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FILE NO. 333-84788
As filed with the Securities and Exchange Commission on January 30, 2009
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
POST EFFECTIVE AMENDMENT NO. 7
 
TO
 
FORM S-6
 
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
 
 
     
A.
  Exact name of trust:
    BLDRS INDEX FUNDS TRUST 
BLDRS ASIA 50 ADR INDEX FUND 
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND 
BLDRS EMERGING MARKETS 50 ADR INDEX FUND 
BLDRS EUROPE 100 ADR INDEX FUND
B.
  Name of depositor:
    Invesco PowerShares Capital Management LLC
C.
  Complete address of depositor’s principal executive offices:
    Invesco PowerShares Capital Management LLC, 300 West Roosevelt Road, Wheaton, IL 60187
D.
  Name and complete address of agent for service:
    H. Bruce Bond, President and Chief Executive Officer, Invesco PowerShares Capital Management LLC, 300 West Roosevelt Road, Wheaton, IL 60187
    Copy to:
    David M. Mahle, Jones Day, 222 East 41st Street, New York, NY 10017
    It is proposed that this filing will become effective immediately upon filing pursuant to paragraph (b) of Rule 485
E.
  Title of securities being registered:
    An indefinite number of units of Beneficial Interest pursuant to Rule 24f-2 under the Investment Company Act of 1940.
F.
  Proposed maximum aggregate offering price to the public of the securities being registered:
    Indefinite.
G.
  Amount of filing fee:
    In accordance with Rule 24f-2, no fee was paid on January 2, 2009 in connection with the filing of the Rule 24f-2 Notice for the Trust’s most recent fiscal year.
H.
  Approximate date of proposed sale to public:
    As soon as practicable after the Effective Date of the Registration Statement.
    It is proposed that this filing will become effective immediately upon filing pursuant to paragraph(b) of Rule 485
 
 


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BLDRS INDEX FUNDS TRUST
Cross Reference Sheet
Pursuant To Regulation C
Under The Securities Act Of 1933, As Amended
 
(Form N-8b-2 Items Required By Instruction 1
As To Prospectus In Form S-6)
 
             
Form N-8B-2
  Form S-6
Item Number
 
Heading in Prospectus
 
I Organization and General Information
   
    1.  
(a) Name of Trust and Internal Revenue Service Employer Identification Number
  Prospectus Front Cover
       
(b) Title of securities issued
  Prospectus Front Cover
    2.   Name, address and Internal Revenue Service Employer Identification Number of depositor   The Sponsor
    3.   Name, address and Internal Revenue Service Employer Identification Number of trustee   The Trustee
    4.   Name, address and Internal Revenue Service Employer Identification Number of principal underwriter   *
    5.   State of organization of Trust   Creation and Redemption of Shares
    6.  
(a) Dates of execution and termination of Trust Agreement under which Trust organized
  Essential Information as of September 30, 2008*; Termination of a Fund
       
(b) Dates of execution and termination of Trust Agreement pursuant to which proceeds of securities held by Trustee
  Same as set forth in 6(a)
    7.   Changes of name   *
    8.   Fiscal Year   *
    9.   Material Litigation   *
     
II General Description of the Trust and Securities of the Trust
   
    10.   (a) Registered or bearer securities   The Funds
        (b) Cumulative or distributive   Essential Information as of September 30, 2008*; Distributions to Beneficial Owners
       
(c) Rights of holders as to withdrawal or redemption
  Creation and Redemption of Shares; Book-Entry Only; Notices and Distributions
       
(d) Rights of holders as to conversion, transfer, etc. 
  Same as set forth in 10(d)
       
(e) Lapses or defaults in principal payments with respect to periodic payment plan certificates
  *
       
(f) Voting rights
  Amendments to the Trust Agreement and Indenture; Termination of a Fund; The Trustee
       
(g) Notice to holders as to change in:
   
       
(1) Composition of Trust assets
  *
       
(2) Terms and conditions of Trust’s securities
  Amendments to the Trust Agreement and Indenture
       
(3) Provisions of Trust Agreement
  Same as set forth in 10(g)(2)
       
(4) Identity of depositor and trustee
  The Trustee; The Sponsor
       
(h) Consent of holders required to change:
   
        (1) Composition of Trust assets   *


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Form N-8B-2
  Form S-6
Item Number
 
Heading in Prospectus
 
        (2) Terms and conditions of Trust’s securities   Amendments to the Trust Agreement and Indenture
        (3) Provisions of Trust Agreement   Same as set forth in 10(h)(2)
        (4) Identity of depositor and trustee   The Sponsor; The Trustee
        (i) Other principal features of the securities   The Funds
    11.   Type of securities comprising units   Prospectus Front Cover; The Funds; The Portfolios; Creation and Redemption of Shares
    12.   Certain information regarding securities comprising periodic payment certificates   *
    13.  
(a) Certain information regarding loads, fees, expenses and charges
  Creation and Redemption of Shares; Expenses of a Fund
       
(b) Certain information regarding periodic payment plan certificates
  *
        (c) Certain percentages   Same as set forth in 13(a)
        (d) Reasons for certain differences in prices   *
       
(e) Certain other loads, fees, or charges payable by holders
  *
       
(f) Certain profits receivable by depositor, principal underwriters, custodian, trustee or affiliated persons
  The Portfolios
       
(g) Ratio of annual charges and deductions to income
  *
    14.   Issuance of Trust’s securities   The Funds; Book-Entry Only; Notices and Distributions
    15.   Receipt and handling of payments from purchasers   The Funds; Creation and Redemption of Shares
    16.   Acquisition and disposition of underlying securities   The Funds; Creation and Redemption of Shares; The Portfolios
    17.   (a) Withdrawal or redemption by holders   Same as set forth in 16
       
(b) Persons entitled or required to redeem or repurchase securities
  Same as set forth in 16
       
(c) Cancellation or resale of repurchased or redeemed securities
  Same as set forth in 16
    18.   (a) Receipt, custody and disposition of income   Distributions to Beneficial Owners
        (b) Reinvestment of distributions   *
        (c) Reserves or special funds   Same as set forth in 18(a)
        (d) Schedule of distributions   *
    19.   Records, accounts and reports   Distributions to Beneficial Owners; Expenses of a Fund; Book-Entry Only; Notices and Distributions
    20.   Certain miscellaneous provisions of Trust Agreement    
        (a) Amendments   Amendments to the Trust Agreement and Indenture
        (b) Extension or termination   Same as set forth in 20(a)
        (c) Removal or resignation of trustee   The Trustee
        (d) Successor trustee   Same as set forth in 20(c)
        (e) Removal or resignation of depositor   The Sponsor


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Form N-8B-2
  Form S-6
Item Number
 
Heading in Prospectus
 
        (f) Successor depositor   Same as set forth in 20(e)
    21.   Loans to security holders   *
    22.   Limitations on liabilities   The Trustee; The Sponsor
    23.   Bonding arrangements   *
    24.   Other material provisions of Trust Agreement   *
     
III Organization, Personnel and Affiliated Persons of Depositor
   
    25.   Organization of depositor   The Sponsor
    26.   Fees received by depositor   *
    27.   Business of depositor   The Sponsor
    28.   Certain information as to officials and affiliated persons of depositor   Same as set forth in 27
    29.   Ownership of voting securities of depositor   Same as set forth in 27
    30.   Persons controlling depositor   *
    31.   Payments by depositor for certain services rendered to Trust   *
    32.   Payments by depositor for certain other services rendered to Trust   *
    33.   Remuneration of employees of depositor for certain services rendered to Trust   *
    34.   Compensation of other persons for certain services rendered to Trust   *
     
IV Distribution and Redemption of Securities
   
    35.   Distribution of Trust’s securities in states   Continuous offering of Shares
    36.   Suspension of sales of Trust’s securities   *
    37.   Denial or revocation of authority to distribute   *
    38.   (a) Method of distribution   Creation and Redemption of Shares of Creation Units; Continuous Offering of Shares; The Funds; Book-Entry Only; Notices and Distributions
        (b) Underwriting agreements   Continuous Offering of Shares; Creation and Redemption of Shares
        (c) Selling agreements   Same as set forth in 38(b)
    39.   (a) Organization of principal underwriter   The Sponsor
       
(b) FINRA membership of principal underwriter
  The Sponsor
    40.   Certain fees received by principal underwriters   *
    41.   (a) Business of principal underwriters   Continuous Offering of Shares
        (b) Branch offices of principal underwriters   *
        (c) Salesmen of principal underwriters   *
    42.   Ownership of Trust’s securities by certain persons   *
    43.   Certain brokerage commissions received by principal underwriters   *
    44.  
(a) Method of valuation for determining offering price
  The Portfolios; Determination of Net Asset Value
       
(b) Schedule as to components of offering price
  *


Table of Contents

             
Form N-8B-2
  Form S-6
Item Number
 
Heading in Prospectus
 
       
(c) Variation in offering price to certain persons
  *
    45.   Suspension of redemption rights   *
    46.  
(a) Certain information regarding redemption or withdrawal valuation
  Determination of Net Asset Value; Creation and Redemption of Shares
       
(b) Schedule as to components of redemption price
  *
    47.   Maintenance of position in underlying securities   The Funds; The Portfolios; Continuous Offering of Shares; Determination of Net Asset Value; Distributions to Beneficial Owners
     
V Information Concerning the Trustee or Custodian
   
    48.   Organization and regulation of trustee   The Trustee
    49.   Fees and expenses of trustee   Expenses of a Fund; Creation and Redemption of Shares
    50.   Trustee’s lien   Same as set forth in 49
     
VI Information Concerning Insurance of Holders of Securities
   
    51.   (a) Name and address of insurance company   *
        (b) Types of policies   *
        (c) Types of risks insured and excluded   *
        (d) Coverage   *
        (e) Beneficiaries   *
        (f) Terms and manner of cancellation   *
        (g) Method of determining premiums   *
        (h) Aggregate premiums paid   *
        (i) Recipients of premiums   *
       
(j) Other material provisions of Trust Agreement relating to insurance
  *
     
VII Policy of Registrant
   
    52.  
(a) Method of selecting and eliminating securities from the Trust
  The Funds; The Portfolios; Creation and Redemption of Shares; Determination of the Portfolio Deposit
        (b) Elimination of securities from the Trust   *
       
(c) Policy of Trust regarding substitution and elimination of securities
  Same as set forth in 52(a)
       
(d) Description of any other fundamental policy of the Trust
  *
        (e) Code of Conduct   Code of Conduct
    53.  
(a) Taxable status of the Trust
  Tax Status of the Trust
       
(b) Qualification of the Trust as a regulated investment company
  Same as set forth in 53(a)
     
VIII Financial and Statistical Information
   
    54.   Information regarding the Trust’s last ten fiscal years   *
    55.   Certain information regarding periodic payment plan certificates   *


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Form N-8B-2
  Form S-6
Item Number
 
Heading in Prospectus
 
    56.   Certain information regarding periodic payment plan certificates   *
    57.   Certain information regarding periodic payment plan certificates   *
    58.   Certain information regarding periodic payment plan certificates   *
    59.   Financial statements (Instruction 1(c) to Form S-6)   *
 
 
* Not applicable, answer negative or not required.


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UNDERTAKING TO FILE REPORTS
 
Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Securities and Exchange Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section.


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PROSPECTUS
 
(BLDRS LOGO)
 
BLDRS ASIA 50 ADR INDEX FUND
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
BLDRS EUROPE 100 ADR INDEX FUND

January 30, 2009
 
 
The BLDRS Index Funds Trust (“Trust”) is a unit investment trust consisting of four (4) separate investment portfolios (each a “BLDRS Index Fund” or a “Fund” and collectively the “BLDRS Index Funds” or the “Funds”). The investment objective of each Fund is to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of publicly traded Depositary Receipts in a particular geographic region or market represented by a specified relevant benchmark index compiled and published by The Bank of New York Mellon (formerly The Bank of New York) (each a “BNY Mellon ADR Index”). Invesco PowerShares Capital Management LLC (formerly PowerShares Capital Management LLC) is the Sponsor of the Trust and the Funds and The Bank of New York Mellon is the Trustee.
 
The units of beneficial interest of each Fund (“Shares”) are listed on The Nasdaq Stock Market, Inc. (“Nasdaq”). The Shares trade on Nasdaq at market prices that may differ to some degree from the Shares’ net asset value. Each Fund issues and redeems Shares on a continuous basis — at net asset value — only in a multiple of 50,000 Shares called a “Creation Unit,” principally in-kind for securities included in the relevant benchmark BNY Mellon ADR Index. EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES ARE NOT REDEEMABLE SECURITIES OF A FUND.
 
Shares of each Fund are not guaranteed or insured by The Federal Deposit Insurance Corporation or any other agency of the U.S. government, nor are Shares deposits or obligations of any bank. Shares involve investment risks, including the loss of principal.
 
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Sponsor: Invesco PowerShares Capital Management LLC
 
“BLDRS” and “Baskets of Listed Depositary Receipts”
are registered trademarks of The Bank of New York Mellon
 
Copyright 2009 by Invesco PowerShares Capital Management LLC
 
all rights reserved


 

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  EX-99.2: OPINION AND CONSENT OF COUNSEL
  EX-99.A.6: CERTIFICATE OF FORMATION
  EX-99.A.11: CODE OF ETHICS AND CODE OF CONDUCT OF THE TRUST
  EX-99.C.1: CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  EX-24: POWER OF ATTORNEY


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ESSENTIAL INFORMATION AS OF SEPTEMBER 30, 2008*
 
                                         
          Fractional
                   
    Number of
    Undivided Interest
    Net Asset
             
    Shares
    Represented by
    Value per
             
    Outstanding     Each Share     Share     Symbol     CUSIP  
 
BLDRS Asia 50 ADR Index Fund:
    3,050,000       1/3,050,000     $ 25.39       ADRA       09348R102  
BLDRS Developed Markets 100 ADR
                                       
Index Fund:
    4,400,000       1/4,400,000     $ 22.31       ADRD       09348R201  
BLDRS Emerging Markets 50 ADR
                                       
Index Fund:
    14,600,000       1/14,600,000     $ 37.94       ADRE       09348R300  
BLDRS Europe 100 ADR Index Fund:
    1,200,000       1/1,200,000     $ 22.10       ADRU       09348R409  
 
Glossary: All defined terms used in this Prospectus and page numbers on which their definitions appear are listed in the Glossary beginning on page 107
 
Sponsor: Invesco PowerShares Capital Management LLC (“Invesco PowerShares”)
 
Distributor: ALPS Distributors, Inc.
 
Trustee: The Bank of New York Mellon
 
Licensor: The Bank of New York Mellon
 
Depositary: The Depository Trust Company (“DTC”)
 
Trust Agreement and Indenture: Dated and Effective as of November 8, 2002 by and between the Sponsor and the Trustee.*
 
Beneficial Owner: Owners of beneficial interests in Shares are referred to as “Beneficial Owners.”
 
Record Dates: Quarterly, currently anticipated to be the Second (2nd) Business Day after the third (3rd) Friday in each of March, June, September and December.**
 
Dividend Payment Dates: Quarterly, on the last Business Day of April, July, October and January.**
 
Fiscal Year: October 1-September 30
 
Estimated Ordinary Operating Expenses of Each Fund:
30/100th of one percent (inclusive of Trustee’s annual fee of 6/100th of one percent to 10/100th of one percent) of the net asset value (“NAV”) of the relevant Fund.***
 
Valuation Time: Closing time of the regular trading session on Nasdaq (ordinarily 4:00 p.m. New York time).
 
Business Day: Any day that Nasdaq is open for business, or that the Funds are open for business as required by Section 22(e) of the Investment Company Act of 1940 (“1940 Act”).
 
Mandatory Termination Date: If a Fund is terminated pursuant to the terms of the Trust Agreement and Indenture, the Mandatory Termination Date shall be the date on which the last security held by a Fund matures, is sold, is redeemed, or upon any other disposition as the case may be.


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Discretionary Termination: At the discretion of the Sponsor, a Fund may be terminated if at any time after three (3) years following the initial Portfolio Deposit such value is less than $350,000,000, adjusted for inflation.****
 
Calculation of the Composition of the Portfolio Deposit for Creation Units:
The Trustee, through the National Securities Clearing Corporation (“NSCC”), makes available on each Business Day, immediately prior to the opening of business on Nasdaq (currently 9:30 a.m., New York time), the list of the names and the required number of shares of each of the securities comprising a Fund’s relevant BNY Mellon ADR Index (each an “Index Security”) to be included in the current Portfolio Deposit (based on information at the end of the previous Business Day) for each Fund. Such Portfolio Deposit is applicable, subject to any adjustments, in order to effect creations and redemptions of Creation Units of a given Fund until such time as the next-announced composition of the Portfolio Deposit is made available.
 
Modification to the Trust Agreement and Indenture:
The Trust Agreement and Indenture for each Fund may be modified unilaterally by the Sponsor to effect certain changes, and may be otherwise modified by a vote of the Beneficial Owners of the outstanding Shares of the relevant Fund under certain circumstances.
 
 
The Trust Agreement and Indenture became effective and the initial deposit for each Fund was made on November 8, 2002 (“Initial Date of Deposit”).
 
** See “Distributions to Beneficial Owners.”
 
*** See “Expenses of a Fund” and the “Trustee”
 
**** A Fund may also be terminated under other circumstances. See “Termination of a Fund.”


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THE FUNDS
 
Each Fund is an “index fund” that holds publicly-traded Depositary Receipts of non-U.S. companies in a particular geographic region or market represented by a specified relevant benchmark BNY Mellon ADR Index. The Shares of each Fund represent an undivided interest in the portfolio of Depositary Receipts held by each Fund. The Shares of each Fund are separate from the underlying securities that are represented by the Shares. Each Fund seeks to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of its relevant benchmark BNY Mellon ADR Index. Each BNY Mellon ADR Index is developed by the Licensor from a universe of Depositary Receipts defined by The Bank of New York Mellon ADR IndexSM (“BNY Mellon ADR Composite Index”). Dow Jones & Company, Inc. (“Dow Jones”) acts as “index calculation agent” in connection with the calculation and dissemination of each BNY Mellon ADR Index and the free-float adjusted market capitalization methodology of Dow Jones is employed. See “Selection Criteria, Construction and Maintenance Standards for the BNY Mellon ADR Indexes.”
 
Depositary Receipts are negotiable U.S. securities that generally represent a non-U.S. company’s publicly traded equity or debt. Depositary Receipts are created when a broker purchases the non-U.S. company’s shares on that company’s home stock market and delivers those shares to the depositary’s local custodian bank, who then instructs the depositary bank, such as The Bank of New York Mellon, to issue Depositary Receipts. Depositary Receipts may also be purchased in the U.S. secondary trading market. Depositary Receipts may trade freely, just like any other security, either on an exchange, Nasdaq or in the over-the-counter market, and can be used to raise capital.
 
Indexing is an investment strategy for tracking, as closely as possible, the performance of a specified market benchmark, or “index.” An index is an unmanaged group of securities whose overall performance is used as a standard to measure the investment performance of a particular market. There are many types of indexes. Some represent entire markets — such as a U.S. or foreign country stock market. Other indexes cover market segments such as small-capitalization stocks or long-term bonds, or particular industries. An index fund holds all, or a representative sample, of the securities that make up its target index. Unlike actively managed funds, index (or “passively managed”) funds do not buy and sell securities based on research and analysis. Rather, index funds simply attempt to mirror what the target index does, for better or worse. An index fund does not always perform exactly like its target index. Like all investment companies, index funds have operating expenses and transaction costs. Market indexes do not, and therefore will usually have a slight performance advantage over funds that track them.
 
The Funds are designed for investors seeking a relatively low cost approach to investing and may be suitable for long-term investment in the market or market segment represented in the relevant benchmark BNY Mellon ADR Index. Shares of each Fund may also be used as an asset allocation tool or as a speculative trading instrument. The Shares have been designed to be tradable in a secondary market on Nasdaq on an intraday basis in lots of any size and to be created and redeemed principally in-kind in Creation Units at each day’s next calculated NAV. The Funds utilize a low cost “passive” or “indexing” investment approach to attempt to approximate the investment performance of their relevant benchmark BNY Mellon ADR Indexes.
 
The Shares provide investors with a security whose market value should approximate 1/15th the value of the relevant benchmark BNY Mellon ADR Index. Thus, for example, if the BNY Mellon ADR Index were at 750, investors might expect a Share to trade at approximately $50. Note, however, that the market price of a Share should also reflect its share of any current and undistributed dividends accumulated on the securities in such Fund’s portfolio and may also be affected by supply and demand, market volatility, investor sentiment and other factors. Therefore, over time, the market value of a Share may not approximate 1/15th the value of its relevant benchmark BNY Mellon ADR Index.
 
This prospectus provides information about the four Funds. The BLDRS Asia 50 ADR Index Fund seeks to track The BNY Mellon Asia 50 ADR Index SM ; The BLDRS Developed Markets 100 ADR Index Fund seeks to track The BNY Mellon Developed Markets 100 ADR Index SM ; The BLDRS Emerging Markets 50 ADR Index Fund seeks to track The BNY Mellon Emerging Markets 50 ADR Index SM and The BLDRS Europe 100 ADR Index Fund seeks to track The BNY Mellon Europe 100 ADR Index SM . Each Fund normally holds at least 95% of its total assets in Depositary Receipts that comprise its relevant benchmark BNY Mellon


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ADR Index, and will seek to correspond generally, before fees and expenses, to the price and yield performance, of its relevant benchmark BNY Mellon ADR Index.
 
THE FUNDS, INDEXES AND TICKER SYMBOLS
 
BLDRS Asia 50 ADR Index Fund (Symbol: ADRA)
 
The BNY Mellon Asia 50 ADR Index includes 50 component Depositary Receipts as of September 30, 2008 representing the securities issued by 50 of the most actively traded companies from the Asian market having a free-float market capitalization ranging from over $3 billion to over $127 billion.
 
BLDRS Developed Markets 100 ADR Index Fund (Symbol: ADRD)
 
The BNY Mellon Developed Markets 100 ADR Index includes 100 component Depositary Receipts as of September 30, 2008 representing the securities issued by 100 of the most actively traded companies from international developed markets having a free-float market capitalization ranging from over $3 billion to over $194 billion.
 
BLDRS Emerging Markets 50 ADR Index Fund (Symbol: ADRE)
 
The BNY Mellon Emerging Markets 50 ADR Index includes 50 component Depositary Receipts as of September 30, 2008 representing the securities issued by 50 of the most actively traded companies from the emerging markets having a free-float market capitalization ranging from over $3 billion to over $57 billion.
 
BLDRS Europe 100 ADR Index Fund (Symbol: ADRU)
 
The BNY Mellon Europe 100 ADR Index includes 99 component Depositary Receipts as of September 30, 2008 representing the securities issued by 99 of the most actively traded companies from the European market having a free-float market capitalization ranging from over $490 million to over $194 billion.
 
RISKS OF INVESTING IN THE FUNDS
 
General Risks
 
Depositary Receipts.   Each Fund holds the securities of non-U.S. and non-Canadian companies in the form of Depositary Receipts, New York shares and Global Shares. Depositary Receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. American Depositary Receipts (“ADRs”) are receipts typically issued by an American bank or trust company that evidence ownership of underlying securities issued by a foreign corporation. New York shares are typically issued by a company incorporated in the Netherlands and represent a direct interest in the company. Unlike traditional Depositary Receipts, New York share programs do not involve custody of the Dutch shares of the company. Global Depositary Receipts (“GDRs”) are receipts issued throughout the world that evidence a similar arrangement. ADRs and GDRs trade in foreign currencies that differ from the currency the underlying security for each ADR or GDR principally trades in. Global Shares are the actual (ordinary) shares of a non-U.S. company, which trade both in the home market and the U.S. ADRs, GDRs, New York shares, and Global Shares are collectively referred to as “Depositary Receipts.” Generally, ADRs, and New York shares in registered form, are designed for use in the U.S. securities markets. GDRs, in registered form, are tradable both in the United States and in Europe and are designed for use throughout the world. Global Shares are represented by the same share certificate in both the U.S. and the home market. Separate registrars in the United States and home country are maintained. In most cases, purchases occurring on a U.S. exchange would be reflected on the U.S. Registrar. Global Shares may also be eligible to list on exchanges in addition to the United States and home country. A Fund may hold unsponsored Depositary Receipts. The issuers of unsponsored Depositary Receipts are not obligated to disclose material information in the United States;


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therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the Depositary Receipts.
 
Equity Risk.   An investment in a Fund should be made with an understanding of the risks inherent in an investment in equity securities, including the risk that the financial condition of issuers may become impaired or that the general condition of the stock market may deteriorate (either of which may cause a decrease in the value of the securities held by a Fund (“Fund Securities”) and thus in the value of Shares). Equity securities and therefore Depositary Receipts are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. These investor perceptions are based on various unpredictable factors, including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises.
 
Currency Risk.   The underlying securities of the Depositary Receipts in a Fund’s portfolio are usually denominated or quoted in currencies other than the U.S. dollar. Changes in foreign currency exchange rates affect the value of a Fund’s portfolio. Generally, when the U.S. dollar rises in value against a foreign currency, a security denominated in that currency loses value because the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollar decreases in value against a foreign currency, a security denominated in that currency gains value because the currency is worth more U.S. dollars. This risk, generally known as “currency risk,” means that a strong U.S. dollar will reduce returns for U.S. investors while a weak U.S. dollar will increase those returns.
 
Foreign Market Risk.   Since the underlying securities of the Depositary Receipts in a Fund’s portfolio trade on foreign exchanges at times when the U.S. markets are not open for trading, the value of the Depositary Receipts representing those underlying securities may change materially at times when the U.S. markets are not open for trading, regardless of whether there is an active U.S. market for Shares.
 
Liquidity Risk.   Although the Depositary Receipts in the relevant benchmark BNY Mellon ADR Indexes are listed on a national securities exchange or Nasdaq there can be no assurance that a market for Depositary Receipts will be made or maintained or that any such market will be or remain liquid. The price at which a Fund’s securities may be sold and the value of a Fund’s Shares will be adversely affected if trading markets for the securities are limited or absent or if bid/ask spreads are wide.
 
Non-Diversification Risk.   The Depositary Receipts of particular issuers, or of issuers in particular industries, may represent a large portion of a BNY Mellon ADR Index. If a Fund holds large positions in securities of a fewer number of issuers, a Fund is more susceptible to any single economic, political, market or regulatory event than an investment company that is more broadly diversified across issuers.
 
Indexing Risk.   Each Fund is a unit investment trust registered under the 1940 Act and is not a managed fund. Traditional methods of investment management for a managed fund typically involve continuing evaluation and changes to a portfolio of securities on the basis of economic, financial and market analyses. The only purchases and sales that are made with respect to a Fund’s portfolio will be those necessary to create a portfolio that is designed to correspond generally, before fees and expenses, to the relevant benchmark BNY Mellon ADR Index to the extent practicable. Because no attempt is made to “manage” a Fund in the traditional sense, the adverse financial condition of an issuer will not be the basis for the sale of its securities from a Fund’s portfolio unless the issuer is removed from the relevant benchmark BNY Mellon ADR Index.
 
Changes to a Fund’s relevant benchmark BNY Mellon ADR Index may cause the Trustee to make corresponding portfolio adjustments. Some or all of the BNY Mellon ADR Indexes may have relatively high component turnover ratios that will require the Trustee to buy Index Securities or sell Portfolio Securities for the relevant Fund in order to create a portfolio that is designed to correspond generally, before fees and expenses, to the Fund’s relevant benchmark BNY Mellon ADR Index. If the composition of a BNY Mellon ADR Index changes frequently and thus the Trustee is required to buy Index Securities or sell Portfolio Securities frequently, there could be adverse tax consequences and other expenses to shareholders of such Fund. See “The Portfolios — Change to a BNY Mellon ADR Index” and “The Portfolios — Adjustments to Portfolios.”


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Substitution Risk.   While the Licensor often chooses a replacement company for the BNY Mellon ADR Composite Index with some characteristics in common with a company or companies removed from the index, a replacement company may have little in common with the company it replaces.
 
Foreign Limitation Risk.   A Participating Party’s ability to acquire Deposit Securities may be limited if the creation of new Deposit Securities would cause any foreign ownership limits for the foreign securities underlying the Deposit Securities to be exceeded. If this were to happen, it is possible that a Participating Party’s ability to create Shares may be adversely affected.
 
Correlation Risk.   The Sponsor believes that over time the correlation between each Fund’s performance and that of its relevant benchmark BNY Mellon ADR Index, before fees and expenses, will be 95% or better. A figure of 100% would indicate perfect correlation. A Fund’s return may not match the return of its relevant benchmark BNY Mellon ADR Index as a result of Fund expenses and other factors. For example, a rebalancing of a Fund’s holdings may at times be necessary to reflect changes in the composition of its relevant benchmark BNY Mellon ADR Index. Rebalancing will result in transaction and other costs and could result in the realization of capital gains or losses.
 
Investment Company Tax Diversification.   Each Fund intends to maintain the required level of diversification so as to qualify as a “regulated investment company” for purposes of the Internal Revenue Code of 1986, as amended (“Code”), in order to avoid liability for federal income tax to the extent that its earnings are distributed to shareholders. Compliance with the diversification requirements of the Code could limit the ability of a Fund to meet its investment objective.
 
Fluctuation of Net Asset Value and Market Value.   The NAV of the Shares will fluctuate with changes in the market value of the securities held in each Fund’s portfolio. The market prices of Shares will fluctuate in accordance with changes in NAV and supply and demand in the secondary market. The Sponsor cannot predict whether Shares will trade below, at or above their NAV. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares will be closely related, but not identical to, the same forces influencing the prices of the Depositary Receipts of the relevant benchmark BNY Mellon ADR Index trading individually or in the aggregate at any point in time. However, given that Shares can be created and redeemed in Creation Units, the Sponsor believes that large discounts or premiums to the NAV of Shares should not be sustained.
 
Trading Halts.   Trading in Shares on Nasdaq may be halted due to market conditions or for reasons that, in the view of Nasdaq, make trading in Shares inadvisable. In addition, trading in Shares on Nasdaq is subject to trading halts caused by extraordinary market volatility pursuant to Nasdaq “circuit breaker” rules.
 
De-Listing from Nasdaq.   There can be no assurance that the requirements of Nasdaq necessary to maintain the listing of Shares of any Fund will continue to be met or remain unchanged. Nasdaq may but is not required to remove the Shares of a Fund from listing if: (1) the Fund has more than 60 days remaining until termination and there are fewer than 50 Beneficial Owners of the Shares for 30 or more consecutive trading days; (2) the value of the relevant benchmark BNY Mellon ADR Index or portfolio of securities on which such Fund is based is no longer calculated or available; or (3) such other event will occur or condition exists that, in the opinion of Nasdaq, makes further dealings on Nasdaq inadvisable. In addition, Nasdaq will remove the Shares from listing and trading upon termination of a Fund.
 
Termination of a Fund.   The Sponsor may direct the Trustee to terminate and liquidate a Fund if at any time three years following the Initial Date of Deposit such value is less than $350,000,000 as adjusted for inflation. The Trustee may also terminate a Fund upon the agreement of the Beneficial Owners of 66 2 / 3 % of the Fund’s outstanding Shares. The Trustee will terminate and liquidate a Fund if one of the following events occurs: (1) DTC is unwilling or unable to continue to perform its functions and a comparable replacement is unavailable; (2) NSCC no longer provides clearance services with respect to the Fund’s Shares, or the Trustee is no longer a participant in NSCC; (3) the Licensor ceases publishing the Fund’s relevant benchmark BNY Mellon ADR Index; (4) the License Agreement is terminated; (5) the Fund’s Shares are de-listed from Nasdaq; (6) the Sponsor resigns or is unable to perform its duties and the Trustee has not appointed a


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successor and has not itself agreed to act as sponsor; (7) the Trustee resigns or is removed and no successor trustee is appointed; or (8) on the Mandatory Termination Date.
 
Upon the termination of a Fund, the Trustee will, within a reasonable time after the termination of the Fund, sell the Fund’s Securities and, after making provisions for the Fund’s liabilities, distribute the proceeds to the Beneficial Owners. See “Termination of a Fund.” In the event the process of terminating a Fund begins and until the date on which the Fund is terminated, the trading pattern of such Fund’s Shares could be negatively effected.
 
Risk Factors Specific to Each Fund
 
Each Fund is subject to the additional risks associated with concentrating its investments in companies in the market sector that its relevant benchmark BNY Mellon ADR Index targets. Additional Fund specific risks include:
 
BLDRS Asia 50 ADR Index Fund
 
Special Risks of Countries in the Asia Pacific Region.   Certain of the risks associated with international investments are heightened for investments in these countries. For example, some of the currencies of these countries have experienced devaluations relative to the U.S. dollar, and adjustments have been made periodically in certain of such currencies. Certain countries, such as Indonesia, face serious exchange constraints. Jurisdictional disputes also exist, for example, between South Korea and North Korea. The Japanese economy and financial markets have experienced considerable difficulty since 1990. The Japanese stock market, as measured by the Tokyo Stock Price Index, has been volatile. Declines in the Tokyo stock market have made the country’s banks and financial institutions vulnerable because of their large share portfolios. Japanese banks have been left with large numbers of non-performing loans. The Japanese economy labors under a heavy government budget deficit and historically low interest rates. As a result of these factors, several high-profile bankruptcies of Japanese banks, brokerage firms and insurance companies have occurred. In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The long-term effects of this reversion are not known at this time.
 
Emerging Markets Risk.   The risks of foreign investments are usually much greater for emerging markets. Investments in emerging markets may be considered speculative. Emerging markets include those countries defined as “emerging” or “developing” by the World Bank, the International Finance Corporation or the United Nations. Emerging markets are riskier because they develop unevenly and may never fully develop. They are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, the securities markets in many of these countries have far lower trading volumes and less liquidity than developed markets. Because these markets are so small, they may be more likely to suffer sharp and frequent price changes or long term price depression due to adverse publicity, investor perceptions or the transactions of a few large investors. Traditional measures of investment value used in the United States, such as price to earnings ratios, may not apply to certain small markets, making it more difficult to value their securities.
 
Political Instability.   Many emerging markets are in countries with histories of political instability and abrupt changes in policies. As a result, their governments are more likely to take actions that are hostile or detrimental to private enterprise or foreign investment than those of more developed countries. Certain emerging markets may also face other significant internal or external risks, including the risk of war, and ethnic, religious and racial conflicts. In addition, governments in many emerging market countries participate to a significant degree in their economies and securities markets, which may impair investment and economic growth.
 
BLDRS Developed Markets 100 ADR Index Fund
 
Movement of Developed Markets.   As increased globalization of Developed Markets occurs, Developed Markets may tend to move in tandem with the U.S. market. This would cause values of Depositary Receipts


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of issuers located in Developed Markets to rise and fall in tandem with securities issued by U.S. companies, and would reduce their asset allocation/diversification benefits for U.S. investors.
 
Japanese Market Risk.   Certain of the risks associated with international investments are heightened for investments in Japan. The Japanese economy and financial markets have experienced considerable difficulty since 1990. The Japanese stock market, as measured by the Tokyo Stock Price Index, has been volatile. Declines in the Tokyo stock market have made the country’s banks and financial institutions vulnerable because of their large share portfolios. Japanese banks have been left with large numbers of non-performing loans. The Japanese economy labors under a heavy government budget deficit and historically low interest rates. As a result of these factors, several high-profile bankruptcies of Japanese banks, brokerage firms and insurance companies have occurred.
 
BLDRS Emerging Markets 50 ADR Index Fund
 
Emerging Markets Risk.   The risks of foreign investments are usually much greater for emerging markets. Investments in emerging markets may be considered speculative. Emerging markets include those countries defined as emerging or developing by the World Bank, the International Finance Corporation or the United Nations. Emerging markets are riskier because they develop unevenly and may never fully develop. They are more likely to experience hyperinflation and currency devaluations, which adversely affect returns to U.S. investors. In addition, the securities markets in many of these countries have far lower trading volumes and less liquidity than developed markets. Because these markets are so small, they may be more likely to suffer sharp and frequent price changes or long term price depression due to adverse publicity, investor perceptions or the transactions of a few large investors. Traditional measures of investment value used in the United States, such as price to earnings ratios, may not apply to certain small markets, making it more difficult to value their securities.
 
Political Instability.   Many emerging markets are in countries with histories of political instability and abrupt changes in policies. As a result, their governments are more likely to take actions that are hostile or detrimental to private enterprise or foreign investment than those of more developed countries. Certain emerging markets may also face other significant internal or external risks, including the risk of war, and ethnic, religious and racial conflicts. In addition, governments in many emerging market countries participate to a significant degree in their economies and securities markets, which may impair investment and economic growth.
 
BLDRS Europe 100 ADR Index Fund
 
Movement of European Markets.   As increased globalization of the world’s markets occurs, European Markets may tend to move in tandem with the U.S. market. This would cause values of Depositary Receipts of issuers located in Europe to rise and fall in tandem with securities issued by U.S. companies, and would reduce their asset allocation/diversification benefits for U.S. investors.


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BAR CHARTS AND TABLES
 
The bar chart on the next page entitled “Annual Total Return for the BLDRS Asia 50 ADR Index Fund” and the table on the next page entitled “Average Annual Total Returns (for periods ending December 31, 2008)” for the BLDRS Asia 50 ADR Index Fund (“Table”) provide some indication of the risks of investing in the BLDRS Asia 50 ADR Index Fund by showing the variability of the Fund’s returns based on net assets and comparing the Fund’s performance to the performance of the BNY Mellon Asia 50 ADR Index and the MSCI AC Asia Pacific Index. Past performance (both before and after tax) is not necessarily an indication of how the Fund will perform in the future.
 
The after-tax returns presented on the next page are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown on the next page. After-tax returns are not relevant to investors who hold Shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
 
The total return in the bar chart on the next page, as well as the total and after-tax returns presented in the table, do not reflect Transaction Fees payable by those persons purchasing and redeeming Creation Units or brokerage commissions incurred by those persons purchasing and selling Shares in the secondary market. The total and after-tax returns may be reduced if they were to reflect Transaction Fees and brokerage commissions (see footnotes to the Table). The total and after-tax returns reflect contractual fee waivers agreed to by the Licensor and the Sponsor. Without these fee waivers, total and after-tax returns could be reduced.
 
The bar chart shows the performance of the BLDRS Asia 50 ADR Index Fund for each full calendar year since its inception on November 8, 2002. During the period shown on the next page (January 1, 2003 through December 31, 2008), the highest quarterly return for the BLDRS Asia 50 ADR Index Fund was 17.19% for the quarter ended June 30, 2003, and the lowest was (21.38)% for the quarter ended December 31, 2008.
 
For more information about Fund performance, including the premiums and discounts at which Shares trade, see the Fund website at www.InvescoPowerShares.com.


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Annual Total Return for the BLDRS Asia 50 ADR Index Fund
 
(GRAPH)
 
Source: The Bank of New York Mellon
 
Average Annual Total Returns
(for periods ending December 31, 2008)
 
                         
    Past
    Past
    Since
 
    One Year     Five Years     Inception(2)  
 
BLDRS Asia 50 ADR Index Fund Return Before Taxes(1)
    (40.75 )%     0.21 %     5.61 %
Return After Taxes on Distributions(1)
    (41.29 )%     (0.41 )%     4.99 %
Return After Taxes on Distributions and Redemption of Creation Units(1)
    (26.40 )%     (0.08 )%     4.56 %
BNY Mellon Asia 50 ADR Index(3)
    (40.84 )%     0.29 %     5.46 %
MSCI AC Asia Pacific Index(3)
    (41.62 )%     2.79 %     7.88 %
 
 
(1) Includes all applicable fees and expenses and is based on the Fund’s NAV.
 
(2) Investment operations commenced on November 8, 2002.
 
(3) Does not reflect deduction for fees, expenses or taxes.
 
Source: The Bank of New York Mellon


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BLDRS ASIA 50 ADR INDEX FUND
GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION*
 
(GRAPH)
 
 
 
* Past performance is not necessarily an indication of how the Fund will perform in the future.
 
Source: The Bank of New York Mellon
 
The bar chart on the next page entitled “Annual Total Return for the BLDRS Developed Markets 100 ADR Index Fund” and the table on the next page entitled “Average Annual Total Returns (for periods ending December 31, 2008)” for the BLDRS Developed Markets 100 ADR Index Fund (“Table”) provide some indication of the risks of investing in the BLDRS Developed Markets 100 ADR Index Fund by showing the variability of the Fund’s returns based on net assets and comparing the Fund’s performance to the performance of the BNY Mellon Developed Markets 100 ADR Index and the MSCI EAFE Index. Past performance (both before and after tax) is not necessarily an indication of how the Fund will perform in the future.
 
The after-tax returns presented on the next page are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown on the next page. After-tax returns are not relevant to investors who hold Shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
 
The total return in the bar chart on the next page, as well as the total and after-tax returns presented in the Table, do not reflect Transaction Fees payable by those persons purchasing and redeeming Creation Units or brokerage commissions incurred by those persons purchasing and selling Shares in the secondary market. The total and after-tax returns may be reduced if they were to reflect Transaction Fees and brokerage commissions. (see footnotes to the Table). The total and after-tax returns reflect contractual fee waivers agreed to by the Licensor and the Sponsor. Without these fee waivers, total and after-tax returns could be reduced.
 
The bar chart shows the performance of the BLDRS Developed Markets 100 ADR Index Fund for each full calendar year since its inception on November 8, 2002. During the period shown on the next page (January 1, 2003 through December 31, 2008), the highest quarterly return for the BLDRS Developed Markets 100 ADR Index Fund was 18.83% for the quarter ended December 31, 2003, and the lowest was (21.40)% for the quarter ended December 31, 2008.
 
For more information about Fund performance, including the premiums and discounts at which Shares trade, see the Fund website at www.InvescoPowerShares.com.


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Annual Total Return for the BLDRS Developed Markets 100 ADR Index Fund
 
(GRAPH)
 
Source: The Bank of New York Mellon
 
AVERAGE ANNUAL TOTAL RETURNS
(for periods ending December 31, 2008)
 
                         
    Past
    Past
    Since
 
    One Year     Five Years     Inception(2)  
 
BLDRS Developed Markets 100 ADR Index Fund Return Before Taxes(1)
    (42.77 )%     0.40 %     5.62 %
Return After Taxes on Distributions(1)
    (43.59 )%     (0.62 )%     4.60 %
Return After Taxes on Distributions and Redemption of Creation Units(1)
    (27.62 )%     (0.04 )%     4.41 %
BNY Mellon Developed Markets 100 ADR Index(3)
    (43.03 )%     0.67 %     5.66 %
MSCI EAFE Index(3)
    (43.06 )%     2.10 %     7.33 %
 
 
(1) Includes all applicable fees and expenses and is based on the Fund’s NAV.
 
(2) Investment operations commenced on November 8, 2002.
 
(3) Does not reflect deduction for fees, expenses or taxes.
 
Source: The Bank of New York Mellon


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BLDRS Developed Markets 100 ADR Index Fund
GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION*
 
(CHART)
 
 
 
* Past performance is not necessarily an indication of how the Fund will perform in the future.
 
Source: The Bank of New York Mellon
 
The bar chart on the next page entitled “Annual Total Return for the BLDRS Emerging Markets 50 ADR Index Fund” and the table on the next page entitled “Average Annual Total Returns (for periods ending December 31, 2008)” for the BLDRS Emerging Markets 50 ADR Index Fund (“Table”) provide some indication of the risks of investing in the BLDRS Emerging Markets 50 ADR Index Fund by showing the variability of the Fund’s returns based on net assets and comparing the Fund’s performance to the performance of the BNY Mellon Emerging Markets 50 ADR Index and the MSCI Emerging Markets Index. Past performance (both before and after tax) is not necessarily an indication of how the Fund will perform in the future.
 
The after-tax returns presented on the next page are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown on the next page. After-tax returns are not relevant to investors who hold Shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
 
The total return in the bar chart on the next page, as well as the total and after-tax returns presented in the Table, do not reflect Transaction Fees payable by those persons purchasing and redeeming Creation Units or brokerage commissions incurred by those persons purchasing and selling Shares in the secondary market. The total and after-tax returns may be reduced if they were to reflect Transaction Fees and brokerage commissions. (see footnotes to the Table). The total and after-tax returns reflect contractual fee waivers agreed to by the Licensor and the Sponsor. Without these fee waivers, total and after-tax returns could be reduced.
 
The bar chart shows the performance of the BLDRS Emerging Markets 50 ADR Index Fund for each full calendar year since its inception on November 8, 2002. During the period shown on the next page (January 1, 2003 through December 31, 2008), the highest quarterly return for the BLDRS Emerging Markets 50 ADR Index Fund was 24.14% for the quarter ended June 30, 2003, and the lowest was (27.41)% for the quarter ended December 31, 2008.
 
For more information about Fund performance, including the premiums and discounts at which Shares trade, see the Fund website at www.InvescoPowerShares.com.


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Annual Total Return For The BLDRS Emerging Markets 50 ADR Index Fund
 
(GRAPH)
 
Source: The Bank of New York Mellon
 
AVERAGE ANNUAL TOTAL RETURNS
(FOR PERIODS ENDING DECEMBER 31, 2008)
 
                         
    Past
    Past
    Since
 
    One Year     Five Years     Inception(2)  
 
BLDRS Emerging Markets 50 ADR Index Fund Return Before Taxes(1)
    (48.96 )%     10.86 %     17.33 %
Return After Taxes on Distributions(1)
    (49.37 )%     10.08 %     16.21 %
Return After Taxes on Distributions and Redemption of Creation Units(1)
    (31.69 )%     9.05 %     14.73 %
BNY Mellon Emerging Markets 50 ADR Index(3)
    (48.09 )%     11.60 %     17.22 %
MSCI Emerging Markets Index(3)
    (53.18 )%     8.02 %     14.47 %
 
 
(1) Includes all applicable fees and expenses and is based on the Fund’s NAV.
 
(2) Investment operations commenced on November 8, 2002.
 
(3) Does not reflect deduction for fees, expenses or taxes.
 
Source: The Bank of New York Mellon


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BLDRS Emerging Markets 50 ADR Index Fund
GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION*
 
(GRAPH)
 
 
* Past performance is not necessarily an indication of how the Fund will perform in the future.
 
Source: The Bank of New York Mellon
 
The bar chart on the next page entitled “Annual Total Return for the BLDRS Europe 100 ADR Index Fund” and the table on the next page entitled “Average Annual Total Returns (for periods ending December 31, 2008)” for the BLDRS Europe 100 ADR Index Fund (“Table”) provide some indication of the risks investing in the BLDRS Europe 100 ADR Index Fund by showing the variability of the Fund’s returns based on net assets and comparing the Fund’s performance to the performance of the BNY Mellon Europe 100 ADR Index and the MSCI AC Europe Index. Past performance (both before and after tax) is not necessarily an indication of how the Fund will perform in the future.
 
The after-tax returns presented on the next page are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown on the next page. After-tax returns are not relevant to investors who hold Shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
 
The total return in the bar chart on the next page, as well as the total and after-tax returns presented in the Table, do not reflect Transaction Fees payable by those persons purchasing and redeeming Creation Units or brokerage commissions incurred by those persons purchasing and selling Shares in the secondary market. The total and after-tax returns may be reduced if they were to reflect Transaction Fees and brokerage commissions. (see footnotes to the Table). The total and after-tax returns reflect contractual fee waivers agreed to by the Licensor and the Sponsor. Without these fee waivers, total and after-tax returns could be reduced.
 
The bar chart shows the performance of the BLDRS Europe 100 ADR Index Fund for each full calendar year since its inception on November 8, 2002. During the period shown on the next page (January 1, 2003 through December 31, 2008), the highest quarterly return for the BLDRS Europe 100 ADR Index Fund was 20.79% for the quarter ended December 31, 2003, and the lowest was (21.32%) for the quarter ended December 31, 2008.
 
For more information about Fund performance, including the premiums and discounts at which Shares trade, see the Fund website at www.InvescoPowerShares.com.


13


Table of Contents

Annual Total Return for the BLDRS Europe 100 ADR Index Fund
 
(GRAPH)
 
Source: The Bank of New York Mellon
 
Average Annual Total Returns
(for periods ending December 31, 2008)
 
                         
    Past
    Past
    Since
 
    One Year     Five Years     Inception(2)  
 
BLDRS Europe 100 ADR Index Fund Return Before Taxes(1)
    (44.30 )%     0.89 %     6.13 %
Return After Taxes on Distributions(1)
    (45.35 )%     (0.36 )%     4.90 %
Return After Taxes on Distributions and Redemption of Creation Units(1)
    (28.60 )%     0.35 %     4.82 %
BNY Mellon Europe 100 ADR Index(3)
    (44.53 )%     1.25 %     6.22 %
MSCI AC Europe Index(3)
    (47.30 )%     1.89 %     7.26 %
 
 
(1) Includes all applicable fees and expenses and is based on the Fund’s NAV.
 
(2) Investment operations commenced on November 8, 2002.
 
(3) Does not reflect deduction for fees, expenses or taxes.
 
Source: The Bank of New York Mellon


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BLDRS Europe 100 ADR Index Fund
GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION*
 
(GRAPH)
 
 
Past performance is not necessarily an indication of how the Fund will perform in the future.
 
Source: The Bank of New York Mellon


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FEES AND EXPENSES
 
The expenses of each Fund are accrued daily and reflected in the NAV of each Fund. After reflecting contractual waivers and reductions, BLDRS Europe 100 ADR Index Fund currently is accruing ordinary operating expenses at an annual rate of 0.30%. See “Expenses of a Fund.”
                                 
                BLDRS
       
                Emerging
       
    BLDRS Asia
    BLDRS Developed
    Markets 50
    BLDRS Europe
 
    50 ADR
    Markets 100 ADR
    ADR Index
    100 ADR
 
    Index Fund     Index Fund     Fund     Index Fund  
 
I. SHAREHOLDER TRANSACTION EXPENSES(a)
                               
A. CREATION TRANSACTION FEE
                               
Through NSCC(b)
  $ 500     $ 1,000     $ 500     $ 1,000  
Outside NSCC(b)
  Up to $ 2,000     Up to $ 4,000     Up to $ 2,000     Up to $ 4,000  
B. REDEMPTION TRANSACTION FEE Through NSCC(c)
  $ 500     $ 1,000     $ 500     $ 1,000  
Outside NSCC(c)
  Up to $ 2,000     Up to $ 4,000     Up to $ 2,000     Up to $ 4,000  
II. ESTIMATED ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets) (AS A PERCENTAGE OF AVERAGE NET ASSETS)
                               
Trustee Fees(d)
    0.10 %     0.10 %     0.09 %     0.10 %
License Fees(e)
    0.06 %     0.06 %     0.06 %     0.06 %
Other Operating Expenses
    0.07 %     0.05 %     0.01 %     0.18 %
                                 
Total
    0.23 %     0.21 %     0.16 %     0.34 %
                                 
Less Expenses Waived by the Licensor(e)
    0.00 %     0.00 %     0.00 %     (0.04 )%
                                 
Less Expenses Assumed by the Sponsor(e)
    0.00 %     0.00 %     0.00 %     (0.00 )%
                                 
Net Expenses after Waivers and Assumptions(f)
    0.23 %     0.21 %     0.16 %     0.30 %
                                 
 
 
(a) Only investors purchasing or redeeming Shares in Creation Units will pay the transaction expenses described in Part I of the Fees and Expenses Table. Shareholders purchasing Shares in the secondary market will incur customary brokerage commissions and charges and may pay some or all of the spread between the bid and the offered price in the secondary market on each leg of a round trip (purchase and sale) transaction.
 
(b) The creation transaction fee is the same regardless of the number of Creation Units being purchased pursuant to any one creation order. One Creation Unit consists of 50,000 Shares.
 
(c) The redemption transaction fee is the same regardless of the number of Creation Units being redeemed pursuant to any one redemption order. One Creation Unit consists of 50,000 Shares.
 
(d) The Trustee’s annual fee for each Fund ranges from 0.06% to 0.10% per year, based on average net assets of the relevant Fund. See “Fees and Expenses.” For the fiscal year ended September 30, 2008, the Trustee’s annual fee for each Fund, as a percentage of net assets of each Fund was 0.10%, with the exception of BLDRS Emerging Markets 50 ADR Index Fund which was 0.09%.
 
(e) In the event a Fund’s ordinary operating expenses exceed 0.30% of its average net assets, until the Sponsor determines otherwise, the Sponsor has undertaken to reimburse such Fund for all ordinary operating expenses in excess of such amount, taking into account any waiver by the Licensor of its license fee. To the extent during such period that ordinary operating expenses of a Fund exceed such 0.30% amount, the Licensor will first waive licensing fees applicable to that Fund and if such waiver is insufficient, the Sponsor will thereafter reimburse that Fund for or assume such excess ordinary operating expenses.
 
(f) Although certain of the Funds were not charged marketing expenses for the period ending September 30, 2008, these Funds may be charged marketing expenses in the periods subsequent to September 30, 2008, subject to the overall expense limitation.


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Example of Expenses:
 
An investor would pay the following expenses on a $10,000 investment, assuming the estimated operating expense ratio of 0.30% set forth in “Fees and Expenses” section above for the fiscal year ended September 30, 2008, and for subsequent fiscal years, the absence of the Sponsor’s undertaking that each Fund’s ordinary operating expenses will not exceed 0.30% of the NAV of such Fund and an operating expense ratio of 0.34% of the NAV of the BLDRS Europe 100 ADR Index Fund; and a 5% annual return on investment throughout the periods for the Fund.
 
Cumulative Expenses Paid for Period of:
 
                                 
    1 Year     3 Years     5 Years     10 Years  
 
BLDRS Europe 100 ADR Index Fund
  $ 31     $ 105     $ 187     $ 427  
 
The example above assumes the reinvestment of all dividends and distributions and utilizes a 5% annual rate of return as mandated by Securities and Exchange Commission (“SEC”) regulations applicable to mutual funds. Although each Fund is a unit investment trust rather than a mutual fund, this information is represented to permit a comparison of fees. The example should not be considered a representation of past or future expenses or annual rate of return; the actual expenses and annual rate of return may be more or less than those assumed for purposes of this example. Investors should also note that the presentation of a $10,000 investment is for illustration purposes only. Pursuant to an exemptive order obtained from the SEC, each Fund may reimburse the Sponsor for certain expenses relating to the printing and distribution of marketing materials describing its Shares and the relevant Fund, annual licensing fees and federal and state annual registration fees for the issuance of Shares up to 0.30% of the relevant Fund’s total assets.
 
See “Expenses of a Fund” in this Prospectus for additional information regarding expenses.
 
Cumulative Expenses Paid for Period of:
 
                                 
    1 Year     3 Years     5 Years     10 Years  
 
BLDRS Asia 50 ADR Index Fund 2
  $ 24     $ 75     $ 130     $ 294  
BLDRS Developed Markets 100 ADR Index Fund 2
  $ 22     $ 69     $ 120     $ 269  
BLDRS Emerging Markets 50 ADR Index Fund 2
  $ 16     $ 51     $ 90     $ 205  
BLDRS Europe 100 ADR Index Fund 1
  $ 31     $ 97     $ 169     $ 380  
 
The example above assumes the reinvestment of all dividends and distributions and utilizes a 5% annual rate of return as mandated by SEC regulations applicable to mutual funds. Although each Fund is a unit investment trust rather than a mutual fund, this information is represented to permit a comparison of fees. The example should not be considered a representation of past or future expenses or annual rate of return; the actual expenses and annual rate of return may be more or less than those assumed for purposes of this example. Investors should also note that the presentation of a $10,000 investment is for illustration purposes only. Pursuant to an exemptive order obtained from the SEC, each Fund may reimburse the Sponsor for certain expenses relating to the printing and distribution of marketing materials describing its Shares and the relevant Fund, annual licensing fees and federal and state annual registration fees for the issuance of Shares up to 0.30% of the relevant Fund’s total assets.
 
 
1  An investor would pay the following expenses on a $10,000 investment, assuming the estimated operating expense ratio of 0.30% set forth in “Fees and Expenses” section above for the fiscal year ended September 30, 2008, and for subsequent fiscal years, the presence of the Sponsor’s undertaking that BLDRS Europe 100 ADR Index Fund’s ordinary operating expenses will not exceed 0.30% of the net asset value of such Fund, and a 5% annual return on investment throughout the periods for each Fund.
      2 For the BLDRS Asia 50 ADR Index Fund, the BLDRS Developed Markets 100 ADR Index Fund and the BLDRS Emerging Markets 50 ADR Index Fund, the actual expense ratios used in this example were the actual expense ratios for the year ending September 30, 2008.


17


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THE BLDRS INDEX FUNDS TRUST
 
This annual report provides information about the four Funds. The BLDRS Asia 50 ADR Index Fund seeks to track The BNY Mellon Asia 50 ADR Index sm ; The BLDRS Developed Markets 100 ADR Index Fund seeks to track The BNY Mellon Developed Markets 100 ADR Index sm ; The BLDRS Emerging Markets 50 ADR Index Fund seeks to track The BNY Mellon Emerging Markets 50 ADR Index sm ; and The BLDRS Europe 100 ADR Index Fund seeks to track The BNY Mellon Europe 100 ADR Index sm . Each Fund will normally hold at least 95% of its total assets in American Depositary Receipts that comprise its relevant benchmark BNY Mellon ADR Index, and will seek to correspond generally, before fees and expenses, to the price and yield performance, of its relevant benchmark BNY Mellon ADR Index.
 
BLDRS Asia 50 ADR Index Fund
 
The BLDRS Asia 50 ADR Index Fund seeks to track The BNY Mellon Asia 50 ADR Index sm . The BNY Mellon Asia 50 ADR Index includes 50 component American Depositary Receipts as of September 30, 2008 representing the securities issued by 50 of the most actively traded companies from the Asian markets having a free-float market capitalization ranging from approximately $3 billion to over $127 billion.
 
BLDRS Developed Markets 100 ADR Index Fund
 
The BLDRS Developed Markets 100 ADR Index Fund seeks to track The BNY Mellon Developed Markets 100 ADR Index sm . The BNY Mellon Developed Markets 100 ADR Index includes 100 component American Depositary Receipts as of September 30, 2008 representing the securities issued by 100 of the most actively traded companies from the international developed markets having a free-float market capitalization ranging from approximately $3 billion to over $194 billion.
 
BLDRS Emerging Markets 50 ADR Index Fund
 
The BLDRS Emerging Markets 50 ADR Index Fund seeks to track The BNY Mellon Emerging Markets 50 ADR Index sm . The BNY Mellon Emerging Markets 50 ADR Index includes 50 component American Depositary Receipts as of September 30, 2008 representing the securities issued by 50 of the most actively traded companies from the international and emerging markets having a free-float market capitalization ranging from approximately $3 billion to over $57 billion.
 
BLDRS Europe 100 ADR Index Fund
 
The BLDRS Europe 100 ADR Index Fund seeks to track The BNY Mellon Europe 100 ADR Index sm . The BNY Mellon Europe 100 ADR Index includes 99 component American Depositary Receipts as of September 30, 2008 representing the securities issued by 99 of the most actively traded companies from the European markets having a free-float market capitalization ranging from approximately $490 million to over $194 billion.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Sponsor, Trustee and the Unitholders of the BLDRS Index Funds Trust
 
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the BLDRS Index Funds Trust (the “Trust”), comprising of the BLDRS Asia 50 ADR Index Fund, the BLDRS Developed Markets 100 ADR Index Fund, the BLDRS Emerging Markets 50 ADR Index Fund and the BLDRS Europe 100 ADR Index Fund (each a “Fund”), as of September 30, 2008, and the related statements of operations and changes in net assets for each of the three years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
 
We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Trust’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each respective Fund constituting the BLDRS Index Funds Trust at September 30, 2008, the results of their operations and the changes in their net assets for each of the three years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
 
/s/  
Ernst & Young LLP
 
New York, New York
January 26, 2009


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS INDEX FUNDS TRUST
 
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2008
 
                 
    BLDRS
    BLDRS Developed
 
    Asia 50
    Markets 100 ADR
 
    ADR Index Fund     Index Fund  
 
Assets:
               
Investments in securities, at value (cost $92,312,608 and $132,023,759, respectively)
  $ 77,303,724     $ 97,978,768  
Cash
    974,178       831,698  
Dividends receivable
    195,094       355,307  
Receivable for units created
          2,187,540  
                 
Total assets
  $ 78,472,996     $ 101,353,313  
                 
Liabilities:
               
Payable for securities purchased
  $     $ 2,186,369  
Distribution payable
    837,395       808,425  
Payable to Trustee
    7,078       8,796  
Payable to Licensor
    30,232       39,790  
Accrued expenses
    170,243       133,216  
                 
Total liabilities
    1,044,948       3,176,596  
                 
Net assets
  $ 77,428,048     $ 98,176,717  
                 
Net assets represented by:
               
Paid in capital
  $ 95,374,595     $ 134,387,107  
Undistributed (distributions in excess of) net investment income
    1,080,825       (188,656 )
Accumulated net realized loss on investments transactions
    (4,018,488 )     (1,976,743 )
Net unrealized depreciation of investments
    (15,008,884 )     (34,044,991 )
                 
Net assets
  $ 77,428,048     $ 98,176,717  
                 
Shares of beneficial interest outstanding, unlimited Shares authorized:
               
$.001 par value:
    3,050,000       4,400,000  
                 
Net asset value per Share: (net assets/Shares of beneficial interest outstanding)
  $ 25.39     $ 22.31  
                 
 
See accompanying notes to financial statements.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS INDEX FUNDS TRUST
 
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2008
 
                 
    BLDRS Emerging
    BLDRS
 
    Markets 50
    Europe 100
 
    ADR Index Fund     ADR Index Fund  
 
Assets:
               
Investments in securities, at value (cost $694,905,918 and $35,172,850, respectively)
  $ 552,814,352     $ 26,508,786  
Cash
    4,502,020       180,583  
Dividends receivable
    1,779,812       116,654  
Receivable for securities sold
          15,022  
                 
Total assets
  $ 559,096,184     $ 26,821,045  
                 
Liabilities:
               
Distribution payable
  $ 4,283,045     $ 216,918  
Payable to Trustee
    47,056       2,522  
Payable to Licensor
    239,649       10,094  
Accrued expenses
    557,497       75,424  
                 
Total liabilities
    5,127,247       304,958  
                 
Net assets
  $ 553,968,937     $ 26,516,087  
                 
Net assets represented by:
               
Paid in capital
  $ 725,109,092     $ 35,719,804  
Undistributed (distributions in excess of) net investment income
    637,523       (216,918 )
Accumulated net realized loss on investments transactions
    (29,686,112 )     (322,735 )
Net unrealized depreciation of investments
    (142,091,566 )     (8,664,064 )
                 
Net assets
  $ 553,968,937     $ 26,516,087  
                 
Shares of beneficial interest outstanding, unlimited Shares authorized: $.001 par value:
    14,600,000       1,200,000  
                 
Net asset value per Share: (net assets/Shares of beneficial interest outstanding)
  $ 37.94     $ 22.10  
                 
 
See accompanying notes to financial statements.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS ASIA 50 ADR INDEX FUND OF
THE BLDRS INDEX FUNDS TRUST

STATEMENTS OF OPERATIONS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Investment income:
                       
Dividend income*
  $ 2,173,612     $ 2,377,837     $ 1,530,075  
Expenses:
                       
Trustee fees
    110,998       119,976       82,174  
Marketing expenses
          175,568       107,259  
Licensing fees
    66,415       72,847       49,330  
SEC filing fees
    500       8,075       5,642  
Professional fees
    60,999       47,195       50,124  
Other fees and expenses
    16,480       9,113       1,321  
                         
Total expenses
    255,392       432,774       295,850  
Less expenses waived by the Licensor
          (72,847 )     (49,330 )
                         
Net expenses
    255,392       359,927       246,520  
                         
Net investment income
    1,918,220       2,017,910       1,283,555  
                         
Realized and unrealized gain (loss) on investments:
                       
Net realized gain (loss) on sales of investments
    (3,657,910 )     1,707,786       29,021  
Net realized gain on in-kind redemptions
    5,011,162       4,323,236       6,417,295  
Net change in unrealized appreciation/depreciation of investments
    (36,864,119 )     17,179,543       (1,246,785 )
                         
Net realized and unrealized gain (loss) on investments
    (35,510,867 )     23,210,565       5,199,531  
                         
Net increase (decrease) in net assets resulting from operations
  $ (33,592,647 )   $ 25,228,475     $ 6,483,086  
                         
 
 
* Net of foreign taxes withheld of $191,144, $157,808 and $80,799 for the years ended September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS DEVELOPED MARKETS 100 ADR INDEX
FUND OF THE BLDRS INDEX FUNDS TRUST

STATEMENTS OF OPERATIONS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Investment income:
                       
Dividend income*
  $ 5,112,855     $ 3,014,159     $ 1,491,882  
Expenses:
                       
Trustee fees
    151,989       109,507       52,325  
Marketing expenses
          152,134       50,138  
Licensing fees
    90,946       66,880       31,378  
SEC filing fees
    500       10,123       3,190  
Professional fees
    60,999       42,740       41,214  
Other fees and expenses
    18,378       14,017       10,108  
                         
Total expenses
    322,812       395,401       188,353  
Less expenses waived by the Licensor
          (66,880 )     (31,378 )
                         
Net expenses
    322,812       328,521       156,975  
                         
Net investment income
    4,790,043       2,685,638       1,334,907  
                         
Realized and unrealized gain (loss) on investments:
                       
Net realized gain (loss) on sales of investments
    (1,567,176 )     3,711,844       (948,483 )
Net realized gain on in-kind redemptions
    9,852,530       5,108,943       1,638,012  
Net change in unrealized appreciation/depreciation of investments
    (56,660,055 )     13,400,542       5,133,512  
                         
Net realized and unrealized gain (loss) on investments
    (48,374,701 )     22,221,329       5,823,041  
                         
Net increase (decrease) in net assets resulting from operations
  $ (43,584,658 )   $ 24,906,967     $ 7,157,948  
                         
 
 
* Net of foreign taxes withheld of $440,429, $377,707 and $188,154 for the years ended September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
OF THE BLDRS INDEX FUNDS TRUST

STATEMENTS OF OPERATIONS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Investment income:
                       
Dividend income*
  $ 17,983,210     $ 10,602,940     $ 6,795,886  
Expenses:
                       
Trustee fees
    760,669       462,767       302,603  
Marketing expenses
          858,301       544,897  
Licensing fees
    494,055       282,150       181,795  
SEC filing fees
    6,350       25,969       3,109  
Professional fees
    60,999       47,195       40,959  
Other fees and expenses
    21,769       26,255       16,241  
                         
Total expenses
    1,343,842       1,702,637       1,089,604  
Less expenses waived by the Licensor
          (282,150 )     (181,795 )
                         
Net expenses
    1,343,842       1,420,487       907,809  
                         
Net investment income
    16,639,368       9,182,453       5,888,077  
                         
Realized and unrealized gain (loss) on investments:
                       
Net realized loss on sales of investments
    (30,235,526 )     (596,271 )     (1,054,055 )
Net realized gain on in-kind redemptions
    135,233,031       26,999,724       34,602,813  
Net change in unrealized appreciation/depreciation of investments
    (357,862,929 )     202,115,293       1,335,904  
                         
Net realized and unrealized gain (loss) on investments
    (252,865,424 )     228,518,746       34,884,662  
                         
Net increase (decrease) in net assets resulting from operations
  $ (236,226,056 )   $ 237,701,199     $ 40,772,739  
                         
 
 
* Net of foreign taxes withheld of $1,563,552, $1,092,673 and $583,290 for the years ended September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS EUROPE 100 ADR INDEX FUND
OF THE BLDRS INDEX FUNDS TRUST

STATEMENTS OF OPERATIONS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Investment income:
                       
Dividend income*
  $ 1,609,156     $ 1,371,031     $ 736,696  
Expenses:
                       
Trustee fees
    44,750       44,669       24,750  
Marketing expenses
          31,206        
Licensing fees
    26,776       27,181       14,838  
SEC filing fees
    500       2,126       350  
Professional fees
    60,999       47,195       45,669  
NASDAQ listing fee
    10,000              
Other fees and expenses
    7,860       8,811       5,105  
                         
Total expenses
    150,885       161,188       90,712  
Less expenses waived by the Licensor
    (16,682 )     (27,181 )     (14,838 )
Less expenses assumed by the Sponsor
                (1,625 )
                         
Net expenses
    134,203       134,007       74,249  
                         
Net investment income
    1,474,953       1,237,024       662,447  
                         
Realized and unrealized gain (loss) on investments:
                       
Net realized gain (loss) on sales of investments
    242,588       1,869,307       (690,109 )
Net realized gain on in-kind redemptions
    3,947,389             3,546,226  
Net change in unrealized appreciation/depreciation of investments
    (19,005,219 )     7,703,178       260,342  
                         
Net realized and unrealized gain (loss) on investments
    (14,815,242 )     9,572,485       3,116,459  
                         
Net increase (decrease) in net assets resulting from operations
  $ (13,340,289 )   $ 10,809,509     $ 3,778,906  
                         
 
 
* Net of foreign taxes withheld of $158,949, $178,969 and $98,938 for the years ended September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS ASIA 50 ADR INDEX FUND OF THE
BLDRS INDEX FUNDS TRUST

STATEMENTS OF CHANGES IN NET ASSETS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Increase (decrease) in net assets:
                       
Operations:
                       
Net investment income
  $ 1,918,220     $ 2,017,910     $ 1,283,555  
Net realized gain (loss) on investment transactions
    1,353,252       6,031,022       6,446,316  
Net change in unrealized appreciation/depreciation of investments
    (36,864,119 )     17,179,543       (1,246,785 )
                         
Net increase (decrease) in net assets resulting from operations
    (33,592,647 )     25,228,475       6,483,086  
Distributions to Unitholders from:
                       
Net investment income
    (1,886,018 )     (2,060,340 )     (1,257,748 )
Realized gain on investments
    (869,706 )            
                         
Total distributions
    (2,755,724 )     (2,060,340 )     (1,257,748 )
                         
Unitholder transactions:
                       
Proceeds from subscriptions of BLDRS Asia 50 ADR Index Fund Shares
    8,661,147       25,925,178       69,936,560  
Less redemptions of BLDRS Asia 50 ADR Index Fund Shares
    (24,252,624 )     (13,454,710 )     (20,477,411 )
                         
Increase (decrease) in net assets due to unitholder transactions
    (15,591,477 )     12,470,468       49,459,149  
                         
Total increase (decrease)
    (51,939,848 )     35,638,603       54,684,487  
Net assets:
                       
Beginning of period
    129,367,896       93,729,293       39,044,806  
                         
End of period(a)
  $ 77,428,048     $ 129,367,896     $ 93,729,293  
                         
 
 
(a) Includes undistributed net investment income of $1,080,825, $24,819 and $67,249 at September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
OF THE BLDRS INDEX FUNDS TRUST

STATEMENTS OF CHANGES IN NET ASSETS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Increase (decrease) in net assets:
                       
Operations:
                       
Net investment income
  $ 4,790,043     $ 2,685,638     $ 1,334,907  
Net realized gain on investment transactions
    8,285,354       8,820,787       689,529  
Net change in unrealized appreciation/depreciation of investments
    (56,660,055 )     13,400,542       5,133,512  
                         
Net increase (decrease) in net assets resulting from operations
    (43,584,658 )     24,906,967       7,157,948  
                         
Distributions to Unitholders from:
                       
Net investment income
    (4,528,854 )     (3,045,557 )     (1,375,148 )
Realized gain on investments
    (3,780,896 )            
                         
Total distributions
    (8,309,750 )     (3,045,557 )     1,375,148  
                         
Unitholder transactions:
                       
Proceeds from subscriptions of BLDRS Developed Markets 100 ADR Index Fund Shares
    11,684,209       114,130,255       26,540,700  
Less redemptions of BLDRS Developed Markets 100 ADR Index Fund Shares
    (51,935,778 )     (15,485,028 )     (5,376,994 )
                         
Increase (decrease) in net assets due to unitholder transactions
    (40,251,569 )     98,645,227       21,163,706  
                         
Total increase (decrease)
    (92,145,977 )     120,506,637       26,946,506  
Net assets:
                       
Beginning of period
    190,322,694       69,816,057       42,869,551  
                         
End of period(a)
  $ 98,176,717     $ 190,322,694     $ 69,816,057  
                         
 
 
(a) Includes distributions in excess of net investment income of $(188,656), $(449,845) and $(89,926) at September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
OF THE BLDRS INDEX FUNDS TRUST

STATEMENTS OF CHANGES IN NET ASSETS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Increase (decrease) in net assets:
                       
Operations:
                       
Net investment income
  $ 16,639,368     $ 9,182,453     $ 5,888,077  
Net realized gain on investment transactions
    104,997,505       26,403,453       33,548,758  
Net change in unrealized appreciation/depreciation of investments
    (357,862,929 )     202,115,293       1,335,904  
                         
Net increase in net assets resulting from operations
    (236,226,056 )     237,701,199       40,772,739  
                         
Distributions to Unitholders from:
                       
Net investment income
    (15,401,987 )     (9,937,606 )     (5,489,387 )
                         
Unitholder transactions:
                       
Proceeds from subscriptions of BLDRS Emerging Markets 50 ADR Index Fund Shares
    570,874,508       356,067,421       259,584,545  
Less redemptions of BLDRS Emerging Markets 50 ADR Index Fund Shares
    (515,631,963 )     (108,125,246 )     (243,518,262 )
                         
Increase in net assets due to unitholder transactions
    55,242,545       247,942,175       16,066,283  
                         
Total increase (decrease)
    (196,385,498 )     475,705,768       51,349,635  
Net assets:
                       
Beginning of period
    750,354,435       274,648,667       223,299,032  
                         
End of period(a)
  $ 553,968,937     $ 750,354,435     $ 274,648,667  
                         
 
 
(a) Includes Undistributed (distributions in excess of ) net investment income of $637,523, $(1,014,583) and $(259,430) at September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


28


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS EUROPE 100 ADR INDEX FUND OF THE BLDRS
INDEX FUNDS TRUST

STATEMENTS OF CHANGES IN NET ASSETS
 
                         
    Year Ended September 30,  
    2008     2007     2006  
 
Increase (decrease) in net assets:
                       
Operations:
                       
Net investment income
  $ 1,474,953     $ 1,237,024     $ 662,447  
Net realized gain on investment transactions
    4,189,977       1,869,307       2,856,117  
Net change in unrealized appreciation/depreciation of investments
    (19,005,219 )     7,703,178       260,342  
                         
Net increase (decrease) in net assets resulting from operations
    (13,340,289 )     10,809,509       3,778,906  
                         
Distributions to Unitholders from:
                       
Net investment income
    (1,413,199 )     (1,236,505 )     (665,155 )
Realized gain on investments
    (2,289,040 )           (10,739 )
                         
Total distributions
    (3,702,239 )     (1,236,505 )     (675,894 )
                         
Unitholder transactions:
                       
Proceeds from subscriptions of BLDRS Europe 100 ADR Index Fund Shares
    5,635,538       18,459,072       17,160,130  
Less redemptions of BLDRS Europe 100 ADR Index Fund Shares
    (20,000,003 )           (19,023,153 )
                         
Increase (decrease) in net assets due to unitholder transactions
    (14,364,465 )     18,459,072       (1,863,023 )
                         
Total increase/decrease
    (31,406,993 )     28,032,076       1,239,989  
Net assets:
                       
Beginning of period
    57,923,080       29,891,004       28,651,015  
                         
End of period(a)
  $ 26,516,087     $ 57,923,080     $ 29,891,004  
                         
 
 
(a) Includes distributions in excess of net investment income of $(216,918), $(93,038) and $(93,557) at September 30, 2008, 2007 and 2006, respectively.
 
See accompanying notes to financial statements.


29


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS INDEX FUNDS TRUST
FINANCIAL HIGHLIGHTS

BLDRS ASIA 50 ADR INDEX FUND
 
                                         
    Year Ended September 30,  
    2008     2007     2006     2005     2004  
 
Net asset value, beginning of period(4)
  $ 35.94     $ 29.29     $ 26.03     $ 20.87     $ 19.29  
Investment operations:
                                       
Net investment income(1)(4)
    0.56       0.55       0.45       0.44       0.32  
Net realized and unrealized gain (loss) on investments(4)
    (10.31 )     6.65       3.25       5.07       1.50  
                                         
Total from investment operations
    (9.75 )     7.20       3.70       5.51       1.82  
Less distribution from:
                                       
Net investment income(4)
    (0.56 )     (0.55 )     (0.44 )     (0.35 )     (0.24 )
Net realized gain on investments(4)
    (0.24 )                        
                                         
Total distributions
    (0.80 )     (0.55 )     (0.44 )     (0.35 )     (0.24 )
                                         
Net asset value, end of year
    25.39       35.94       29.29       26.03       20.87  
                                         
Total investment return(2)
    (27.48 )%     24.70 %     14.03 %     26.63 %     9.45 %
Ratios and Supplemental data:
                                       
Net assets, end of year (000’s)
  $ 77,428     $ 129,368     $ 93,729     $ 39,045     $ 15,655  
Ratios to average net assets:
                                       
Expenses before expenses waived and/or assumed
    0.23 %     0.36 %     0.36 %     0.43 %     0.95 %
Expenses after expenses waived and/or assumed
    0.23 %     0.30 %     0.30 %     0.30 %     0.30 %
Net investment income before expenses waived and/or assumed
    1.74 %     1.60 %     1.50 %     1.81 %     0.86 %
Net investment income after expenses waived and/or assumed
    1.74 %     1.66 %     1.56 %     1.94 %     1.51 %
Portfolio turnover rate(3)
    7.49 %     21.98 %     9.71 %     14.89 %     17.16 %
 
The financial highlights summarize the impact of net investment income, net realized and unrealized gains and losses and distributions on a single share of the BLDRS Asia 50 ADR Index Fund outstanding for each period presented. Additionally, important relationships between certain financial statement items are expressed in ratio form.
 
 
(1) Calculated using the average shares outstanding method.
 
(2) Total return calculation assumes the reinvestment of dividends and capital gain distributions, if any, at net asset value. Total return excludes the effect of transaction fees connected to the creation and redemption of Creation Units and brokerage commissions incurred by purchasing and/or selling shares of the Fund in the secondary market. Currently, the Fund does not have a dividend reinvestment program.
 
(3) Portfolio turnover excludes securities received or delivered from processing creations or redemptions of Fund Shares.
 
(4) On July 10, 2006, there was a 3 for 1 stock split. Historical per-share amounts have been adjusted to reflect the 3 for 1 stock split on a retroactive basis.
 
See accompanying notes to financial statements.


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
THE BLDRS INDEX FUNDS TRUST
FINANCIAL HIGHLIGHTS — (Continued)
 
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
 
                                         
    Year Ended September 30,  
    2008     2007     2006     2005     2004  
 
Net asset value, beginning of period(4)
  $ 32.81     $ 26.85     $ 23.82     $ 19.84     $ 16.78  
Investment operations:
                                       
Net investment income(1)(4)
    0.92       0.75       0.65       0.58       0.40  
Net realized and unrealized gain (loss) on investments(4)
    (9.84 )     5.96       3.03       3.93       3.06  
                                         
Total from investment operations
    (8.92 )     6.71       3.68       4.51       3.46  
Less distributions from:
                                       
Net investment income(4)
    (0.90 )     (0.75 )     (0.65 )     (0.53 )     (0.40 )
Net realized gains on investments(4)
    (0.68 )                        
                                         
Total distributions
    (1.58 )     (0.75 )     (0.65 )     (0.53 )     (0.40 )
                                         
Net asset value, end of year
  $ 22.31     $ 32.81     $ 26.85     $ 23.82     $ 19.84  
                                         
Total investment return(2)
    (28.24 )%     25.18 %     15.56 %     22.98 %     20.69 %
Ratios and Supplemental data:
                                       
Net assets, end of year (000’s)
  $ 98,177     $ 190,323     $ 69,816     $ 42,870     $ 5,951  
Ratios to average net assets:
                                       
Expenses before expenses waived and/or assumed
    0.21 %     0.35 %     0.36 %     0.47 %     1.58 %
Expenses after expenses waived and/or assumed
    0.21 %     0.30 %     0.30 %     0.30 %     0.30 %
Net investment income before expenses waived and/or assumed
    3.14 %     2.35 %     2.49 %     2.47 %     0.76 %
Net investment income after expenses waived and/or assumed
    3.14 %     2.41 %     2.55 %     2.64 %     2.04 %
Portfolio turnover rate(3)
    13.09 %     22.94 %     8.33 %     7.91 %     13.74 %
 
The financial highlights summarize the impact of net investment income, net realized and unrealized gains and losses and distributions on a single share of the BLDRS Developed Markets 100 ADR Fund outstanding for each period presented. Additionally, important relationships between certain financial statement items are expressed in ratio form.
 
 
(1) Calculated using the average shares outstanding method.
 
(2) Total return calculation assumes the reinvestment of dividends and capital gain distributions, if any, at net asset value. Total return excludes the effect of transaction fees connected to the creation and redemption of Creation Units and brokerage commissions incurred by purchasing and/or selling shares of the Fund in the secondary market. Currently, the Fund does not have a dividend reinvestment program.
 
(3) Portfolio turnover excludes securities received or delivered from processing creations or redemptions of Fund Shares.
 
(4) On July 10, 2006, there was a 3 for 1 stock split. Historical per-share amounts have been adjusted to reflect the 3 for 1 stock split on a retroactive basis.
 
See accompanying notes to financial statements.


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
THE BLDRS INDEX FUNDS TRUST
FINANCIAL HIGHLIGHTS — (Continued)
 
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
 
                                         
    Year Ended September 30,  
    2008     2007     2006     2005     2004  
 
Net asset value, beginning of period(4)
  $ 52.84     $ 32.31     $ 27.23     $ 18.00     $ 15.94  
Investment operations:
                                       
Net investment income(1)(4)
    1.04       0.81       0.60       0.51       0.40  
Net realized and unrealized gain (loss) on investments(4)
    (14.98 )     20.53       5.07       9.17       2.53  
                                         
Total from investment operations
    (13.94 )     21.34       5.67       9.68       2.93  
Less distributions from:
                                       
Net investment income(4)
    (0.96 )     (0.81 )     (0.59 )     (0.45 )     (0.34 )
Realized gain on investments(4)
                            (0.53 )
                                         
Total distributions
    (0.96 )     (0.81 )     (0.59 )     (0.45 )     (0.87 )
                                         
Net asset value, end of year
  $ 37.94     $ 52.84     $ 32.31     $ 27.23     $ 18.00  
                                         
Total investment return(2)
    (26.73 )%     66.50 %     20.76 %     54.38 %     18.48 %
Ratios and Supplemental data:
                                       
Net assets, end of year (000’s)
  $ 553,969     $ 750,354     $ 274,649     $ 223,299     $ 18,002  
Ratios to average net assets:
                                       
Expenses before expenses waived and/or assumed
    0.16 %     0.36 %     0.36 %     0.37 %     0.84 %
Expenses after expenses waived and/or assumed
    0.16 %     0.30 %     0.30 %     0.30 %     0.30 %
Net investment income before expenses waived and/or assumed
    2.03 %     1.89 %     1.89 %     2.19 %     1.75 %
Net investment income after expenses waived and/or assumed
    2.03 %     1.95 %     1.95 %     2.26 %     2.29 %
Portfolio turnover rate(3)
    10.67 %     14.38 %     2.64 %     25.53 %     16.46 %
 
The financial highlights summarize the impact of net investment income, net realized and unrealized gains and losses and distributions on a single share of the BLDRS Emerging Markets 50 ADR Index Fund outstanding for each period presented. Additionally, important relationships between certain financial statement items are expressed in ratio form.
 
 
(1) Calculated using the average shares outstanding method.
 
(2) Total return calculation assumes the reinvestment of dividends and capital gain distributions, if any, at net asset value. Total return excludes the effect of transaction fees connected to the creation and redemption of Creation Units and brokerage commissions incurred by purchasing and/or selling shares of the Fund in the secondary market. Currently, the Fund does not have a dividend reinvestment program.
 
(3) Portfolio turnover excludes securities received or delivered from processing creations or redemptions of Fund Shares.
 
(4) On July 10, 2006, there was a 4 for 1 stock split. Historical per-share amounts have been adjusted to reflect the 4 for 1 stock split on a retroactive basis.
 
See accompanying notes to financial statements.


32


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
THE BLDRS INDEX FUNDS TRUST
FINANCIAL HIGHLIGHTS — (Continued)
 
BLDRS EUROPE 100 ADR INDEX FUND
 
                                         
    Year Ended September 30,  
    2008     2007     2006     2005     2004  
 
Net asset value, beginning of period(4)
  $ 34.07     $ 27.17     $ 23.88     $ 20.04     $ 16.56  
Investment operations:
                                       
Net investment income(1)(4)
    0.99       0.85       0.68       0.56       0.46  
Net realized and unrealized gain (loss) on investments(4)
    (10.50 )     6.87       3.34       3.89       3.45  
                                         
Total from investment operations
    (9.51 )     7.72       4.02       4.45       3.91  
Less distributions from:
                                       
Net investment income(4)
    (0.98 )     (0.82 )     (0.72 )     (0.59 )     (0.43 )
Realized gain on investments(4)
    (1.48 )           (0.01 )     (0.02 )      
                                         
Total distributions
    (2.46 )     (0.82 )     (0.73 )     (0.61 )     (0.43 )
                                         
Net asset value, end of year
  $ 22.10     $ 34.07     $ 27.17     $ 23.88     $ 20.04  
                                         
Total investment return(2)
    (29.72 )%     28.66 %     17.02 %     22.45 %     23.72 %
Ratios and Supplemental data:
                                       
Net assets, end of year (000’s)
  $ 26,516     $ 57,923     $ 29,891     $ 28,651     $ 9,017  
Ratios to average net assets:
                                       
Expenses before expenses waived and/or assumed
    0.34 %     0.36 %     0.37 %     0.69 %     1.12 %
Expenses after expenses waived and/or assumed
    0.30 %     0.30 %     0.30 %     0.30 %     0.30 %
Net investment income before expenses waived and/or assumed
    3.27 %     2.67 %     2.61 %     2.08 %     1.54 %
Net investment income after expenses waived and/or assumed
    3.31 %     2.73 %     2.68 %     2.48 %     2.36 %
Portfolio turnover rate(3)
    15.85 %     18.92 %     6.87 %     8.43 %     11.91 %
 
The financial highlights summarize the impact of net investment income, net realized and unrealized gains and losses and distributions on a single share of the BLDRS Europe 100 ADR Index Fund outstanding for each period presented. Additionally, important relationships between certain financial statement items are expressed in ratio form.
 
 
(1) Calculated using the average shares outstanding method.
 
(2) Total return calculation assumes the reinvestment of dividends and capital gain distributions, if any, at net asset value. Total return excludes the effect of transaction fees connected to the creation and redemption of Creation Units and brokerage commissions incurred by purchasing and/or selling shares of the Fund in the secondary market. Currently, the Fund does not have a dividend reinvestment program.
 
(3) Portfolio turnover excludes securities received or delivered from processing creations or redemptions of Fund Shares.
 
(4) On July 10, 2006, there was a 3 for 1 stock split. Historical per-share amounts have been adjusted to reflect the 3 for 1 stock split on a retroactive basis.
 
See accompanying notes to financial statements.


33


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
 
1.   Organization
 
BLDRS Index Funds Trust (the “Trust”) is a unit investment trust consisting of four separate investment portfolios; BLDRS Asia 50 ADR Index Fund (“Asia”), BLDRS Developed Markets 100 ADR Index Fund (“Developed Markets”), BLDRS Emerging Markets 50 ADR Index Fund (“Emerging Markets”) and BLDRS Europe 100 ADR Index Fund (“Europe”) (each a “Fund” and collectively the “Funds”), created under the laws of the State of New York and registered under the Investment Company Act of 1940. The Funds were created to provide investors with the opportunity to purchase units of beneficial interest in the Funds representing proportionate undivided interests in the portfolio of securities held by each respective Fund. The portfolios of the Funds consist of substantially all of the securities, in substantially the same weighting, as the component securities of The BNY Mellon Asia 50 ADR Index, The BNY Mellon Developed Markets 100 ADR Index, The BNY Mellon Emerging Markets 50 ADR Index and The BNY Mellon Europe 100 ADR Index, respectively.
 
Invesco PowerShares Capital Management, LLC (formerly PowerShares Capital Management, LLC) is the Sponsor of the Trust and The Bank of New York Mellon (formerly The Bank of New York) is the Trustee. Effective March 21, 2007, sponsorship the Trust was transferred to Invesco PowerShares Capital Management, LLC pursuant to a transaction agreement between Invesco PowerShares Capital Management, LLC and The Nasdaq Stock Market, Inc., the parent of the former sponsor, Nasdaq Global Funds, Inc.
 
2.   Significant Accounting Policies
 
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Funds.
 
Security Valuation
 
Portfolio securities are valued at the closing sale price on the exchange or market where the security is primarily traded. Securities for which market quotations are not readily available are valued at fair value as determined by the Trustee in good faith based on available information. Factors considered by the Trustee when valuing securities in good faith are (a) the closing price for the security on another market on which the security is traded (unless the Trustee deems such price inappropriate as a basis for evaluation) or if there is no such appropriate closing price, at the closing bid price on such other market, (b) on current bid prices on the Nasdaq Stock Market or such other markets, (c) if bid prices are not available, on the basis of current bid prices for comparable securities, (d) by the Trustee appraising the value of the securities in good faith on the bid side of the market, or (e) by any combination thereof.
 
Investment Transactions
 
Investment transactions are recorded on trade date. Realized gains and losses from the sale or disposition of securities are recorded on a specific identification basis. Dividend income is recorded on the ex-dividend date. Dividends received by each Fund may be subject to withholding and other taxes imposed by foreign countries.
 
Distributions to Unitholders
 
The Funds declare and distribute dividends, if any, from net investment income to their unitholders quarterly. The Funds will distribute net realized capital gains, if any, at least annually.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS — (Continued)
 
Federal Income Tax
 
The Funds have qualified and intend to continue to qualify as “regulated investment companies” under Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying, the Funds will not be subject to federal income taxes to the extent they distribute all of their investment company taxable income and any net realized capital gains, each fiscal year. In addition, by distributing each calendar year substantially all of their net investment income and capital gains, if any, the Funds will not be subject to federal excise tax. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.
 
The Trust is subject to the provisions of FASB interpretation No. 48, Accounting for Uncertainties in Income Tax (FIN 48). Management has analyzed the Trust’s tax positions taken on its federal income tax return for all open tax years and has concluded that, as of September 30, 2008, no provision for income tax would be required in the Trust’s financial statements. The Trust files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally a Trust is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
 
3.   Federal Income Tax
 
At September 30, 2008, the following permanent differences were reclassified within the components of net assets of the Funds, primarily due to the tax treatment of in-kind transactions, the tax character of distributions, and utilization of earnings and profits distributed to shareholders on redemption of shares. These reclassifications had no effect on net assets of the Funds.
 
                         
    Net Increase
    Net (Decrease) to
       
    (Decrease) to
    Accumulated Net
       
    Undistributed Net
    Realized Gain on
    Net Increase to
 
    Investment Income     Investment     Paid in Capital  
 
Asia
  $ 1,023,804     $ (6,112,072 )   $ 5,088,268  
Developed Markets
          (9,179,058 )     9,179,058  
Emerging Markets
    414,725       (132,696,986 )     132,282,261  
Europe
    (185,634 )     (3,400,120 )     3,585,754  
 
Distributions during the fiscal years ended September 30, 2008, 2007 and 2006 were characterized for tax purposes as follows:
 
                                                 
    Ordinary Income
    Long-Term Capital Gains
 
    Year Ended September 30,     Year Ended September 30,  
    2008     2007     2006     2008     2007     2006  
 
Asia
  $ 1,211,392     $ 2,060,340     $ 1,257,748     $ 1,544,332     $     $  
Developed Markets
    5,189,893       3,045,557       1,375,148       3,119,857              
Emerging Markets
    15,142,089       9,937,606       5,489,387       259,898              
Europe
    1,965,587       1,236,505       654,006       1,736,652             21,888  


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS — (Continued)
 
At September 30, 2008, the components of accumulated earnings/deficit on a tax basis were as follows:
 
                                 
          Net Unrealized
             
    Undistributed
    Appreciation/
    Accumulated Capital
    Undistributed Long
 
    Ordinary Income     (Depreciation)     and Other Losses*     Term Capital Gain  
 
Asia
  $ 1,918,220     $ (16,152,346 )   $ (2,875,026 )   $  
Developed Markets
    874,458       (35,597,939 )     (681,334 )     2,850  
Emerging Markets
    4,920,568       (151,503,959 )     (20,273,719 )      
Europe
          (8,818,799 )     (168,000 )      
 
 
* Amounts represent post October Capital Losses. Net capital losses incurred after October 31, 2007 and within the taxable year, are deemed to arise on the first day of the Funds’ next taxable year.
 
4.   Transactions with the Trustee, Licensor and Sponsor
 
The Funds pay the expenses of their operations, including Trustee fees, reimbursements to the Sponsor for expenses of the Sponsor relating to the marketing of the Funds and for payments to The Bank of New York Mellon (the “Licensor”) for a license to use the BNY Mellon Asia 50 ADR Index, BNY Mellon Developed Markets 100 ADR Index, BNY Mellon Emerging Markets 50 ADR Index and BNY Mellon Europe 100 ADR Index as a basis for determining the composition and weighting of securities held by each respective Fund. The Funds pay an annual licensing fee to the Licensor equal 6 / 100 of one percent (0.06%) of the average net assets of the Funds subject to waiver provisions discussed on the following page.
 
In accordance with the Trust Agreement, the Trustee maintains the Funds’ accounting records, acts as custodian and transfer agent to the Funds, and provides administrative services, including filing of all required regulatory reports. The Trustee is also responsible for determining the composition of the portfolios of securities, which must be delivered in exchange for the issuance of Creation Units of the Funds, and for adjusting the composition of each Fund’s portfolio from time to time to conform to changes in the compositions and/or weighting structure of the respective index.
 
For these services, the Trustee receives a fee from each Fund at the following annual rates:
 
     
    Fee as a Percentage of
Net Assets
 
Net Assets
 
$0 — $499,999,999*
  10/100 of 1% per annum
$500,000,000 — $2,499,999,999*
  8/100 of 1% per annum
$2,500,000,000 and above*
  6/100 of 1% per annum
 
 
* The fee indicated applies to that portion of the net assets of each Fund that falls in the size category indicated and is computed each business day on the basis of the net assets of the Fund on such day.
 
Marketing expenses, if any, for the fiscal years ended September 30, 2008, 2007 and 2006, represent expenses incurred by the Sponsor on behalf of the Funds and charged to the Funds, subject to the reimbursement provisions below.
 
The Sponsor had undertaken that on each day during the fiscal year ended September 30, 2008, and until determined otherwise, the ordinary operating expenses of the Funds as calculated by the Trustee would not be permitted to exceed an amount which is 30 / 100 of one percent (0.30%) per annum of the daily net asset value of each Fund. To the extent during such period that ordinary operating expenses of a Fund exceeded such 0.30% amount, the Licensor will first waive licensing fees applicable to the Fund and, if such waiver is insufficient, the Sponsor will thereafter reimburse the Fund for or assume such excess ordinary operating expenses. The Licensor and Sponsor may be repaid by the Funds for licensing fees so waived or expenses so reimbursed or


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS — (Continued)
 
assumed respectively, in each case to the extent that subsequently during the fiscal year expenses fall below the 0.30% per annum level on any given day.
 
For the fiscal years ended September 30, 2008, 2007 and 2006, in the event when ordinary operating expenses incurred by the Fund exceeded the 0.30% per annum level and, accordingly, the Licensor waived and the Sponsor assumed the following expenses incurred by the Funds:
 
                                                 
    Licence Fees Waived by Licensor
    Expenses Assumed by the Sponsor
 
    Year Ended September 30,     Year Ended September 30,  
    2008     2007     2006     2008     2007     2006  
 
Asia
  $     $     $ 49,330     $  —     $  —     $  
Developed Markets
                31,378                    
Emerging Markets
                181,795                    
Europe
    16,682       27,181       14,838                   1,625  
 
ALPS Distributors, Inc. (the “Distributor”) is the distributor for the Trust. The Sponsor, not the Funds, pays the Distributor a flat annual fee of $20,000 for each Fund for its distribution services and the Funds do not reimburse the sponsor for such fees.
 
5.   Related Party Transactions
 
During the fiscal years ended September 30, 2008, 2007 and 2006, the Trust paid $314,764, $224,122, and $139,431 respectively, in commissions on trades to a related party, BNY ConvergEx Group. BNY ConvergEx is an affiliate of the Trustee.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS — (Continued)
 
6.   Transactions in Shares of the BLDRS Index Funds Trust
 
Transactions in shares are as follows:
 
                         
    For The Year Ended September 30,  
    2008     2007     2006  
    Shares     Shares     Shares  
 
Asia shares sold
    250,000       800,000       800,000  
Asia shares split*
                2,300,000  
Asia shares redeemed
    (800,000 )     (400,000 )     (400,000 )
                         
                         
Net increase/decrease
    (550,000 )     400,000       2,700,000  
                         
Developed Markets shares sold
    400,000       3,700,000       600,000  
Developed Markets shares split*
                1,600,000  
Developed Markets share redeemed
    (1,800,000 )     (500,000 )     (200,000 )
                         
Net increase/decrease
    (1,400,000 )     3,200,000       2,000,000  
                         
Emerging Markets shares sold
    10,950,000       8,550,000       3,050,000  
Emerging Markets shares split**
                7,050,000  
Emerging Markets shares redeemed
    (10,550,000 )     (2,850,000 )     (3,650,000 )
                         
Net increase/decrease
    400,000       5,700,000       6,450,000  
                         
Europe shares sold
    200,000       600,000       350,000  
Europe shares split*
                600,000  
Europe shares redeemed
    (700,000 )           (250,000 )
                         
Net increase/decrease
    (500,000 )     600,000       700,000  
                         
 
 
* Split 3 for 1 on July 10, 2006
 
** Split 4 for 1 on July 10, 2006
 
The shares of the Funds are issued and redeemed only in Creation Unit size aggregations of 50,000 shares. Such transactions are only permitted on an in-kind basis, with a separate cash payment that is equivalent to the undistributed net investment income of the shares and a balancing cash component to equate the transaction to the net asset value of the shares on the transaction date.
 
The transaction fee in connection with creation or redemption of Creation Units through the BLDRS Asia 50 ADR Clearing Process, BLDRS Developed Markets 100 ADR Clearing Process, BLDRS Emerging Markets 50 ADR Clearing Process and BLDRS Europe 100 ADR Clearing Process is $10 per security “name” in the Portfolio Deposit or Redemption Payment, rounded up to the nearest $500 for Asia and Emerging Markets and to $1,000 for Developed Markets and Europe per participating party per day, regardless of the number of Creation Units purchased or redeemed on such day by the participating party. The total fee charged in connection with the creation or redemption of Creation Units outside the listed above Clearing Processes is four times the normal transaction cost of $500 ($2,000) and $1,000 ($4,000) per participating party per day.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS — (Continued)
 
Transaction fees are received by the Trustee and used to offset its expense of processing orders. For the fiscal years ended September 30, 2008, 2007 and 2006, the Trustee earned the following amounts in transaction fees:
 
                         
    Transaction Fees Earned by Trustee
 
    Year Ended September 30,  
    2008     2007     2006  
 
Asia
  $ 5,000     $ 5,000     $ 5,500  
Developed Markets
    16,000       27,000       6,000  
Emerging Markets
    52,000       31,500       17,500  
Europe
    7,000       6,000       5,000  
 
The Trustee, in its sole discretion, may voluntarily reduce or waive its fee, or modify the transaction fee schedule, subject to certain limitations. There were no such reductions or waivers for the fiscal years that ended September 30, 2008, 2007 or 2006.
 
7.   Investment Transactions
 
For the fiscal year ended September 30, 2008, the Funds had purchases and sales of investment securities, excluding securities received or delivered from processing creations or redemptions of the Funds’ shares, as follows:
 
                 
    Purchases     Sales  
 
Asia
  $ 8,303,810     $ 9,158,315  
Developed Markets
    19,805,417       23,692,274  
Emerging Markets
    87,073,891       86,857,657  
Europe
    7,081,260       9,275,767  
 
At September 30, 2008, the Funds’ cost of investments for federal income tax purposes and unrealized appreciation /(depreciation) was as follows:
 
                                 
                      Net Unrealized
 
    Cost of
    Gross Unrealized
    Gross Unrealized
    Appreciation/
 
    Investments     Appreciation     (Depreciation)     (Depreciation)  
 
Asia
  $ 93,456,070     $ 3,772,319     $ (19,924,665 )   $ (16,152,346 )
Developed Markets
    133,576,707       206,322       (35,804,261 )     (35,597,939 )
Emerging Markets
    704,318,311       2,990,507       (154,494,466 )     (151,503,959 )
Europe
    35,327,585       172,921       (8,991,720 )     (8,818,799 )
 
8.   Representations and Indemnifications
 
In the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements in unknown as this would involve future claims that maybe made against the Funds that have not yet occurred. However, based on experience, the Trust expects the risk of loss to be remote.
 
9.   Recent Accounting Pronouncement
 
On September 15, 2006, the FASB released Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), which provides enhanced guidance for measuring fair value. The standard requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The standard does not expand the use of fair value in any new circumstances, but provides clarification on acceptable fair valuation methods


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS INDEX FUNDS TRUST
 
NOTES TO FINANCIAL STATEMENTS — (Continued)
 
and applications. Adoption of FAS 157 is required for fiscal years beginning after November 15, 2007. At this time, the Trustee is evaluating the implications of FAS 157 and the adoption of FAS 157 is not expected to have a material impact on the Funds.
 
10.   Subsequent event
 
The Sponsor has entered into an Amended and Restated Chief Compliance Officer Agreement with ALPS Funds Services Inc. on behalf of the Trust. The effective date of this agreement is January 16, 2009. The Trust shall pay ALPS an annual fee of $115,000.


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Asia 50 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments
September 30, 2008
 
                 
American Depositary Receipts
  Shares     Value  
 
Toyota Motor Corp. 
    105,152     $ 9,022,042  
Mitsubishi UFJ Financial Group, Inc. 
    767,970       6,712,058  
BHP Billiton Ltd. 
    118,411       6,156,188  
Honda Motor Co., Ltd. 
    129,022       3,884,852  
Mizuho Financial Group, Inc. 
    408,304       3,560,411  
Canon, Inc. 
    83,025       3,134,194  
China Mobile Ltd. 
    58,857       2,947,559  
Taiwan Semiconductor Manufacturing Co., Ltd. 
    311,131       2,915,297  
Panasonic Corp.*
    149,660       2,593,608  
Westpac Banking Corp. 
    26,330       2,435,262  
Sony Corp. 
    70,348       2,171,643  
POSCO
    20,162       1,882,526  
NTT DoCoMo, Inc. 
    115,552       1,837,277  
China Life Insurance Co., Ltd. 
    32,987       1,834,737  
Nomura Holdings, Inc. 
    134,552       1,759,940  
Hitachi Ltd. 
    23,525       1,632,400  
Mitsui & Co., Ltd. 
    6,393       1,567,883  
PetroChina Co., Ltd. 
    14,894       1,530,061  
Nippon Telegraph & Telephone Corp. 
    63,542       1,430,330  
Infosys Technologies Ltd. 
    40,322       1,343,126  
CNOOC Ltd. 
    10,590       1,212,661  
Nissan Motor Co., Ltd. 
    88,875       1,207,811  
KB Financial Group, Inc.*
    23,746       1,084,955  
Kyocera Corp. 
    13,270       1,010,643  
FUJIFILM Holdings Corp. 
    36,326       943,749  
Shinhan Financial Group Co., Ltd. 
    13,070       931,368  
China Petroleum & Chemical Corp. 
    11,846       927,897  
Chunghwa Telecom Co., Ltd. 
    33,371       789,892  
ICICI Bank Ltd. 
    29,071       683,750  
Santos Ltd. 
    10,504       670,365  
AU Optronics Corp. 
    52,253       593,594  
Nidec Corp. 
    34,261       522,480  
Telekomunikasi Indonesia Tbk PT
    17,364       517,100  
HDFC Bank Ltd. 
    6,046       513,608  
Kubota Corp. 
    15,793       495,900  
TDK Corp. 
    9,095       449,930  
Korea Electric Power Corp. 
    35,164       435,682  
SK Telecom Co., Ltd. 
    22,621       425,727  


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Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Asia 50 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
                 
American Depositary Receipts
  Shares     Value  
 
China Unicom Ltd. 
    27,568       416,828  
China Telecom Corp Ltd. 
    9,795       400,615  
Satyam Computer Services Ltd. 
    21,538       347,839  
China Netcom Group Corp Hong Kong Ltd. 
    6,966       316,814  
LG Display Co., Ltd. 
    24,703       313,728  
Philippine Long Distance Telephone Co. 
    5,309       299,109  
Alumina Ltd. 
    25,166       254,177  
Siliconware Precision Industries Co. 
    43,842       252,968  
Suntech Power Holdings Co., Ltd.*
    6,703       240,437  
KT Corp. 
    14,090       236,571  
Telecom Corp of New Zealand Ltd. 
    25,729       236,449  
Baidu.com*
    885       219,683  
                 
Total Investments (Cost $92,312,608)
          $ 77,303,724  
                 
 
 
* Non-income producing security for the year ended September 30, 2008.

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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Asia 50 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
The securities of the BLDRS Asia 50 ADR Index Fund investment portfolio categorized by industry group, as a percentage of total investments at value, are as follows:
 
                 
Industry Classification
  Value     Percentage  
 
Banks
  $ 14,990,044       19.39 %
Auto Manufacturers
    14,114,705       18.26 %
Telecommunications
    9,854,271       12.75 %
Mining
    6,410,365       8.29 %
Home Furnishings
    4,765,251       6.16 %
Oil & Gas
    4,340,984       5.62 %
Semiconductors
    3,168,265       4.10 %
Office/Business Equipment
    3,134,194       4.06 %
Diversified Financial Services
    2,691,308       3.48 %
Electronics
    2,440,445       3.16 %
Iron/Steel
    1,882,526       2.44 %
Electrical Components & Equipment
    1,872,837       2.42 %
Insurance
    1,834,737       2.37 %
Software
    1,690,965       2.19 %
Distribution/Wholesale
    1,567,883       2.03 %
Miscellaneous Manufacturers
    943,749       1.22 %
Machinery-Diversified
    495,900       0.64 %
Computers
    449,930       0.58 %
Electric
    435,682       0.56 %
Internet
    219,683       0.28 %
                 
Total
  $ 77,303,724       100.00 %
                 
 
See accompanying notes to financial statements.


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Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Developed Markets 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments
September 30, 2008
 
                 
American Depositary Receipts
  Shares     Value  
 
HSBC Holdings PLC
    60,518     $ 4,891,670  
BP PLC
    78,720       3,949,382  
Novartis AG
    61,614       3,255,684  
Total SA
    53,132       3,224,050  
Toyota Motor Corp. 
    37,496       3,217,157  
GlaxoSmithKline PLC
    71,926       3,125,904  
Vodafone Group PLC
    133,290       2,945,709  
Royal Dutch Shell PLC, Class A
    44,643       2,634,383  
Telefonica SA
    34,512       2,467,263  
Mitsubishi UFJ Financial Group, Inc. 
    273,850       2,393,449  
Banco Santander SA
    157,432       2,364,629  
BHP Billiton Ltd. 
    42,224       2,195,226  
Royal Dutch Shell PLC, Class B
    34,253       1,955,504  
Siemens AG
    20,400       1,915,356  
Nokia OYJ
    95,668       1,784,208  
Sanofi-Aventis SA
    51,571       1,695,139  
Rio Tinto PLC
    6,690       1,669,155  
ENI SpA
    30,669       1,623,924  
AstraZeneca PLC
    36,586       1,605,394  
Allianz SE
    113,865       1,561,089  
Banco Bilbao Vizcaya Argentaria SA
    89,627       1,449,269  
Honda Motor Co., Ltd. 
    46,007       1,385,271  
AXA SA
    41,400       1,352,124  
France Telecom SA
    47,817       1,339,354  
Royal Bank of Scotland Group PLC*
    416,494       1,332,781  
UBS AG*
    73,818       1,294,768  
BHP Billiton PLC
    28,081       1,289,199  
Mizuho Financial Group, Inc. 
    145,598       1,269,615  
Barclays PLC
    51,253       1,265,949  
Credit Suisse Group AG
    26,056       1,257,984  
SAP AG
    22,382       1,195,870  
Deutsche Telekom AG
    74,993       1,142,143  
ABB Ltd. 
    58,470       1,134,318  
Daimler AG
    22,437       1,133,069  
Anglo American PLC
    67,559       1,130,262  
ING Groep NV
    52,343       1,120,140  
Canon, Inc. 
    29,606       1,117,627  
British American Tobacco PLC
    17,841       1,106,142  


44


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Developed Markets 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
                 
American Depositary Receipts
  Shares     Value  
 
Unilever NV
    39,089       1,100,746  
Diageo PLC
    15,884       1,093,772  
Deutsche Bank AG
    13,359       972,402  
ArcelorMittal
    18,920       934,270  
Panasonic Corp.*
    53,367       924,850  
Unilever PLC
    32,968       897,059  
Westpac Banking Corp. 
    9,389       868,389  
National Grid PLC
    12,967       832,741  
Sony Corp. 
    25,085       774,374  
Koninklijke Philips Electronics NV
    26,337       717,683  
Telefonaktiebolaget LM Ericsson
    75,127       708,448  
NTT DoCoMo, Inc. 
    41,205       655,160  
Nomura Holdings, Inc. 
    47,980       627,578  
Novo Nordisk A/S
    11,824       605,389  
Lloyds TSB Group PLC
    35,784       598,666  
Repsol YPF SA
    19,915       590,679  
Hitachi Ltd. 
    8,390       582,182  
Prudential PLC
    31,355       576,932  
BT Group PLC
    19,492       565,463  
Mitsui & Co., Ltd. 
    2,280       559,170  
StatoilHydro ASA
    23,358       555,920  
Syngenta AG
    12,197       516,177  
National Bank of Greece SA
    62,459       515,287  
Nippon Telegraph & Telephone Corp. 
    22,660       510,077  
Nissan Motor Co., Ltd. 
    31,692       430,694  
Veolia Environment
    9,964       411,314  
Telecom Italia SpA
    25,734       383,951  
Kyocera Corp. 
    4,732       360,389  
Cadbury PLC
    8,534       349,382  
FUJIFILM Holdings Corp. 
    12,954       336,545  
Aegon NV
    34,803       305,570  
CRH PLC
    13,797       294,152  
Reed Elsevier PLC
    7,149       286,961  
Fresenius Medical Care AG & Co KGaA
    4,720       245,157  
WPP Group PLC
    5,912       240,618  
Santos Ltd. 
    3,745       239,006  
Smith & Nephew PLC
    4,457       236,622  
Shire PLC
    4,699       224,377  

45


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Developed Markets 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
                 
American Depositary Receipts
  Shares     Value  
 
Alcatel-Lucent
    58,335       224,006  
Pearson PLC
    20,357       221,891  
Reed Elsevier NV
    7,413       220,166  
British Sky Broadcasting Group PLC
    6,714       199,406  
ASML Holding NV*
    11,189       197,038  
Allied Irish Banks PLC
    11,560       190,046  
Nidec Corp. 
    12,217       186,309  
Portugal Telecom SGPS SA
    18,025       181,692  
Kubota Corp. 
    5,632       176,845  
STMicroelectronics NV
    16,603       169,019  
TDK Corp. 
    3,243       160,431  
Delhaize Group
    2,524       147,149  
Governor & Co of the Bank of Ireland
    6,459       146,490  
Elan Corp PLC*
    11,897       126,941  
Carnival PLC
    4,086       126,666  
Hellenic Telecommunications Organization SA
    12,824       115,416  
Cie Generale de Geophysique-Veritas*
    3,467       110,216  
Infineon Technologies AG*
    18,873       105,500  
Thomson Reuters PLC
    754       102,340  
Logitech International SA*
    4,267       99,506  
Coca Cola Hellenic Bottling Co SA
    4,314       95,943  
Alumina Ltd. 
    8,975       90,647  
Telecom Corp of New Zealand Ltd. 
    9,175       84,318  
Ryanair Holdings PLC*
    3,677       82,475  
                 
Total Investments (Cost $132,023,759)
          $ 97,978,768  
                 
 
 
* Non-income producing security for the year ended September 30, 2008.

46


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Developed Markets 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
The securities of the BLDRS Developed Markets 100 ADR Index Fund investment portfolio categorized by industry group, as a percentage of total investments at value, are as follows:
 
                 
Industry Classification
  Value     Percentage  
 
Banks
  $ 18,258,642       18.63 %
Oil & Gas
    14,772,848       15.08 %
Telecommunications
    13,107,208       13.38 %
Pharmaceuticals
    10,638,828       10.86 %
Mining
    6,374,489       6.51 %
Auto Manufacturers
    6,166,191       6.29 %
Insurance
    4,915,855       5.02 %
Diversified Financial Services
    3,180,330       3.25 %
Food
    2,494,336       2.55 %
Miscellaneous Manufacturers
    2,251,901       2.30 %
Home Furnishings
    1,699,224       1.73 %
Media
    1,271,382       1.30 %
Electronics
    1,264,381       1.29 %
Software
    1,195,870       1.22 %
Beverages
    1,189,715       1.21 %
Engineering & Construction
    1,134,318       1.16 %
Office/Business Equipment
    1,117,627       1.14 %
Agriculture
    1,106,142       1.13 %
Iron/Steel
    934,270       0.95 %
Electric
    832,741       0.85 %
Electrical Computer & Equipment
    582,182       0.59 %
Distribution/Wholesale
    559,170       0.57 %
Chemicals
    516,177       0.53 %
Semiconductors
    471,557       0.48 %
Water
    411,314       0.42 %
Building Materials
    294,152       0.30 %
Computers
    259,937       0.27 %
Healthcare-Services
    245,157       0.25 %
Healthcare-Products
    236,622       0.24 %
Machinery-Diversified
    176,845       0.18 %
Leisure Time
    126,666       0.13 %
Oil & Gas Services
    110,216       0.11 %
Airlines
    82,475       0.08 %
                 
Total
  $ 97,978,768       100.00 %
                 
 
See accompanying notes to financial statements.


47


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Emerging Markets 50 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments
September 30, 2008
 
                 
American Depositary Receipts
  Shares     Value  
 
Petroleo Brasileiro S/A A
    1,113,907     $ 41,682,400  
Petroleo Brasileiro S/A
    808,325       35,525,884  
China Mobile Ltd. 
    599,752       30,035,580  
Taiwan Semiconductor Manufacturing Co., Ltd. 
    3,170,430       29,706,929  
America Movil SAB de CV
    587,116       27,218,698  
Teva Pharmaceutical Industries Ltd. 
    586,750       26,867,282  
Companhia Vale do Rio Doce Cl A Preferred
    1,498,994       26,532,194  
POSCO
    205,471       19,184,827  
China Life Insurance Co., Ltd. 
    336,140       18,696,107  
Companhia Vale do Rio Doce
    960,467       18,392,943  
Banco Bradesco SA
    1,095,785       17,642,138  
Banco Itau Holding Financeira SA
    919,722       16,095,135  
PetroChina Co., Ltd. 
    151,769       15,591,229  
Sasol Ltd. 
    335,591       14,259,262  
Infosys Technologies Ltd. 
    410,879       13,686,379  
CNOOC Ltd. 
    107,928       12,358,835  
KB Financial Group, Inc.*
    241,964       11,055,335  
Cemex SAB de CV*
    580,607       9,998,053  
Shinhan Financial Group Co., Ltd. 
    133,176       9,490,122  
China Petroleum & Chemical Corp. 
    120,703       9,454,666  
Chunghwa Telecom Co., Ltd. 
    340,050       8,048,983  
Unibanco-Uniao de Bancos Brasileiros SA
    77,160       7,786,987  
Grupo Televisa SA
    352,407       7,707,141  
Mobile Telesystems OJSC
    135,356       7,581,290  
ICICI Bank Ltd. 
    296,247       6,967,729  
Tenaris SA
    167,924       6,261,886  
Cia de Bebidas das Americas
    112,458       6,141,331  
AU Optronics Corp. 
    532,469       6,048,848  
Cia Siderurgica Nacional SA
    279,636       5,945,061  
Fomento Economico Mexicano SAB de CV
    155,455       5,929,054  
Telekomunikasi Indonesia Tbk PT
    176,953       5,269,660  
Gerdau SA
    471,689       5,235,748  
HDFC Bank Ltd. 
    61,609       5,233,685  
Telefonos de Mexico SAB de CV
    201,861       5,197,921  
AngloGold Ashanti Ltd. 
    206,357       4,766,847  
Gold Fields Ltd. 
    467,553       4,483,833  
Korea Electric Power Corp. 
    358,297       4,439,300  
Vimpel-Communications
    216,897       4,403,009  


48


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Emerging Markets 50 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
                 
American Depositary Receipts
  Shares     Value  
 
SK Telecom Co., Ltd. 
    230,511       4,338,217  
China Unicom Ltd. 
    280,920       4,247,510  
China Telecom Corp Ltd. 
    99,823       4,082,761  
Cia Energetica de Minas Gerais
    200,960       3,966,950  
Satyam Computer Services Ltd. 
    219,471       3,544,457  
Empresa Nacional de Electricidad SA/Chile
    78,703       3,503,071  
China Netcom Group Corp Hong Kong Ltd. 
    70,974       3,227,898  
Tele Norte Leste Participacoes SA
    183,246       3,199,475  
LG Display Co., Ltd. 
    251,719       3,196,831  
Philippine Long Distance Telephone Co. 
    54,094       3,047,656  
Enersis SA
    185,074       3,020,408  
Mechel
    140,134       2,516,807  
                 
Total Investments (Cost $694,905,918)
          $ 552,814,352  
                 
 
 
* Non-income producing security for the year ended September 30, 2008.

49


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Emerging Markets 50 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
The securities of the BLDRS Emerging Markets 50 ADR Index Fund investment portfolio categorized by industry group, as a percentage of total investments at value, are as follows:
 
                 
Industry Classification
  Value     Percentage  
 
Oil & Gas
  $ 128,872,276       23.31 %
Telecommunications
    109,898,658       19.88 %
Banks
    64,781,009       11.72 %
Mining
    54,175,817       9.80 %
Iron/Steel
    32,882,443       5.95 %
Semiconductors
    29,706,929       5.37 %
Pharmaceuticals
    26,867,282       4.86 %
Insurance
    18,696,107       3.38 %
Software
    17,230,836       3.12 %
Electric
    14,929,729       2.70 %
Beverages
    12,070,385       2.18 %
Building Materials
    9,998,053       1.81 %
Diversified Financial Services
    9,490,122       1.72 %
Electronics
    9,245,679       1.67 %
Media
    7,707,141       1.40 %
Metal Fabricate/Hardware
    6,261,886       1.13 %
                 
Total
  $ 552,814,352       100.00 %
                 
 
See accompanying notes to financial statements.


50


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Europe 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments
September 30, 2008
 
                 
American Depositary Receipts
  Shares     Value  
 
HSBC Holdings PLC
    20,001     $ 1,616,681  
BP PLC
    26,017       1,305,273  
Novartis AG
    20,364       1,076,034  
Total SA
    17,559       1,065,480  
GlaxoSmithKline PLC
    23,772       1,033,131  
Vodafone Group PLC
    44,052       973,549  
Royal Dutch Shell PLC, Class A
    14,754       870,634  
Telefonica SA
    11,406       815,415  
Banco Santander SA
    52,030       781,491  
Royal Dutch Shell PLC, Class B
    11,320       646,259  
Siemens AG
    6,742       633,006  
Nokia OYJ
    31,618       589,676  
Sanofi-Aventis SA
    17,044       560,236  
Rio Tinto PLC
    2,211       551,644  
ENI SpA
    10,137       536,754  
AstraZeneca PLC
    12,091       530,553  
Allianz SE
    37,631       515,921  
Banco Bilbao Vizcaya Argentaria SA
    29,621       478,972  
AXA SA
    13,682       446,854  
France Telecom SA
    15,804       442,670  
Royal Bank of Scotland Group PLC
    137,648       440,474  
UBS AG*
    24,395       427,888  
BHP Billiton PLC
    9,280       426,045  
Barclays PLC
    16,938       418,369  
Credit Suisse Group AG
    8,611       415,739  
SAP AG
    7,397       395,222  
Deutsche Telekom AG
    24,784       377,460  
ABB Ltd. 
    19,324       374,886  
Daimler AG
    7,415       374,458  
Anglo American PLC
    22,328       373,547  
ING Groep NV
    17,299       370,199  
British American Tobacco PLC
    5,896       365,552  
Unilever NV
    12,919       363,799  
Diageo PLC
    5,249       361,446  
Deutsche Bank AG
    4,415       321,368  
ArcelorMittal
    6,252       308,724  
Unilever PLC
    10,896       296,480  


51


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Europe 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)
 
                 
American Depositary Receipts
  Shares     Value  
 
National Grid PLC
    4,284       275,118  
Koninklijke Philips Electronics NV
    8,703       237,157  
Telefonaktiebolaget LM Ericsson
    24,828       234,128  
Novo Nordisk A/S
    3,907       200,038  
Lloyds TSB Group PLC
    11,826       197,849  
Repsol YPF SA
    6,582       195,222  
Prudential PLC
    10,362       190,661  
BT Group PLC
    6,442       186,882  
StatoilHydro ASA
    7,719       183,712  
Syngenta AG
    4,031       170,592  
National Bank of Greece SA
    20,643       170,305  
Veolia Environnement
    3,293       135,935  
Telecom Italia SpA
    8,505       126,895  
Cadbury PLC
    2,819       115,410  
Aegon NV
    11,503       100,996  
CRH PLC
    4,560       97,219  
Reed Elsevier PLC
    2,363       94,851  
Mobile Telesystems OJSC
    1,566       87,712  
Fresenius Medical Care AG & Co KGaA
    1,560       81,026  
WPP Group PLC
    1,955       79,568  
Smith & Nephew PLC
    1,474       78,255  
Shire PLC
    1,552       74,108  
Alcatel-Lucent
    19,280       74,035  
Pearson PLC
    6,728       73,335  
Reed Elsevier NV
    2,450       72,765  
British Sky Broadcasting Group PLC
    2,220       65,934  
ASML Holding NV
    3,698       65,122  
Allied Irish Banks PLC
    3,821       62,817  
Portugal Telecom SGPS SA
    5,958       60,057  
STMicroelectronics NV
    5,487       55,858  
Vimpel-Communications
    2,508       50,912  
Delhaize Group
    834       48,622  
Governor & Co of the Bank of Ireland/The
    2,134       48,399  
Elan Corp PLC*
    3,931       41,944  
Carnival PLC
    1,351       41,881  
Hellenic Telecommunications Organization SA
    4,237       38,133  
Cie Generale de Geophysique-Veritas*
    1,145       36,400  
Infineon Technologies AG*
    6,237       34,865  

52


Table of Contents

 
Financial Statements and the related Report of Independent Registered Public Accounting Firm
 
 
BLDRS Europe 100 ADR Index Fund
of the
BLDRS Index Funds Trust

Schedule of Investments — (Continued)