THE DOW INDUSTRIALS(SM) ("DIAMONDS")(SM)
DIAMONDS TRUST SERIES 1
A UNIT INVESTMENT TRUST
SEMI-ANNUAL REPORT
APRIL 30, 2005
(UNAUDITED)
"Dow Jones Industrial Average", "DJIA", "Dow Jones", "The Dow", "THE DOW
INDUSTRIALS", and "DIAMONDS" are trademarks and service marks of Dow Jones &
Company, Inc. ("Dow Jones") and have been licensed for use for certain purposes
by PDR Services LLC and the American Stock Exchange LLC pursuant to a License
Agreement with Dow Jones. The Trust, based on the DJIA, is not sponsored,
endorsed, sold, or promoted by Dow Jones and Dow Jones makes no representation
regarding the advisability of investing in the Trust.
DIAMONDS TRUST SERIES 1
SCHEDULE OF INVESTMENTS
APRIL 30, 2005 (UNAUDITED)
-----------------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
-----------------------------------------------------------------------------------------
3M Co. ..................................................... 4,718,328 $ 360,810,542
Alcoa, Inc. ................................................ 4,718,328 136,925,879
Altria Group, Inc. ......................................... 4,718,328 306,644,137
American Express Co. ....................................... 4,718,328 248,655,886
American International Group, Inc. ......................... 4,718,328 239,926,979
Boeing Co. ................................................. 4,718,328 280,834,882
Caterpillar, Inc. .......................................... 4,718,328 415,448,780
Citigroup, Inc. ............................................ 4,718,328 221,572,683
Coca-Cola Co. (The)......................................... 4,718,328 204,964,168
Disney (Walt) Co. (The)..................................... 4,718,328 124,563,859
Du Pont (E.I.) de Nemours................................... 4,718,328 222,280,432
Exxon Mobil Corp. .......................................... 4,718,328 269,086,246
General Electric Co. ....................................... 4,718,328 170,803,474
General Motors Corp. ....................................... 4,718,328 125,884,991
Hewlett-Packard Co. ........................................ 4,718,328 96,584,174
Home Depot, Inc. ........................................... 4,718,328 166,887,261
Honeywell International, Inc. .............................. 4,718,328 168,727,409
Intel Corp. ................................................ 4,718,328 110,975,075
International Business Machines Corp. ...................... 4,718,328 360,385,893
JPMorgan Chase & Co. ....................................... 4,718,328 167,453,461
Johnson & Johnson Co. ...................................... 4,718,328 323,818,851
McDonald's Corp. ........................................... 4,718,328 138,294,194
Merck & Co., Inc. .......................................... 4,718,328 159,951,319
Microsoft Corp. ............................................ 4,718,328 119,373,698
Pfizer Inc. ................................................ 4,718,328 128,196,972
Procter & Gamble Co. ....................................... 4,718,328 255,497,407
SBC Communications Inc. .................................... 4,718,328 112,296,206
United Technologies Corp. .................................. 4,718,328 479,948,324
Verizon Communications Inc. ................................ 4,718,328 168,916,142
Wal-Mart Stores, Inc. ...................................... 4,718,328 222,421,982
--------------
Total Common Stocks -- (Cost $7,560,305,486)................ $6,508,131,306
==============
See accompanying notes to financial statements.
1
DIAMONDS TRUST SERIES 1
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2005 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at value....................... $ 6,508,131,306
Cash...................................................... 8,698,702
Dividends receivable...................................... 11,255,999
---------------
TOTAL ASSETS................................................ 6,528,086,007
---------------
LIABILITIES
Payable for income related to DIAMONDS in-kind
transactions........................................... 64,110
Distribution payable...................................... 4,595,552
Accrued Trustee fees...................................... 320,091
Accrued expenses and other liabilities.................... 2,338,562
---------------
TOTAL LIABILITIES........................................... 7,318,315
---------------
NET ASSETS.................................................. $ 6,520,767,692
===============
NET ASSETS REPRESENTED BY:
Paid in surplus........................................... $ 7,876,924,830
Undistributed net investment income....................... 9,303,454
Accumulated net realized (loss) on investments............ (313,286,412)
Net unrealized (depreciation) on investments.............. (1,052,174,180)
---------------
NET ASSETS.................................................. $ 6,520,767,692
===============
NET ASSET VALUE PER DIAMOND................................. $101.92
=======
UNITS OF FRACTIONAL UNDIVIDED INTEREST
("DIAMONDS") OUTSTANDING, UNLIMITED UNITS AUTHORIZED,
$0.00 PAR VALUE........................................ 63,978,791
---------------
COST OF INVESTMENTS......................................... $ 7,560,305,486
===============
See accompanying notes to financial statements.
2
DIAMONDS TRUST SERIES 1
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005 FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2002
---------------- ------------------ ------------------ ------------------
INVESTMENT INCOME
Dividend income........ $ 100,492,569 $ 145,895,782 $ 120,911,703 $ 71,072,353
------------- -------------- -------------- -------------
EXPENSES:
Trustee expense........ 2,184,178 4,708,689 3,480,020 2,450,305
Marketing expense...... 2,174,764 4,019,534 3,230,848 1,549,601
DJIA license fee....... 2,094,610 3,750,004 1,947,815 1,567,729
Legal and audit
services.......... 36,929 89,900 249,444 64,908
SEC registration
expense........... 86,543 73,883 116,131 30,592
Printing and postage
expense........... 74,181 43,194 338,844 151,203
Amortization of
organization
costs............. -- -- 101,829 502,266
Miscellaneous
expense........... -- 661 715 687
------------- -------------- -------------- -------------
Total expenses.............. 6,651,205 12,685,865 9,465,646 6,317,291
Trustee earnings
credit............... (44,508) (88,355) (61,870) (61,606)
------------- -------------- -------------- -------------
Net expenses after Trustee
earnings credit........... 6,606,697 12,597,510 9,403,776 6,255,685
------------- -------------- -------------- -------------
NET INVESTMENT INCOME....... 93,885,872 133,298,272 111,507,927 64,816,668
------------- -------------- -------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain on
investment
transactions......... 432,146,952 213,134,509 276,147,528 173,854,529
Net change in
unrealized
depreciation......... (244,447,086) (133,449,812) 636,501,507 (496,933,157)
------------- -------------- -------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS............... 187,699,866 79,684,697 912,649,035 (323,078,628)
------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS................ $ 281,585,738 $ 212,982,969 $1,024,156,962 $(258,261,960)
============= ============== ============== =============
See accompanying notes to financial statements.
3
DIAMONDS TRUST SERIES 1
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2005 FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2002
---------------- ------------------ ------------------ ------------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS:
Net investment income... $ 93,885,872 $ 133,298,272 $ 111,507,927 $ 64,816,668
Net realized gain on
investment
transactions....... 432,146,952 213,134,509 276,147,528 173,854,529
Net change in unrealized
depreciation....... (244,447,086) (133,449,812) 636,501,507 (496,933,157)
--------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS................. 281,585,738 212,982,969 1,024,156,962 (258,261,960)
--------------- -------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME INCLUDED IN PRICE OF
UNITS ISSUED AND REDEEMED,
NET........................ (5,121,371) (1,282,877) (398,863) 913,179
--------------- -------------- -------------- --------------
DISTRIBUTIONS TO UNITHOLDERS
FROM NET INVESTMENT
INCOME..................... (89,645,977) (130,617,261) (110,187,836) (62,477,206)
--------------- -------------- -------------- --------------
NET (DECREASE) INCREASE IN
NET ASSETS FROM ISSUANCE
AND REDEMPTION OF
DIAMONDS................... (1,856,941,344) 2,118,716,178 959,445,015 1,703,425,938
--------------- -------------- -------------- --------------
NET (DECREASE) INCREASE IN
NET ASSETS DURING PERIOD... (1,670,122,954) 2,199,799,009 1,873,015,278 1,383,599,951
NET ASSETS AT BEGINNING OF
PERIOD..................... 8,190,890,646 5,991,091,637 4,118,076,359 2,734,476,408
--------------- -------------- -------------- --------------
NET ASSETS END OF PERIOD*.... $ 6,520,767,692 $8,190,890,646 $5,991,091,637 $4,118,076,359
=============== ============== ============== ==============
*INCLUDES UNDISTRIBUTED
(DISTRIBUTIONS IN EXCESS
OF) NET INVESTMENT
INCOME..................... $ 9,303,454 $ 5,063,559 $ 2,382,548 $ 1,062,457
--------------- -------------- -------------- --------------
See accompanying notes to financial statements.
4
DIAMONDS TRUST SERIES 1
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A DIAMOND OUTSTANDING DURING THE PERIOD
--------------------------------------------------------------------------------
SIX MONTHS FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
4/30/05* 10/31/04 10/31/03 10/31/02 10/31/01
--------------- ------------ ------------ ------------ ------------
NET ASSET VALUE, BEGINNING OF YEAR..... $ 100.48 $ 98.20 $ 84.12 $ 90.84 $ 109.73
---------- ---------- ---------- ---------- ----------
INVESTMENT OPERATIONS:
Net investment income(1)........... 1.33 1.94 1.91 1.73 1.56
Net realized and unrealized gain
(loss) on investments............ 1.41 2.28 14.06 (6.77) (18.86)
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS....... 2.74 4.22 15.97 (5.04) (17.30)
---------- ---------- ---------- ---------- ----------
UNDISTRIBUTED NET INVESTMENT INCOME
INCLUDED IN PRICE OF UNITS ISSUED AND
REDEEMED, NET........................ 0.00(5) 0.00(5) (0.01) 0.00(5) 0.00(5)
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS FROM:
Net investment income.............. (1.30) (1.94) (1.88) (1.68) (1.59)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD......... $ 101.92 $ 100.48 $ 98.20 $ 84.12 $ 90.84
========== ========== ========== ========== ==========
TOTAL INVESTMENT RETURN(2)............. 5.41% 4.27% 19.22% (5.71)% (15.91)%
RATIOS AND SUPPLEMENTAL DATA
Ratios to average net assets:
Net investment income.............. 2.54% 1.89% 2.12% 1.85% 1.51%
Total expenses..................... 0.18% 0.18% 0.18% 0.18% 0.18%
Net expenses excluding trustee
earnings credit.................. 0.18% 0.18% 0.18% 0.18% 0.18%
Net expenses excluding rebates,
trustee earnings credit and
waivers(3)....................... 0.18% 0.18% 0.18% 0.18% 0.17%
Portfolio turnover rate(4)......... 0.00% 13.88% 8.71% 0.26% 12.66%
NET ASSET VALUE, END OF YEAR (000'S)... $6,520,768 $8,190,891 $5,991,092 $4,118,076 $2,734,476
--------------------------------------------------------------------------------
* Unaudited
(1) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period.
(2) Total returns for periods of less than one year are not annualized and do
not include transaction fees.
(3) Excludes expenses reimbursed by the Sponsor and Trustee from the period
October 1, 2001 through February 29, 2001 and the Sponsor from the period
March 1, 2001 through October 31, 2001.
(4) Portfolio turnover ratio excludes securities received or delivered from
processing creations or redemptions of DIAMONDS.
(5) Amount shown represents less than $0.005.
See accompanying notes to financial statements.
5
DIAMONDS TRUST SERIES 1
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2005 (UNAUDITED)
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NOTE 1 -- ORGANIZATION
DIAMONDS Trust Series 1 (the "Trust") is a unit investment trust created under
the laws of the State of New York and registered under the Investment Company
Act of 1940. The Trust was created to provide investors with the opportunity to
purchase units of beneficial interest in the Trust representing proportionate
undivided interests in the portfolio of securities consisting of substantially
all of the component common stocks, which comprise the Dow Jones Industrial
Average (the "DJIA"). Each unit of fractional undivided interest in the Trust is
referred to as a "DIAMONDS". The Trust commenced operations on January 14, 1998
upon the initial issuance of 500,000 DIAMONDS (equivalent to ten "Creation
Units" -- see Note 4) in exchange for a portfolio of securities assembled to
reflect the intended portfolio composition of the Trust.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that effect the reported amounts and disclosures in
the financial statements. Actual results could differ from these estimates. The
following is a summary of significant accounting policies followed by the Trust.
SECURITY VALUATION
Portfolio securities are valued based on the closing sale price on the exchange
which is deemed to be the principal market for the security, except for
securities listed on the NASDAQ which are valued at the NASDAQ official closing
price. If no closing sale price or official closing price is available, then the
security is valued at the previous closing sale price on the exchange which is
deemed to be the principal market for the security, or at the previous official
closing price if the security is listed on the NASDAQ. If there is no closing
sale price available or official closing price available, valuation will be
determined by the Trustee in good faith based on available information.
INVESTMENT TRANSACTIONS
Investment transactions are recorded on the trade date. Realized gains and
losses from the sale or disposition of securities are recorded on the identified
cost basis. Dividend income is recorded on the ex-dividend date.
DISTRIBUTIONS TO UNITHOLDERS
The Trust declares and distributes dividends from net investment income to its
unitholders monthly. The Trust will distribute net realized capital gains, if
any, at least annually.
FEDERAL INCOME TAX
The Trust has qualified and intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended. By
so qualifying and electing, the Trust will not be subject to federal income
taxes to the extent it distributes its taxable income, including any net
realized capital gains, for each fiscal year. In addition, by distributing
during each calendar year substantially all of its net investment income and
capital gains, if any, the Trust 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 generally
6
DIAMONDS TRUST SERIES 1
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 2005 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
accepted accounting principles. These differences are primarily due to differing
treatments for income equalization, in-kind transactions and losses deferred due
to wash sales. Net investment income per share calculations in the financial
highlights for all years presented exclude these differences.
During the six months ended April 30, 2005, the Trust reclassified $432,146,952
of non-taxable security gains realized in the in-kind redemption of Creation
Units (Note 4) as an increase to paid in surplus in the Statements of Assets and
Liabilities.
At October 31, 2004, the Trust had the following capital loss carryforwards
which may be used to offset any net realized gains, expiring October 31:
2007.................................... $ 9,197,094
2008.................................... 11,386,433
2010.................................... 2,065,467
2011.................................... 68,716,435
2012.................................... 221,260,584
EQUALIZATION
The Funds follow the accounting practice known as "Equalization" by which a
portion of the proceeds from sales and costs of reacquiring capital shares,
equivalent on a per share basis to the amount of distributable net investment
income on the date of the transaction, is credited or charged to undistributed
net investment income. As a result, undistributed net investment income per
share is unaffected by sales or reacquisitions of capital shares.
NOTE 3 -- TRANSACTIONS WITH THE TRUSTEE AND SPONSOR
In accordance with the Trust Agreement, State Street Bank and Trust Company (the
"Trustee") maintains the Trust's accounting records, acts as custodian and
transfer agent to the Trust, and provides administrative services, including
filing of all required regulatory reports. The Trustee is also responsible for
determining the composition of the portfolio of securities which must be
delivered and/or received in exchange for the issuance and/or redemption of
Creation Units of the Trust, and for adjusting the composition of the Trust's
portfolio
7
DIAMONDS TRUST SERIES 1
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 2005 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 3 -- TRANSACTIONS WITH THE TRUSTEE AND SPONSOR (CONTINUED)
from time to time to conform to changes in the composition and/or weighting
structure of the DJIA. For these services, the Trustee received a fee at the
following annual rates for the six months ended April 30, 2005:
NET ASSET VALUE OF THE TRUST FEE AS A PERCENTAGE OF NET ASSET VALUE OF THE TRUST
---------------------------- ---------------------------------------------------
$0 - $499,999,999 10/100 of 1% per annum plus or minus the Adjustment
Amount
$500,000,000 - $2,499,999,999 8/100 of 1% per annum plus or minus the Adjustment
Amount
$2,500,000,000 - and above 6/100 of 1% per annum plus or minus the Adjustment
Amount
The Adjustment Amount is the sum of (a) the excess or deficiency of transaction
fees received by the Trustee, less the expenses incurred in processing orders
for creation and redemption of DIAMONDS and (b) the amounts earned by the
Trustee with respect to the cash held by the Trustee for the benefit of the
Trust. During the six months ended April 30, 2005, the Adjustment Amount
decreased the Trustee's fee by $44,507.
PDR Services LLC (the "Sponsor", a wholly-owned subsidiary of the American Stock
Exchange LLC) agreed to reimburse the Trust for, or assume, the ordinary
operating expenses of the Trust which exceeded 18.00/100 of 1% per annum of the
daily net asset value of the Trust. The amounts of such reimbursements by the
Sponsor for the fiscal years ended October 31, 2002, October 31, 2003, October
31, 2004 and the six-month period ended April 30, 2005 were $0.
Dow Jones & Company, Inc. ("Dow Jones"), the American Stock Exchange LLC (the
"AMEX"), and PDR Services (the "Sponsor") have entered into a License Agreement
pursuant to which certain Dow Jones marks may be used in connection with the
Trust subject to the payment of license fees.
NOTE 4 -- TRUST TRANSACTIONS IN DIAMONDS
Transactions in DIAMONDS were as follows.
SIX MONTHS ENDED APRIL 30, 2005
-------------------------------
DIAMONDS AMOUNTS
------------ ----------------
DIAMONDS sold.......................................... 55,650,000 $ 5,865,539,320
DIAMONDS issued upon dividend reinvestment............. 8,655 919,997
DIAMONDS redeemed...................................... (73,200,000) (7,728,522,032)
Net income equalization................................ -- 5,121,371
----------- ---------------
Net Decrease........................................... (17,541,345) $(1,856,941,344)
=========== ===============
8
DIAMONDS TRUST SERIES 1
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 2005 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 4 -- TRUST TRANSACTIONS IN DIAMONDS (CONTINUED)
YEAR ENDED OCTOBER 31, 2004
-----------------------------
DIAMONDS AMOUNTS
----------- ---------------
DIAMONDS sold.......................................... 72,900,000 $ 7,485,525,585
DIAMONDS issued upon dividend reinvestment............. 11,705 1,201,305
DIAMONDS redeemed...................................... (52,400,000) (5,369,293,589)
Net income equalization................................ -- 1,282,877
----------- ---------------
Net Increase........................................... 20,511,705 $ 2,118,716,178
=========== ===============
YEAR ENDED OCTOBER 31, 2003
-----------------------------
DIAMONDS AMOUNTS
----------- ---------------
DIAMONDS sold.......................................... 70,850,000 $ 6,167,457,123
DIAMONDS issued upon dividend reinvestment............. 4,321 385,016
DIAMONDS redeemed...................................... (58,800,000) (5,208,795,987)
Net income equalization................................ -- 398,863
----------- ---------------
Net Increase........................................... 12,054,321 $ 959,445,015
=========== ===============
YEAR ENDED OCTOBER 31, 2002
-----------------------------
DIAMONDS AMOUNTS
----------- ---------------
DIAMONDS sold.......................................... 85,000,000 $ 8,317,016,274
DIAMONDS issued upon dividend reinvestment............. 2,297 210,273
DIAMONDS redeemed...................................... (66,150,000) (6,612,887,430)
Net income equalization................................ -- (913,179)
----------- ---------------
Net Increase........................................... 18,852,297 $ 1,703,425,938
=========== ===============
Except for under the Trust's dividend reinvestment plan, DIAMONDS are issued and
redeemed by the Trust only in Creation Unit size aggregations of 50,000
DIAMONDS. Such transactions are only permitted on an in-kind basis, with a
separate cash payment which is equivalent to the undistributed net investment
income per DIAMOND (income equalization) and a balancing cash component to
equate the transaction to the net asset value per unit of the Trust on the
transaction date. A transaction fee of $1,000 is charged in connection with each
creation or redemption of Creation Units through the DIAMONDS Clearing Process
per Participating party per day, regardless of the number of Creation Units
created or redeemed. Transaction fees are received by the Trustee and used to
offset the expense of processing orders.
NOTE 5 -- INVESTMENT TRANSACTIONS
For the six months ended April 30, 2005, the Trust had net in-kind
contributions, net in-kind redemptions, purchases and sales of investment
securities of $4,701,079,983, $6,558,608,250, $0 and $0, respectively. At April
30, 2005, the cost of investments for federal income tax purposes was
$7,560,305,486 accordingly, gross
9
DIAMONDS TRUST SERIES 1
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 2005 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 5 -- INVESTMENT TRANSACTIONS (CONTINUED)
unrealized appreciation was $96,291,717, and gross unrealized depreciation was
$1,148,465,897, resulting in net unrealized depreciation of $1,052,174,180.
NOTE 6 -- TAX INFORMATION
For Federal income tax purposes, the percentage of Trust ordinary distributions
which qualify for the corporate dividends received deduction for the fiscal year
ended October 31, 2004 is 100%.
For the fiscal year ended October 31, 2004, certain dividends paid by the Trust
may be designated as qualified dividend income and subject to a maximum tax rate
of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of
2003. Complete information will be reported in conjunction with your 2003 Form
1099-DIV.
10
DIAMONDS TRUST SERIES 1
OTHER INFORMATION
APRIL 30, 2005 (UNAUDITED)
--------------------------------------------------------------------------------
FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS
BID/ASK PRICE VS. NET ASSET VALUE (NAV)
FIVE YEAR PERIOD ENDING 4/30/2005
NUMBER PERCENTAGE OF
RANGE OF DAYS TOTAL DAYS
----- ------- -------------
PREMIUM
More than 0.25%........................................... 74 4.9%
Between zero and 0.25%.................................... 656 43.5%
BID/ASK PRICE EQUAL TO NAV.................................. 40 2.7%
DISCOUNT
Between zero and -0.25%................................... 669 44.4%
Less than -0.25%.......................................... 69 4.6%
----- ----
Total:................................................. 1,508 100%
===== ====
COMPARISON OF TOTAL RETURNS BASED ON NAV AND BID/ASK PRICE
CUMULATIVE TOTAL RETURNS
ONE YEAR FIVE YEAR SINCE FIRST TRADE
-------- --------- -----------------
Return Based on NAV........................................ 1.63% 4.20% 46.76%
Return Based on Bid/Ask Price.............................. 1.44% 3.93% 46.53%
Dow Jones Industrial Average Index......................... 1.84% 4.91% 48.40%
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR FIVE YEAR SINCE FIRST TRADE
-------- --------- -----------------
Return Based on NAV........................................ 1.63% 0.83% 5.42%
Return Based on Bid/Ask Price.............................. 1.44% 0.78% 5.39%
Dow Jones Industrial Average Index......................... 1.84% 0.96% 5.58%
---------------
(1) Currently, the Bid/Ask Price is circulated on the best bid and best offer on
the AMEX at 4:00 p.m. However, prior to April 3, 2001, calculation of the
Bid/Ask Price was based on the midpoint of the best bid and best offer at
the close of trading on the AMEX, ordinarily 4:15 p.m.
(2) The Trust commenced trading on the AMEX on January 20, 1998.
11
DIAMONDS TRUST SERIES 1
--------------------------------------------------------------------------------
SPONSOR
PDR Services LLC
c/o American Stock Exchange LLC
86 Trinity Place
New York, NY 10006
TRUSTEE
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALPS Distributors, Inc.
1625 Broadway, Suite 2200
Denver, CO 80202
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110
LEGAL COUNSEL
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005