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)
 
--------------------------------------------------------------------------------
 
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
 
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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