vice President    Since 2009    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2009-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director—Chief Administrative Officer, Americas, Invesco PowerShares Capital Management LLC; Senior Vice President, Invesco Advisers, Inc. (2009–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Inc. (2009–Present); Senior Vice President, Invesco Management Group, Inc. (2007–Present); Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) and Chief Administrative Officer, North American Retail, Invesco Ltd. (2007-Present); Director, Invesco Canada Holdings Inc. (2002–Present), Invesco Corporate Class Inc., and Invesco Canada Fund Inc.; Director, Invesco Financial Services Ltd. and Trimark Investments Ltd. (2014-Present); formerly, Director, Executive Vice President and Chief Financial Officer, Invesco Canada Ltd. (formerly, Invesco Trimark Ltd.) (2000-2006).

Sheri Morris (1964)

Invesco Management Group, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046

    Vice President    Since 2012    Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) (2009-Present) and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust (2011-2013); Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   89  

 

 

Trustees and Officers (continued)

 

 

Name, Address and Year of Birth
of Executive Officers		    Position(s)
Held
with Trust		    Length of
Time
Served*		    Principal Occupation(s) During Past 5 Years

Rudolf E. Reitmann (1971)

Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President    Since 2013    Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global Exchange Traded Funds Operations, Invesco PowerShares Capital Management LLC (2013-Present).

Daniel E. Draper (1968)

Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President    Since 2013    Senior Vice President, Invesco Distributors, Inc. (2014-Present); Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Managing Director, Invesco PowerShares Capital Management LLC (2013-Present); formerly, Managing Director, Credit Suisse Asset Management (2010–2013) and Lyxor Asset Management/Societe Generale (2007–2010).

Steven M. Hill (1964)

Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Vice President and Treasurer    Since 2013    Vice President and Treasurer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2013-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Global ETF Administration, Invesco PowerShares Capital Management LLC (2011-Present); Principal Financial and Accounting Officer—Investment Pools, Invesco PowerShares Capital Management LLC (2015-Present); formerly, Senior Managing Director and Chief Financial Officer, Destra Capital Management LLC and its subsidiaries (2010-2011); Chief Financial Officer, Destra Investment Trust and Destra Investment Trust II (2010-2011); Senior Managing Director, Claymore Securities, Inc. (2003-2010); and Chief Financial Officer, Claymore sponsored mutual funds (2003-2010).

Christopher Joe (1969)

Invesco PowerShares

Capital Management LLC

11 Greenway Plaza, Suite 1000

Houston, TX 77046

    Chief Compliance Officer    Since 2012    Chief Compliance Officer of Invesco PowerShares Capital Management LLC (2015-Present); Chief Compliance Officer of PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2012-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); formerly, Chief Compliance Officer, Invesco Investment Advisers, LLC (registered investment adviser) (2010–2013), U.S. Compliance Director, Invesco, Ltd. (2006-2014) and Deputy Chief Compliance Officer of Invesco Advisers, Inc. (2014-2015).

Anna Paglia (1974)

Invesco PowerShares

Capital Management LLC

3500 Lacey Road, Suite 700

Downers Grove, IL 60515

    Secretary    Since 2011    Secretary, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust (2011-Present) and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust (2014-Present); Head of Legal (2010-Present) and Secretary (2015-Present), Invesco PowerShares Capital Management LLC; formerly, Partner, K&L Gates LLP (formerly, Bell Boyd & Lloyd LLP) (2007-2010); Associate Counsel at Barclays Global Investors Ltd. (2004-2006).

Availability of Additional Information About the Trustees

The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request at (800) 983-0903.

 

* This is the date the Officers began serving the Trust. Each Officer serves an indefinite term, until his or her successor is elected.

 

 

   90  

 

 

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares S&P 500 Momentum Portfolio and PowerShares S&P 500 Value Portfolio

 

At a meeting held on June 23, 2015, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust II (the “Trust”), including the Independent Trustees, approved the Investment Advisory Agreement (the “Agreement”) between Invesco PowerShares Capital Management LLC (the “Adviser”) and the Trust for PowerShares S&P 500 Momentum Portfolio and PowerShares S&P 500 Value Portfolio (each a “Fund” and together, the “Funds”).

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

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser’s services, the Trustees reviewed information concerning the functions to be performed by the Adviser for each Fund, information describing the Adviser’s current organization and staffing, including operational support that would be provided by the Adviser’s parent organization, Invesco Ltd., the background and experience of the persons who will be responsible for the day-to-day management of the Funds, and considered the quality of services provided by the Adviser to other exchange-traded funds (“ETFs”). The Trustees also reviewed information related to the Adviser’s portfolio transaction policies and procedures, as well as reports on the correlation and tracking error between the underlying indexes and the performance of other ETFs for which the Adviser serves as investment adviser.

The Trustees also considered the services to be provided by the Adviser in its oversight of the Funds’ administrator, custodian and transfer agent. They noted the significant amount of time, effort and resources that had been devoted to this oversight function for the other ETFs and that was expected to be provided for each Fund.

Based on their review, the Trustees concluded that the nature, extent and quality of the services to be provided by the Adviser to each Fund under the Agreement were expected to be appropriate and reasonable.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund’s proposed advisory fee, as compared to information compiled from Lipper Inc. (“Lipper”) databases on the median net expense ratios of ETF, open-end index (non-ETF) and open-end actively managed (non-ETF) peers. The Trustees noted that the proposed annual advisory fee to be charged to each Fund was a unitary fee, and that the Adviser has agreed to pay all other expenses of each Fund except brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses. The Trustees noted that each Fund’s proposed unitary advisory fee was higher than the median net expense ratio of the ETF peer group, but lower than the median net expense ratios of the open-end index and open-end actively managed peer groups. The Trustees considered each Fund’s proposed advisory fee in light of the administrative, operational and management oversight costs for the Adviser. The Trustees noted that each Fund’s proposed licensing fee will be payable out of the proposed unitary fee to be charged to each Fund. The Board concluded that the unitary advisory fee to be charged to each Fund is reasonable and appropriate in light of the services expected to be provided by the Adviser.

In conjunction with their review of the unitary advisory fee, the Trustees also considered information provided by the Adviser on the proposed costs of services for each Fund and the estimated fees to be paid by the Adviser. The Trustees considered information provided by the Adviser on its profitability, as well as any profits or losses realized by the Adviser from its relationship with other ETFs for which it serves as investment adviser. The Trustees concluded that the estimated profits to be realized by the Adviser with respect to each Fund appeared to be reasonable in comparison with the proposed cost of providing investment advisory services to each Fund.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale may be realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees noted that any reduction in fixed costs associated with the management of each Fund would be enjoyed by the Adviser, but that a unitary fee provides a level of certainty in expenses for each Fund. The Trustees considered whether the proposed advisory fee rate for each Fund is reasonable in relation to the projected asset size of each Fund, and concluded that the flat advisory fee was reasonable and appropriate.

The Trustees noted that the Adviser had not identified any further benefits that it would derive from its relationships with each Fund, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the Agreement for each Fund.

 

 

   91  

 

 

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio

 

At a meeting held on September 24, 2015, the Board of Trustees of the PowerShares Exchange-Traded Fund Trust II (the “Trust”), including the Independent Trustees, approved the Investment Advisory Agreement (the “Agreement”) between Invesco PowerShares Capital Management LLC (the “Adviser”) and the Trust for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio (each a “Fund” and together, the “Funds”).

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

Nature, Extent and Quality of Services. In evaluating the nature, extent and quality of the Adviser’s services, the Trustees reviewed information concerning the functions to be performed by the Adviser for each Fund, information describing the Adviser’s current organization and staffing, including operational support that would be provided by the Adviser’s parent organization, Invesco Ltd., the background and experience of the persons who will be responsible for the day-to-day management of the Funds, and considered the quality of services provided by the Adviser to other exchange-traded funds (“ETFs”). The Trustees also reviewed information related to the Adviser’s portfolio transaction policies and procedures, as well as reports on the correlation and tracking error between the underlying indexes and the performance of other ETFs for which the Adviser serves as investment adviser.

The Trustees also considered the services to be provided by the Adviser in its oversight of the Funds’ administrator, custodian and transfer agent. They noted the significant amount of time, effort and resources that had been devoted to this oversight function for the other ETFs and that was expected to be provided for each Fund.

Based on their review, the Trustees concluded that the nature, extent and quality of the services to be provided by the Adviser to each Fund under the Agreement were expected to be appropriate and reasonable.

Fees, Expenses and Profitability. The Trustees reviewed and discussed the information provided by the Adviser on each Fund’s proposed advisory fee, as compared to information compiled from Lipper Inc. (“Lipper”) databases on the median net expense ratios of ETF, open-end index (non-ETF) and open-end actively managed (non-ETF) peers. The Trustees noted that the proposed annual advisory fee to be charged to each Fund was a unitary fee, and that the Adviser has agreed to pay all other expenses of each Fund except brokerage expenses, taxes, interest, litigation expenses and other extraordinary expenses. The Trustees also compared each Fund’s proposed unitary advisory fee against the median net expense ratio of its ETF, open-end index and open-end actively managed peer groups, if any, as illustrated in the table below:

 

PowerShares Fund

    Equal to/Lower
than ETF Median		      Equal to/Lower
than Open-End
Index Fund
Median1		    Equal to/Lower
than Open-End
Active Fund
Median		  
PowerShares Russell 1000 Low Beta Equal Weight Portfolio       X      X   
PowerShares FTSE International Low Beta Equal Weight Portfolio            X   
PowerShares DWA Tactical Sector Rotation Portfolio      X       N/A      X   

 

1  The information provided by the Adviser indicated that the Fund with “N/A” noted did not have open-end index fund peers.

The Trustees noted that the comparable fee data provided by the Adviser for PowerShares DWA Tactical Sector Rotation Portfolio (which is structured as a fund-of-funds) had only one peer fund and that, in response to a request from counsel for the Independent Trustees, the Adviser provided supplemental data that showed the unitary fees for four other fund-of-funds that invested in affiliated ETFs. The Trustees considered that the unitary advisory fees for those other funds were higher than for PowerShares DWA Tactical Sector Rotation Portfolio, but that the adviser to the other funds agreed to waive a portion of the unitary fee approximately equal to the estimated Acquired Fund Fees and Expenses through November 30, 2015, such that the net unitary fee for those other funds is slightly less than the Fund’s unitary fee.

 

 

   92  

 

 

Board Considerations Regarding Approval of Investment Advisory Agreement for PowerShares Russell 1000 Low Beta Equal Weight Portfolio, PowerShares FTSE International Low Beta Equal Weight Portfolio and PowerShares DWA Tactical Sector Rotation Portfolio (continued)

 

The Trustees considered each Fund’s proposed advisory fee in light of the administrative, operational and management oversight costs for the Adviser. The Trustees noted that each Fund’s proposed licensing fee will be payable out of the proposed unitary fee to be charged to each Fund. The Board concluded that the unitary advisory fee to be charged to each Fund is reasonable and appropriate in light of the services expected to be provided by the Adviser.

In conjunction with their review of the unitary advisory fee, the Trustees also considered information provided by the Adviser on the proposed costs of services for each Fund and the estimated fees to be paid by the Adviser. The Trustees considered information provided by the Adviser on its profitability, as well as any profits or losses realized by the Adviser from its relationship with other ETFs for which it serves as investment adviser. The Trustees concluded that the estimated profits to be realized by the Adviser with respect to each Fund appeared to be reasonable in comparison with the proposed cost of providing investment advisory services to each Fund.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees reviewed the information provided by the Adviser as to the extent to which economies of scale may be realized as each Fund grows and whether fee levels reflect economies of scale for the benefit of shareholders. The Trustees noted that any reduction in fixed costs associated with the management of each Fund would be enjoyed by the Adviser, but that a unitary fee provides a level of certainty in expenses for each Fund. The Trustees considered whether the proposed advisory fee rate for each Fund is reasonable in relation to the projected asset size of each Fund, and concluded that the flat advisory fee was reasonable and appropriate.

The Trustees noted that the Adviser had not identified any further benefits that it would derive from its relationships with each Fund, and had noted that it does not have any soft-dollar arrangements.

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined to approve the Agreement for each Fund.

 

 

   93  

 

 

 

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Proxy Voting Policies and Procedures

A description of the Trust’s 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) 983-0903. This information is also available on the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov.

Information regarding how each Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is available, without charge and upon request, by (i) calling (800) 983-0903; or (ii) accessing the Trust’s Form N-PX on the Commission’s website at www.sec.gov.

Quarterly Portfolios

The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Form N-Qs will be available on the Commission’s website at www.sec.gov. The Trust’s Form N-Qs may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.

Frequency Distribution of Discounts and Premiums

A table showing the number of days the market price of each Fund’s shares was greater than the Fund’s net asset value, and the number of days it was less than the Fund’s net asset value (i.e., premium or discount) for the most recently completed calendar year, and the calendar quarters since that year end (or the life of the Fund, if shorter) may be found at the Fund’s website at www.invescopowershares.com.

LOGO

©2015 Invesco PowerShares Capital Management LLC    P-PS-AR-12
3500 Lacey Road, Suite 700
Downers Grove, IL 60515		   
invescopowershares.com    800.983.0903   LOGO   @PowerShares   

Item 2. Code of Ethics.

The Registrant has adopted a Code of Ethics that applies to the Registrant’s principal executive officer and principal financial officer. This Code is filed as an exhibit to this report on Form N-CSR under Item 12(a)(1). No substantive amendments to this Code were made during the reporting period. There were no waivers for the fiscal year ended October 31, 2015.

Item 3. Audit Committee Financial Expert.

The Registrant’s Board of Trustees (the “Board”) has determined that the Registrant has three “audit committee financial experts” serving on its audit committee: Mr. Marc M. Kole, Mr. Gary R. Wicker, and Mr. Donald H. Wilson. Each of these audit committee members is “independent,” meaning that he is not an “interested person” of the Registrant (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended) and he does not accept any consulting, advisory, or other compensatory fee from the Registrant (except in his capacity as a Board or committee member).

An “audit committee financial expert” is not an “expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933, as a result of being designated as an “audit committee financial expert.” Further, the designation of a person as an “audit committee financial expert” does not mean that a person has any greater duties, obligations, or liability than those imposed on a person without the “audit committee financial expert” designation. Similarly, the designation of a person as an “audit committee financial expert” does not affect the duties, obligations, or liability of any other member of the audit committee or Board of Trustees.

Item 4. Principal Accountant Fees and Services.

(a) to (d)

PricewaterhouseCoopers LLP (“PwC”) billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:

 

    

Fees Billed by

PwC for Services

Rendered to the

Registrant for

fiscal

year end 2015

   

(e)(2)

Percentage of

Services Approved

for fiscal year end

2015 Pursuant to

Waiver of Pre-

Approval

Requirement(1)

  

Fees Billed by

PwC for Services

Rendered to the

Registrant for

fiscal year end

2014

   

(e)(2)

Percentage of

Services Approved

for fiscal year end

2014 Pursuant to

Waiver of Pre-

Approval
Requirement(1)

Audit Fees

    $    1,093,585    N/A   $    948,635    N/A

Audit-Related Fees

    $    0    0%   $    0    0%

Tax Fees(2)

    $   498,190    0%   $  507,812    0%

All Other Fees

    $     0    0%   $    0    0%

Total Fees

    $    1,591,775    0%   $    1,456,447    0%

 

 

(1) For the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant during the fiscal year in which the services are provided; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit.

(2) Tax fees for the fiscal year ended October 31, 2015 includes fees billed for reviewing tax returns, 2015 excise tax returns and excise tax distribution calculations. Tax fees for the fiscal year ended October 31, 2014 included fees billed for reviewing tax returns, 2014 excise tax returns and excise tax distribution calculations and fees billed for preparing the final tax returns for the eight liquidated portfolios of the Registrant.

(e)(1)     Audit Committee Pre Approval Policies and Procedures

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES

POLICIES AND PROCEDURES

As Adopted by the Audit Committee of the PowerShares Funds (the “Funds”)

Adopted June 26, 2009, amended March 12, 2015

Statement of Principles

Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission (“SEC”) (“Rules”), the Audit Committee of the Funds’ (the “Audit Committee”) Board of Trustees (the “Board”) is responsible for the appointment, compensation and oversight of the work of independent accountants (an “Auditor”). As part of this responsibility and to assure that the Auditor’s independence is not impaired, the Audit Committee pre-approves the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds’ investment adviser and to affiliates of the adviser that provide ongoing services to the Funds (“Service Affiliates”) if the services directly impact the Funds’ operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations.

Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”) or require the specific pre-approval of the Audit Committee (“specific pre-approval”). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committee before payment is made. The Audit Committee will also consider the impact of additional fees on the Auditor’s independence when determining whether to approve any additional fees for previously pre-approved services.

The Audit Committee will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee. The term of any general pre-approval runs from the date of such pre-approval through June 30th of the following year, unless the Audit Committee considers a different period and states otherwise. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.

The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committee in fulfilling its responsibilities.

Delegation

The Chairman of the Audit Committee (or, in his or her absence, any member of the Audit Committee) may grant specific pre-approval for non-prohibited services. All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting.

Audit Services

The annual Audit services engagement terms will be subject to specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committee will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor’s qualifications and independence.

In addition to the annual Audit services engagement, the Audit Committee may grant either general or specific pre-approval of other Audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Non-Audit Services

The Audit Committee may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committee believes that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC’s Rules on auditor independence, and otherwise conforms to the Audit Committee’s general principles and policies as set forth herein.

Audit-Related Services

“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Funds’ financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; and assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities.

Tax Services

“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy.

No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.

Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committee pre-approval of permissible Tax services, the Auditor shall:

 

  1.

Describe in writing to the Audit Committee, which writing may be in the form of the proposed engagement letter:

 

  a.

The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and

 

  b.

Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service;

 

  2.

Discuss with the Audit Committee the potential effects of the services on the independence of the Auditor; and

 

  3.

Document the substance of its discussion with the Audit Committee.

All Other Auditor Services

The Audit Committee may pre-approve non-audit services classified as “All other services” that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy.

Pre-Approval Fee Levels or Established Amounts

Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committee. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committee at the quarterly Audit Committee meeting and will require specific approval by the Audit Committee before payment is made. The Audit Committee will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services.

Procedures

On an annual basis, the Auditor will submit to the Audit Committee for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request.

Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committee will be submitted to the Funds’ Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed at the next quarterly scheduled Audit Committee meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means.

Each request to provide services that require specific approval by the Audit Committee shall be submitted to the Audit Committee jointly by the Funds’ Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the pre-approval policies and procedures and the SEC Rules.

Each request to provide Tax services under either the general or specific pre-approval of the Audit Committee will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committee the potential effects of the services on the Auditor’s independence and will document the substance of the discussion.

Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committee for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied.

On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services.

The Audit Committee has designated the Funds’ Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds’ Treasurer will report to the Audit Committee on a periodic basis as to the results of such monitoring. Both the Funds’ Treasurer and management will immediately report to the Chairman of the Audit Committee any breach of these policies and procedures that comes to the attention of the Funds’ Treasurer or senior management.

Exhibit 1 to Pre-Approval of Audit and Non-Audit Services Policies and Procedures

Conditionally Prohibited Non-Audit Services (not prohibited if the Fund can reasonably conclude that the results of the service would not be subject to audit procedures in connection with the audit of the Fund’s financial statements)

 

  •   Bookkeeping or other services related to the accounting records or financial statements of the audit client

 

  •   Financial information systems design and implementation

 

  •   Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

 

  •   Actuarial services

 

  •   Internal audit outsourcing services

Categorically Prohibited Non-Audit Services

 

  •   Management functions

 

  •   Human resources

 

  •   Broker-dealer, investment adviser, or investment banking services

 

  •   Legal services

 

  •   Expert services unrelated to the audit

 

  •   Any service or product provided for a contingent fee or a commission

 

  •   Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance

 

  •   Tax services for persons in financial reporting oversight roles at the Fund

  •   Any other service that the Public Company Oversight Board determines by regulation is impermissible.

 

  (f) Not applicable.

 

  (g) PwC billed the Registrant aggregate fees of $498,190 for the fiscal year ended October 31, 2015 and $507,812 for the fiscal year ended October 31, 2014 for non-audit services rendered to the Registrant.

PwC did not bill any fees for non-audit services rendered to the Registrant’s investment adviser (not including any Sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) or any entity controlling, controlled by or under common control with the Registrant’s investment adviser that provides ongoing services to the Registrant for the fiscal years ended October 31, 2015 and October 31, 2014.

 

  (h) Not applicable

Item 5. Audit Committee of Listed Registrants.

 

  (a)

The Registrant has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, which consists solely of independent trustees. The Audit Committee members are: Marc M. Kole, Gary R. Wicker, and Donald H. Wilson.

 

  (b) Not applicable.

Item 6. Schedule of Investments.

 

(a) The Schedules of Investments are included as a part of the report to shareholders filed under Item 1 of this Form N-CSR.

 

(b) Not applicable.

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 Treasurer (principal financial officer) have concluded that such disclosure controls and procedures are effective.

 

  (b)

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1)  Code of Ethics is attached as Exhibit 99.CODEETH.

 

  (a)(2)

Certifications of the Registrant’s President and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 99.CERT.

 

  (a)(3)

Not applicable.

 

  (b)

Certifications of the Registrant’s President and Treasurer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)  PowerShares Exchange-Traded Fund Trust II

 

By:     /s/ Andrew Schlossberg        
Name:   Andrew Schlossberg
Title:   President
Date:   December 31, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:     /s/ Andrew Schlossberg        
Name:   Andrew Schlossberg
Title:   President
Date:   December 31, 2015
By:     /s/ Steven Hill                        
Name:   Steven Hill
Title:   Treasurer
Date:   December 31, 2015