-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HBMWI3H07EUF3eYNQjOm78rLSqLlqTH5yMAtjrptVYsqGDBAhgbRN+l2ZfHUX9ts MmtsPOCU0SJReRD8fk5Ydg== 0000898430-02-002440.txt : 20020626 0000898430-02-002440.hdr.sgml : 20020626 20020626172705 ACCESSION NUMBER: 0000898430-02-002440 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020430 FILED AS OF DATE: 20020626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ISHARES TRUST CENTRAL INDEX KEY: 0001100663 IRS NUMBER: 943351276 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-09729 FILM NUMBER: 02688167 BUSINESS ADDRESS: STREET 1: 45 FREMONT STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 N-30D 1 dn30d.txt ISHARES DOW JONES SERIES TRUST 2002 ANNUAL REPORT iShares(R) iShares(R) DOW JONES SERIES iShares(R) COHEN & STEERS SERIES [PICTURE] iShares APRIL 30, 2002 2002 ANNUAL REPORT TO SHAREHOLDERS Table of Contents
Shareholder Letter...................................................... 1 Market Overview......................................................... 3 Managers' Discussion & Analysis......................................... 4 Schedules of Investments................................................ 36 iShares Dow Jones U.S. Total Market Index Fund........................ 36 iShares Dow Jones U.S. Basic Materials Sector Index Fund.............. 58 iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund............ 59 iShares Dow Jones U.S. Consumer Non-Cyclical Sector Index Fund........ 63 iShares Dow Jones U.S. Energy Sector Index Fund....................... 65 iShares Dow Jones U.S. Financial Sector Index Fund.................... 66 iShares Dow Jones U.S. Healthcare Sector Index Fund................... 70 iShares Dow Jones U.S. Industrial Sector Index Fund................... 73 iShares Dow Jones U.S. Technology Sector Index Fund................... 76 iShares Dow Jones U.S. Telecommunications Sector Index Fund........... 81 iShares Dow Jones U.S. Utilities Sector Index Fund.................... 82 iShares Dow Jones U.S. Chemicals Index Fund........................... 84 iShares Dow Jones U.S. Financial Services Index Fund.................. 85 iShares Dow Jones U.S. Internet Index Fund............................ 88 iShares Dow Jones U.S. Real Estate Index Fund......................... 89 iShares Cohen & Steers Realty Majors Index Fund....................... 90 Financial Statements.................................................... 91 Financial Highlights.................................................... 105 Notes to the Financial Statements....................................... 111 Report of Independent Accountants....................................... 119 Tax Information (Unaudited)............................................. 120 Supplemental Information (Unaudited).................................... 121 Trustees Information (Unaudited)........................................ 130
To Our Shareholders 2001 was a troubling year for us all: as investors, as business people and as human beings. The year was marked by scores of company closings and layoffs, the near-evaporation of IPOs, a plunging euro and rumblings of a recession. Then there was the emotional shock of September 11, which in turn set off deep financial aftershocks still being felt to this day. It was truly a "baptism by fire" for iShares. After all, iShares were launched only a short time before this complicated period began. By the close of our fiscal year, most traditional mutual funds had shrunk in size, hundreds had shut down entirely,/1/ and plans for dozens of new ones were quietly put on hold. But iShares followed a very different course this year. Instead of shrinking in size, iShares' assets under management grew to over $21 billion by the close of fiscal year 2001, up from $9.1 billion at the end of the previous fiscal year. In fact, iShares became the nation's third-fastest growing family of equity funds/2/, surpassing some of the most established and best-known mutual fund groups. And instead of holding back on new offerings in 2001, Barclays Global Investors opened 19 new iShares funds. With a total of 77 different funds, iShares now gives its investors nearly four times more ways to structure their portfolios than any other provider of exchange traded funds (ETFs). How do we explain such success? Typically, investments that achieve sudden popularity in troubling times are those few "hot funds" which managed to outperform the market benchmarks. That's not the case with iShares. Our funds are designed to neither over- nor underperform their benchmarks, but instead, to seek investment results that correspond to their benchmarks. Therefore, iShares can maintain their fundamental appeal in spite of the market's daily ups and downs. We believe that in 2001, investors and their advisors began to recognize iShares as not merely an investment choice, but as a new type of investment tool. We call them "industrial strength" investment tools, and there are four simple reasons which are worth keeping in mind when you and your advisor next rebalance your portfolio. First, iShares embody a key goal of institutional investors: potentially higher returns without taking on the corresponding potential for more risk. iShares seek to do this by simply taking less of a bite out of a fund's returns through lower capital gains and management fees. These are not insignificant savings. It's estimated that between 1994 and 1999, investors in diversified U.S. stock funds lost, on average, 15% of their annual gains to taxes./3/ iShares, on the other hand, are managed in a way that keeps capital gains to a minimum. (During the calendar year 2001, for instance, none of our domestic iShares funds distributed any capital gains.) By the same token, we're also able to keep fund management fees low -- on average, about half that of traditional actively managed mutual funds/4/. Second, iShares embody a key tactic of institutional investors: uncomplicated diversification. The benefits of diversification (as compared to "stock picking") are well documented. It's possible, of course, to diversify by hand-selecting a wide variety of stocks within an asset class. But to do it accurately is complicated and time-consuming -- all to merely approximate what an index fund already does. This is a reason why $1.65 trillion of institutional assets are invested in index funds such as iShares/5/. _____________________ /1/John Hechinger, Hey, Where Did My Mutual Fund Go?, THE WALL STREET JOURNAL, April 17, 2002. /2/Financial Research Corporation (FRC) database, BGI analysis. /3/Jonathan Clements, Fund Distributions are a Taxing Problem; How the Tax Man Dines on Your Funds, THE WALL STREET JOURNAL, August 1999. /4/Source: Morningstar Principia, BGI analysis 6/01. /5/Source: PENSIONS & INVESTMENTS, 9/17/01. Shareholder Letter 1 Third, iShares embody a key strategy of institutional investors: modular asset allocation. With so many different iShares to choose from, each focusing on a very specific slice of the equity market, investors have tremendous flexibility in structuring their portfolios to meet specific needs. The fourth reason we call iShares "industrial strength" is that they come to you from Barclays Global Investors. BGI is the world's largest institutional asset manager/6/, with over two thousand institutional clients around the world. You might also be interested to know that BGI has a longer track record in index-based investing than any other fund manager -- in fact, it was BGI that created the world's first index strategy, over thirty years ago. In 2002 we will be working closely with the financial advisor community to develop new strategies for structuring their clients' portfolios more effectively. And we will continue to improve the online tools and services available to iShares investors and advisors. (If you haven't visited www.iShares.com in a while, we invite you to do so. You'll discover a number of powerful tools and videos, which led Forbes Magazine to name it "Best of the Web" among all ETF sites/7/.) On behalf of iShares Trust and our colleagues at BGI, we thank you for making iShares a part of your portfolio, and look forward to meeting your needs in the year ahead. /s/ Garrett F. Bouton /s/ Lee T. Kranefuss Garrett F. Bouton Lee T. Kranefuss President and Chairman of the Vice President of ishares Trust Board of Trustees of iShares Trust ______________________ /6/Source: Pensions & Investments, 5/14/01. /7/Forbes Winter 2001. 2 2002 iShares Annual Report to Shareholders Market Overview U.S. Equity Markets The U.S. stock market endured another volatile period during the twelve months ended April 30, 2002 (the "reporting period"). For most of the reporting period, earnings disappointments, job cuts, and weak economic indicators continued to plague equity markets. In response to the bleak economic signs and weak markets, the Federal Reserve Board (the "Fed") continued its campaign to attempt to stimulate the sagging economy. After eleven rate cuts, the Fed had lowered short-term rates to 1.75%, its lowest level in forty years. The federal government also acted to attempt to revive the economy. In the second quarter of 2001, a $1.35 trillion tax cut was passed, including a tax rebate intended to inject capital into the economy. Despite these actions, discouraging economic signs and poor earnings growth weighed on the markets for much of the year. The events of September 11 accelerated the broad market sell off. After remaining closed for four business days following September 11, equity markets reopened on September 17. Despite the combined effects of monetary stimulus from the Fed and fiscal stimulus from the federal government, equity markets declined sharply through the remainder of the month. The losses resulted in the largest quarterly declines for both the S&P 500 Index and the Dow Jones Industrial Average since the quarter that included the stock market crash of 1987. Finally, in the fourth quarter of 2001, markets rallied. Other economic indicators delivered positive news: inventories declined, factory orders surged, housing starts increased, and consumer confidence rose. Although job losses remained high and third quarter GDP shrank, many investors found cause to be optimistic about economic recovery. In the first few months of 2002, additional positive news helped to boost consumer confidence. By the end of January, the jobless rate declined to 5.6%, ending eight straight months of increases. Fourth quarter 2001 GDP, originally predicted to be a 1.1% decline, was revised several times, ultimately reflecting a surprising 1.7% growth rate. Not all news was positive, however: most notably, accounting concerns resulting from Enron's and Arthur Andersen's problems dominated the news and drove many investors from stock markets. More encouraging data was released in late March 2002, when the consumer confidence index climbed to 110.2 in March from 95 in February. In April, the first quarter GDP number was released, showing that the U.S. economy had grown at a robust 5.8% annual rate in the first quarter of 2002, its strongest showing since the final quarter of 1999. U.S. Fixed Income Markets Like U.S. equity markets, bond markets experienced a volatile twelve-month period. However, because what is positive for stocks typically tends to be negative for bonds and vice versa, the bond markets' performance pattern was opposite the performance of equities markets. During the second quarter of 2001, the signs of possible economic recovery that had temporarily buoyed equity markets hurt bonds, particularly long-term Treasury bonds. Because the prospect of economic strength brought with it the potential for inflation, long-term rates crept up during the second quarter. The federal government's tax cut also lowered projections of future government budget surpluses. This led investors to believe that the Treasury would be buying back fewer of its outstanding bonds than had originally been anticipated. Meanwhile, additional Fed rate cuts helped short-term yields to drift lower through the second quarter. In the wake of the September 11 events, the Fed lowered short-term rates in an attempt to boost investor confidence. This move caused a further steepening of the yield curve. A flight to quality that led investors from equities and lower-quality bonds to the safe haven of government securities, particularly short-term issues, contributed to the phenomenon. For Treasury bonds, yields reached their lows in early November before spiking upward as investors began anticipating an economic recovery, and the stock market rebounded strongly. Long-term bonds rallied more than 8.5% in October 2001, when the Treasury announced its suspension of the 30-year bond, but erased those gains in November and December as yields increased. During the first two months of 2002, fixed-income markets posted gains, benefiting from investors' apprehension about equity markets. However, the encouraging economic news released in March renewed the possibility of inflation, and bond yields spiked up, giving up their gains of the previous two months of the period. Market Overview 3 Managers' Discussion & Analysis iShares Dow Jones U.S. Total Market Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ------------------------- ------------------------- ------------------------- IShares Index Fund NAV MARKET INDEX NAV MARKET INDEX NAV MARKET INDEX Dow Jones U.S. Total Market (11.93)% (11.79)% (11.74)% (13.28)% (13.83)% (13.13)% (23.56)% (24.33)% (23.26)%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/16/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. Sector Breakout DOW JONES U.S. TOTAL MARKET INDEX [PIE CHART] Basic Materials 2.54% Consumer Cyclical 14.43% Consumer Non-Cyclical 8.89% Energy 6.40% Financial 20.40% Healthcare 13.95% Industrial 11.49% Technology 14.85% Telecommunications 3.77% Utilities 3.28% The iShares Dow Jones U.S. Total Market Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Total Market Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 11.93%, while the Index fell 11.74%. Many of the themes of previous months carried over into the reporting period, which opened amid earnings disappointments, weak economic indicators and job cuts. Working to prevent the sluggish economy from falling into recession, the Federal Reserve Board (the "Fed") continued its policy to lower interest rates. By the end of 2001, the federal funds rate stood at its lowest level in forty years. By early 2002, signs began to point to an improving economy. Strong GDP growth numbers, an increase in durable goods orders, and a jump in consumer confidence levels prompted the Fed to leave rates unchanged during the remainder of the reporting period. Not surprisingly, the telecommunication services sector (3.77% of the Index as of April 30, 2002) suffered the worst declines, falling 39.18%. Technology stocks (14.85% of the Index as of April 30, 2002) also endured a difficult year, losing 31.17%. Utilities stocks (3.28% of 4 2002 iShares Annual Report to Shareholders the Index as of April 30, 2002) fell 21.02%. As would be expected, consumer discretionary stocks (14.43% of the Index as of April 30, 2002) were also negatively impacted by the slowing economy, declining 7.46% during the reporting period. On the other hand, consumer staples (8.89% of the Index as of April 30, 2002) gained 20.41% for the reporting period. Individual stock performance reflected the volatile market conditions. The largest holding in the Index, General Electric Co. (2.89% of the Index as of April 30, 2002), declined 33.89% during the reporting period. International Business Machines Corp. (1.33% of the Index as of April 30, 2002) fell 26.88%, and Microsoft Corp. (2.25% of the Index as of April 30) lost 22.86%. Of the Index's ten largest holdings, the only positive performers over the period were Johnson & Johnson (1.80% of the Index as of April 30), which gained 34.12%, and Wal-Mart Stores Inc. (1.42% of the Index), which gained 8.54%. [GRAPH] IShares Dow Jones U.S. Total Market Index Fund GROWTH OF $10,000 INVESTMENT
IShares Dow Jones U.S. Total Market Index Fund Dow Jones U.S. Total Market Index Jun 00 $10,000 $10,000 Jul 00 $ 9,920 $ 9,925 Oct 00 $ 9,994 $10,003 Jan 01 $ 9,516 $ 9,522 Apr 01 $ 8,680 $ 8,694 Jul 01 $ 8,426 $ 8,441 Oct 01 $ 7,383 $ 7,403 Jan 02 $ 7,933 $ 7,958 Apr 02 $ 7,646 $ 7,674
Past performance is no guarantee of future results. Managers' Discussion & Analysis 5 Managers' Discussion & Analysis iShares Dow Jones U.S. Basic Materials Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns --------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* -------------------- ----------------------- ------------------------- iSHARES INDEX FUND NAV MARKET INDEX NAV MARKET INDEX NAV MARKET INDEX Dow Jones U.S. Basic Materials Sector 3.38% 2.47% 3.92% 7.47% 8.85% 7.94% 14.54% 17.15% 15.44%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Du Pont (E.I.) de Nemours & Co. 16.56% Alcoa Inc. 10.49% Dow Chemical Co. (The) 10.36% International Paper Co. 7.24% Weyerhaeuser Co. 4.64% Newmont Mining Corp. 4.22% Air Products & Chemicals Inc. 4.00% Praxair Inc. 3.33% PPG Industries Inc. 3.19% Georgia-Pacific Corp. 2.42% The iShares Dow Jones U.S. Basic Materials Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Basic Materials Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund returned 3.38%, while the Index returned 3.92%. For the majority of the reporting period, basic materials shares as a whole struggled. Three primary factors: slowing economic conditions, rising oil prices, and decreased corporate earnings estimates weighed on global markets during most of the period as investors grew apprehensive about the potential for future growth. By the beginning of 2002, however, economic signs began to point to the possibility of recovery. In response to the encouraging outlook, the Federal Reserve Board left rates unchanged through the end of the reporting period. As prospects for economic growth began to improve, many basic materials companies were able to recoup their losses and finish the reporting period in positive territory. However, companies that depend on oil and natural gas were hit hard throughout the reporting period, as the prices for these resources continued to rise. 6 2002 iShares Annual Report to Shareholders Within the Index's top ten holdings, performance for the period was mixed. Alcoa Inc. (10.49% of the Index as of April 30, 2002), declined 16.43%. Dow Chemical Co., (10.36% of the Index as of April 30, 2002) which was hurt early in the reporting period by higher energy costs as well as lower European demand, finished the period down 1.00%. However, because gold represents a safe harbor in an uncertain environment, gold mining company Newmont Mining Corp. (4.22% of the Index as of April 30) benefited from the economic conditions, rising 57.27%. Natural gas and chemicals producer Air Products & Chemicals Inc. (4.00% of the Index as of April 30, 2002) gained 13.78%, and Praxair Inc. (3.33% of the Index) climbed 22.25%. iShares Dow Jones U.S. Basic Materials Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Basic Materials Sector Index Fund Dow Jones U.S. Basic Materials Sector Index Jun 00 $10,000 $10,000 Jul 00 $ 9,434 $ 9,438 Oct 00 $ 9,614 $ 9,631 Jan 01 $10,589 $10,607 Apr 01 $11,079 $11,108 Jul 01 $11,096 $11,145 Oct 01 $ 9,973 $10,027 Jan 02 $11,025 $11,093 Apr 02 $11,455 $11,542
Past performance is no guarantee of future results. Managers' Discussion & Analysis 7 Managers' Discussion & Analysis iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ---------------------- ---------------------- ------------------------- ISHARES INDEX FUND NAV MARKET INDEX NAV MARKET INDEX NAV MARKET INDEX Dow Jones U.S. Consumer Cyclical Sector (7.98)% (8.10)% (7.46)% (3.82)% (4.40)% (3.35)% (7.09)% (8.04)% (6.20)%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/20/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Wal-mart Stores Inc. 9.84% Home Depot Inc. 6.87% Aol Time Warner Inc. 5.17% Viacom Inc. "B" 4.63% Walt Disney Co. (The) 3.02% Target Corp. 2.50% Walgreen Co. 2.45% Mcdonalds Corp. 2.34% Cardinal Health Inc. 1.99% Lowe's Companies Inc. 1.89% The iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Consumer Cyclical Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 7.98% while the Index fell 7.46%. Stock markets suffered through a difficult twelve months, driven by many of the same themes from previous reporting periods: corporations announced layoffs and missed earnings targets, economic signs weakened, and the Federal Reserve Board (the "Fed") continued its easing of monetary policy in an attempt to help the economy sidestep a recession. Finally, the economy appeared to have turned the corner toward recovery by the beginning of 2002. In response to some encouraging economic indicators, the Fed left rates unchanged during the first four months of 2002. The slowdown in the economy was reflected in consumer spending levels. Overall, consumer spending dropped 1.8% in September 2001, its biggest drop since 1987. On the retail level, sales dropped 2.4% in September, the biggest drop in a decade, as customers curtailed purchases on all but the most essential items in the wake of the terrorist attacks. Discount stores fared better than department stores, and 8 2002 iShares Annual Report to Shareholders toward year-end some retailers were able to lure customers in with offers of zero percent financing and deep discounts. In the first few months of 2002, the trend continued as consumer spending levels rose and the consumer confidence level jumped more than 15% from February to March. On an individual stock basis, performance of the Index's top ten holdings was mixed. Lowe's Companies Inc. (1.89% of the Index as of April 30, 2002) logged the biggest gains of the top ten Index holdings, climbing 34.53% for the reporting period. Discounters Wal-Mart Stores Inc. (9.84% of the Index as of April 30, 2002) and Target Corp. (2.50% of the Index as of April 30) gained 8.54% and 14.18%, respectively. AOL Time Warner Inc. (5.17% of the Index as of April 30) suffered the biggest decline of the Index's top ten holdings, falling 62.34% over the period. The Walt Disney Co. (3.02% of the Index) declined 22.63%, and Walgreen Co. (2.45% of the Index as of April 30) slid 11.37%. iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
IShares Dow Jones U.S. Consumer Cyclical Sector Index Fund Dow Jones U.S. Consumer Cyclical Sector Index Jun 00 $10,000 $10,000 Jul 00 $10,012 $10,013 Oct 00 $ 9,713 $9,729 Jan 01 $10,443 $10,469 Apr 01 $10,099 $10,138 Jul 01 $10,121 $10,177 Oct 01 $ 8,036 $8,090 Jan 02 $ 9,292 $9,367 Apr 02 $ 9,292 $9,381
Past performance is no guarantee of future results. Managers' Discussion & Analysis 9 Managers' Discussion & Analysis iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------- ------------------------- YEAR ENDED 4/30/02 INCEPTION TO 4/30/02* INCEPTION TO 4/30/02* ---------------------- ---------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Consumer Non-Cyclical Sector 19.65% 20.00% 20.41% 10.02% 9.40% 10.90% 19.73% 18.34% 21.47%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/16/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Coca-Cola Co. (The) 13.15% Philip Morris Companies Inc. 12.21% Procter & Gamble Co. 12.19% Pepsico Inc. 9.40% Anheuser-Busch Companies Inc. 4.85% Kimberly-Clark Corp. 3.54% Gillette Co. (The) 3.52% Colgate-Palmolive Co. 3.03% Safeway Inc. 2.18% Sysco Corp. 2.00% The iSHARES DOW JONES U.S. CONSUMER NON-CYCLICAL SECTOR INDEX FUND seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Consumer Non-Cyclical Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund returned 19.65%, while the Index gained 20.41%. Many of the themes of previous months carried over into the reporting period, which opened amid earnings disappointments, weak economic indicators and job cuts. Working to prevent the sluggish economy from falling into recession, the Federal Reserve Board (the "Fed") continued its stance on lowering interest rates. By the end of 2001, the federal funds rate stood at its lowest level in forty years. By early 2002, signs began to point to an improving economy. Strong GDP growth numbers, an increase in durable goods orders, and a jump in consumer confidence levels prompted the Fed to leave rates unchanged during the remainder of the reporting period. The general economic slowdown permeated into most sectors, as consumer and capital spending shrank during the reporting period. Consumer non-cyclicals, however, were one of the least affected sectors for the period. Because the stocks that comprise the Index produce 10 2002 iShares Annual Report to Shareholders basic goods and services that are purchased even during an economic slowdown, their share price tends to be less sensitive to a downturn in the economy. The best of the Index's top ten holdings, Proctor & Gamble Co. (12.19% of the Index as of April 30, 2002), logged a healthy 53.33% gain for the reporting period. Gillette Co. (3.52% of the Index as of April 30, 2002) gained 27.72%. Coca-Cola Co. (13.15% of the Index as of April 30) and PepsiCo Inc. (9.40% of the Index) also performed well, returning 22.06% and 19.92%, respectively. The only negative performers over the period among the Index's ten largest holdings were Safeway Inc. (2.18% of the Index as of April 30, 2002), which fell 22.74% and Colgate-Palmolive (3.03% of the Index), which dropped 3.86%. iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund Dow Jones U.S. Consumer Non-cyclical Sector Index Jun 00 $10,000 $10,000 Jul 00 $ 9,935 $ 9,948 Oct 00 $10,452 $10,478 Jan 01 $10,497 $10,567 Apr 01 $10,008 $10,086 Jul 01 $10,320 $10,414 Oct 01 $10,413 $10,530 Jan 02 $10,979 $11,116 Apr 02 $11,976 $12,144
Past performance is no guarantee of future results. Managers' Discussion & Analysis 11 Managers' Discussion & Analysis iShares Dow Jones U.S. Energy Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ------------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ------------------------- ---------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Energy Sector (13.34)% (13.71)% (12.19)% (1.04)% (2.10)% (0.29)% (1.96)% (3.89)% (0.54)%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/16/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Exxon Mobil Corp. 39.55% ChevronTexaco Corp. 13.30% Schlumberger Ltd. 4.52% El Paso Corp. 3.04% Phillips Petroleum Co. 2.98% Conoco Inc. 2.52% Anadarko Petroleum Corp. 1.93% Baker Hughes Inc. 1.82% Transocean Sedco Forex Inc. 1.62% Occidental Petroleum Corp. 1.53% The iShares Dow Jones U.S. Energy Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Energy Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 13.34% while the Index fell 12.19%. The same familiar themes of earnings warnings, layoffs, and weak economic reports dominated markets during much of the reporting period. In its effort to stimulate the slowing economy, the Federal Reserve Board (the "Fed"), continued a campaign of lowering short-term interest rates throughout the period. By year-end, the Fed's actions began to achieve the desired result, and economic signs revealed the possibility of economic recovery. During the first four months of 2002, additional evidence of a strengthening economy appeared in the form of increased GDP figures and consumer confidence, and the Fed left rates unchanged through the end of the reporting period. The weakening U.S. economy that took its toll on energy-related company shares was part of a broader global slowdown. Similarly, the improving economic conditions in the U.S. were echoed around the world. For most of the period, a global slowdown meant lower demand for energy, and energy shares languished. Among energy companies, the oil exploration and services companies were hurt the most. These 12 2002 iShares Annual Report to Shareholders companies tend to be more sensitive to changes in oil prices than are the larger, more diversified oil companies. The power producers were dealt an additional blow by the controversy surrounding Enron. In terms of individual Index holdings, nine of the Index's ten largest holdings posted declines during the reporting period. The worst performer over the period was El Paso Corp. (3.04% of the Index as of April 30, 2002), which sank 40.81% in the wake of the Enron fallout. The smaller oil services and exploration companies also posted declines: Transocean Sedco Forex Inc. (1.62% of the Index as of April 30, 2002) fell 34.36%, Anadarko Petroleum Corp. (1.93% of the Index as of April 30) lost 16.34%, and Schlumberger Ltd (4.52% of the Index as of April 30) declined 16.28%. Diversified oil companies Exxon Mobil Corp. (39.55% of the Index), ChevronTexaco Corp. (13.30% of the Index as of April 30, 2002), and Conoco Inc. (2.52% of the Index), on the other hand, suffered less severe declines over the period, dropping 7.24%, 7.44%, and 5.67%, respectively. iShares Dow Jones U.S. Energy Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Energy Sector Index Fund Dow Jones U.S. Energy Sector Index Jun 00 $10,000 $10,000 Jul 00 $ 9,270 $ 9,409 Oct 00 $10,104 $10,333 Jan 01 $10,372 $10,448 Apr 01 $11,314 $11,327 Jul 01 $ 9,959 $ 9,973 Oct 01 $ 9,302 $ 9,373 Jan 02 $ 9,061 $ 9,205 Apr 02 $ 9,806 $ 9,945
Past performance is no guarantee of future results. Managers' Discussion & Analysis 13 Managers' Discussion & Analysis iShares Dow Jones U.S. Financial Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns --------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* -------------------- ----------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Financial Sector 0.66% 0.48% 1.28% 8.65% 7.42% 9.33% 17.48% 14.71% 18.89%
* Since inception total return periods are calculated from inception date (5/22/00) for the NAV and Index returns and from the first day of trading (5/31/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Citigroup Inc. 10.09% American International Group Inc. 7.15% Bank of America Corp. 5.15% Wells Fargo & CO. 3.95% Fannie Mae 3.56% JP Morgan Chase & CO. 3.15% Wachovia Corp. 2.34% American Express Co. 2.18% Bank One Corp. 2.16% Morgan Stanley Dean Witter & CO. 2.16% The iShares Dow Jones U.S. Financial Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Financial Sector Index. For the twelve-month period ended April 30, 2002, (the "reporting period"), the Fund returned 0.66% and the Index gained 1.28%. Most of the reporting period was dominated by earnings disappointments, weak economic indicators and job cuts. Working to prevent the sluggish economy from falling into recession, the Federal Reserve Board (the "Fed") continued its campaign to lower interest rates. By year-end, the federal funds rate stood at its lowest level in forty years. By the beginning of 2002, signs of economic recovery began to emerge, and the Fed left interest rates unchanged through the end of the period. Within the financial sector, performance was mixed. In general, investment banks were hurt the most, as markets slumped and investor activity dropped. Meanwhile, banks performed relatively well, benefiting from lower short-term interest rates. 14 2002 iShares Annual Report to Shareholders In terms of individual holdings, investment banks J.P. Morgan Chase & Co. (3.15% of the Index as of April 30, 2002) and Morgan Stanley Dean Witter & Co. (2.16% of the Index as of April 30, 2002) suffered the biggest losses among the Index's ten largest holdings, falling 24.15% and 22.75%, respectively. American International Group Inc. (7.15% of the Index as of April 30) declined 15.33%, and Citigroup Inc., the largest holding at 10.09% of the Index lost 10.78%. By contrast, banks logged positive returns: Bank of America Corp. (5.15% of the Index as of April 30), gained 34.39%, Wachovia Corp. (2.34% of the Index) rose 30.72%, Wells Fargo & Co. (3.95% of the Index as of April 30) climbed 11.37%, and Bank One Corp. (2.16% of the Index as of April 30, 2002) returned 10.71% for the reporting period. iShares Dow Jones U.S. Financial Sector Index Fund GROWTH OF $10,000 INVESTMENT
iShares Dow Jones U.S. Financial Sector Index Fund Dow Jones U.S. Financial Sector Index May 00 $10,000 $10,000 Jul 00 $10,676 $10,688 Oct 00 $11,890 $11,917 Jan 01 $12,359 $12,400 Apr 01 $11,670 $11,739 Jul 01 $12,023 $12,117 Oct 01 $10,516 $10,615 Jan 02 $11,370 $11,490 Apr 02 $11,747 $11,889
Past performance is no guarantee of future results. Managers' Discussion & Analysis 15 Managers' Discussion & Analysis iShares Dow Jones U.S. Healthcare Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ---------------------- ---------------------- ------------------------- iSHARES INDEX FUND NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Healthcare Sector (7.60)% (8.04)% (7.05)% (1.95)% (5.06)% (1.27)% (3.65)% (9.27)% (2.38)%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/16/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Pfizer Inc. 15.18% Johnson & JOHNSON 12.93% Merck & Co. Inc. 8.16% Abbott Laboratories 5.17% Wyeth 4.93% Lilly (Eli) and Co. 4.21% Bristol-myers Squibb Co. 3.68% Amgen Inc. 3.64% Medtronic Inc. 3.57% Pharmacia Corp. 3.51% The iShares Dow Jones U.S. Healthcare Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Healthcare Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 7.60%, while the Index declined 7.05%. For the first nine months of the reporting period, stock markets suffered through many of the familiar themes from previous reporting periods: corporations announced layoffs and missed earnings targets, economic signs weakened, and the Federal Reserve Board (the "Fed") continued its easing of monetary policy in an attempt to help the economy sidestep a recession. By the beginning of 2002, however, economic signs began to point to the possibility of recovery. In response to the encouraging outlook, the Fed left rates unchanged through the end of the reporting period. Healthcare stocks, which had appealed to many investors as a defensive play during uncertain economic times, began to fall out of favor as hints of economic recovery surfaced. For pharmaceutical stocks, rumors of legislation that could limit profit margins also dragged down performance, and this group was hit particularly hard. 16 2002 iShares Annual Report to Shareholders Among the Index's ten largest holdings, the best performing individual holding by far was Johnson & Johnson (12.93% of the Index as of April 30, 2002), which gained a healthy 34.12%. Abbott Laboratories (5.17% of the Index as of April 30, 2002) returned 18.24%. The worst returns among the Index's ten largest holdings came from pharmaceutical companies. Bristol Myers Squibb Co. (3.68% of the Index as of April 30, 2002) fell 44.73%, Merck & Co. Inc. (8.16% of the Index), slid 26.97%, Eli Lilly and Co. (4.21% of the Index as of April 30) lost 21.16%, and Pharmacia Corp. (3.51% of the Index as of April 30, 2002) declined 20.10%. iShares Dow Jones U.S. Healthcare Sector Index Fund GROWTH OF $10,000 INVESTMENT [CHART]
iShares Dow Jones U.S. Healthcare Sector Index Fund Dow Jones U.S. Healthcare Sector Index Jun 00 $10,000 $10,000 Jul 00 $10,481 $10,506 Oct 00 $11,480 $11,541 Jan 01 $11,044 $11,105 Apr 01 $10,428 $10,501 Jul 01 $10,568 $10,660 Oct 01 $10,254 $10,357 Jan 02 $10,244 $10,364 Apr 02 $ 9,635 $ 9,761
Past performance is no guarantee of future results. Managers' Discussion & Analysis 17 Managers' Discussion & Analysis iShares Dow Jones U.S. Industrial Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------------- ------------------------- YEAR ENDED 4/30/02 INCEPTION TO 4/30/02* INCEPTION TO 4/30/02* ------------------------- ------------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Industrial Sector (14.72)% (14.94)% (15.40)% (11.30)% (11.16)% (12.43)% (20.23)% (19.78)% (22.08)%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/20/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] General Electric Co. 25.14% 3M Co. 3.94% Tyco International Ltd. 2.96% Boeing Co. (The) 2.86% United Technologies Corp. 2.65% Automatic Data Processing Inc. 2.51% First Data Corp. 2.43% Honeywell International Inc. 2.39% Emerson Electic Co. 1.80% Lockheed Martin Corp. 1.77% The iSHARES DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Industrial Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 14.72%, while the Index fell 15.40%. Earnings disappointments, weak economic indicators and job cuts weighed on markets during the reporting period. In its effort to avoid a recession, the Federal Reserve Board (the "Fed") continued its stance on lowering interest rates, ultimately bringing the federal funds rate to its lowest level in forty years. Finally, by the beginning of 2002, encouraging signs emerged, including higher than expected GDP growth levels and a spike in consumer confidence. Faced with the promising outlook, the Fed left rates unchanged during the first four months of 2002. The sluggish economic conditions in the U.S. for much of the reporting period were echoed around the world. As slower growth led to a cutback in industrial production, the industrial sector languished. Although the global economy showed renewed signs of life toward the end of the reporting period, industrials generally finished the period in negative territory. 18 2002 iShares Annual Report to Shareholders In terms of the Index's top ten holdings, Tyco International Ltd. (2.96% of the Index as of April 30, 2002) suffered the biggest decline, falling 65.39%. General Electric Co., the largest holding at 25.14% of the Index as of April 30, lost 33.89%. The share price of the aerospace company Boeing Co. (2.86% of the Index as of April 30, 2002) dropped 26.75% for the reporting period as airline travel declined in the wake of the events of September 11. On a positive note, other Index holdings including aerospace company Lockheed Martin Corp (1.77% of the Index as of April 30, 2002) regained some of those losses and finished the reporting period up 80.68%. First Data Corp. (2.43% of the Index as of April 30) gained 18.00%, and 3M Co. (3.94% of the Index) returned 7.91% for the period. iShares Dow Jones U.S. Industrial Sector Index Fund GROWTH OF $10,000 INVESTMENT
iShares Dow Jones U.S. Industrial Sector Index Fund Dow Jones U.S. Industrial Sector Index Jun 00 $10,000 $10,000 Jul 00 $ 9,964 $ 9,975 Oct 00 $10,364 $10,303 Jan 01 $ 9,894 $ 9,701 Apr 01 $ 9,354 $ 9,211 Jul 01 $ 8,824 $ 8,702 Oct 01 $ 7,634 $ 7,503 Jan 02 $ 8,318 $ 8,146 Apr 02 $ 7,977 $ 7,791
Past performance is no guarantee of future results. Managers' Discussion & Analysis 19 Managers' Discussion & Analysis iShares Dow Jones U.S. Technology Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ------------------------- ------------------------- ------------------------- iSHARES INDEX FUND NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Technology Sector (31.55)% (31.79)% (31.17)% (39.56)% (37.81)% (39.19)% (62.76)% (60.41)% (62.28)%
* Since inception total return periods are calculated from inception date (5/15/00) for the NAV and Index returns and from the first day of trading (5/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Microsoft Corp. 15.15% Intel Corp. 11.95% International Business Machines Corp. 8.95% Cisco Systems Inc. 6.62% Dell Computer Corp. 3.77% Texas Instruments Inc. 3.33% Oracle Corp. 2.61% Applied Materials Inc. 2.47% Motorola Inc. 2.13% Hewlett-Packard Co. 1.73% The iShares Dow Jones U.S. Technology Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Technology Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 31.55% while the Index fell 31.17%. An extremely challenging environment for technology companies prevailed throughout the reporting period. Many technology firms, whose stocks had soared just a few years ago, were forced to lay off workers as revenues and earnings continued to decline well into 2002. The first quarter of 2001 had been the worst in technology-heavy Nasdaq's history, and there was little cause for optimism about a rapid recovery in the technology sector. Corporate investment in information technology, a key source of sales for many tech companies, rapidly declined as the economy weakened. In an attempt to restart economic growth, the Federal Reserve Board (the "Fed") cut interest rates eleven times in 2001, making three cuts in the aftermath of September 11. The last interest rate reduction, on December 11, 2001 brought the federal funds rate to 1.75%, where it 20 2002 iShares Annual Report to Shareholders stood at the reporting period's end. Despite the Fed's actions, the near-term prospects for many technology companies appeared weak in the first quarter of 2002. The difficult environment negatively affected the Index's top ten holdings. Microsoft Corp. (15.15% of the Index as of April 30, 2002), declined 22.86% over the reporting period. Intel Corp. (11.95% of the Index as of April 30, 2002) shares dropped 7.20%, International Business Machines Corp. (IBM) (8.95% of the Index as of April 30) lost 26.88%, and Cisco Systems Inc. (6.62% of the Index) declined 13.72%. Texas Instruments Inc. (3.33% of the Index) dropped 19.86%, Oracle Corp. (2.61% of the Index as of April 30, 2002) lost 37.87%, Applied Materials Inc. (2.47% of the Index as of April 30) fell 10.92%, and Motorola Inc. (2.13% of the Index) rose 0.09%. Hewlett-Packard Co. (1.73% of the Index as of April 30, 2002) declined 38.90%. Not all of the Index's top ten holdings had negative performance for the period. Dell Computer Corp. (3.77% of the Index as of April 30) managed to rise 0.38%. iShares Dow Jones U.S. Technology Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Technology Sector Index Fund Dow Jones U.S. Technology Sector Index May 00 $10,000 $10,000 Jul 00 $10,342 $10,362 Oct 00 $ 9,153 $ 9,186 Jan 01 $ 7,427 $ 7,468 Apr 01 $ 5,441 $ 5,480 Jul 01 $ 4,869 $ 4,911 Oct 01 $ 3,953 $ 3,992 Jan 02 $ 4,612 $ 4,664 Apr 02 $ 3,725 $ 3,772
Past performance is no guarantee of future results. Managers' Discussion & Analysis 21 Managers' Discussion & Analysis iShares Dow Jones U.S. Telecommunications Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ------------------------- ------------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Telecommunications Sector (41.12)% (41.29)% (39.18)% (37.13)% (36.81)% (32.56)% (59.41)% (58.80)% (53.43)%
* Since inception total return periods are calculated from inception date (5/22/00) for the NAV and Index returns and from the first day of trading (5/26/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Verizon Communications Inc. 26.45% SBC Communications Inc. 25.63% Bellsouth Corp. 13.88% AT&T Corp. 11.32% AT&T Wireless Services Inc. 5.89% Alltel Corp. 3.58% Sprint Corp. (FON Group) 3.06% Worldcom Inc.-MCI Group 1.78% Qwest Communications Intrnational Inc. 1.67% Sprint Corp. (PCS Group) 1.63% The iShares Dow Jones U.S. Telecommunications Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Telecommunications Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 41.12%, while the Index fell 39.18%. U.S. telecommunications stocks endured an exceptionally difficult reporting period, with many companies reporting large declines in net income and poor sales. In turn, the sector was further affected by an ongoing correction in stock prices that had once reflected highly optimistic growth projections. With the U.S. economy expanding rapidly and corporate spending on IT and telecom robust, many telecommunications companies had invested heavily in large infrastructure projects during the late 1990s. When the economy slowed dramatically, a number of large telecommunications companies saw their revenues fall and their debt burdens become onerous. 22 2002 iShares Annual Report to Shareholders Some investors believed an improving economy would benefit telecom companies, and watched hopefully as the Federal Reserve Board (the "Fed") attempted to restart economic growth with eleven rate cuts in 2001 -- three of them in the aftermath of September 11. The last interest rate reduction on December 11, 2001 brought the federal funds rate to a forty-year low of 1.75%, where it stood at the reporting period's end. Each of the top ten holdings in the Index lost ground over the reporting period. Verizon Communications Inc. (26.45% of the Index as of April 30, 2002) fell 24.90%. SBC Communications Inc. (25.63% of the Index as of April 30, 2002) and BellSouth Corp. (13.88% of the Index as of April 30) dropped 22.73% and 26.20%, respectively. AT&T Corp. (11.32% of the Index as of April 30) fell 23.19%, AT&T Wireless Services Inc. (5.89% of the Index) dropped 55.47%, and Alltel Corp (3.58% of the Index as of April 30) lost 7.25%. Sprint Corp. (FON Group) (3.06% of the Index as of April 30, 2002) fell 23.96%, while WorldCom Inc-MCI Group (1.78% of the Index as of April 30) declined 85.87%. Qwest Communications International Inc. (1.67% of the Index as of April 30) lost 87.68%. Finally, Sprint Corp. (PCS Group) (1.63% of the Index as of April 30) declined 56.26%. iShares Dow Jones U.S. Telecommunications Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Telecommunications Sector Index Fund Dow Jones U.S. Telecommunications Sector Index May 00 $10,000 $10,000 Jul 00 $ 9,756 $ 9,768 Oct 00 $ 9,169 $ 9,498 Jan 01 $ 8,231 $ 8,629 Apr 01 $ 6,895 $ 7,657 Jul 01 $ 6,729 $ 7,522 Oct 01 $ 5,399 $ 6,285 Jan 02 $ 5,150 $ 6,003 Apr 02 $ 4,060 $ 4,658
Past performance is no guarantee of future results. Managers' Discussion & Analysis 23 Managers' Discussion & Analysis iShares Dow Jones U.S. Utilities Sector Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ------------------------- ------------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Utilities Sector (21.38)% (21.65)% (21.02)% (0.54)% 0.01% (0.10)% (1.01)% 0.01% (0.19)%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Duke Energy Corp. 8.86% Southern Co. 5.54% Dominion Resources Inc. 4.88% Exelon Corp. 4.86% American Electric Power Co. Inc. 4.14% Txu Corp. 4.05% Progress Energy Inc. 3.16% Fpl Group Inc. 3.14% Entergy Corp. 2.86% FirstEnergy Corp. 2.78% The iShares Dow Jones U.S. Utilities Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Utilities Sector Index. For the twelve-month period ended April 30, 2002 (the "reporting period") the Fund declined 21.38%, while the Index fell 21.02%. The reporting period proved difficult for the utilities sector, as a series of challenges put downward pressure on share prices. While a number of the Index's top ten holdings managed positive returns, the group as a whole performed poorly. The Enron scandal cast a significant shadow over the group, as did last summer's power crisis in California. Deregulation presented a longer-term challenge to many utilities, which now had to deal with increased competition. Other factors that impacted utilities included a mild winter across the U.S. and declining natural gas and electricity prices. Many utilities were also hampered by an oversupply of capacity, caused by the overbuilding of power plants during better economic times. As a result of investment in new power plants, many utilities companies struggle under high debt levels. 24 2002 iShares Annual Report to Shareholders Another key factor in the poor performance of utilities was the domestic economy, which remained sluggish for most of the reporting period. Seeking to restore growth, the Federal Reserve Board (the "Fed") reduced interest rates a eleven times in 2001 -- a record number -- and made three cuts directly after September 11 to attempt to reassure shaky financial markets worldwide. The final decrease in December brought the federal funds rate to 1.75%, its lowest level in forty years. As 2002 began, it was unclear if the economy was responding to the Fed's actions. Rising levels of unemployment remained a concern during the reporting period. With their bottom lines threatened, many corporations cut their workforces, bringing the unemployment rate to 6% in April 2002, a large rise from the 4.6% level at the period's start. Perhaps the most positive indication of economic recovery was news that U.S. GDP growth was 5.8% in the first quarter of 2002. While markets remained volatile during the quarter, some investors were cautiously optimistic about prospects for a moderate economic recovery. Performance for the top ten holdings in the Index was largely positive during the reporting period. Southern Co (5.54% of the Index as of April 30, 2002) gained 28.23%, while Dominion Resources Inc. (4.88% of the Index as of April 30) rose 1.11%. TXU Corp. (4.05% of the Index as of April 30) rose 30.08%, Progress Energy Inc (3.16% of the Index) moved up 22.92%, and FPL Group Inc. (3.14% of the Index as of April 30, 2002) gained 10.42%. Entergy Corp. (2.86% of the Index as of April 30) rose 18.31%, while FirstEnergy Corp. (2.78% of the Index) increased 15.03%. Not all top ten holdings had positive returns, however. Duke Energy Corp. (8.86% of the Index as of April 30) declined 15.67%. Exelon Corp. (4.86% of the Index) fell 18.79% and American Electric Power Co. Inc. (4.14% of the Index as of April 30, 2002) slipped 1.98%. iShares Dow Jones U.S. Utilities Sector Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Utilities Sector Index Fund Dow Jones U.S. Utilities Sector Index Jun 00 $10,000 $10,000 Jul 00 $10,033 $10,040 Oct 00 $11,932 $11,965 Jan 01 $11,633 $11,672 Apr 01 $12,590 $12,636 Jul 01 $10,995 $11,036 Oct 01 $ 9,575 $ 9,625 Jan 02 $ 9,181 $ 9,238 Apr 02 $ 9,900 $ 9,980
Past performance is no guarantee of future results. Managers' Discussion & Analysis 25 Managers' Discussion & Analysis iShares Dow Jones U.S. Chemicals Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ------------------------------------------ ------------------------ Year Ended 4/30/02 Inception to 4/30/02 Inception to 4/30/02* -------------------- -------------------- ------------------------ iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Chemicals 5.80% 6.12% 5.47% 6.56% 8.60% 4.74% 12.72% 16.62% 9.09%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Du Pont (E.I.) De Nemours & CO. 28.19% Dow Chemical Co. (The) 17.65% Air Products & Chemicals Inc. 6.80% Praxair Inc. 5.67% PPG Industries Inc. 5.44% Rohm & Haas Co. "A" 3.87% Avery Dennison Corp. 3.86% Ecolab Inc. 2.98% Engelhard Corp. 2.46% Eastman Chemical Co. 2.10% The iShares Dow Jones U.S. Chemicals Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Chemicals Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund returned 5.80%, while the Index gained 5.47%. Despite the weak economy that characterized much of the reporting period, the Dow Jones U.S. Chemicals Index managed a small gain as a number of chemicals companies turned in solid performance. The performance of chemical companies often has been perceived as an early indicator of the direction of the economy, and for much of the period, many firms had to operate against a backdrop of declining factory orders and manufacturing activity. However, for most of the top ten holdings in the Index, performance over the past twelve months was solid. In the aftermath of September 11 many of these stocks were hit hard as investors worried that the already fragile economy could slide further, taking with it cyclical stocks like chemicals. But buoyed by interest rate cuts and a generally improving economic outlook, many of the chemical stocks recouped their losses in the months that followed. 26 2002 iShares Annual Report to Shareholders Throughout the period, the Federal Reserve Board (the "Fed") sought to reenergize the economy by reducing interest rates. The Fed cut rates eleven times in 2001, a record number, and made three cuts after September 11 alone in an attempt to reassure shaky financial markets worldwide. In December, a final reduction brought the federal funds rate to 1.75%, their lowest level in forty years. Many of the top ten holdings in the Index rose over the reporting period. The stock with the largest percentage representation in the Index, Du Pont (E.I.) de Nemours & Co. (28.19% of the Index as of April 30, 2002), gained 1.67%. Air Products & Chemicals Inc. (6.80% of the Index as of April 30, 2002) rose 13.78%, Praxair Inc. (5.67% of the Index as of April 30) moved 22.25% higher, and PPG Industries Inc. (5.44% of the Index) increased 1.62%. In addition, Rohm & Haas Co. "A" (3.87% of the Index as of April 30, 2002) gained 10.41%, Avery Dennison Corp. (3.86% of the Index) rose 16.80%, Ecolab Inc. (2.98% of the Index as of April 30, 2002) increased 17.65%, and Englehard Corp. (2.46% of the Index as of April 30, 2002) gained 20.14%. Not all the top ten holdings had positive returns, however. Dow Chemical Co. (17.65% of the Index as of April 30, 2002) declined 1.0%, and Eastman Chemical Co. (2.10% of the Index as of April 30, 2002) lost 13.54%. iShares Dow Jones U.S. Chemicals Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH] iSHARES DOW JONES U.S. CHEMICALS INDEX FUND DOW JONES U.S. CHEMICALS INDEX Jun 00 $10,000 $10,000 Jul 00 $ 9,275 $ 9,141 Oct 00 $ 9,614 $ 9,449 Jan 01 $10,383 $10,071 Apr 01 $10,654 $10,344 Jul 01 $10,650 $10,303 Oct 01 $ 9,828 $ 9,612 Jan 02 $10,695 $10,397 Apr 02 $11,273 $10,910 Past performance is no guarantee of future results. Managers' Discussion & Analysis 27 Managers' Discussion & Analysis iShares Dow Jones U.S. Financial Services Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns --------------------------------------------- ------------------------ Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* -------------------- ----------------------- ------------------------ iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Financial Services 0.00% (0.37)% 0.64% 5.70% 7.56% 6.38% 11.02% 14.56% 12.32%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Citigroup Inc. 13.75% Bank of America Corp. 7.02% Wells Fargo & CO. 5.38% Fannie Mae 4.86% JP Morgan Chase & CO. 4.29% Wachovia Corp. 3.19% American Express Co. 2.97% Bank One Corp. 2.94% Morgan Stanley Dean Witter & CO. 2.94% U.S. Bancorp 2.86% The iShares Dow Jones U.S. Financial Services Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Financial Services Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund returned 0.00%, while the Index gained 0.64%. The Index ended the reporting period with a modest increase that belied the volatility of the past twelve months. Indeed, the period encompassed record interest rate cuts by the Federal Reserve Board (the "Fed"), the events of September 11, the Enron accounting scandal, and the ongoing sell off in technology shares. In addition, some financial firms took hits to their bottom lines from the Argentina economic crisis. 28 2002 iShares Annual Report to Shareholders The financial services group as a whole was bolstered by interest rate cuts during the reporting period. Seeking to restore economic growth at home and improve investor confidence abroad, the Fed reduced rates a record eleven times in 2001, making three cuts after September 11, in an attempt to reassure financial markets worldwide. The last rate cut on December 11 brought the federal funds rate to 1.75%, the lowest level since 1962. This helped maintain a relatively positive operating environment for many financial services companies. Over the reporting period, performance of Index's top ten holdings was quite mixed. Citigroup Inc. (13.75% of the Index as of April 30, 2002) lost 10.78%, while Bank of America Corp (7.02% of the Index as of April 30, 2002) rose 34.39%. Wells Fargo & Co (5.38% of the Index as of April 30, 2002) rose 11.37%, while Fannie Mae (4.86% of the Index as of April 30, 2002) declined 0.11%. JP Morgan Chase & Co. (4.29% of the Index as of April 30, 2002) lost 24.15%, while Wachovia Corp. (3.19% of the Index) increased 30.72%. American Express Co (2.97% of the Index as of April 30, 2002) fell 2.50%. Bank One Corp. (2.94% of the Index as of April 30, 2002) gained 10.71%, Morgan Stanley Dean Witter & Co. (2.94% of the Index) fell 22.75%, and US Bancorp (2.86% of the Index as of April 30, 2002) rose 15.84%. iShares Dow Jones U.S. Financial Services Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH] iShares Dow Jones U.S. Financial Fund Dow Jones U.S. Financial Services Index Services Index Jun 00 $10,000 $10,000 Jul 00 $10,112 $10,123 Oct 00 $11,215 $11,242 Jan 01 $11,948 $11,990 Apr 01 $11,102 $11,160 Jul 01 $11,472 $11,552 Oct 01 $9,823 $9,907 Jan 02 $10,793 $10,903 Apr 02 $11,102 $11,232 Past performance is no guarantee of future results. Managers' Discussion & Analysis 29 Managers' Discussion & Analysis iShares Dow Jones U.S. Internet Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ------------------------- ------------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Dow Jones U.S. Internet (50.69)% (50.71)% (50.64)% (61.27)% (60.31)% (60.86)% (84.44)% (83.51)% (84.09)%
* Since inception total return periods are calculated from inception date (5/15/00) for the NAV and Index returns and from the first day of trading (5/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] eBay Inc. 12.46% Yahoo! Inc. 10.23% Amazon.com Inc. 7.91% BEA Systems Inc. 7.75% Check Point Software Technologies 6.27% TMP Worldwide Inc. 4.83% E*TRADE Group Inc. 4.58% WebMD Corp. 3.80% VeriSign Inc. 3.78% Overture Services Inc. 3.27% The iShares Dow Jones U.S. Internet Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Internet Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund declined 50.69%, while the Index fell 50.64%. Most publicly traded Internet companies continued to fall from investor favor during the reporting period. Some firms were de-listed from Nasdaq for failing to meet share price requirements, some went out of business, and few were spared from dramatic declines in stock price. A weakening U.S. economy meant less corporate investment in Internet-based technologies, which hurt revenues. In addition, online sales to consumers, while still growing, did not reach projected levels. Seeking to ignite the stalled economy, the Federal Reserve Board (the "Fed") cut interest rates eleven times in 2001, with three cuts in the aftermath of September 11 alone. The last interest rate reduction of the period came in December 2001, bringing the federal funds rate to 30 2002 iShares Annual Report to Shareholders 1.75%, a forty-year low. Despite the Fed's actions, the near-term prospects for many Internet companies were weak in the first quarter of 2002. The performance of most of the Index's top ten holdings reflected the difficult operating environment over the period. Yahoo! Inc. (10.23% of the Index as of April 30, 2002) dropped 26.86%, BEA Systems Inc. (7.75% of the Index as of April 30) fell 73.76%, and Check Point Software Technologies Ltd. (6.27% of the Index) declined 71.07%. TMP Worldwide Inc. (4.83% of the Index as of April 30, 2002) lost 37.46%, E*Trade Group Inc. (4.58% of the Index) fell 19.79%, WebMD Corp. (3.80% of the Index as of April 30, 2002) dropped 20.78%, and VeriSign Inc (3.78% of the Index as of April 30, 2002) lost 81.96%. Not all of the Index's top ten holdings had negative performance for the period, however. eBay Inc. (12.46% of the Index as of April 30, 2002) rose 5.19%, Amazon.com Inc. (7.91% of the Index as of April 30) increased 5.77%, and Overture Services Inc. (3.27% of the Index as of April 30) moved up 92.08%. iShares Dow Jones U.S. Internet Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Dow Jones U.S. Internet Index Fund Dow Jones U.S. Internet Index May 00 $10,000 $10,000 Jul 00 $ 9,749 $ 9,784 Oct 00 $ 8,400 $ 8,437 Jan 01 $ 5,409 $ 5,593 Apr 01 $ 3,155 $ 3,222 Jul 01 $ 2,454 $ 2,509 Oct 01 $ 1,673 $ 1,704 Jan 02 $ 2,154 $ 2,196 Apr 02 $ 1,556 $ 1,591
Past performance is no guarantee of future results. Managers' Discussion & Analysis 31 Managers' Discussion & Analysis iShares Dow Jones U.S. Real Estate Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ---------------------- ---------------------- ------------------------- iShares Index Fund NAV MARKET INDEX NAV MARKET INDEX NAV MARKET INDEX Dow Jones U.S. Real Estate 17.83% 17.53% 18.72% 18.21% 17.36% 18.76% 37.06% 34.81% 38.16%
* Since inception total return periods are calculated from inception date (6/12/00) for the NAV and Index returns and from the first day of trading (6/19/00) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Equity Office Properties Trust 9.18% Equity Residential Properties Trust 5.96% Simon Property Group Inc. 3.70% Archstone-Smith Trust 3.61% Plum Creek Timber Co. Inc. 3.27% Prologis Trust 3.02% Boston Properties Inc. 2.74% Vornado Realty Trust 2.74% Apartment Investment & Management Co. "A" 2.66% Duke Realty Corp. 2.52% The iSHARES DOW JONES U.S. REAL ESTATE INDEX FUND seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Real Estate Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund returned 17.83%, while the Index gained 18.72%. Throughout the reporting period, the domestic real estate sector provided a rare bright spot for investors. Despite a slow economy and uncertainty in the wake of September 11, real estate -- particularly residential -- maintained its strength. Existing home sales, new home sales, and housing starts all rose over the period. Non-residential building wasn't as strong, a casualty of the weak economy. Each of the top ten stocks in the Index rose during the reporting period. Equity Office Properties Trust (9.18% of the Index as of April 30, 2002) increased 6.91%, Equity Residential Properties Trust (5.96% of the Index as of April 30) moved up 13.96%, Simon Property Group Inc. (3.70% of the Index) gained 37.09%, and Archstone-Smith Trust (3.61% of the Index) rose 11.68%. Plum Creek Timber Co. Inc. (3.27% of the Index as of April 30, 2002) moved 31.30% higher, Prologis Trust (3.02% of the Index as of April 30) increased 15.05%, and Boston Properties Inc. (2.74% of the Index) gained 4.71%. Vornado Realty Trust (2.74% of the Index as of April 30, 2002) grew 28.69%, and 32 2002 iShares Annual Report to Shareholders Apartment Investment & Management Co. "A" (2.66% of the Index) rose 18.33% higher. Duke Realty Corp. (2.52% of the Index as of April 30, 2002) gained 22.96%. [GRAPH] iShares Dow Jones U.S. Real Estate Index Fund GROWTH OF $10,000 INVESTMENT
iSHARES DOW JONES U.S. REAL ESTATE INDEX FUND DOW JONES U.S. REAL ESTATE INDEX Jun 00 $10,000 $10,000 Jul 00 $10,966 $10,909 Oct 00 $10,517 $10,471 Jan 01 $11,474 $11,457 Apr 01 $11,632 $11,637 Jul 01 $12,290 $12,333 Oct 01 $11,649 $11,707 Jan 02 $12,623 $12,696 Apr 02 $13,708 $13,813
Past performance is no guarantee of future results. Managers' Discussion & Analysis 33 Managers' Discussion & Analysis iShares Cohen & Steers Realty Majors Index Fund Performance as of 4/30/02
Average Annual Total Returns Cumulative Total Returns ---------------------------------------------- ------------------------- Year Ended 4/30/02 Inception to 4/30/02* Inception to 4/30/02* ---------------------- ---------------------- ------------------------- iShares Index Fund NAV Market INDEX NAV Market INDEX NAV Market INDEX Cohen & Steers Realty Majors 19.05% 18.60% 19.35% 15.78% 15.92% 16.15% 20.14% 20.12% 20.58%
* Since inception total return periods are calculated from inception date (1/29/01) for the NAV and Index returns and from the first day of trading (2/2/01) for the Market return. Average annual total return represents the average annual change in value of an investment over the periods indicated. Cumulative total return represents the change in value of an investment over the periods indicated. A Fund's per share net asset value or "NAV" is the value of one share of a Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV per share of the Fund, and the Market return is based on the market price per share of the Fund. The price used to calculate "market" returns ("Market Price") is the price of the last reported trade for shares of the Fund on any national securities exchange or other major U.S. market. Market Price and NAV may be calculated at different times, and this timing difference is one of the reasons that NAV and market price returns may differ. Further discussion of Market Price and NAV can be found in the Supplemental Information, located elsewhere in this report. Market and NAV returns assume that dividends and capital gains distributions have been reinvested in the Fund at market price and net asset value, respectively. An Index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the Index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund's past performance is no guarantee of future results. TOP 10 INDEX HOLDINGS [BAR CHART] Equity Residential Properties Trust 7.90% Equity Office Properties Trust 7.47% Simon Property Group Inc. 6.88% Archstone-Smith Trust 5.52% Vornado Realty Trust 5.14% Public Storage Inc. 5.10% Prologis Trust 4.58% Apartment Investment & Management Co. "A" 4.30% Boston Properties Inc. 4.18% Duke Realty Corp. 4.06% The iShares Cohen & Steers Realty Majors Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cohen & Steers Realty Majors Index. For the twelve-month period ended April 30, 2002 (the "reporting period"), the Fund returned 19.05%, while the Index returned 19.35%. Throughout the reporting period, the domestic real estate sector provided a rare bright spot for investors. Despite the slow economy and uncertainty in the wake of September 11, real estate--particularly residential--maintained its strength. Despite declines in March 2002, existing home sales, new home sales, and housing starts all rose over the period. Non-residential building was less strong, however, a casualty of the weak economy. The series of interest rate cuts by the Federal Reserve Board (the "Fed") during the period also helped to fuel the performance of real estate companies. Attempting to restore economic growth, the Fed reduced rates a record eleven times in 2001, making three cuts directly after September 11 in an attempt to reassure financial markets worldwide. The last rate cut on December 11 brought the federal funds rate 34 2002 iShares Annual Report to Shareholders to 1.75%, its lowest level since 1962, and contributed to a positive operating environment for a number of real estate companies. With interest rates and thus mortgages low, many consumers were encouraged to invest in real estate. Each of the top ten holdings in the Index rose during the reporting period. Equity Residential Properties Trust (7.90% of the Index as of April 30, 2002) moved up 13.96%, while Equity Office Properties Trust (7.47% of the Index as of April 30, 2002) increased 6.91%. Simon Property Group Inc. (6.88% of the Index as of April 30) gained 37.09%, Archstone-Smith Trust (5.52% of the Index) rose 11.68%, Vornado Realty Trust (5.14% of the Index as of April 30, 2002) grew 28.69%, and Prologis Trust (4.58% of the Index as of April 30, 2002) increased 15.05%. Apartment Investment & Management Co. "A" (4.30% of the Index as of April 30) moved 18.33% higher. Boston Properties Inc. (4.18% of the Index) gained 4.71% while Duke Realty Corp. (4.06% of the Index as of April 30, 2002) gained 22.96%. iShares Cohen & Steers Realty Majors Index Fund GROWTH OF $10,000 INVESTMENT [GRAPH]
iShares Cohen & Steers Realty Majors Index Fund Cohen & Steers Realty Majors Index Jan 01 $10,046 $10,054 Apr 01 $10,091 $10,103 Jul 01 $10,621 $10,649 Oct 01 $10,309 $10,324 Jan 02 $11,085 $11,113 Apr 02 $12,013 $12,059
Past performance is no guarantee of future results. Managers' Discussion & Analysis 35 Schedule of Investments iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 99.90% General Electric Co. 110,800 $ 3,495,740 Exxon Mobil Corp. 76,276 3,064,007 Microsoft Corp./1/ 52,091 2,722,276 Pfizer Inc. 70,505 2,562,857 Citigroup Inc. 57,549 2,491,872 Johnson & Johnson 34,184 2,182,990 Intel Corp. 75,045 2,147,037 American International Group Inc. 25,518 1,763,804 Wal-Mart Stores Inc. 30,749 1,717,639 International Business Machines Corp. 19,199 1,608,108 Coca-Cola Co. (The) 25,517 1,416,449 Merck & Co. Inc. 25,355 1,377,791 Philip Morris Companies Inc. 24,177 1,315,954 Procter & Gamble Co. 14,544 1,312,741 Bank of America Corp. 17,552 1,272,169 Verizon Communications Inc. 30,107 1,207,592 Home Depot Inc. 25,902 1,201,076 Cisco Systems Inc./1/ 81,056 1,187,470 SBC Communications Inc. 37,666 1,169,906 ChevronTexaco Corp. 11,894 1,031,329 PepsiCo Inc. 19,522 1,013,192 Wells Fargo & Co. 19,068 975,328 AOL Time Warner Inc./1/ 47,490 903,260 Fannie Mae 11,154 880,385 Abbott Laboratories 16,191 873,504 Wyeth 14,625 833,625 Viacom Inc. "B"/1/ 17,178 809,084 JP Morgan Chase & Co. 22,144 777,254 Lilly (Eli) and Co. 10,766 711,094 Dell Computer Corp./1/ 25,730 677,728 BellSouth Corp. 20,891 634,042 Bristol-Myers Squibb Co. 21,590 621,792 Amgen Inc./1/ 11,617 614,307 Medtronic Inc. 13,483 602,555 Texas Instruments Inc. 19,356 598,681 Pharmacia Corp. 14,388 593,217 Wachovia Corp. 15,184 577,599 3M Co. 4,360 548,488 American Express Co. 13,153 539,405 Morgan Stanley Dean Witter & Co. 11,167 532,889 Bank One Corp. 13,038 532,863 Walt Disney Co. (The) 22,719 526,626 Anheuser-Busch Companies Inc. 9,872 523,216 U.S. Bancorp 21,848 517,798 AT&T Corp. 39,420 517,190 Du Pont (E.I.) de Nemours & Co. 11,414 507,923 Freddie Mac 7,772 507,900 Oracle Corp./1/ 46,812 469,992 Applied Materials Inc./1/ 18,332 445,834 Schering-Plough Corp. 16,314 445,372 Target Corp. 9,989 436,020 Walgreen Co. 11,329 427,896 FleetBoston Financial Corp. 11,665 411,775 Tyco International Ltd. 22,309 411,601 McDonald's Corp. 14,439 410,068 Washington Mutual Inc. 10,831 408,654 Boeing Co. (The) 8,875 395,825 Motorola Inc. 24,822 382,259 Kimberly-Clark Corp. 5,860 381,603 Gillette Co. (The) 10,689 379,246 Baxter International Inc. 6,587 374,800 Fifth Third Bancorp 5,419 371,689 Merrill Lynch & Co. Inc. 8,827 370,204 United Technologies Corp. 5,246 368,112 Duke Energy Corp. 9,150 350,719 Schlumberger Ltd. 6,396 350,181 Automatic Data Processing Inc. 6,877 349,627 Cardinal Health Inc. 5,034 348,605 First Data Corp. 4,260 338,627 Honeywell International Inc. 9,077 332,944 Lowe's Companies Inc. 7,869 332,780 Colgate-Palmolive Co. 6,156 326,330 Alcoa Inc. 9,475 322,434 General Motors Corp. "A" 4,979 319,403 Dow Chemical Co. (The) 10,020 318,636 Hewlett-Packard Co. 18,238 311,870 Ford Motor Company 19,437 310,992 Marsh & McLennan Companies Inc. 3,076 310,922 UnitedHealth Group Inc. 3,486 306,106 36 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Bank of New York Co. Inc. (The) 8,258 $ 302,160 MBNA Corp. 8,407 298,028 Sun Microsystems Inc./1/ 36,371 297,515 Household International Inc. 5,104 297,512 Allstate Corp. (The) 7,469 296,818 Clear Channel Communications Inc./1/ 6,088 285,832 Liberty Media Corp. "A"/1/ 26,445 282,961 MetLife Inc. 8,096 276,397 Comcast Corp. "A"/1/ 10,127 270,897 AT&T Wireless Services Inc./1/ 30,033 268,795 Tenet Healthcare Corp./1/ 3,614 265,159 Electronic Data Systems Corp. 4,867 264,083 QUALCOMM Inc./1/ 8,535 257,416 Emerson Electric Co. 4,679 249,812 Lockheed Martin Corp. 3,920 246,568 HCA Inc. 5,123 244,828 Illinois Tool Works Inc. 3,366 242,689 El Paso Corp. 5,923 236,920 Safeway Inc./1/ 5,580 234,081 Phillips Petroleum Co. 3,844 229,910 United Parcel Service Inc. 3,748 225,030 EMC Corp./1/ 24,590 224,753 International Paper Co. 5,371 222,521 Southern Co. 7,746 219,599 Sysco Corp. 7,444 215,950 Gannett Co. Inc. 2,938 215,355 Caterpillar Inc. 3,831 209,249 Kohls Corp./1/ 2,798 206,213 Kroger Co./1/ 8,973 204,315 Prudential Financial Inc./1/ 6,311 202,583 Costco Wholesale Corp./1/ 5,002 201,080 General Dynamics Corp. 2,061 200,102 Mellon Financial Corp. 5,230 197,485 Cendant Corp./1/ 10,942 196,847 Conoco Inc. 6,974 195,621 BB&T Corp. 5,096 194,056 Dominion Resources Inc. 2,921 194,013 Exelon Corp. 3,557 193,145 Compaq Computer Corp. 18,976 192,606 Hartford Financial Services Group Inc. 2,772 192,100 Sears, Roebuck and Co. 3,603 190,058 SunTrust Banks Inc. 2,781 189,052 Goldman Sachs Group Inc. (The) 2,398 188,842 State Street Corp. 3,638 185,938 Sara Lee Corp. 8,732 184,944 Raytheon Co. 4,361 184,470 Waste Management Inc. 6,974 183,695 National City Corp. 5,790 180,648 Omnicom Group Inc. 2,068 180,412 Harley-Davidson Inc. 3,389 179,583 Maxim Integrated Products Inc./1/ 3,605 179,529 Concord EFS Inc./1/ 5,645 178,517 General Mills Inc. 4,046 178,226 CIGNA Corp. 1,619 176,471 PNC Financial Services Group (The) 3,171 174,881 Lucent Technologies Inc./1/ 37,997 174,786 AFLAC Inc. 5,841 174,646 USA Education Inc. 1,747 167,450 American Electric Power Co. Inc. 3,590 164,422 Alltel Corp. 3,313 163,993 Heinz (H.J.) Co. 3,889 163,299 TXU Corp. 2,963 161,246 FedEx Corp./1/ 3,086 159,454 Lehman Brothers Holdings Inc. 2,658 156,822 Southwest Airlines Co. 8,493 154,658 Forest Laboratories Inc. "A"/1/ 1,977 152,506 Analog Devices Inc./1/ 4,051 149,725 Anadarko Petroleum Corp. 2,779 149,566 Union Pacific Corp. 2,621 148,873 Avon Products Inc. 2,646 147,779 ConAgra Foods Inc. 5,993 146,828 CVS Corp. 4,369 146,274 Chubb Corp. 1,891 145,040 Micron Technology Inc./1/ 6,091 144,357 Capital One Financial Corp. 2,401 143,796 Agilent Technologies Inc./1/ 4,763 143,128 Weyerhaeuser Co. 2,400 143,064 Masco Corp. 5,090 143,029 Schedules of Investments 37 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Albertson's Inc. 4,240 $ 142,210 Best Buy Co. Inc./1/ 1,908 141,860 Xilinx Inc./1/ 3,734 140,996 XL Capital Ltd. "A" 1,493 140,865 Baker Hughes Inc. 3,737 140,810 Sprint Corp. (FON Group) 8,827 139,908 McGraw-Hill Companies Inc. (The) 2,167 138,666 Paychex Inc. 3,699 138,084 Linear Technology Corp. 3,538 137,487 KeyCorp 4,759 133,775 TJX Companies Inc. 3,055 133,137 Carnival Corp. "A" 3,984 132,707 Schwab (Charles) Corp. (The) 11,621 132,363 Northrop Grumman Corp. 1,094 132,002 Equity Office Properties Trust 4,571 130,868 Newmont Mining Corp. 4,564 130,120 Hancock (John) Financial Services Inc. 3,345 129,117 Guidant Corp./1/ 3,426 128,818 Interpublic Group of Companies Inc. 4,165 128,615 Kraft Foods Inc. 3,120 128,045 Transocean Sedco Forex Inc. 3,555 126,203 Veritas Software Corp./1/ 4,446 126,000 ACE Ltd. 2,891 125,816 Progress Energy Inc. 2,409 125,003 FPL Group Inc. 1,965 124,758 Comerica Inc. 1,974 124,066 Northern Trust Corp. 2,333 123,929 Progressive Corp. (The) 2,151 123,683 Air Products & Chemicals Inc. 2,551 122,576 KLA-Tencor Corp./1/ 2,075 122,363 McKesson Corp. 2,973 120,079 WellPoint Health Networks Inc./1/ 1,591 119,452 Bed Bath & Beyond Inc./1/ 3,213 119,427 Burlington Northern Santa Fe Corp. 4,325 118,894 Occidental Petroleum Corp. 4,128 118,680 Deere & Co. 2,626 117,540 St. Paul Companies Inc. 2,337 116,406 Pitney Bowes Inc. 2,729 114,891 Entergy Corp. 2,452 113,773 May Department Stores Co. (The) 3,247 112,606 Siebel Systems Inc./1/ 4,626 111,903 FirstEnergy Corp. 3,315 110,389 Williams Companies Inc. 5,764 110,092 General Motors Corp. "H"/1/ 7,219 108,141 Tribune Co. 2,430 107,333 Public Service Enterprise Group Inc. 2,310 107,069 Adobe Systems Inc. 2,651 105,934 Becton Dickinson & Co. 2,843 105,674 Marriott International Inc. "A" 2,402 105,544 Eastman Kodak Co. 3,245 104,521 Xcel Energy Inc. 4,082 103,805 TRICON Global Restaurants Inc./1/ 1,631 102,851 Consolidated Edison Inc. 2,358 102,785 Staples Inc./1/ 5,138 102,606 Golden West Financial Corp. 1,496 102,311 Praxair Inc. 1,790 102,209 Nike Inc. "B" 1,911 101,914 PG&E Corp./1/ 4,332 101,802 SouthTrust Corp. 3,809 101,624 Unocal Corp. 2,717 101,045 Lincoln National Corp. 2,097 100,446 Marathon Oil Corp. 3,446 100,141 Burlington Resources Inc. 2,247 99,834 Gap Inc. (The) 6,979 98,474 Mattel Inc. 4,753 98,102 PPG Industries Inc. 1,871 97,872 Delphi Automotive Systems Corp. 6,253 97,234 Archer-Daniels-Midland Co. 7,308 96,977 Genzyme Corp. - General Division/1/ 2,368 96,946 Allergan Inc. 1,470 96,888 Immunex Corp./1/ 3,558 96,564 Starbucks Corp./1/ 4,219 96,278 eBay Inc./1/ 1,812 96,217 Computer Associates International Inc. 5,097 94,804 Apple Computer Inc./1/ 3,903 94,726 AON Corp. 2,639 94,291 38 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Kellogg Co. 2,624 $ 94,254 Limited Inc. (The) 4,911 94,095 IDEC Pharmaceuticals Corp./1/ 1,709 93,910 Fiserv Inc./1/ 2,109 93,766 Newell Rubbermaid Inc. 2,979 93,541 Loews Corp. 1,555 93,222 Ingersoll-Rand Co. "A" 1,866 93,207 SunGard Data Systems Inc./1/ 3,119 92,821 AmSouth Bancorp 4,081 92,680 Norfolk Southern Corp. 4,301 92,170 Electronic Arts Inc./1/ 1,551 91,587 AutoZone Inc./1/ 1,204 91,504 Stryker Corp./1/ 1,678 89,790 Apache Corp. 1,531 89,303 Altera Corp./1/ 4,337 89,169 Regions Financial Corp. 2,534 88,867 Wrigley (William Jr.) Co. 1,615 88,825 AmerisourceBergen Corp. 1,146 88,815 MBIA Inc. 1,643 88,607 Charter One Financial Inc. 2,500 88,450 Fortune Brands Inc. 1,665 87,013 Genentech Inc./1/ 2,447 86,868 MedImmune Inc./1/ 2,597 86,740 CSX Corp. 2,387 86,338 Lexmark International Inc. "A"/1/ 1,441 86,143 Federated Department Stores Inc./1/ 2,155 85,618 M&T Bank Corp. 1,002 85,551 Intuit Inc./1/ 2,174 85,177 Equity Residential Properties Trust 3,018 85,108 Biomet Inc. 2,993 84,492 Clorox Co. 1,909 84,473 Jefferson-Pilot Corp. 1,685 84,385 Dover Corp. 2,259 84,170 Starwood Hotels & Resorts Worldwide Inc. 2,207 83,425 Danaher Corp. 1,162 83,176 Johnson Controls Inc. 961 82,886 DTE Energy Co. 1,821 82,564 Halliburton Co. 4,800 81,552 Block (H & R) Inc. 2,024 81,203 WorldCom Corp./1/ 32,752 81,192 Computer Sciences Corp./1/ 1,810 81,178 Boston Scientific Corp./1/ 3,208 79,943 St. Jude Medical Inc./1/ 960 79,882 Anthem Inc./1/ 1,156 78,839 King Pharmaceuticals Inc./1/ 2,508 78,601 Cincinnati Financial Corp. 1,669 78,209 Campbell Soup Co. 2,832 78,192 MGIC Investment Corp. 1,093 77,996 Synovus Financial Corp. 2,878 77,821 Textron Inc. 1,581 77,754 Union Planters Corp. 1,535 76,919 Qwest Communications International Inc. 15,159 76,250 Zimmer Holdings Inc./1/ 2,178 75,598 Aetna Inc. 1,585 75,446 Novellus Systems Inc./1/ 1,588 75,271 Sprint Corp. (PCS Group)/1/ 6,666 74,726 Reliant Energy Inc. 2,932 74,414 GlobalSantaFe Corp. 2,113 74,145 Georgia-Pacific Corp. 2,557 74,102 UST Inc. 1,859 73,988 R.J. Reynolds Tobacco Holdings Inc. 1,069 73,975 Ambac Financial Group Inc. 1,159 72,855 Cox Communications Inc. "A"/1/ 2,161 72,156 Nabors Industries Inc./1/ 1,582 72,060 Biogen Inc./1/ 1,650 71,725 Broadcom Corp. "A"/1/ 2,075 71,587 Cintas Corp. 1,380 71,443 Devon Energy Corp. 1,448 71,401 Xerox Corp./1/ 8,028 71,048 Affiliated Computer Services Inc. "A"/1/ 1,313 70,994 Hershey Foods Corp. 1,043 70,924 Corning Inc. 10,505 70,278 Rohm & Haas Co. "A" 1,891 70,175 Avery Dennison Corp. 1,092 69,943 North Fork Bancorp Inc. 1,810 69,902 Marshall & Ilsley Corp. 1,095 69,697 Amerada Hess Corp. 903 69,423 Quest Diagnostics Inc./1/ 754 69,315 Schedules of Investments 39 Schedule of Investments (Continued) iSHARES DOW JONES U.S. TOTAL MARKET INDEX FUND April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Sabre Holdings Corp./1/ 1,479 $ 68,774 Franklin Resources Inc. 1,636 68,548 Bear Stearns Companies Inc. (The) 1,103 68,320 UNUMProvident Corp. 2,404 67,889 Hilton Hotels Corp. 4,137 67,681 IMS Health Inc. 3,278 67,560 ITT Industries Inc. 965 67,415 Kerr-McGee Corp. 1,121 67,036 PeopleSoft Inc./1/ 2,883 66,799 Teradyne Inc./1/ 2,014 66,361 Edison International/1/ 3,651 66,266 Genuine Parts Co. 1,920 66,259 HEALTHSOUTH Corp./1/ 4,362 65,866 Gilead Sciences Inc./1/ 2,112 65,725 Microchip Technology Inc./1/ 1,475 65,638 Office Depot Inc./1/ 3,421 65,478 New York Times Co. "A" 1,405 65,417 Brocade Communications Systems Inc./1/ 2,555 65,382 Eaton Corp. 772 65,319 Moody's Corp. 1,493 65,065 Weatherford International Inc./1/ 1,304 65,030 MeadWestvaco Corp. 2,205 64,739 Tiffany & Co. 1,628 64,713 Parker Hannifin Corp. 1,293 64,585 National Commerce Financial Corp. 2,304 64,489 Noble Drilling Corp./1/ 1,485 64,375 Network Appliance Inc./1/ 3,679 64,199 Countrywide Credit Industries Inc. 1,373 64,133 Ameren Corp. 1,530 63,893 Penney (J.C.) Co. Inc. (The) 2,928 63,655 TRW Inc. 1,150 63,285 Cinergy Corp. 1,780 63,243 BJ Services Co./1/ 1,712 62,899 Univision Communications Inc./1/ 1,572 62,817 RadioShack Corp. 2,013 62,806 EchoStar Communications Corp./1/ 2,304 62,669 Family Dollar Stores Inc. 1,809 62,591 International Game Technology/1/ 991 62,383 PPL Corp. 1,632 62,196 Solectron Corp./1/ 8,498 62,035 Knight Ridder Inc. 925 61,975 National Semiconductor Corp./1/ 1,959 61,748 Harrah's Entertainment Inc./1/ 1,236 60,762 Yahoo! Inc./1/ 4,079 60,206 Sanmina-SCI Corp./1/ 5,770 60,008 SPX Corp./1/ 442 59,515 USA Networks Inc./1/ 1,966 58,803 Sempra Energy 2,292 58,606 Allegheny Energy Inc. 1,393 58,395 Constellation Energy Group Inc. 1,828 58,350 Health Management Associates Inc. "A"/1/ 2,731 58,280 Leggett & Platt Inc. 2,201 57,886 PACCAR Inc. 807 57,676 JDS Uniphase Corp./1/ 13,244 57,479 Huntington Bancshares Inc. 2,820 57,218 Torchmark Corp. 1,392 56,919 Millennium Pharmaceuticals Inc./1/ 2,833 56,538 Pepsi Bottling Group Inc. 1,970 56,421 Whirlpool Corp. 751 56,287 Cadence Design Systems Inc./1/ 2,742 56,156 Symantec Corp./1/ 1,567 55,487 Fox Entertainment Group Inc. "A"/1/ 2,345 55,342 First Tennessee National Corp. 1,426 55,129 Zions Bancorporation 1,016 54,945 Radian Group Inc. 1,052 54,599 Caremark Rx Inc./1/ 2,538 54,567 KeySpan Corp. 1,534 54,150 Ecolab Inc. 1,230 54,009 Kinder Morgan Inc. 1,112 53,832 Mirant Corp.(1) 4,422 53,418 Scripps (E.W.) Co. 670 53,392 Simon Property Group Inc. 1,574 53,123 L-3 Communications Holdings Inc./1/ 414 52,901 Archstone-Smith Trust 1,956 52,734 Laboratory Corp. of America Holdings/1/ 529 52,477 Stilwell Financial Inc. 2,450 52,332 40 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iSHARES DOW JONES U.S. TOTAL MARKET INDEX FUND April 30, 2002 Security Shares Value - ------------------------------------------------------------------ LSI Logic Corp./1/ 4,069 $ 52,287 Darden Restaurants Inc. 1,306 52,109 Convergys Corp./1/ 1,876 51,909 Robert Half International Inc./1/ 1,965 51,601 Coca-Cola Enterprises Inc. 2,622 51,444 Compass Bancshares Inc. 1,438 51,437 Valero Energy Corp. 1,190 51,360 ENSCO International Inc. 1,520 51,315 NiSource Inc. 2,305 50,941 Nucor Corp. 866 50,618 American Standard Companies Inc./1/ 668 49,900 Telephone & Data Systems Inc. 579 49,794 EOG Resources Inc. 1,168 49,698 Chiron Corp./1/ 1,211 49,009 Rockwell Collins Inc. 2,052 48,879 T. Rowe Price Group Inc. 1,380 48,397 SAFECO Corp. 1,436 47,962 Grainger (W.W.) Inc. 853 47,828 Unisys Corp./1/ 3,538 47,763 Dollar Tree Stores Inc./1/ 1,251 47,713 AutoNation Inc./1/ 2,971 47,536 Circuit City Stores Inc.- Circuit City Group 2,199 47,410 GreenPoint Financial Corp. 956 47,274 Apollo Group Inc. "A"/1/ 1,230 47,158 Estee Lauder Companies Inc. "A" 1,304 47,140 Plum Creek Timber Co. Inc. 1,545 47,045 ServiceMaster Co. (The) 3,359 47,026 Vulcan Materials Co. 1,013 46,618 Dollar General Corp. 2,943 46,352 QLogic Corp./1/ 1,013 46,304 Cooper Industries Inc. 1,051 46,034 Amazon.com Inc./1/ 2,752 45,931 BEA Systems Inc./1/ 4,284 45,924 Banknorth Group Inc. 1,696 44,757 BISYS Group Inc. (The)/1/ 1,307 44,699 Express Scripts Inc. "A"/1/ 707 44,689 Stanley Works (The) 961 44,667 SUPERVALU Inc. 1,487 44,610 Sherwin-Williams Co. (The) 1,445 44,405 Oxford Health Plans Inc./1/ 960 44,314 Rockwell International Corp. 2,054 44,099 Engelhard Corp. 1,444 43,926 Black & Decker Corp. 902 43,909 Amdocs Ltd./1/ 2,017 43,829 Equifax Inc. 1,602 43,767 Atmel Corp./1/ 4,845 43,605 Jones Apparel Group Inc./1/ 1,118 43,546 VF Corp. 994 43,507 Prologis Trust 1,951 43,312 NVIDIA Corp./1/ 1,244 43,304 TECO Energy Inc. 1,550 43,152 Golden State Bancorp Inc. 1,303 42,986 TCF Financial Corp. 818 42,577 Advanced Micro Devices Inc./1/ 3,807 42,562 Nextel Communications Inc. "A"/1/ 7,600 41,876 Pinnacle West Capital Corp. 950 41,629 Applera Corp. - Applied Biosystems Group 2,429 41,584 Sealed Air Corp./1/ 930 41,543 NCR Corp./1/ 1,068 41,502 AES Corp. (The)/1/ 5,144 41,255 Old Republic International Corp. 1,240 41,205 Donnelley (R.R.) & Sons Co. 1,289 41,196 Murphy Oil Corp. 436 41,137 CenturyTel Inc. 1,483 41,079 Ocean Energy Inc. 1,909 40,853 Health Net Inc./1/ 1,374 40,739 Goodyear Tire & Rubber Co. (The) 1,817 40,428 Trigon Healthcare Inc./1/ 399 40,163 DST Systems Inc./1/ 811 40,080 Sovereign Bancorp Inc. 2,773 40,014 Apartment Investment & Management Co. "A" 812 39,869 BMC Software Inc./1/ 2,730 39,476 Vornado Realty Trust 894 39,425 Smith International Inc./1/ 561 39,298 PMI Group Inc. (The) 484 39,262 Waters Corp./1/ 1,445 38,943 Dynegy Inc. "A" 2,150 38,700 D.R. Horton Inc. 1,495 38,571 Schedules of Investments 41 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Boston Properties Inc. 988 $ 38,512 Delta Air Lines Inc. 1,382 38,295 Popular Inc. 1,299 38,204 Toys R Us Inc./1/ 2,210 38,167 Brinker International Inc./1/ 1,108 38,160 Eastman Chemical Co. 865 38,146 ChoicePoint Inc./1/ 687 38,087 Wendy's International Inc. 1,017 38,036 Republic Services Inc. "A"/1/ 1,917 37,957 Centex Corp. 673 37,890 Thermo Electron Corp./1/ 2,004 37,876 Lincare Holdings Inc./1/ 1,189 37,430 American Water Works Co. Inc. 854 37,320 DPL Inc. 1,433 37,287 Calpine Corp./1/ 3,374 37,114 Fluor Corp. 898 37,114 SCANA Corp. 1,154 36,870 Mylan Laboratories Inc. 1,389 36,781 Hillenbrand Industries Inc. 569 36,757 Mohawk Industries Inc./1/ 571 36,732 Pactiv Corp./1/ 1,775 36,689 Check Point Software Technologies Ltd./1/ 2,015 36,572 Ross Stores Inc. 899 36,508 Lear Corp./1/ 709 36,450 Sigma-Aldrich Corp. 769 36,435 Ceridian Corp./1/ 1,633 36,383 Jabil Circuit Inc./1/ 1,780 36,330 AMR Corp./1/ 1,691 36,306 Liz Claiborne Inc. 1,160 36,296 BJ's Wholesale Club Inc./1/ 809 36,106 Maytag Corp. 781 36,043 Legg Mason Inc. 717 36,022 Edwards (A.G.) Inc. 879 35,969 Accenture Ltd./1/ 1,675 35,912 Park Place Entertainment Corp./1/ 2,914 35,842 Lam Research Corp./1/ 1,396 35,821 AmeriCredit Corp./1/ 922 35,792 Tyson Foods Inc. "A" 2,551 35,765 Duke Realty Corp. 1,352 35,558 Hibernia Corp. "A" 1,781 35,531 Tellabs Inc./1/ 4,161 35,327 Scientific-Atlanta Inc. 1,761 35,220 Commerce Bancorp Inc. 711 35,116 Everest Re Group Ltd. 517 35,104 Federated Investors Inc. "B" 1,094 35,074 Vishay Intertechnology Inc./1/ 1,592 35,008 McCormick & Co. Inc. 1,360 34,870 Agere Systems Inc./1/ 8,123 34,442 Dean Foods Co./1/ 930 34,429 Manpower Inc. 855 34,414 AvalonBay Communities Inc. 720 34,322 Gallagher (Arthur J.) & Co. 950 34,295 ADC Telecommunications Inc./1/ 8,754 34,053 Mercury Interactive Corp./1/ 911 33,953 Lennar Corp. 610 33,879 Dana Corp. 1,667 33,773 Wisconsin Energy Corp. 1,296 33,696 Avnet Inc. 1,315 33,690 Expeditors International Washington Inc. 579 33,507 Astoria Financial Corp. 1,044 33,502 Goodrich Co. 1,048 33,452 CDW Computer Centers Inc./1/ 607 33,264 Deluxe Corp. 753 33,042 Abercrombie & Fitch Co. "A"/1/ 1,100 33,000 Varian Medical Systems Inc./1/ 760 32,946 Public Storage Inc. 865 32,844 Integrated Device Technology Inc./1/ 1,167 32,723 Beckman Coulter Inc. 683 32,627 Compuware Corp./1/ 4,134 32,411 Cooper Cameron Corp./1/ 587 32,191 Andrx Group/1/ 710 32,106 Cephalon Inc./1/ 546 32,017 International Rectifier Corp./1/ 691 31,869 Patterson Dental Co./1/ 690 31,809 Rational Software Corp./1/ 2,178 31,733 Westwood One Inc./1/ 881 31,716 Mercantile Bankshares Corp. 770 31,693 Smurfit-Stone Container Corp./1/ 1,927 31,294 Bard (C.R.) Inc. 567 31,151 Phelps Dodge Corp. 868 31,074 42 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Juniper Networks Inc./1/ 3,063 $ 30,967 Fastenal Co. 370 30,947 Sonoco Products Co. 1,069 30,894 Valley National Bancorp 865 30,777 Bemis Co. 578 30,767 DENTSPLY International Inc. 774 30,705 MGM Mirage/1/ 764 30,675 Principal Financial Group (The)/1/ 1,102 30,636 AdvancePCS/1/ 904 30,564 Lamar Advertising Co./1/ 709 30,437 Host Marriott Corp. 2,555 30,430 Viad Corp. 995 30,328 Sunoco Inc. 882 30,323 Triad Hospitals Inc./1/ 721 30,282 Synopsys Inc./1/ 670 30,224 First Virginia Banks Inc. 528 30,217 Cypress Semiconductor Corp./1/ 1,356 30,198 D&B/1/ 784 30,192 SEI Investment Co. 893 30,085 General Growth Properties Inc. 654 29,907 Northeast Utilities 1,493 29,860 Fairchild Semiconductor International Corp. "A"/1/ 1,108 29,850 Humana Inc./1/ 1,822 29,790 Williams-Sonoma Inc./1/ 514 29,612 Bowater Inc. 621 29,609 Diebold Inc. 782 29,575 Temple-Inland Inc. 557 29,488 Associated Banc-Corp 787 29,462 Manor Care Inc./1/ 1,148 29,435 Michaels Stores Inc./1/ 726 29,367 Citizens Communications Co./1/ 3,162 29,312 Hasbro Inc. 1,832 29,275 NVR Inc./1/ 79 29,210 Watson Pharmaceuticals Inc./1/ 1,187 29,200 First Health Group Corp./1/ 1,005 29,145 Arrow Electronics Inc./1/ 1,103 29,119 Ashland Inc. 713 29,112 International Flavors & Fragrances Inc. 901 29,012 New York Community Bancorp Inc. 976 28,948 Allmerica Financial Corp. 579 28,898 Conexant Systems Inc./1/ 2,826 28,825 Pulte Homes Inc. 541 28,781 Iron Mountain Inc./1/ 930 28,644 Pall Corp. 1,377 28,642 Ball Corp. 601 28,578 Whole Foods Market Inc./1/ 611 28,570 CMS Energy Corp. 1,475 28,556 PMC-Sierra Inc./1/ 1,835 28,553 Energy East Corp. 1,298 28,543 Commerce Bancshares Inc. 642 28,486 Allied Capital Corp. 1,090 28,449 Intersil Corp. "A"/1/ 1,051 28,219 UnionBanCal Corp. 583 28,217 Omnicare Inc. 1,049 28,050 White Mountains Insurance Group Inc. 78 27,963 Molex Inc. "A" 953 27,942 Fidelity National Financial Inc. 904 27,888 Kimco Realty Corp. 867 27,831 KPMG Consulting Inc./1/ 1,586 27,755 TMP Worldwide Inc./1/ 918 27,696 Tech Data Corp./1/ 585 27,694 Neuberger Berman Inc. 637 27,678 Apogent Technologies Inc./1/ 1,191 27,631 Potomac Electric Power Co. 1,208 27,615 Brunswick Corp. 978 27,570 Patterson-UTI Energy Inc./1/ 856 27,392 RF Micro Devices Inc./1/ 1,573 27,370 CIENA Corp./1/ 3,650 27,338 FirstMerit Corp. 960 27,264 CH Robinson Worldwide Inc. 866 27,253 Network Associates Inc./1/ 1,533 27,211 Washington Post Company (The) "B" 43 27,167 Certegy Inc./1/ 696 27,005 RenaissanceRe Holdings Ltd. 230 26,956 Rowan Companies Inc./1/ 1,060 26,903 Allied Waste Industries Inc./1/ 2,208 26,805 Schedules of Investments 43 Schedule of Investments (Continued) iShares Dow Jones U.s. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Charter Communications Inc./1/ 3,260 $ 26,699 Navistar International Corp. 668 26,653 Outback Steakhouse Inc./1/ 757 26,548 AMB Property Corp. 946 26,526 Emulex Corp./1/ 913 26,468 Harris Corp. 730 26,433 NSTAR 577 26,427 Coach Inc./1/ 471 26,376 Universal Health Services Inc. "B"/1/ 566 26,347 XTO Energy Inc. 1,291 26,336 E*TRADE Group Inc./1/ 3,491 26,322 Pentair Inc. 542 26,320 Marvell Technology Group Ltd./1/ 722 25,992 Owens-Illinois Inc./1/ 1,619 25,936 Nordstrom Inc. 1,105 25,923 Royal Caribbean Cruises Ltd. 1,098 25,902 Equitable Resources Inc. 720 25,884 Liberty Property Trust 810 25,879 Gentex Corp./1/ 817 25,866 Constellation Brands Inc./1/ 426 25,730 American Power Conversion Corp./1/ 1,997 25,661 Alliant Techsystems Inc./1/ 238 25,633 Investors Financial Services Corp. 345 25,406 Health Care Property Investors Inc. 620 25,315 Pioneer Natural Resources Co./1/ 1,053 25,261 Questar Corp. 905 25,250 Pier 1 Imports Inc. 1,053 25,219 Investment Technology Group Inc./1/ 547 25,162 ICN Pharmaceuticals Inc. 908 25,115 Rouse Co. (The) 772 24,982 Tidewater Inc. 573 24,926 Bank of Hawaii Corp. 869 24,749 ALLETE Inc. 807 24,646 Comverse Technology Inc./1/ 2,048 24,637 Semtech Corp./1/ 766 24,497 City National Corp. 443 24,476 Alliant Energy Corp. 866 24,464 Foot Locker Inc./1/ 1,540 24,255 National-Oilwell Inc./1/ 909 24,152 Energizer Holdings Inc./1/ 1,005 24,019 Citrix Systems Inc./1/ 2,069 24,000 Saks Inc./1/ 1,613 23,985 Mandalay Resort Group/1/ 668 23,954 Nicor Inc. 512 23,951 Pride International Inc./1/ 1,286 23,907 DaVita Inc./1/ 920 23,846 Storage Technology Corp./1/ 1,153 23,729 Helmerich & Payne Inc. 572 23,572 ArvinMeritor Inc. 738 23,395 Wilmington Trust Corp. 370 23,362 Reynolds & Reynolds Co. (The) "A" 806 23,342 Belo Corp. 997 23,290 Waddell & Reed Financial Inc. "A" 902 23,227 Furniture Brands International Inc./1/ 568 23,191 Aquila Inc. 1,445 23,178 Eaton Vance Corp. 634 23,160 Conectiv 928 23,144 American National Insurance Co. 232 23,061 Valspar Corp. (The) 499 22,979 Henry Schein Inc./1/ 481 22,891 Providian Financial Corp. 3,207 22,770 Crescent Real Estate Equities Co. 1,154 22,641 Valassis Communications Inc./1/ 605 22,621 Applied Micro Circuits Corp./1/ 3,350 22,613 Tektronix Inc./1/ 1,026 22,572 Autodesk Inc. 1,226 22,546 Noble Affiliates Inc. 577 22,532 PartnerRe Ltd. 417 22,510 Protective Life Corp. 705 22,461 Dow Jones & Co. Inc. 413 22,455 Markel Corp./1/ 103 22,454 IVAX Corp./1/ 1,902 22,444 WebMD Corp./1/ 3,251 22,432 KB HOME 449 22,383 Visteon Corp. 1,449 22,373 Hospitality Properties Trust 657 22,338 44 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.s. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Coors (Adolf) Company "B" 334 $ 22,328 Unitrin Inc. 534 22,252 Fulton Financial Corp. 901 22,237 Diamond Offshore Drilling Inc. 713 22,189 3Com Corp./1/ 3,843 22,174 Gemstar-TV Guide International Inc./1/ 2,453 21,979 MDU Resources Group Inc. 754 21,964 Dial Corp. (The) 1,045 21,924 Bausch & Lomb Inc. 609 21,906 Cullen/Frost Bankers Inc. 580 21,889 Readers Digest Association Inc. (The) "A" 919 21,872 Security Capital Group Inc. "B"/1/ 846 21,768 Teleflex Inc. 385 21,756 Career Education Corp./1/ 482 21,666 Boise Cascade Corp. 639 21,643 VeriSign Inc./1/ 2,335 21,599 Symbol Technologies Inc. 2,537 21,463 Cablevision Systems Corp./1/ 910 21,385 Roslyn Bancorp Inc. 926 21,317 Cheesecake Factory (The)/1/ 510 21,231 Cabot Corp. 712 21,218 Barr Laboratories Inc./1/ 316 21,061 Borders Group Inc./1/ 903 21,049 Webster Financial Corp. 530 21,004 MONY Group Inc. (The) 538 20,982 Millipore Corp. 525 20,974 Herman Miller Inc. 856 20,912 OGE Energy Corp. 879 20,788 Catalina Marketing Corp./1/ 591 20,738 Polycom Inc./1/ 1,003 20,682 National Fuel Gas Co. 866 20,628 Martin Marietta Materials Inc. 529 20,610 Mack-Cali Realty Corp. 628 20,598 Catellus Development Corp./1/ 1,009 20,584 IKON Office Solutions Inc. 1,575 20,475 Molex Inc. 609 20,475 Cooper Tire & Rubber Co. 825 20,460 Harman International Industries Inc. 346 20,431 Hormel Foods Corp. 827 20,427 Snap-On Inc. 642 20,339 Hispanic Broadcasting Corp./1/ 756 20,276 Cytyc Corp./1/ 1,287 20,219 Puget Energy Inc. 964 19,984 Independence Community Bank Corp. 613 19,978 OM Group Inc. 299 19,958 Big Lots Inc. 1,280 19,789 Grant Prideco Inc./1/ 1,236 19,776 GTECH Holdings Corp./1/ 330 19,770 Krispy Kreme Doughnuts Inc./1/ 517 19,739 Palm Inc./1/ 6,224 19,730 Lyondell Chemical Co. 1,334 19,717 Dillards Inc. "A" 805 19,714 Human Genome Sciences Inc./1/ 1,247 19,628 StanCorp Financial Group Inc. 335 19,598 Lubrizol Corp. 568 19,585 Jacobs Engineering Group Inc./1/ 496 19,572 Mid Atlantic Medical Services Inc./1/ 537 19,563 Arden Realty Inc. 694 19,536 Varco International Inc./1/ 951 19,486 Transatlantic Holdings Inc. 230 19,403 New Plan Excel Realty Trust 992 19,394 Colonial BancGroup Inc. (The) 1,209 19,344 Pennzoil-Quaker State Co. 893 19,298 Polaris Industries Inc. 256 19,277 Pogo Producing Co. 562 19,243 Sky Financial Group Inc. 825 19,239 Overture Services Inc./1/ 561 19,181 Six Flags Inc./1/ 1,048 19,178 Clayton Homes Inc. 1,115 19,066 BancorpSouth Inc. 865 18,943 United Dominion Realty Trust Inc. 1,133 18,921 CBRL Group Inc. 623 18,908 Hawaiian Electric Industries Inc. 400 18,896 Precision Castparts Corp. 533 18,852 Renal Care Group Inc./1/ 531 18,851 RPM Inc. 1,110 18,815 Avaya Inc./1/ 3,062 18,801 Schedules of Investments 45 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ KEMET Corp./1/ 968 $ 18,750 Henry (Jack) & Associates Inc. 805 18,740 Vectren Corp. 749 18,680 Amkor Technology Inc./1/ 928 18,653 Harsco Corp. 438 18,615 Invitrogen Corp./1/ 535 18,554 Smithfield Foods Inc./1/ 879 18,547 Brown & Brown Inc. 558 18,526 Hubbell Inc. "B" 538 18,523 Camden Property Trust 465 18,507 Activision Inc./1/ 586 18,447 HON Industries Inc. 615 18,401 Washington Federal Inc. 703 18,362 BorgWarner Inc. 293 18,307 Newfield Exploration Co./1/ 482 18,244 Donaldson Co. Inc. 422 18,209 United States Steel Corp. 1,009 18,202 Cablevision Systems Corporation- Rainbow Media Group/1/ 822 18,166 O'Reilly Automotive Inc./1/ 560 18,138 Accredo Health Inc./1/ 280 18,124 Greater Bay Bancorp 540 18,085 Medicis Pharmaceutical Corp. "A"/1/ 337 18,046 Ruby Tuesday Inc. 718 18,036 Rite Aid Corp./1/ 5,653 17,920 Weingarten Realty Investors 502 17,871 Ryder System Inc. 629 17,838 DeVry Inc./1/ 672 17,801 Hudson City Bancorp Inc. 473 17,771 W.R. Berkley Corp. 293 17,727 Quintiles Transnational Corp./1/ 1,248 17,722 People's Bank 666 17,702 LifePoint Hospitals Inc./1/ 420 17,640 Entercom Communications Corp./1/ 337 17,608 Titan Corp. (The)/1/ 770 17,602 CheckFree Corp./1/ 864 17,591 Enzon Inc./1/ 471 17,540 Barnes & Noble Inc./1/ 576 17,407 Vertex Pharmaceuticals Inc./1/ 818 17,399 Varian Semiconductor Equipment Associates Inc./1/ 372 17,380 Protein Design Labs Inc./1/ 966 17,349 Westamerica Bancorp 392 17,346 Scholastic Corp./1/ 339 17,197 Rayonier Inc. 293 17,190 PerkinElmer Inc. 1,341 17,165 Adaptec Inc./1/ 1,167 17,155 Toll Brothers Inc./1/ 576 17,136 IndyMac Bancorp Inc./1/ 677 17,094 Freeport-McMoRan Copper & Gold Inc./1/ 960 17,050 Advent Software Inc./1/ 344 16,987 BRE Properties Inc. "A" 520 16,978 Direct Focus Inc./1/ 378 16,897 Celgene Corp./1/ 853 16,872 CNF Inc. 533 16,848 Silicon Valley Bancshares/1/ 525 16,774 Hudson United Bancorp 528 16,759 Erie Indemnity Co. "A" 384 16,735 FMC Technologies Inc./1/ 735 16,721 Edwards Lifesciences Corp./1/ 665 16,705 Flowserve Corp./1/ 484 16,698 Great Plains Energy Inc. 707 16,607 Micrel Inc./1/ 756 16,594 Acxiom Corp./1/ 993 16,514 Cummins Inc. 385 16,382 Highwoods Properties Inc. 582 16,366 Trustmark Corp. 634 16,338 Zebra Technologies Corp. "A"/1/ 288 16,321 AGCO Corp./1/ 718 16,313 Ethan Allen Interiors Inc. 395 16,278 Brown-Forman Corp. "B" 207 16,274 Old National Bancorp 657 16,208 IDACORP Inc. 428 16,196 Pittston Brink's Group 588 16,182 Advanced Fibre Communications Inc./1/ 912 16,179 Reebok International Ltd./1/ 584 16,148 Performance Food Group Co./1/ 448 16,142 First Midwest Bancorp Inc. 530 16,128 46 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ HCC Insurance Holdings Inc. 620 $ 16,120 PETsMART Inc./1/ 1,071 16,086 Linens 'N Things Inc./1/ 462 16,031 Continental Airlines Inc. "B"/1/ 616 16,016 Dole Food Co. 479 15,936 Media General Inc. "A" 232 15,920 Cymer Inc./1/ 335 15,835 Cerner Corp./1/ 298 15,827 Winn-Dixie Stores Inc. 912 15,823 Crane Co. 573 15,803 Axcelis Technologies Inc./1/ 1,096 15,782 Scotts Co. (The) "A"/1/ 330 15,744 Crown Castle International Corp./1/ 2,153 15,717 Sybase Inc./1/ 1,117 15,705 LaBranche & Co. Inc./1/ 573 15,700 Zale Corp./1/ 394 15,650 Commercial Federal Corp. 531 15,611 Callaway Golf Co. 883 15,541 Ryland Group Inc. 141 15,510 Crompton Corp. 1,287 15,508 Whitney Holding Corp. 424 15,476 Extended Stay America Inc./1/ 926 15,464 Level 3 Communications Inc./1/ 3,785 15,443 York International Corp. 423 15,401 Maxtor Corp./1/ 2,220 15,385 99 Cents Only Stores/1/ 495 15,385 Community Health Systems Inc./1/ 530 15,381 Doral Financial Corp. 440 15,374 Expedia Inc. "A"/1/ 190 15,359 UTStarcom Inc./1/ 626 15,337 Apria Healthcare Group Inc./1/ 588 15,282 Roper Industries Inc. 332 15,269 Broadwing Inc./1/ 2,313 15,266 Coventry Health Care Inc./1/ 484 15,246 Crown Cork & Seal Co. Inc./1/ 1,352 15,224 M.D.C. Holdings Inc. 301 15,200 Annaly Mortgage Management Inc. 835 15,197 Andrew Corp./1/ 913 15,147 SICOR Inc./1/ 851 15,080 Timken Co. (The) 565 15,057 Novell Inc./1/ 4,069 15,055 Peoples Energy Corp. 385 15,015 Affiliated Managers Group Inc./1/ 236 15,010 Scios Inc./1/ 485 15,001 RGS Energy Group Inc. 378 14,999 ICOS Corp./1/ 579 14,915 Philadelphia Suburban Corp. 618 14,894 Getty Images Inc./1/ 427 14,864 Steris Corp./1/ 671 14,863 Macromedia Inc./1/ 663 14,845 Lee Enterprises Inc. 378 14,836 AK Steel Holding Corp. 1,209 14,822 CSG Systems International Inc./1/ 563 14,762 Cytec Industries Inc./1/ 447 14,747 United Stationers Inc./1/ 378 14,746 First Industrial Realty Trust Inc. 437 14,714 Thomas & Betts Corp. 625 14,688 Raymond James Financial Inc. 439 14,680 Charles River Laboratories International Inc./1/ 490 14,675 First American Corp. 664 14,674 Citizens Banking Corp. 441 14,641 IMC Global Inc. 1,160 14,616 Corporate Executive Board Co. (The)/1/ 384 14,592 AMETEK Inc. 376 14,562 Meredith Corp. 340 14,559 AptarGroup Inc. 391 14,526 Mercury General Corp. 290 14,500 Applebee's International Inc. 371 14,484 Tommy Hilfiger Corp./1/ 922 14,411 Peregrine Systems Inc./1/ 2,102 14,399 AnnTaylor Stores Corp./1/ 331 14,389 Lafarge North America Inc. 328 14,360 Post Properties Inc. 422 14,344 Payless ShoeSource Inc./1/ 245 14,342 Chico's FAS Inc./1/ 397 14,324 Chesapeake Energy Corp./1/ 1,671 14,287 Lattice Semiconductor Corp./1/ 1,202 14,244 Alkermes Inc./1/ 706 14,219 WGL Holdings Inc. 524 14,200 Schedules of Investments 47 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ ITT Educational Services Inc./1/ 277 $ 14,030 Conseco Inc./1/ 3,758 14,017 Key Energy Services Inc./1/ 1,152 13,997 Wiley (John) & Sons Inc. "A" 526 13,992 Louisiana-Pacific Corp. 1,194 13,970 Mentor Graphics Corp./1/ 723 13,954 CenterPoint Properties Corp. 255 13,948 Jack in the Box Inc./1/ 435 13,890 Developers Diversified Realty Corp. 626 13,835 Leucadia National Corp. 379 13,815 CEC Entertainment Inc./1/ 298 13,768 United Bancshares Inc. 430 13,760 American Financial Group Inc. 463 13,746 Harte-Hanks Inc. 427 13,715 Gateway Inc./1/ 2,499 13,695 Commerce Group Inc. 339 13,682 Healthcare Realty Trust Inc. 451 13,665 TriQuint Semiconductor Inc./1/ 1,339 13,577 AGL Resources Inc. 566 13,550 Perot Systems Corp. "A"/1/ 759 13,510 Hercules Inc./1/ 1,105 13,481 Tupperware Corp. 584 13,409 American Eagle Outfitters Inc./1/ 527 13,402 Credence Systems Corp./1/ 661 13,379 Alberto-Culver Co. "B" 245 13,370 THQ Inc./1/ 381 13,358 Cox Radio Inc. "A"/1/ 466 13,346 Carlisle Companies Inc. 328 13,281 Monsanto Co. 428 13,182 Swift Transportation Co. Inc./1/ 675 13,129 NetIQ Corp./1/ 585 13,122 Province Healthcare Co./1/ 340 13,093 Kennametal Inc. 330 13,088 Piedmont Natural Gas Co. 351 13,075 Mueller Industries Inc./1/ 383 13,056 La Quinta Corp./1/ 1,636 13,055 Quantum Corp./1/ 1,770 13,010 ImClone Systems Inc./1/ 808 13,009 SkyWest Inc. 566 12,990 Affymetrix Inc./1/ 512 12,989 Meridian Gold Inc./1/ 853 12,983 Shaw Group Inc. (The)/1/ 425 12,975 Allegheny Technologies Inc. 767 12,947 Lancaster Colony Corp. 335 12,897 Park National Corp. 128 12,896 Regis Corp. 429 12,896 Retek Inc./1/ 546 12,885 National Instruments Corp./1/ 335 12,874 Varian Inc./1/ 381 12,855 HRPT Properties Trust 1,478 12,829 American Capital Strategies Ltd. 400 12,828 Vitesse Semiconductor Corp./1/ 2,142 12,809 Cleco Corp. 516 12,786 Ingram Micro Inc. "A"/1/ 860 12,780 Sonic Corp./1/ 436 12,779 Community First Bankshares Inc. 465 12,778 Fair Isaac and Co. Inc. 229 12,764 Copart Inc./1/ 827 12,728 Western Digital Corp./1/ 2,048 12,677 Downey Financial Corp. 238 12,643 Orthodontic Centers of America Inc./1/ 474 12,632 Techne Corp./1/ 472 12,598 Universal Corp. 296 12,583 Service Corp. International/1/ 3,218 12,582 Cabot Microelectronics Corp./1/ 257 12,567 Longs Drug Stores Corp. 415 12,550 Invacare Corp. 328 12,405 Staten Island Bancorp Inc. 621 12,389 Church & Dwight Co. Inc. 433 12,384 PNM Resources Inc. 427 12,383 Corn Products International Inc. 374 12,379 GATX Corp. 385 12,328 Integrated Circuit Systems Inc./1/ 619 12,318 Massey Energy Co. 819 12,244 Pharmaceutical Product Development Inc./1/ 486 12,237 Manitowoc Co. Inc. (The) 280 12,236 Stericycle Inc./1/ 181 12,223 Chittenden Corp. 369 12,195 DQE Inc. 623 12,161 48 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Shurgard Storage Centers Inc. "A" 345 $ 12,161 Stone Energy Corp./1/ 285 12,084 Arch Coal Inc. 544 12,077 Ohio Casualty Corp./1/ 624 12,056 NDCHealth Corp. 374 12,032 American Greetings Corp. "A" 677 12,017 Bob Evans Farms Inc. 395 12,008 Parametric Technology Corp./1/ 2,972 12,007 OSI Pharmaceuticals Inc./1/ 374 11,957 PepsiAmericas Inc. 782 11,926 Prentiss Properties Trust 387 11,900 AVX Corp. 595 11,858 Federal Realty Investment Trust 440 11,858 Worthington Industries Inc. 800 11,840 Applera Corp. - Celera Genomics Group/1/ 755 11,808 Avocent Corp./1/ 472 11,800 Covance Inc./1/ 587 11,781 Cousins Properties Inc. 436 11,772 SanDisk Corp./1/ 719 11,763 Superior Industries International Inc. 228 11,758 iStar Financial Inc. 378 11,756 Southwest Bancorp of Texas Inc./1/ 335 11,735 Plexus Corp./1/ 469 11,720 Northwest Airlines Corp. "A"/1/ 633 11,673 SL Green Realty Corp. 332 11,653 Abgenix Inc./1/ 825 11,641 Global Payments Inc. 303 11,641 Reckson Associates Realty Corp. 477 11,639 Forest Oil Corp./1/ 368 11,592 Extreme Networks Inc./1/ 1,282 11,525 Pediatrix Medical Group Inc./1/ 244 11,466 Cambrex Corp. 279 11,464 Blyth Inc. 385 11,454 Tootsie Roll Industries Inc. 244 11,436 ONEOK Inc. 521 11,389 Macerich Co. (The) 388 11,388 Arbitron Inc./1/ 331 11,376 Emmis Communications Corp./1/ 390 11,337 Airborne Inc. 546 11,324 Nationwide Financial Services Inc. 276 11,316 Insight Enterprises Inc./1/ 432 11,275 Potlatch Corp. 326 11,254 FMC Corp./1/ 290 11,223 Priority Healthcare Corp. "B"/1/ 377 11,212 LTX Corp./1/ 526 11,156 Dreyer's Grand Ice Cream Inc. 239 11,152 Neurocrine Biosciences Inc./1/ 338 11,117 South Financial Group Inc. (The) 481 11,077 Seacor Smit Inc./1/ 230 11,063 DoubleClick Inc./1/ 1,424 11,050 Respironics Inc./1/ 337 11,050 Sepracor Inc./1/ 872 11,040 Garmin Ltd./1/ 490 11,030 Western Resources Inc. 634 11,025 Jeffries Group Inc. 237 11,018 Chelsea Property Group Inc. 182 11,002 Hanover Compressor Co./1/ 583 10,990 Trinity Industries Inc. 467 10,975 ResMed Inc./1/ 295 10,947 Openwave Systems Inc./1/ 1,913 10,942 United Rentals Inc./1/ 428 10,914 Great Lakes Chemical Corp. 423 10,888 Transkaryotic Therapies Inc./1/ 273 10,882 St. Joe Co. (The) 353 10,855 Fleming Companies Inc. 492 10,844 McDermott International Inc./1/ 678 10,828 IDEXX Laboratories Inc./1/ 378 10,765 Sylvan Learning Systems Inc./1/ 390 10,764 Pep Boys-Manny, Moe & Jack Inc. 562 10,762 American Management Systems Inc./1/ 470 10,754 Hughes Supply Inc. 256 10,680 Macrovision Corp./1/ 478 10,626 Cognex Corp./1/ 431 10,624 Banta Corp. 282 10,603 NBTY Inc./1/ 613 10,531 EMCOR Group Inc./1/ 173 10,527 Men's Wearhouse Inc. (The)/1/ 423 10,414 Alexander & Baldwin Inc. 382 10,379 Wallace Computer Services Inc. 476 10,353 Schedules of Investments 49 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Amphenol Corp. "A"/1/ 236 $ 10,349 EarthLink Inc./1/ 1,421 10,345 Electronics For Imaging Inc./1/ 577 10,334 Horace Mann Educators Corp. 431 10,322 Provident Financial Group Inc. 340 10,292 Elantec Semiconductor Inc./1/ 248 10,252 Ascential Software Corp./1/ 2,973 10,227 i2 Technologies Inc./1/ 3,235 10,190 VISX Inc./1/ 622 10,182 Finisar Corp./1/ 1,586 10,135 Manugistics Group Inc./1/ 641 10,102 Coherent Inc./1/ 330 10,098 ATMI Inc./1/ 331 10,095 Charming Shoppes Inc./1/ 1,167 10,083 MPS Group Inc./1/ 1,115 10,035 Briggs & Stratton Corp. 238 10,032 Kansas City Southern Industries Inc. 624 9,984 FelCor Lodging Trust Inc. 464 9,976 ADVO Inc./1/ 230 9,959 CBL & Associates Properties Inc. 272 9,955 USFreightways Corp. 297 9,935 NPS Pharmaceuticals Inc./1/ 333 9,927 Waste Connections Inc./1/ 281 9,919 American Italian Pasta Co. "A"/1/ 199 9,898 CarrAmerica Realty Corp. 308 9,893 Tom Brown Inc./1/ 341 9,889 Donnelley (R.H.) Corp./1/ 336 9,885 PacifiCare Health Systems Inc. "A"/1/ 326 9,865 Photronics Inc./1/ 298 9,855 Talbots Inc. (The) 285 9,804 Black Hills Corp. 281 9,796 Solutia Inc. 1,170 9,781 Nationwide Health Properties Inc. 525 9,765 US Oncology Inc./1/ 1,015 9,744 Ariba Inc./1/ 2,596 9,735 Black Box Corp./1/ 207 9,686 International Speedway Corp. "A" 225 9,675 Cree Inc./1/ 818 9,644 CNA Financial Corp./1/ 320 9,619 Interstate Bakeries Corp. 389 9,608 Timberland Co. "A"/1/ 235 9,588 Kaydon Corp. 336 9,573 American Tower Corp./1/ 1,917 9,566 Grey Wolf Inc./1/ 2,101 9,560 Monaco Coach Corp./1/ 332 9,535 Mentor Corp. 238 9,532 Beverly Enterprises Inc./1/ 1,108 9,529 Station Casinos Inc./1/ 514 9,509 Health Care REIT Inc. 337 9,503 Energen Corp. 337 9,487 Edwards (J.D.) & Co./1/ 853 9,468 Pacific Sunwear of California Inc./1/ 379 9,467 Fuller (H.B.) Co. 304 9,457 Reliant Resources Inc./1/ 612 9,443 Total System Services Inc. 424 9,434 MAF Bancorp Inc. 254 9,413 Atlantic Coast Airlines Holdings Inc./1/ 430 9,395 Aeroflex Inc./1/ 671 9,381 Kulicke & Soffa Industries Inc./1/ 517 9,378 Ralcorp Holdings Inc./1/ 334 9,352 Cirrus Logic Inc./1/ 768 9,331 Modine Manufacturing Co. 317 9,326 Photon Dynamics Inc./1/ 192 9,300 Western Gas Resources Inc. 241 9,293 G&K Services Inc. "A" 225 9,281 Olin Corp. 509 9,269 Ferro Corp. 326 9,232 Claire's Stores Inc. 427 9,215 Landstar System Inc./1/ 94 9,203 Ryan's Family Steak Houses Inc./1/ 351 9,196 Terex Corp./1/ 367 9,193 Trimeris Inc./1/ 191 9,158 CommScope Inc./1/ 576 9,147 Millennium Chemicals Inc. 670 9,146 Texas Industries Inc. 235 9,113 LNR Property Corp. 248 9,077 Werner Enterprises Inc. 509 9,035 Silicon Storage Technology Inc./1/ 909 9,017 Keane Inc./1/ 576 9,009 50 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ El Paso Electric Co./1/ 577 $ 9,001 Electro Scientific Industries Inc./1/ 298 8,958 Kilroy Realty Corp. 318 8,952 AmerUs Group Co. 237 8,930 Aztar Corp./1/ 382 8,889 Metris Companies Inc. 679 8,854 Orbotech Ltd./1/ 341 8,852 Ligand Pharmaceuticals Inc. "B"/1/ 566 8,813 Insight Communications Co. Inc./1/ 568 8,810 MSC Industrial Direct Co. Inc. "A"/1/ 414 8,798 Alaska Air Group Inc./1/ 286 8,760 UCBH Holdings Inc. 222 8,758 Southern Union Co./1/ 499 8,733 Plantronics Inc./1/ 414 8,719 East West Bancorp Inc. 243 8,699 Flowers Foods Inc./1/ 333 8,688 Exar Corp./1/ 435 8,674 CACI International Inc. "A"/1/ 287 8,660 Wolverine World Wide Inc. 480 8,650 Nordson Corp. 278 8,612 Internet Security Systems Inc./1/ 439 8,604 Sybron Dental Specialties Inc./1/ 436 8,589 Avista Corp. 537 8,587 Republic Bancorp Inc. 579 8,569 Powerwave Technologies Inc./1/ 716 8,549 Veeco Instruments Inc./1/ 288 8,533 Perrigo Co./1/ 683 8,524 Cabot Oil & Gas Corp. "A" 339 8,519 Wind River Systems Inc./1/ 782 8,516 Meristar Hospitality Corp. 485 8,512 Technitrol Inc. 335 8,509 RealNetworks Inc./1/ 1,210 8,506 W.P. Stewart & Co. Ltd. 298 8,469 Selective Insurance Group Inc. 282 8,460 Documentum Inc./1/ 435 8,448 Net.B@nk Inc./1/ 525 8,426 PRG-Schultz International Inc./1/ 614 8,424 Delta & Pine Land Co. 430 8,368 Intergraph Corp./1/ 491 8,347 Nextel Partners Inc. "A"/1/ 1,637 8,332 Evergreen Resources Inc./1/ 186 8,323 eFunds Corp./1/ 523 8,316 Rent-A-Center Inc./1/ 137 8,261 Northwest Natural Gas Co. 290 8,236 Adelphia Communications Corp. "A"/1/ 1,359 8,181 IHOP Corp./1/ 225 8,179 ValueVision International Inc. "A"/1/ 432 8,160 UAL Corp. 579 8,158 Oak Technology Inc./1/ 573 8,154 Georgia Gulf Corp. 368 8,107 Sierra Pacific Resources 1,134 8,040 Acuity Brands Inc. 433 8,032 Brandywine Realty Trust 335 8,003 Hyperion Solutions Corp./1/ 341 7,979 webMethods Inc./1/ 535 7,961 Granite Construction Inc. 344 7,950 Haemonetics Corp./1/ 238 7,887 Owens & Minor Inc. 381 7,883 Newport Corp. 382 7,835 Spherion Corp./1/ 614 7,810 Hollinger International Inc. 608 7,770 Vintage Petroleum Inc. 563 7,769 Tetra Tech Inc./1/ 544 7,757 JDA Software Group Inc./1/ 256 7,741 Reinsurance Group of America Inc. 239 7,720 Texas Regional Bancshares Inc. "A" 154 7,700 Medarex Inc./1/ 759 7,696 UCAR International Inc./1/ 591 7,683 Ameritrade Holding Corp. "A"/1/ 1,430 7,679 Lone Star Technologies Inc./1/ 288 7,675 Tower Automotive Inc./1/ 522 7,658 Duane Reade Inc./1/ 241 7,652 Stillwater Mining Co./1/ 436 7,652 Silicon Laboratories Inc./1/ 258 7,626 UniSource Energy Corp. 376 7,588 PSS World Medical Inc./1/ 763 7,554 Metro-Goldwyn-Mayer Inc./1/ 467 7,542 Schedules of Investments 51 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ FreeMarkets Inc./1/ 424 $ 7,530 Loral Space & Communications Ltd./1/ 3,822 7,529 Pixar Inc./1/ 186 7,514 Tesoro Petroleum Corp./1/ 659 7,447 GlobeSpanVirata Inc./1/ 1,250 7,375 IGEN International Inc./1/ 178 7,362 HNC Software Inc./1/ 385 7,361 Superior Energy Services Inc./1/ 658 7,343 Lands' End Inc./1/ 146 7,342 Quanta Services Inc./1/ 438 7,341 Home Properties of NY Inc. 203 7,312 Provident Bankshares Corp. 280 7,297 Dycom Industries Inc./1/ 482 7,293 Pre-Paid Legal Services Inc./1/ 248 7,256 Primedia Inc./1/ 2,635 7,246 Avant! Corp./1/ 435 7,243 Syncor International Corp./1/ 231 7,221 Taro Pharmaceutical Industries Ltd./1/ 328 7,198 ONI Systems Inc./1/ 1,374 7,186 NRG Energy Inc./1/ 572 7,161 Vignette Corp./1/ 2,783 7,152 Sycamore Networks Inc./1/ 2,114 7,145 Iomega Corp./1/ 567 7,144 Zoran Corp./1/ 197 7,133 Insituform Technologies Inc. "A"/1/ 287 7,132 Unifi Inc./1/ 635 7,118 Colonial Properties Trust 195 7,094 Manufactured Home Communities Inc. 211 7,094 Sotheby's Holdings Inc. "A"/1/ 479 7,060 Rambus Inc./1/ 1,053 7,034 Borland Software Corp./1/ 641 6,987 Schulman (A.) Inc. 344 6,983 AMCORE Financial Inc. 290 6,960 Yellow Corp./1/ 258 6,958 Global Industries Ltd./1/ 720 6,941 Legato Systems Inc./1/ 1,004 6,928 Casey's General Store Inc. 532 6,927 Benchmark Electronics Inc./1/ 227 6,901 Knight Trading Group Inc./1/ 1,230 6,900 Footstar Inc./1/ 233 6,871 Regeneron Pharmaceuticals Inc./1/ 332 6,856 C&D Technologies Inc. 296 6,808 Silicon Image Inc./1/ 705 6,803 Albany International Corp. "A" 270 6,799 Helix Technology Corp. 251 6,792 Cost Plus Inc./1/ 230 6,773 Power Integrations Inc./1/ 320 6,768 FileNET Corp./1/ 392 6,762 EGL Inc./1/ 394 6,757 Mercury Computer Systems Inc./1/ 233 6,745 Brooks Automation Inc./1/ 189 6,738 Interactive Data Corp./1/ 386 6,736 Winnebago Industries Inc. 144 6,725 Micromuse Inc./1/ 823 6,716 Actel Corp./1/ 276 6,707 IDT Corp. "B"/1/ 383 6,706 Wausau-Mosinee Paper Corp. 514 6,687 Capital Automotive REIT 275 6,655 Mykrolis Corp./1/ 451 6,648 NCO Group Inc./1/ 238 6,626 Quiksilver Inc./1/ 271 6,612 Asyst Technologies Inc./1/ 402 6,593 InterDigital Communications Corp./1/ 579 6,572 FuelCell Energy Inc./1/ 380 6,498 Tredegar Corp. 283 6,495 Oceaneering International Inc./1/ 245 6,493 Kellwood Co. 238 6,485 Regal-Beloit Corp. 248 6,485 Checkpoint Systems Inc./1/ 373 6,434 Power-One Inc./1/ 769 6,429 Bally Total Fitness Holding Corp./1/ 293 6,402 Genesco Inc./1/ 228 6,350 SangStat Medical Corp./1/ 272 6,338 TIBCO Software Inc./1/ 754 6,326 Foundry Networks Inc./1/ 1,111 6,322 Hunt (J.B.) Transport Services Inc./1/ 241 6,312 Littelfuse Inc./1/ 234 6,297 Prime Hospitality Corp./1/ 488 6,290 52 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Wellman Inc. 378 $ 6,275 Cable Design Technologies Corp./1/ 498 6,260 Bowne & Co. Inc. 391 6,217 McDATA Corp. "A"/1/ 915 6,213 DuPont Photomasks Inc./1/ 159 6,198 Advanced Digital Information Corp./1/ 687 6,183 Maverick Tube Corp./1/ 340 6,171 Red Hat Inc./1/ 1,342 6,160 Dionex Corp./1/ 250 6,157 Veritas DGC Inc./1/ 340 6,154 Mills Corp. 223 6,137 Echelon Corp./1/ 388 6,130 United States Cellular Corp./1/ 155 6,123 Informatica Corp./1/ 772 6,122 International Multifoods Corp./1/ 228 6,122 Sterling Bancshares Inc. 447 6,115 CV Therapeutics Inc./1/ 211 6,106 Stewart Enterprises Inc. "A"/1/ 1,013 6,088 Newpark Resources Inc./1/ 726 6,077 ShopKo Stores Inc./1/ 291 6,062 Glenborough Realty Trust Inc. 270 6,061 OfficeMax Inc./1/ 965 6,060 Riverstone Networks Inc./1/ 1,286 6,044 Presidential Life Corp. 241 6,001 Arris Group Inc./1/ 690 5,989 ADTRAN Inc./1/ 240 5,966 Sonus Networks Inc./1/ 2,168 5,962 Ionics Inc./1/ 198 5,940 PolyMedica Corp./1/ 152 5,922 Arkansas Best Corp./1/ 245 5,917 Sinclair Broadcast Group Inc. "A"/1/ 443 5,914 Incyte Genomics Inc./1/ 720 5,911 Alpha Industries Inc./1/ 482 5,904 Koger Equity Inc. 322 5,899 Viasys Healthcare Inc./1/ 291 5,872 Hain Celestial Group Inc./1/ 320 5,866 Actuant Corp. "A"/1/ 133 5,839 Park Electrochemical Corp. 193 5,838 Kopin Corp./1/ 732 5,812 Alpharma Inc. "A" 339 5,797 Albany Molecular Research Inc./1/ 239 5,796 DSP Group Inc./1/ 272 5,772 Papa John's International Inc./1/ 185 5,754 Myriad Genetics Inc./1/ 239 5,679 CTS Corp. 331 5,677 MICROS Systems Inc./1/ 201 5,628 Esterline Technologies Corp./1/ 242 5,626 Oakley Inc./1/ 282 5,617 Carpenter Technology Corp. 211 5,591 Overseas Shipholding Group Inc. 244 5,573 Harbor Florida Bancshares Inc. 274 5,570 InFocus Corp./1/ 430 5,564 Dendrite International Inc./1/ 419 5,552 Silicon Graphics Inc./1/ 1,982 5,550 Tekelec/1/ 524 5,544 Stewart & Stevenson Services Inc. 293 5,535 Fossil Inc./1/ 199 5,522 Cell Genesys Inc./1/ 387 5,499 CNET Networks Inc./1/ 1,331 5,457 Lone Star Steakhouse & Saloon Inc. 278 5,421 Pioneer-Standard Electronics Inc. 369 5,395 Systems & Computer Technology Corp./1/ 345 5,365 Cohu Inc. 191 5,350 Harmonic Inc./1/ 661 5,321 MacDermid Inc. 241 5,302 PRI Automation Inc./1/ 284 5,280 S1 Corp./1/ 587 5,265 Anchor BanCorp Wisconsin Inc. 238 5,236 FirstFed Financial Corp./1/ 183 5,234 Elcor Corp. 193 5,207 Core Laboratories NV/1/ 346 5,190 Immunomedics Inc./1/ 393 5,172 Sunrise Assisted Living Inc./1/ 191 5,159 ESS Technology Inc./1/ 323 5,158 Children's Place Retail Stores Inc. (The)/1/ 148 5,124 Noven Pharmaceuticals Inc./1/ 254 5,103 Verity Inc./1/ 380 5,069 Dime Community Bancshares 218 5,059 Schedules of Investments 53 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Milacron Inc. 381 $ 5,048 Great Atlantic & Pacific Tea Co./1/ 197 5,047 Russell Corp. 272 5,029 IDT Corp./1/ 250 5,000 WorldCom Inc.- MCI Group 1,332 4,996 Pacific Northwest Bancorp 178 4,995 First Sentinel Bancorp Inc. 339 4,987 Fremont General Corp. 712 4,977 Quest Software Inc./1/ 379 4,927 Interwoven Inc./1/ 1,167 4,925 Atwood Oceanics Inc./1/ 107 4,917 TeleTech Holdings Inc./1/ 401 4,912 E.piphany Inc./1/ 813 4,894 Trimble Navigation Ltd./1/ 295 4,894 PFF Bancorp Inc. 149 4,887 Transaction Systems Architects Inc. "A"/1/ 421 4,884 WD-40 Co. 178 4,867 Western Wireless Corp. "A"/1/ 764 4,844 Input/Output Inc./1/ 535 4,842 Priceline.com Inc./1/ 959 4,842 Read-Rite Corp./1/ 1,352 4,800 Tularik Inc./1/ 417 4,796 Datascope Corp. 152 4,780 Aspen Technology Inc./1/ 352 4,770 Cato Corp. "A" 186 4,762 Parker Drilling Co./1/ 1,102 4,717 Ticketmaster "B"/1/ 200 4,706 Nautica Enterprises Inc./1/ 322 4,634 Biosite Inc./1/ 148 4,625 Guitar Center Inc./1/ 233 4,599 Sapient Corp./1/ 941 4,592 PAREXEL International Corp./1/ 294 4,578 Enzo Biochem Inc./1/ 252 4,561 Inhale Therapeutic Systems Inc./1/ 576 4,550 Gene Logic Inc./1/ 292 4,535 Inter-Tel Inc. 221 4,533 RFS Hotel Investors Inc. 297 4,508 Airtran Holdings Inc./1/ 804 4,494 Concurrent Computer Corp./1/ 655 4,487 Kaman Corp. "A" 250 4,487 Centillium Communications Inc./1/ 385 4,474 PanAmSat Corp./1/ 190 4,463 Agile Software Corp./1/ 486 4,452 Triarc Companies Inc./1/ 159 4,452 Impath Inc./1/ 188 4,450 JDN Realty Corp. 349 4,422 Roadway Corp. 144 4,392 SonicWALL Inc./1/ 587 4,356 Stride Rite Corp. 495 4,356 Dress Barn Inc./1/ 144 4,320 BE Aerospace Inc./1/ 332 4,316 ArthroCare Corp./1/ 269 4,309 Interface Inc. "A" 535 4,307 Hutchinson Technology Inc./1/ 238 4,263 Offshore Logistics Inc./1/ 211 4,262 Integrated Silicon Solution Inc./1/ 317 4,248 Phillips-Van Heusen Corp. 274 4,176 UnitedGlobalCom Inc. "A"/1/ 767 4,142 ProBusiness Services Inc./1/ 211 4,140 Young Broadcasting Inc. "A"/1/ 183 4,134 Roxio Inc./1/ 194 4,122 CMGI Inc./1/ 3,219 4,120 Cubist Pharmaceuticals Inc./1/ 293 4,096 Touch America Holdings Inc./1/ 1,207 4,092 Fleetwood Enterprises Inc. 383 4,087 Champion Enterprises Inc./1/ 490 4,067 AirGate PCS Inc./1/ 284 4,061 U.S. Airways Group Inc./1/ 781 4,061 MedQuist Inc./1/ 140 4,043 Cell Therapeutics Inc./1/ 322 3,999 Steelcase Inc. 238 3,975 Chesapeake Corp. 144 3,953 General Cable Corp. 343 3,938 SWS Group Inc. 195 3,920 Imagistics International Inc./1/ 225 3,915 Bay View Capital Corp./1/ 559 3,913 WMS Industries Inc./1/ 241 3,883 Hearst-Argyle Television Inc./1/ 143 3,872 Jakks Pacific Inc./1/ 198 3,815 Caraustar Industries Inc. 336 3,797 Redback Networks Inc./1/ 1,678 3,792 54 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Actuate Corp./1/ 669 $ 3,780 C-COR.net Corp./1/ 345 3,774 REMEC Inc./1/ 470 3,760 CIBER Inc./1/ 534 3,738 CuraGen Corp./1/ 430 3,711 RSA Security Inc./1/ 606 3,697 Curtiss-Wright Corp. 49 3,690 Robert Mondavi Corp. (The) "A"/1/ 94 3,687 Alexion Pharmaceuticals Inc./1/ 198 3,659 NUI Corp. 136 3,645 Methode Electronics Inc. "A" 317 3,636 Trico Marine Services Inc./1/ 444 3,632 Liberate Technologies/1/ 710 3,614 DMC Stratex Networks Inc./1/ 860 3,612 Chemed Corp. 94 3,610 IDX Systems Corp./1/ 209 3,609 Inktomi Corp./1/ 1,523 3,533 Learning Tree International Inc./1/ 146 3,533 Stein Mart Inc./1/ 295 3,481 Ryerson Tull Inc. 294 3,455 GBC Bancorp 107 3,445 Corvis Corp./1/ 2,870 3,444 ANADIGICS Inc./1/ 338 3,427 Equity Inns Inc. 426 3,425 Commerce One Inc./1/ 3,078 3,417 Alliance Semiconductor Corp./1/ 320 3,411 Artesyn Technologies Inc./1/ 437 3,395 Molecular Devices Corp./1/ 190 3,392 U.S. Industries Inc./1/ 929 3,344 MatrixOne Inc./1/ 479 3,305 Safeguard Scientifics Inc./1/ 1,255 3,288 Ocwen Financial Corp./1/ 438 3,285 Ultratech Stepper Inc./1/ 191 3,260 Vicor Corp./1/ 235 3,257 Trenwick Group Ltd. 383 3,252 InfoSpace Inc./1/ 2,776 3,248 Anaren Microwave Inc./1/ 257 3,246 Navigant Consulting Co./1/ 499 3,234 Electroglas Inc./1/ 191 3,211 Casella Waste Systems Inc. "A"/1/ 259 3,199 SERENA Software Inc./1/ 231 3,176 Forrester Research Inc./1/ 173 3,157 Three-Five Systems Inc./1/ 225 3,150 Theragenics Corp./1/ 350 3,143 Computer Network Technology Corp./1/ 329 3,139 Aspect Communications Corp./1/ 655 3,137 USG Corp./1/ 445 3,137 OceanFirst Financial Corp. 97 3,092 DiamondCluster International Inc. "A"/1/ 245 3,087 AAR Corp. 238 3,032 Bio-Technology General Corp./1/ 614 3,008 Maxygen Inc./1/ 325 2,996 Triton PCS Holdings Inc. "A"/1/ 369 2,970 Tollgrade Communications Inc./1/ 145 2,916 Emisphere Technologies Inc./1/ 190 2,911 XOMA Ltd./1/ 777 2,898 Trans World Entertainment Corp./1/ 352 2,851 FSI International Inc./1/ 238 2,839 Wabash National Corp. 289 2,829 Leap Wireless International Inc./1/ 381 2,827 DDi Corp./1/ 469 2,823 BSB Bancorp Inc. 94 2,813 Answerthink Inc./1/ 435 2,806 M-Systems Flash Disk Pioneers Ltd./1/ 320 2,781 MRO Software Inc./1/ 191 2,762 Pharmacopeia Inc./1/ 236 2,738 Covansys Corp./1/ 342 2,736 Kenneth Cole Productions "A"/1/ 101 2,727 MasTec Inc./1/ 350 2,723 Transmeta Corp./1/ 1,145 2,702 Cyberonics Inc./1/ 199 2,696 AXT Inc./1/ 232 2,691 Nabi Biopharmaceuticals/1/ 428 2,688 Astec Industries Inc./1/ 144 2,686 Stamps.com Inc./1/ 584 2,657 Presstek Inc./1/ 353 2,648 Pinnacle Entertainment Inc./1/ 238 2,642 Sirius Satellite Radio Inc./1/ 587 2,636 Cleveland-Cliffs Inc. 97 2,619 Schedules of Investments 55 Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ RadiSys Corp./1/ 178 $ 2,611 Zygo Corp./1/ 152 2,601 Netegrity Inc./1/ 335 2,563 Keynote Systems Inc./1/ 280 2,556 Viewpoint Corp./1/ 422 2,532 Atlas Air Worldwide Holdings Inc./1/ 203 2,531 United Therapeutics Inc./1/ 210 2,518 EMCORE Corp./1/ 284 2,513 RTI International Metals Inc./1/ 191 2,512 Caliper Technologies Corp./1/ 238 2,506 F5 Networks Inc./1/ 191 2,487 BroadVision Inc./1/ 2,414 2,462 Allegiance Telecom Inc./1/ 1,208 2,452 Kadant Inc./1/ 154 2,449 Meridian Resource Corp. (The)/1/ 541 2,424 Vitria Technology Inc./1/ 1,052 2,367 Packeteer Inc./1/ 333 2,331 Akamai Technologies Inc./1/ 1,017 2,329 Capstone Turbine Corp./1/ 759 2,315 Lexicon Genetics Inc./1/ 285 2,280 Entrust Inc./1/ 544 2,279 Praecis Pharmaceuticals Inc./1/ 622 2,227 Enterasys Networks Inc./1/ 1,976 2,174 Avid Technology Inc./1/ 211 2,171 Vans Inc./1/ 178 2,168 Wild Oats Markets Inc./1/ 196 2,152 Guilford Pharmaceuticals Inc./1/ 277 2,133 Zomax Inc./1/ 369 2,122 Stratos Lightwave Inc./1/ 758 2,092 Time Warner Telecom Inc. "A"/1/ 542 2,043 Kos Pharmaceuticals Inc./1/ 77 2,002 Handspring Inc./1/ 761 1,979 Geron Corp./1/ 248 1,964 Oplink Communications Inc./1/ 1,528 1,956 Pope & Talbot Inc. 136 1,945 Seitel Inc./1/ 238 1,916 StorageNetworks Inc./1/ 641 1,865 Symmetricom Inc./1/ 290 1,856 MRV Communications Inc./1/ 903 1,842 Portal Software Inc./1/ 1,240 1,835 PLX Technology Inc./1/ 246 1,830 EntreMed Inc./1/ 232 1,810 SuperGen Inc./1/ 332 1,803 SONICblue Inc./1/ 914 1,782 Avanex Corp./1/ 562 1,770 Multex.com Inc./1/ 389 1,727 New Focus Inc./1/ 582 1,717 Terayon Communication Systems Inc./1/ 709 1,702 MetaSolv Inc./1/ 287 1,693 TranSwitch Corp./1/ 995 1,662 Siliconix Inc./1/ 52 1,647 SpeechWorks International Inc./1/ 334 1,637 WatchGuard Technologies Inc./1/ 248 1,595 Plug Power Inc./1/ 152 1,590 Allen Telecom Inc./1/ 238 1,568 McDATA Corp. "B"/1/ 223 1,550 CYTOGEN Corp./1/ 919 1,544 Nuance Communications Inc./1/ 271 1,518 InterVoice-Brite Inc./1/ 342 1,505 American Superconductor Corp./1/ 194 1,498 Kana Software Inc./1/ 141 1,451 Audiovox Corp. "A"/1/ 191 1,427 Cygnus Inc./1/ 299 1,408 SBA Communications Corp./1/ 472 1,364 Digital River Inc./1/ 273 1,349 Advanced Tissue Sciences Inc./1/ 489 1,345 Aether Systems Inc./1/ 392 1,305 SeeBeyond Technology Corp./1/ 379 1,304 OpenTV Corp./1/ 307 1,302 Netro Corp./1/ 464 1,295 AudioCodes Ltd./1/ 378 1,263 Visible Genetics Inc./1/ 187 1,240 Cell Pathways Inc./1/ 353 1,214 PC-Tel Inc./1/ 146 1,197 Ditech Communications Corp./1/ 378 1,153 Pharmacyclics Inc./1/ 185 1,138 Genome Therapeutics Corp./1/ 289 1,133 NMS Communications Corp./1/ 341 1,129 Stellent Inc./1/ 211 1,112 hi/fn Inc./1/ 94 996 56 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Total Market Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Novoste Corp./1/ 152 $ 942 Valence Technology Inc./1/ 390 901 Wireless Facilities Inc./1/ 181 818 Pegasus Communications Corp./1/ 391 809 Medallion Financial Corp. 136 699 Internap Network Services Corp./1/ 1,141 662 ViroPharma Inc./1/ 187 655 SpectraSite Holdings Inc./1/ 1,579 632 MicroStrategy Inc./1/ 365 631 Universal Access Global Holdings Inc./1/ 566 487 TOTAL COMMON STOCKS (COST: $136,388,091) 121,017,000 SHORT TERM INSTRUMENTS - 2.07% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,812,404 $ 1,812,404 Dreyfus Money Market Fund 166,445 166,445 Goldman Sachs Financial Square Prime Obligation Fund 114,187 114,187 Providian Temp Cash Money Market Fund 420,493 420,493 TOTAL SHORT TERM INSTRUMENTS (COST: $2,513,529) 2,513,529 TOTAL INVESTMENTS IN SECURITIES - 101.97% (COST $138,901,620) 123,530,529 OTHER ASSETS, LESS LIABILITIES - (1.97%) (2,390,606) ------------ NET ASSETS - 100.00% $121,139,923 ============ /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 57 Schedule of Investments iShares Dow Jones U.S. Basic Materials Sector Index Fund April 30, 2002 Security Shares Value - ----------------------------------------------------------------- COMMON STOCKS - 99.90% Du Pont (E.I.) de Nemours & Co. 215,558 $ 9,592,331 Alcoa Inc. 178,567 6,076,635 Dow Chemical Co. (The) 188,799 6,003,808 International Paper Co. 101,217 4,193,420 Weyerhaeuser Co. 45,113 2,689,186 Newmont Mining Corp. 85,834 2,447,127 Air Products & Chemicals Inc. 48,158 2,313,992 Praxair Inc. 33,764 1,927,924 PPG Industries Inc. 35,375 1,850,466 Georgia-Pacific Corp. 48,313 1,400,111 Rohm & Haas Co. "A" 35,521 1,318,184 Avery Dennison Corp. 20,491 1,312,449 MeadWestvaco Corp. 41,376 1,214,799 Ecolab Inc. 23,068 1,012,916 Nucor Corp. 16,312 953,436 Engelhard Corp. 27,507 836,763 Eastman Chemical Co. 16,180 713,538 Sigma-Aldrich Corp. 14,344 679,619 Phelps Dodge Corp. 16,556 592,705 Bowater Inc. 11,578 552,039 International Flavors & Fragrances Inc. 17,049 548,978 Ashland Inc. 13,348 544,999 Valspar Corp. (The) 9,475 436,324 Boise Cascade Corp. 12,203 413,316 Cabot Corp. 13,179 392,734 OM Group Inc. 5,813 388,018 Lubrizol Corp. 10,759 370,970 Lyondell Chemical Co. 24,723 365,406 RPM Inc. 21,447 363,527 United States Steel Corp. 18,681 337,005 Rayonier Inc. 5,697 334,243 Freeport-McMoRan Copper & Gold Inc./1/ 18,606 330,443 Crompton Corp. 23,691 285,477 Cytec Industries Inc./1/ 8,353 275,565 IMC Global Inc. 21,800 274,680 AK Steel Holding Corp. 21,485 263,406 Louisiana-Pacific Corp. 21,897 256,195 Hercules Inc./1/ 20,489 249,966 Cabot Microelectronics Corp./1/ 5,081 248,461 Meridian Gold Inc./1/ 15,957 242,866 Allegheny Technologies Inc. 14,066 237,434 Worthington Industries Inc. 14,566 215,577 Cambrex Corp. 5,087 209,025 Great Lakes Chemical Corp. 8,060 207,464 Potlatch Corp. 5,941 205,083 Fuller (H.B.) Co. 5,928 184,420 Millennium Chemicals Inc. 13,336 182,036 Solutia Inc. 21,732 181,680 Ferro Corp. 5,979 169,325 Olin Corp. 9,213 167,769 Georgia Gulf Corp. 6,666 146,852 Stillwater Mining Co./1/ 8,099 142,137 Wausau-Mosinee Paper Corp. 10,109 131,518 Schulman (A.) Inc. 6,134 124,520 Tredegar Corp. 5,000 114,750 Carpenter Technology Corp. 4,189 111,008 Wellman Inc. 6,676 110,822 MacDermid Inc. 5,031 110,682 WD-40 Co. 3,317 90,687 Caraustar Industries Inc. 5,862 66,241 Ryerson Tull Inc. 5,210 61,217 Cleveland-Cliffs Inc. 2,133 57,591 RTI International Metals Inc./1/ 4,113 54,086 Pope & Talbot Inc. 3,058 43,729 TOTAL COMMON STOCKS (Cost: $59,156,361) 57,929,680 SHORT TERM INSTRUMENTS - 2.86% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,197,164 1,197,164 Dreyfus Money Market Fund 110,313 110,313 Goldman Sachs Financial Square Prime Obligation Fund 75,679 75,679 Providian Temp Cash Money Market Fund 278,685 278,685 TOTAL SHORT TERM INSTRUMENTS (Cost: $1,661,841) 1,661,841 TOTAL INVESTMENTS IN SECURITIES - 102.76% (Cost $60,818,202) 59,591,521 Other Assets, Less Liabilities - (2.76%) (1,602,774) ----------- NET ASSETS - 100.00% $57,988,747 =========== /1/ Non-income earning securities. See notes to financial statements. 58 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 100.01% Wal-Mart Stores Inc. 227,950 $ 12,733,287 Home Depot Inc. 191,817 8,894,554 AOL Time Warner Inc./1/ 351,971 6,694,488 Viacom Inc. "B"/1/ 127,245 5,993,240 Walt Disney Co. (The) 168,558 3,907,174 Target Corp. 74,061 3,232,763 Walgreen Co. 83,905 3,169,092 McDonald's Corp. 106,891 3,035,704 Cardinal Health Inc. 37,281 2,581,709 Lowe's Companies Inc. 58,013 2,453,370 General Motors Corp. "A" 36,810 2,361,361 Ford Motor Company 143,867 2,301,872 Clear Channel Communications Inc./1/ 45,037 2,114,487 Liberty Media Corp. "A"/1/ 195,809 2,095,156 Comcast Corp. "A"/1/ 75,022 2,006,838 Gannett Co. Inc. 21,813 1,598,893 Kohls Corp./1/ 20,834 1,535,466 Costco Wholesale Corp./1/ 37,048 1,489,330 Sears, Roebuck and Co. 26,609 1,403,625 Omnicom Group Inc. 15,287 1,333,638 Harley-Davidson Inc. 25,051 1,327,452 Southwest Airlines Co. 62,989 1,147,030 CVS Corp. 32,274 1,080,534 Best Buy Co. Inc./1/ 14,203 1,055,993 McGraw-Hill Companies Inc. (The) 16,087 1,029,407 TJX Companies Inc. 22,573 983,731 Carnival Corp. "A" 29,456 981,179 Interpublic Group of Companies Inc. 30,956 955,921 McKesson Corp. 22,260 899,081 Bed Bath & Beyond Inc./1/ 23,861 886,913 May Department Stores Co. (The) 24,255 841,163 General Motors Corp. "H"/1/ 53,263 797,880 Tribune Co. 17,957 793,161 Eastman Kodak Co. 23,907 770,044 Marriott International Inc. "A" 17,514 769,565 Staples Inc./1/ 38,057 759,998 TRICON Global Restaurants Inc./1/ 12,046 759,621 Nike Inc. "B" 14,103 752,113 Gap Inc. (The) 51,994 733,635 Mattel Inc. 35,282 728,220 Delphi Automotive Systems Corp. 46,302 719,996 Starbucks Corp./1/ 31,287 713,969 Limited Inc. (The) 35,966 689,109 AutoZone Inc./1/ 8,919 677,844 Electronic Arts Inc./1/ 11,328 668,918 AmerisourceBergen Corp. 8,551 662,703 Federated Department Stores Inc./1/ 15,903 631,826 Johnson Controls Inc. 7,222 622,897 Starwood Hotels & Resorts Worldwide Inc. 16,419 620,638 Cox Communications Inc. "A"/1/ 15,979 533,539 Hilton Hotels Corp. 30,535 499,553 Genuine Parts Co. 14,330 494,528 Office Depot Inc./1/ 25,409 486,328 New York Times Co. "A" 10,354 482,082 TRW Inc. 8,641 475,514 Tiffany & Co. 11,955 475,211 Penney (J.C.) Co. Inc. (The) 21,605 469,693 International Game Technology/1/ 7,424 467,341 Knight Ridder Inc. 6,956 466,052 Univision Communications Inc./1/ 11,641 465,174 EchoStar Communications Corp. "A"/1/ 17,030 463,216 Family Dollar Stores Inc. 13,317 460,768 RadioShack Corp. 14,750 460,200 Harrah's Entertainment Inc./1/ 9,209 452,714 USA Networks Inc./1/ 14,863 444,552 Leggett & Platt Inc. 16,216 426,481 Fox Entertainment Group Inc. "A"/1/ 17,669 416,988 Whirlpool Corp. 5,505 412,600 Caremark Rx Inc./1/ 18,644 400,846 Scripps (E.W.) Co. 4,941 393,748 Darden Restaurants Inc. 9,591 382,681 Dollar Tree Stores Inc./1/ 9,222 351,727 AutoNation Inc./1/ 21,840 349,440 Circuit City Stores Inc. - Circuit City Group 16,172 348,668 Dollar General Corp. 21,840 343,980 Amazon.com Inc./1/ 20,489 341,961 Jones Apparel Group Inc./1/ 8,332 324,531 VF Corp. 7,376 322,848 Schedules of Investments 59 Schedule of Investments (Continued) iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Goodyear Tire & Rubber Co. (The) 13,534 $ 301,131 Centex Corp. 5,024 282,851 Toys R Us Inc./1/ 16,322 281,881 Delta Air Lines Inc. 10,118 280,370 Brinker International Inc./1/ 8,047 277,139 Wendy's International Inc. 7,386 276,236 D.R. Horton Inc. 10,622 274,048 Lear Corp./1/ 5,312 273,090 Mohawk Industries Inc./1/ 4,240 272,759 AMR Corp./1/ 12,631 271,188 Maytag Corp. 5,862 270,531 Liz Claiborne Inc. 8,613 269,501 BJ's Wholesale Club Inc./1/ 6,021 268,717 Ross Stores Inc. 6,588 267,539 Park Place Entertainment Corp./1/ 21,581 265,446 Lennar Corp. 4,511 250,541 Dana Corp. 12,281 248,813 CDW Computer Centers Inc./1/ 4,458 244,298 Abercrombie & Fitch Co. "A"/1/ 8,097 242,910 Westwood One Inc./1/ 6,447 232,092 Fastenal Co. 2,731 228,421 MGM Mirage/1/ 5,549 222,792 Williams-Sonoma Inc./1/ 3,809 219,436 Michaels Stores Inc./1/ 5,363 216,933 Hasbro Inc. 13,499 215,714 Pulte Homes Inc. 4,000 212,800 NVR Inc./1/ 560 207,060 Brunswick Corp. 7,251 204,406 Lamar Advertising Co./1/ 4,744 203,660 Coach Inc./1/ 3,622 202,832 Outback Steakhouse Inc./1/ 5,691 199,583 Charter Communications Inc./1/ 24,266 198,739 Gentex Corp./1/ 6,210 196,609 Nordstrom Inc. 8,332 195,469 Royal Caribbean Cruises Ltd. 8,003 188,791 Washington Post Company (The) "B" 290 183,222 Pier 1 Imports Inc. 7,629 182,715 Foot Locker Inc./1/ 11,530 181,597 Mandalay Resort Group/1/ 4,891 175,391 ArvinMeritor Inc. 5,494 174,160 Belo Corp. 7,434 173,658 Saks Inc./1/ 11,647 173,191 Furniture Brands International Inc./1/ 4,186 170,914 Visteon Corp. 10,871 167,848 Valassis Communications Inc./1/ 4,466 166,984 KB HOME 3,332 166,100 Dow Jones & Co. Inc. 3,005 163,382 Cablevision Systems Corp./1/ 6,774 159,189 Gemstar-TV Guide International Inc./1/ 17,758 159,112 Harman International Industries Inc. 2,677 158,077 Readers Digest Association Inc. (The) "A" 6,634 157,889 Borders Group Inc./1/ 6,720 156,643 Herman Miller Inc. 6,211 151,735 Cooper Tire & Rubber Co. 5,927 146,990 Hispanic Broadcasting Corp./1/ 5,459 146,410 Big Lots Inc. 9,451 146,112 Cheesecake Factory (The)/1/ 3,494 145,455 Polaris Industries Inc. 1,922 144,727 GTECH Holdings Corp./1/ 2,399 143,724 Pennzoil-Quaker State Co. 6,576 142,107 Dillards Inc. "A" 5,785 141,675 Clayton Homes Inc. 8,239 140,887 Activision Inc./1/ 4,464 140,527 CBRL Group Inc. 4,602 139,671 Six Flags Inc./1/ 7,531 137,817 BorgWarner Inc. 2,204 137,706 Entercom Communications Corp./1/ 2,634 137,626 Barnes & Noble Inc./1/ 4,546 137,380 HON Industries Inc. 4,564 136,555 Rite Aid Corp./1/ 42,629 135,134 Ruby Tuesday Inc. 5,357 134,568 O'Reilly Automotive Inc./1/ 4,084 132,281 Cablevision Systems Corporation-Rainbow Media Group/1/ 5,930 131,053 Scholastic Corp./1/ 2,534 128,550 Continental Airlines Inc. "B"/1/ 4,852 126,152 Ethan Allen Interiors Inc. 3,060 126,103 Toll Brothers Inc./1/ 4,214 125,367 Direct Focus Inc./1/ 2,774 123,998 Reebok International Ltd./1/ 4,465 123,457 60 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ PETsMART Inc./1/ 8,145 $ 122,338 Ryland Group Inc. 1,070 117,700 Linens 'N Things Inc./1/ 3,383 117,390 Extended Stay America Inc./1/ 6,964 116,299 Media General Inc. "A" 1,687 115,762 Zale Corp./1/ 2,909 115,545 Callaway Golf Co. 6,490 114,224 Chico's FAS Inc./1/ 3,137 113,183 99 Cents Only Stores/1/ 3,635 112,976 Applebee's International Inc. 2,865 111,850 M.D.C. Holdings Inc. 2,213 111,757 Tommy Hilfiger Corp./1/ 7,012 109,598 Lee Enterprises Inc. 2,774 108,880 Wiley (John) & Sons Inc. "A" 4,089 108,767 CEC Entertainment Inc./1/ 2,345 108,339 Payless ShoeSource Inc./1/ 1,838 107,597 THQ Inc./1/ 3,044 106,723 Meredith Corp. 2,489 106,579 AnnTaylor Stores Corp./1/ 2,398 104,241 Jack in the Box Inc./1/ 3,238 103,389 American Eagle Outfitters Inc./1/ 4,036 102,635 Harte-Hanks Inc. 3,105 99,733 Cox Radio Inc. "A"/1/ 3,387 97,004 Sonic Corp./1/ 3,302 96,782 SkyWest Inc. 4,142 95,059 Longs Drug Stores Corp. 3,101 93,774 Insight Enterprises Inc./1/ 3,421 89,288 Emmis Communications Corp./1/ 3,050 88,663 Bob Evans Farms Inc. 2,910 88,464 Northwest Airlines Corp. "A"/1/ 4,784 88,217 American Greetings Corp. "A" 4,855 86,176 Superior Industries International Inc. 1,644 84,781 DoubleClick Inc./1/ 10,449 81,084 Priority Healthcare Corp. "B"/1/ 2,724 81,012 Pep Boys-Manny, Moe & Jack Inc. 4,040 77,366 Charming Shoppes Inc./1/ 8,853 76,490 Men's Wearhouse Inc. (The)/1/ 3,100 76,322 ADVO Inc./1/ 1,692 73,264 Claire's Stores Inc. 3,384 73,027 Timberland Co. "A"/1/ 1,781 72,665 Atlantic Coast Airlines Holdings Inc./1/ 3,278 71,624 Aztar Corp./1/ 3,063 71,276 Donnelley (R.H.) Corp./1/ 2,410 70,902 International Speedway Corp. "A" 1,640 70,520 Pacific Sunwear of California Inc./1/ 2,722 67,996 Modine Manufacturing Co. 2,305 67,813 Alaska Air Group Inc./1/ 2,209 67,662 Station Casinos Inc./1/ 3,633 67,211 Talbots Inc. (The) 1,942 66,805 Ryan's Family Steak Houses Inc./1/ 2,540 66,548 Insight Communications Co. Inc./1/ 4,180 64,832 UAL Corp. 4,559 64,236 IHOP Corp./1/ 1,727 62,776 Wolverine World Wide Inc. 3,476 62,638 Duane Reade Inc./1/ 1,922 61,023 Pixar Inc./1/ 1,459 58,944 ValueVision International Inc. "A"/1/ 3,106 58,672 Metro-Goldwyn-Mayer Inc./1/ 3,569 57,639 Tower Automotive Inc./1/ 3,803 55,790 Primedia Inc./1/ 20,108 55,297 Hollinger International Inc. 4,293 54,865 Cost Plus Inc./1/ 1,787 52,627 Bally Total Fitness Holding Corp./1/ 2,400 52,440 Lands' End Inc./1/ 1,035 52,050 Kellwood Co. 1,883 51,312 Genesco Inc./1/ 1,832 51,021 Unifi Inc./1/ 4,508 50,535 ShopKo Stores Inc./1/ 2,396 49,909 Footstar Inc./1/ 1,647 48,570 Winnebago Industries Inc. 1,038 48,475 Interactive Data Corp./1/ 2,773 48,389 OfficeMax Inc./1/ 7,331 46,039 Quiksilver Inc./1/ 1,884 45,970 Prime Hospitality Corp./1/ 3,521 45,386 Oakley Inc./1/ 2,210 44,023 Children's Place Retail Stores Inc. (The)/1/ 1,224 42,375 Papa John's International Inc./1/ 1,358 42,234 Sinclair Broadcast Group Inc. "A"/1/ 3,144 41,972 Fossil Inc./1/ 1,405 38,989 Dress Barn Inc./1/ 1,218 36,540 Guitar Center Inc./1/ 1,835 36,223 Schedules of Investments 61 Schedule of Investments (Continued) iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Nautica Enterprises Inc./1/ 2,489 $ 35,817 Russell Corp. 1,883 34,817 Lone Star Steakhouse & Saloon Inc. 1,751 34,145 Hearst-Argyle Television Inc./1/ 1,235 33,444 UnitedGlobalCom Inc. "A"/1/ 6,108 32,983 Young Broadcasting Inc. "A"/1/ 1,454 32,846 Airtran Holdings Inc./1/ 5,728 32,020 WMS Industries Inc./1/ 1,972 31,769 Cato Corp. "A" 1,236 31,642 Champion Enterprises Inc./1/ 3,803 31,565 Fleetwood Enterprises Inc. 2,912 31,071 Stride Rite Corp. 3,478 30,606 Interface Inc. "A" 3,668 29,527 U.S. Airways Group Inc./1/ 5,634 29,297 Steelcase Inc. 1,742 29,091 Jakks Pacific Inc./1/ 1,505 29,001 Phillips-Van Heusen Corp. 1,878 28,621 Stein Mart Inc./1/ 2,159 25,476 Sirius Satellite Radio Inc./1/ 4,652 20,887 Trans World Entertainment Corp./1/ 2,445 19,805 Avid Technology Inc./1/ 1,922 19,777 Kenneth Cole Productions "A"/1/ 708 19,116 Pinnacle Entertainment Inc./1/ 1,696 18,826 Vans Inc./1/ 1,499 18,258 SONICblue Inc./1/ 6,529 12,732 Pegasus Communications Corp./1/ 2,776 5,746 TOTAL COMMON STOCKS (Cost: $131,391,362) 129,371,693 SHORT TERM INSTRUMENTS - 3.49% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3,250,243 3,250,243 Dreyfus Money Market Fund 299,827 299,827 Goldman Sachs Financial Square Prime Obligation Fund 205,690 205,690 Providian Temp Cash Money Market Fund 757,457 757,457 TOTAL SHORT TERM INSTRUMENTS (Cost: $4,513,217) 4,513,217 TOTAL INVESTMENTS IN SECURITIES - 103.50% (Cost $135,904,579) 133,884,910 Other Assets, Less Liabilities - (3.50%) (4,523,213) ------------ NET ASSETS - 100.00% $129,361,697 ============ /1/ Non-income earning securities. See notes to financial statements. 62 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 99.94% Coca-Cola Co. (The) 272,146 $ 15,106,824 Philip Morris Companies Inc. 257,845 14,034,503 Procter & Gamble Co. 155,160 14,004,742 PepsiCo Inc. 208,205 10,805,839 Anheuser-Busch Companies Inc. 105,240 5,577,720 Kimberly-Clark Corp. 62,513 4,070,847 Gillette Co. (The) 113,952 4,043,017 Colgate-Palmolive Co. 65,658 3,480,531 Safeway Inc./1/ 59,623 2,501,185 Sysco Corp. 79,346 2,301,827 Kroger Co./1/ 95,615 2,177,154 Cendant Corp./1/ 116,821 2,101,610 Sara Lee Corp. 93,076 1,971,350 General Mills Inc. 43,193 1,902,652 Heinz (H.J.) Co. 41,398 1,738,302 Avon Products Inc. 28,327 1,582,063 ConAgra Foods Inc. 63,887 1,565,231 Albertson's Inc. 45,263 1,518,121 Kraft Foods Inc. 33,362 1,369,176 Archer-Daniels-Midland Co. 77,902 1,033,753 eBay Inc./1/ 19,277 1,023,609 Kellogg Co. 27,844 1,000,156 Newell Rubbermaid Inc. 31,723 996,102 Wrigley (William Jr.) Co. 17,133 942,315 Fortune Brands Inc. 17,672 923,539 Clorox Co. 20,299 898,231 Block (H & R) Inc. 21,737 872,088 Campbell Soup Co. 30,104 831,171 R.J. Reynolds Tobacco Holdings Inc. 11,418 790,126 UST Inc. 19,679 783,224 Hershey Foods Corp. 11,077 753,236 Pepsi Bottling Group Inc. 20,884 598,118 Coca-Cola Enterprises Inc. 27,947 548,320 Apollo Group Inc. "A"/1/ 13,262 508,446 ServiceMaster Co. (The) 35,626 498,764 Estee Lauder Companies Inc. "A" 13,589 491,242 Stanley Works (The) 10,169 472,655 SUPERVALU Inc. 15,749 472,470 Black & Decker Corp. 9,502 462,557 Tyson Foods Inc. "A" 27,304 382,802 McCormick & Co. Inc. 14,637 375,293 Dean Foods Co./1/ 10,082 373,236 Whole Foods Market Inc./1/ 6,661 311,468 Constellation Brands Inc./1/ 4,472 270,109 Energizer Holdings Inc./1/ 10,904 260,606 Dial Corp. (The) 11,287 236,801 Career Education Corp./1/ 5,239 235,493 Coors (Adolf) Company "B" 3,508 234,510 Hormel Foods Corp. 8,879 219,311 Snap-On Inc. 6,873 217,737 Krispy Kreme Doughnuts Inc./1/ 5,381 205,447 Smithfield Foods Inc./1/ 9,259 195,365 DeVry Inc./1/ 7,239 191,761 Brown-Forman Corp. "B" 2,252 177,052 Expedia Inc. "A"/1/ 2,144 173,312 Performance Food Group Co./1/ 4,807 173,201 Dole Food Co. 5,085 169,178 Winn-Dixie Stores Inc. 9,702 168,330 Scotts Co. (The) "A"/1/ 3,500 166,985 Alberto-Culver Co. "B" 2,634 143,737 Lancaster Colony Corp. 3,718 143,143 Tupperware Corp. 6,107 140,217 ITT Educational Services Inc./1/ 2,746 139,085 Regis Corp. 4,506 135,450 Service Corp. International/1/ 34,516 134,958 Universal Corp. 3,152 133,992 Church & Dwight Co. Inc. 4,608 131,789 PepsiAmericas Inc. 8,600 131,150 Corn Products International Inc. 3,945 130,579 Dreyer's Grand Ice Cream Inc. 2,742 127,942 United Rentals Inc./1/ 4,789 122,120 Tootsie Roll Industries Inc. 2,598 121,768 Blyth Inc. 4,090 121,677 Sylvan Learning Systems Inc./1/ 4,262 117,631 Fleming Companies Inc. 5,282 116,415 NBTY Inc./1/ 6,334 108,818 American Italian Pasta Co. "A"/1/ 2,110 104,951 Interstate Bakeries Corp. 4,235 104,604 Ralcorp Holdings Inc./1/ 3,548 99,344 Flowers Foods Inc./1/ 3,363 87,741 Schedules of Investments 63 Schedule of Investments (Continued) iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Rent-A-Center Inc./1/ 1,395 $ 84,119 Sotheby's Holdings Inc. "A"/1/ 5,330 78,564 Pre-Paid Legal Services Inc./1/ 2,489 72,828 Casey's General Store Inc. 5,463 71,128 Stewart Enterprises Inc. "A"/1/ 11,475 68,965 Hain Celestial Group Inc./1/ 3,260 59,756 International Multifoods Corp./1/ 2,069 55,553 Great Atlantic & Pacific Tea Co./1/ 1,967 50,395 Priceline.com Inc./1/ 9,979 50,384 Ticketmaster "B"/1/ 2,015 47,413 Triarc Companies Inc./1/ 1,581 44,268 Robert Mondavi Corp. (The) "A"/1/ 1,096 42,985 Learning Tree International Inc./1/ 1,307 31,629 Wild Oats Markets Inc./1/ 2,585 28,383 Stamps.com Inc./1/ 5,483 24,948 Valence Technology Inc./1/ 4,031 9,312 TOTAL COMMON STOCKS (COST: $109,131,207) 114,908,554 SHORT TERM INSTRUMENTS - 1.26% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,040,246 1,040,246 Dreyfus Money Market Fund 97,355 97,355 Goldman Sachs Financial Square Prime Obligation Fund 66,788 66,788 Providian Temp Cash Money Market Fund 245,948 245,948 TOTAL SHORT TERM INSTRUMENTS (COST: $1,450,337) 1,450,337 TOTAL INVESTMENTS IN SECURITIES - 101.20% (COST $110,581,544) 116,358,891 OTHER ASSETS, LESS LIABILITIES - (1.20%) (1,385,122) ------------ NET ASSETS - 100.00% $114,973,769 ============ /1/ Non-income earning securities. See notes to financial statements. 64 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Energy Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 99.98% Exxon Mobil Corp. 627,455 $ 25,204,867 ChevronTexaco Corp. 240,397 20,844,824 Schlumberger Ltd. 96,198 5,266,840 Phillips Petroleum Co. 78,228 4,678,817 Conoco Inc. 161,163 4,520,622 El Paso Corp. 81,610 3,264,400 Occidental Petroleum Corp. 107,620 3,094,075 Baker Hughes Inc. 73,269 2,760,776 Anadarko Petroleum Corp. 47,345 2,548,108 Unocal Corp. 64,854 2,411,920 Burlington Resources Inc. 47,376 2,104,916 Williams Companies Inc. 97,780 1,867,598 Transocean Sedco Forex Inc. 52,171 1,852,070 Apache Corp. 29,271 1,707,377 Murphy Oil Corp. 17,415 1,643,105 Marathon Oil Corp. 55,864 1,623,408 Kerr-McGee Corp. 26,152 1,563,890 Devon Energy Corp. 28,347 1,397,791 Amerada Hess Corp. 18,017 1,385,147 Nabors Industries Inc./1/ 26,200 1,193,410 EOG Resources Inc. 25,600 1,089,280 Kinder Morgan Inc. 22,361 1,082,496 BJ Services Co./1/ 25,619 941,242 Noble Drilling Corp./1/ 20,461 886,984 GlobalSantaFe Corp. 24,887 873,285 Weatherford International Inc./1/ 14,844 740,270 Ocean Energy Inc. 30,057 643,220 Valero Energy Corp. 12,650 545,974 ENSCO International Inc. 16,050 541,848 Smith International Inc./1/ 7,179 502,889 Noble Affiliates Inc. 12,631 493,241 Diamond Offshore Drilling Inc. 14,825 461,354 Pioneer Natural Resources Co./1/ 18,759 450,028 Helmerich & Payne Inc. 10,413 429,120 Cooper Cameron Corp./1/ 6,889 377,793 Sunoco Inc. 10,908 375,017 Newfield Exploration Co./1/ 9,210 348,598 Tidewater Inc. 6,494 282,489 XTO Energy Inc. 13,384 273,034 National-Oilwell Inc./1/ 9,685 257,330 Massey Energy Co. 15,689 234,551 Tom Brown Inc./1/ 7,531 218,399 Grant Prideco Inc./1/ 13,621 217,936 Stone Energy Corp./1/ 4,183 177,359 Hanover Compressor Co./1/ 9,295 175,211 Key Energy Services Inc./1/ 14,054 170,756 Cabot Oil & Gas Corp. "A" 6,679 167,843 Evergreen Resources Inc./1/ 3,689 165,083 Varco International Inc./1/ 7,150 146,503 Lone Star Technologies Inc./1/ 4,184 111,504 Forest Oil Corp./1/ 3,441 108,391 Vintage Petroleum Inc. 7,266 100,271 Chesapeake Energy Corp./1/ 9,038 77,275 Veritas DGC Inc./1/ 3,799 68,762 Seacor Smit Inc./1/ 1,282 61,664 Rowan Companies Inc./1/ 1,083 27,487 Patterson-UTI Energy Inc./1/ 520 16,640 TOTAL COMMON STOCKS (COST: $109,079,525) 104,775,088 SHORT TERM INSTRUMENTS - 2.32% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,758,098 1,758,098 Dreyfus Money Market Fund 159,913 159,913 Goldman Sachs Financial Square Prime Obligation Fund 109,705 109,705 Providian Temp Cash Money Market Fund 403,991 403,991 TOTAL SHORT TERM INSTRUMENTS (COST: $2,431,707) 2,431,707 TOTAL INVESTMENTS IN SECURITIES - 102.30% (COST $111,511,232) 107,206,795 OTHER ASSETS, LESS LIABILITIES - (2.30%) (2,410,009) ------------ NET ASSETS - 100.00% $104,796,786 ============ /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 65 Schedule of Investments iShares Dow Jones U.S. Financial Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 99.90% Citigroup Inc. 283,711 $ 12,284,686 American International Group Inc. 125,884 8,701,102 Bank of America Corp. 86,476 6,267,780 Wells Fargo & Co. 93,969 4,806,514 Fannie Mae 54,993 4,340,597 JP Morgan Chase & Co. 109,133 3,830,568 Wachovia Corp. 74,791 2,845,050 American Express Co. 64,775 2,656,423 Morgan Stanley Dean Witter & Co. 54,994 2,624,314 Bank One Corp. 64,181 2,623,077 U.S. Bancorp 107,613 2,550,428 Freddie Mac 38,308 2,503,428 FleetBoston Financial Corp. 57,442 2,027,703 Washington Mutual Inc. 53,332 2,012,216 Fifth Third Bancorp 26,824 1,839,858 Merrill Lynch & Co. Inc. 43,474 1,823,300 Marsh & McLennan Companies Inc. 15,139 1,530,250 Bank of New York Co. Inc. (The) 40,719 1,489,908 MBNA Corp. 41,409 1,467,949 Household International Inc. 25,169 1,467,101 Allstate Corp. (The) 36,715 1,459,054 MetLife Inc. 39,863 1,360,923 Prudential Financial Inc./1/ 31,250 1,003,125 Mellon Financial Corp. 25,720 971,187 BB&T Corp. 25,222 960,454 Hartford Financial Services Group Inc. 13,460 932,778 SunTrust Banks Inc. 13,693 930,850 Goldman Sachs Group Inc. (The) 11,748 925,155 State Street Corp. 17,903 915,022 National City Corp. 28,646 893,755 PNC Financial Services Group (The) 15,610 860,892 AFLAC Inc. 28,717 858,638 USA Education Inc. 8,604 824,693 Lehman Brothers Holdings Inc. 13,100 772,900 Chubb Corp. 9,347 716,915 Capital One Financial Corp. 11,819 707,840 XL Capital Ltd. "A" 7,363 694,699 KeyCorp 23,448 659,123 Schwab (Charles) Corp. (The) 57,182 651,303 Equity Office Properties Trust 22,579 646,437 Hancock (John) Financial Services Inc. 16,410 633,426 ACE Ltd. 14,265 620,813 Comerica Inc. 9,752 612,913 Progressive Corp. (The) 10,637 611,628 Northern Trust Corp. 11,475 609,552 St. Paul Companies Inc. 11,498 572,715 Golden West Financial Corp. 7,461 510,258 SouthTrust Corp. 18,735 499,850 Lincoln National Corp. 10,339 495,238 AON Corp. 13,022 465,276 Loews Corp. 7,690 461,016 AmSouth Bancorp 20,080 456,017 Regions Financial Corp. 12,507 438,620 MBIA Inc. 8,128 438,343 Charter One Financial Inc. 12,357 437,191 Equity Residential Properties Trust 14,879 419,588 M&T Bank Corp. 4,866 415,459 Jefferson-Pilot Corp. 8,291 415,213 Cincinnati Financial Corp. 8,336 390,625 MGIC Investment Corp. 5,396 385,059 Synovus Financial Corp. 14,237 384,968 Union Planters Corp. 7,555 378,581 Ambac Financial Group Inc. 5,819 365,782 North Fork Bancorp Inc. 8,909 344,066 Marshall & Ilsley Corp. 5,365 341,482 Bear Stearns Companies Inc. (The) 5,471 338,874 Franklin Resources Inc. 8,066 337,965 UNUMProvident Corp. 11,921 336,649 National Commerce Financial Corp. 11,293 316,091 Countrywide Credit Industries Inc. 6,746 315,106 Huntington Bancshares Inc. 13,866 281,341 66 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Financial Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Torchmark Corp. 6,856 $ 280,342 Zions Bancorporation 5,048 272,996 First Tennessee National Corp. 6,987 270,117 Radian Group Inc. 5,137 266,610 Simon Property Group Inc. 7,733 260,989 Stilwell Financial Inc. 12,059 257,580 Archstone-Smith Trust 9,425 254,098 Compass Bancshares Inc. 7,066 252,751 T. Rowe Price Group Inc. 6,775 237,599 SAFECO Corp. 7,041 235,169 GreenPoint Financial Corp. 4,699 232,366 Plum Creek Timber Co. Inc. 7,579 230,781 Banknorth Group Inc. 8,430 222,468 BISYS Group Inc. (The)/1/ 6,499 222,266 Prologis Trust 9,651 214,252 Golden State Bancorp Inc. 6,420 211,796 TCF Financial Corp. 3,982 207,263 Old Republic International Corp. 6,113 203,135 PMI Group Inc. (The) 2,421 196,392 Sovereign Bancorp Inc. 13,574 195,873 Boston Properties Inc. 5,004 195,056 Vornado Realty Trust 4,352 191,923 Popular Inc. 6,434 189,224 Apartment Investment & Management Co. "A" 3,832 188,151 Edwards (A.G.) Inc. 4,429 181,235 AmeriCredit Corp./1/ 4,620 179,348 Duke Realty Corp. 6,748 177,472 Commerce Bancorp Inc. 3,582 176,915 Hibernia Corp. "A" 8,826 176,079 Legg Mason Inc. 3,492 175,438 Federated Investors Inc. "B" 5,384 172,611 AvalonBay Communities Inc. 3,599 171,564 Everest Re Group Ltd. 2,512 170,565 Gallagher (Arthur J.) & Co. 4,614 166,565 Astoria Financial Corp. 5,058 162,311 Public Storage Inc. 4,255 161,562 Mercantile Bankshares Corp. 3,821 157,272 First Virginia Banks Inc. 2,685 153,663 Principal Financial Group (The)/1/ 5,513 153,261 Host Marriott Corp. 12,729 151,602 Valley National Bancorp 4,208 149,721 Associated Banc-Corp 3,979 149,042 Allmerica Financial Corp. 2,952 147,334 SEI Investment Co. 4,340 146,215 General Growth Properties Inc. 3,144 143,775 Kimco Realty Corp. 4,451 142,877 UnionBanCal Corp. 2,950 142,780 Allied Capital Corp. 5,459 142,480 New York Community Bancorp Inc. 4,768 141,419 Commerce Bancshares Inc. 3,163 140,342 Neuberger Berman Inc. 3,146 136,694 Fidelity National Financial Inc. 4,428 136,604 FirstMerit Corp. 4,736 134,502 RenaissanceRe Holdings Ltd. 1,138 133,374 E*TRADE Group Inc./1/ 17,461 131,656 Investors Financial Services Corp. 1,784 131,374 AMB Property Corp. 4,614 129,377 White Mountains Insurance Group Inc. 357 127,985 Liberty Property Trust 3,994 127,608 Health Care Property Investors Inc. 3,070 125,348 City National Corp. 2,244 123,981 Investment Technology Group Inc./1/ 2,665 122,590 Rouse Co. (The) 3,769 121,965 Eaton Vance Corp. 3,225 117,809 Bank of Hawaii Corp. 4,090 116,483 Waddell & Reed Financial Inc. "A" 4,402 113,352 Wilmington Trust Corp. 1,790 113,021 Unitrin Inc. 2,694 112,259 Crescent Real Estate Equities Co. 5,701 111,854 Fulton Financial Corp. 4,527 111,726 Protective Life Corp. 3,468 110,490 American National Insurance Co. 1,108 110,135 Hospitality Properties Trust 3,222 109,548 Markel Corp./1/ 502 109,436 Webster Financial Corp. 2,718 107,714 Cullen/Frost Bankers Inc. 2,843 107,295 PartnerRe Ltd. 1,987 107,258 Security Capital Group Inc. "B"/1/ 4,092 105,287 Schedules of Investments 67 Schedule of Investments (Continued) iShares Dow Jones U.S. Financial Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Mack-Cali Realty Corp. 3,160 $ 103,648 New Plan Excel Realty Trust 5,282 103,263 Roslyn Bancorp Inc. 4,471 102,922 MONY Group Inc. (The) 2,608 101,712 Catellus Development Corp./1/ 4,852 98,981 Independence Community Bank Corp. 2,985 97,281 Colonial BancGroup Inc. (The) 6,018 96,288 StanCorp Financial Group Inc. 1,643 96,116 Transatlantic Holdings Inc. 1,138 96,002 United Dominion Realty Trust Inc. 5,673 94,739 Sky Financial Group Inc. 4,045 94,329 Brown & Brown Inc. 2,817 93,524 Arden Realty Inc. 3,299 92,867 W.R. Berkley Corp. 1,528 92,444 Greater Bay Bancorp 2,749 92,064 BancorpSouth Inc. 4,190 91,761 Washington Federal Inc. 3,462 90,427 People's Bank 3,355 89,176 Camden Property Trust 2,216 88,197 Weingarten Realty Investors 2,461 87,612 IndyMac Bancorp Inc./1/ 3,379 85,320 First Midwest Bancorp Inc. 2,797 85,113 Hudson City Bancorp Inc. 2,258 84,833 Westamerica Bancorp 1,895 83,854 Highwoods Properties Inc. 2,902 81,604 BRE Properties Inc. "A" 2,499 81,592 Trustmark Corp. 3,160 81,433 Silicon Valley Bancshares/1/ 2,539 81,121 HCC Insurance Holdings Inc. 3,120 81,120 Annaly Mortgage Management Inc. 4,440 80,808 Erie Indemnity Co. "A" 1,850 80,623 Hudson United Bancorp 2,532 80,366 Doral Financial Corp. 2,248 78,545 Old National Bancorp 3,156 77,859 First American Corp. 3,505 77,460 Affiliated Managers Group Inc./1/ 1,208 76,829 LaBranche & Co. Inc./1/ 2,801 76,747 Whitney Holding Corp. 2,078 75,847 Raymond James Financial Inc. 2,264 75,708 Commercial Federal Corp. 2,543 74,764 First Industrial Realty Trust Inc. 2,189 73,704 Mercury General Corp. 1,430 71,500 Conseco Inc./1/ 18,952 70,691 Citizens Banking Corp. 2,111 70,085 Developers Diversified Realty Corp. 3,148 69,571 Post Properties Inc. 2,020 68,660 CenterPoint Properties Corp. 1,250 68,375 Healthcare Realty Trust Inc. 2,246 68,054 United Bancshares Inc. 2,121 67,872 Commerce Group Inc. 1,659 66,957 American Financial Group Inc. 2,242 66,565 Leucadia National Corp. 1,804 65,756 La Quinta Corp./1/ 7,950 63,441 Staten Island Bancorp Inc. 3,165 63,142 American Capital Strategies Ltd. 1,956 62,729 Park National Corp. 622 62,667 Reckson Associates Realty Corp. 2,510 61,244 Ohio Casualty Corp./1/ 3,159 61,032 Downey Financial Corp. 1,143 60,716 Southwest Bancorp of Texas Inc./1/ 1,701 59,586 Chittenden Corp. 1,798 59,424 HRPT Properties Trust 6,837 59,345 Federal Realty Investment Trust 2,196 59,182 Cousins Properties Inc. 2,187 59,049 Prentiss Properties Trust 1,917 58,948 Shurgard Storage Centers Inc. "A" 1,672 58,938 Community First Bankshares Inc. 2,131 58,560 Chelsea Property Group Inc. 959 57,972 SL Green Realty Corp. 1,626 57,073 iStar Financial Inc. 1,798 55,918 Horace Mann Educators Corp. 2,333 55,875 Jeffries Group Inc. 1,192 55,416 Nationwide Financial Services Inc. 1,312 53,792 CarrAmerica Realty Corp. 1,647 52,902 St. Joe Co. (The) 1,713 52,675 South Financial Group Inc. (The) 2,272 52,324 Provident Financial Group Inc. 1,673 50,642 Macerich Co. (The) 1,717 50,394 68 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Financial Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Nationwide Health Properties Inc. 2,698 $ 50,183 LNR Property Corp. 1,370 50,142 Health Care REIT Inc. 1,768 49,858 CBL & Associates Properties Inc. 1,313 48,056 CNA Financial Corp./1/ 1,592 47,856 FelCor Lodging Trust Inc. 2,166 46,569 Metris Companies Inc. 3,534 46,083 Republic Bancorp Inc. 3,093 45,776 MAF Bancorp Inc. 1,230 45,584 Total System Services Inc. 2,032 45,212 Net.B@nk Inc./1/ 2,788 44,747 Meristar Hospitality Corp. 2,548 44,717 AmerUs Group Co. 1,163 43,822 UCBH Holdings Inc. 1,099 43,356 East West Bancorp Inc. 1,211 43,354 Brandywine Realty Trust 1,762 42,094 Selective Insurance Group Inc. 1,399 41,970 Kilroy Realty Corp. 1,479 41,634 W.P. Stewart & Co. Ltd. 1,438 40,868 Texas Regional Bancshares Inc. "A" 808 40,400 Home Properties of NY Inc. 1,121 40,378 Ameritrade Holding Corp. "A"/1/ 7,144 38,363 Colonial Properties Trust 1,049 38,163 Provident Bankshares Corp. 1,406 36,640 Manufactured Home Communities Inc. 1,089 36,612 Reinsurance Group of America Inc. 1,110 35,853 Capital Automotive REIT 1,409 34,098 Glenborough Realty Trust Inc. 1,492 33,495 Sterling Bancshares Inc. 2,418 33,078 AMCORE Financial Inc. 1,360 32,639 Knight Trading Group Inc./1/ 5,798 32,527 Presidential Life Corp. 1,171 29,158 Dime Community Bancshares 1,237 28,761 Anchor BanCorp Wisconsin Inc. 1,296 28,512 Mills Corp. 1,000 27,520 Koger Equity Inc. 1,464 26,820 FirstFed Financial Corp./1/ 936 26,770 Harbor Florida Bancshares Inc. 1,241 25,230 First Sentinel Bancorp Inc. 1,644 24,183 CMGI Inc./1/ 18,820 24,090 Pacific Northwest Bancorp 843 23,654 Fremont General Corp. 3,356 23,458 Bay View Capital Corp./1/ 3,284 22,988 PFF Bancorp Inc. 686 22,501 JDN Realty Corp. 1,693 21,450 RFS Hotel Investors Inc. 1,381 20,964 GBC Bancorp 636 20,479 SWS Group Inc. 891 17,909 Trenwick Group Ltd. 2,056 17,455 Ocwen Financial Corp./1/ 2,215 16,613 Equity Inns Inc. 2,056 16,530 BSB Bancorp Inc. 538 16,102 Safeguard Scientifics Inc./1/ 5,976 15,657 OceanFirst Financial Corp. 410 13,071 Medallion Financial Corp. 821 4,220 TOTAL COMMON STOCKS (Cost: $118,128,052) 121,680,967 SHORT TERM INSTRUMENTS - 2.91% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 2,603,511 2,603,511 Dreyfus Money Market Fund 222,346 222,346 Goldman Sachs Financial Square Prime Obligation Fund 152,536 152,536 Providian Temp Cash Money Market Fund 561,715 561,715 TOTAL SHORT TERM INSTRUMENTS (Cost: $3,540,108) 3,540,108 TOTAL INVESTMENTS IN SECURITIES - 102.81% (Cost $121,668,160) 125,221,075 Other Assets, Less Liabilities - (2.81%) (3,425,424) ------------ NET ASSETS - 100.00% $121,795,651 ============ /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 69 Schedule of Investments iShares Dow Jones U.S. Healthcare Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 100.00% Pfizer Inc. 986,189 $ 35,847,970 Johnson & Johnson 478,460 30,554,456 Merck & Co. Inc. 354,832 19,281,571 Abbott Laboratories 226,424 12,215,575 Wyeth 204,420 11,651,940 Lilly (Eli) and Co. 150,528 9,942,374 Bristol-Myers Squibb Co. 301,806 8,692,013 Amgen Inc./1/ 162,478 8,591,837 Medtronic Inc. 188,529 8,425,361 Pharmacia Corp. 201,054 8,289,456 Schering-Plough Corp. 228,128 6,227,894 Baxter International Inc. 92,063 5,238,385 UnitedHealth Group Inc. 48,649 4,271,869 Tenet Healthcare Corp./1/ 50,595 3,712,155 HCA Inc. 71,587 3,421,143 CIGNA Corp. 22,570 2,460,130 Forest Laboratories Inc. "A"/1/ 27,760 2,141,406 Guidant Corp./1/ 47,889 1,800,626 WellPoint Health Networks Inc./1/ 22,596 1,696,508 Becton Dickinson & Co. 40,061 1,489,067 Immunex Corp./1/ 49,948 1,355,589 Genzyme Corp. - General Division/1/ 33,105 1,355,319 Allergan Inc. 20,539 1,353,725 IDEC Pharmaceuticals Corp./1/ 23,816 1,308,689 Stryker Corp./1/ 23,375 1,250,796 MedImmune Inc./1/ 36,554 1,220,904 Genentech Inc./1/ 34,141 1,212,005 Biomet Inc. 41,869 1,181,962 St. Jude Medical Inc./1/ 13,612 1,132,655 Boston Scientific Corp./1/ 44,879 1,118,385 King Pharmaceuticals Inc./1/ 35,097 1,099,940 Anthem Inc./1/ 16,074 1,096,247 Aetna Inc. 22,396 1,066,050 Zimmer Holdings Inc./1/ 30,526 1,059,558 Biogen Inc./1/ 23,211 1,008,982 Quest Diagnostics Inc./1/ 10,676 981,445 Gilead Sciences Inc./1/ 29,960 932,355 HEALTHSOUTH Corp./1/ 61,283 925,373 Health Management Associates Inc. "A"/1/ 38,067 812,350 Millennium Pharmaceuticals Inc./1/ 39,966 797,718 Laboratory Corp. of America Holdings/1/ 7,382 732,294 Chiron Corp./1/ 17,195 695,882 Oxford Health Plans Inc./1/ 13,690 631,930 Express Scripts Inc. "A"/1/ 9,779 618,131 Health Net Inc./1/ 19,193 569,072 Applera Corp. - Applied Biosystems Group 33,181 568,059 Trigon Healthcare Inc./1/ 5,614 565,105 Lincare Holdings Inc./1/ 16,761 527,636 Mylan Laboratories Inc. 19,527 517,075 Hillenbrand Industries Inc. 7,870 508,402 Cephalon Inc./1/ 7,894 462,904 Varian Medical Systems Inc./1/ 10,526 456,302 Beckman Coulter Inc. 9,545 455,965 Andrx Group/1/ 10,060 454,913 Patterson Dental Co./1/ 9,777 450,720 Bard (C.R.) Inc. 7,974 438,092 Triad Hospitals Inc./1/ 10,281 431,802 DENTSPLY International Inc. 10,736 425,897 AdvancePCS/1/ 12,378 418,500 First Health Group Corp./1/ 14,270 413,830 Humana Inc./1/ 25,240 412,674 Watson Pharmaceuticals Inc./1/ 16,650 409,590 Manor Care Inc./1/ 15,946 408,855 Omnicare Inc. 14,558 389,281 Apogent Technologies Inc./1/ 16,630 385,816 Universal Health Services Inc. "B"/1/ 7,915 368,443 ICN Pharmaceuticals Inc. 12,643 349,705 DaVita Inc./1/ 13,212 342,455 Henry Schein Inc./1/ 6,652 316,569 IVAX Corp./1/ 26,306 310,411 Barr Laboratories Inc./1/ 4,563 304,124 Bausch & Lomb Inc. 8,415 302,688 Cytyc Corp./1/ 18,139 284,964 Human Genome Sciences Inc./1/ 17,729 279,054 70 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Healthcare Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Mid Atlantic Medical Services Inc./1/ 7,596 $ 276,722 Renal Care Group Inc./1/ 7,677 272,533 Invitrogen Corp./1/ 7,697 266,932 Accredo Health Inc./1/ 4,096 265,134 LifePoint Hospitals Inc./1/ 6,128 257,376 Medicis Pharmaceutical Corp. "A"/1/ 4,717 252,595 Quintiles Transnational Corp./1/ 17,761 252,206 Enzon Inc./1/ 6,707 249,769 Vertex Pharmaceuticals Inc./1/ 11,669 248,200 Protein Design Labs Inc./1/ 13,749 246,932 Celgene Corp./1/ 11,789 233,186 Edwards Lifesciences Corp./1/ 9,239 232,084 Apria Healthcare Group Inc./1/ 8,544 222,059 Scios Inc./1/ 7,140 220,840 Coventry Health Care Inc./1/ 6,830 215,145 Steris Corp./1/ 9,670 214,190 SICOR Inc./1/ 12,077 214,004 ICOS Corp./1/ 8,305 213,937 Community Health Systems Inc./1/ 7,267 210,888 Charles River Laboratories International Inc./1/ 6,912 207,014 Alkermes Inc./1/ 10,045 202,306 Affymetrix Inc./1/ 7,484 189,869 Monsanto Co. 5,980 184,184 ImClone Systems Inc./1/ 11,422 183,894 OSI Pharmaceuticals Inc./1/ 5,684 181,717 Pharmaceutical Product Development Inc./1/ 7,158 180,238 Province Healthcare Co./1/ 4,666 179,688 Orthodontic Centers of America Inc./1/ 6,668 177,702 Covance Inc./1/ 8,767 175,954 Invacare Corp. 4,631 175,144 Techne Corp./1/ 6,521 174,045 Pediatrix Medical Group Inc./1/ 3,618 170,010 Applera Corp. - Celera Genomics Group/1/ 10,766 168,380 Abgenix Inc./1/ 11,817 166,738 Transkaryotic Therapies Inc./1/ 4,101 163,466 ResMed Inc./1/ 4,367 162,059 Respironics Inc./1/ 4,764 156,212 Neurocrine Biosciences Inc./1/ 4,668 153,531 IDEXX Laboratories Inc./1/ 5,272 150,147 PacifiCare Health Systems Inc. "A"/1/ 4,811 145,581 US Oncology Inc./1/ 14,850 142,560 VISX Inc./1/ 8,656 141,699 NPS Pharmaceuticals Inc./1/ 4,748 141,538 Beverly Enterprises Inc./1/ 16,385 140,911 Trimeris Inc./1/ 2,936 140,781 Mentor Corp. 3,482 139,454 Haemonetics Corp./1/ 3,826 126,794 Perrigo Co./1/ 10,031 125,187 Ligand Pharmaceuticals Inc. "B"/1/ 7,705 119,967 Sybron Dental Specialties Inc./1/ 5,958 117,373 Owens & Minor Inc. 5,333 110,340 Delta & Pine Land Co. 5,630 109,560 IGEN International Inc./1/ 2,646 109,439 Medarex Inc./1/ 10,543 106,906 Syncor International Corp./1/ 3,175 99,250 Taro Pharmaceutical Industries Ltd./1/ 4,517 99,130 Regeneron Pharmaceuticals Inc./1/ 4,619 95,382 CV Therapeutics Inc./1/ 3,284 95,039 SangStat Medical Corp./1/ 3,999 93,177 Immunomedics Inc./1/ 6,560 86,330 Myriad Genetics Inc./1/ 3,509 83,374 Albany Molecular Research Inc./1/ 3,431 83,202 Alpharma Inc. "A" 4,830 82,593 PolyMedica Corp./1/ 2,090 81,426 Sunrise Assisted Living Inc./1/ 3,013 81,381 Incyte Genomics Inc./1/ 9,691 79,563 Cell Genesys Inc./1/ 5,466 77,672 Biosite Inc./1/ 2,283 71,344 Noven Pharmaceuticals Inc./1/ 3,533 70,978 Inhale Therapeutic Systems Inc./1/ 8,634 68,209 Tularik Inc./1/ 5,841 67,171 Enzo Biochem Inc./1/ 3,614 65,413 Gene Logic Inc./1/ 4,204 65,288 Cubist Pharmaceuticals Inc./1/ 4,453 62,253 Schedules of Investments 71 Schedule of Investments (Continued) iShares Dow Jones U.S. Healthcare Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Datascope Corp. 1,970 $ 61,956 PAREXEL International Corp./1/ 3,924 61,097 Cell Therapeutics Inc./1/ 4,832 60,013 Impath Inc./1/ 2,504 59,270 ArthroCare Corp./1/ 3,596 57,608 Alexion Pharmaceuticals Inc./1/ 2,864 52,927 CuraGen Corp./1/ 6,032 52,056 Bio-Technology General Corp./1/ 9,216 45,149 Molecular Devices Corp./1/ 2,473 44,143 Theragenics Corp./1/ 4,648 41,739 XOMA Ltd./1/ 11,063 41,265 Maxygen Inc./1/ 4,363 40,227 Caliper Technologies Corp./1/ 3,804 40,056 Pharmacopeia Inc./1/ 3,383 39,243 Emisphere Technologies Inc./1/ 2,539 38,897 Cyberonics Inc./1/ 2,787 37,764 Nabi Biopharmaceuticals/1/ 6,004 37,705 Guilford Pharmaceuticals Inc./1/ 4,497 34,627 Lexicon Genetics Inc./1/ 4,270 34,160 United Therapeutics Inc./1/ 2,702 32,397 Geron Corp./1/ 3,691 29,233 Praecis Pharmaceuticals Inc./1/ 8,084 28,941 EntreMed Inc./1/ 3,389 26,434 SuperGen Inc./1/ 4,642 25,206 Advanced Tissue Sciences Inc./1/ 8,621 23,708 Cygnus Inc./1/ 4,925 23,197 Kos Pharmaceuticals Inc./1/ 886 23,036 Visible Genetics Inc./1/ 3,358 22,267 CYTOGEN Corp./1/ 12,118 20,358 Novoste Corp./1/ 2,644 16,393 Cell Pathways Inc./1/ 4,724 16,251 Pharmacyclics Inc./1/ 2,622 16,125 Genome Therapeutics Corp./1/ 3,700 14,500 ViroPharma Inc./1/ 3,007 10,524 TOTAL COMMON STOCKS (COST: $259,537,231) 236,230,690 SHORT TERM INSTRUMENTS - 3.09% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5,612,204 5,612,204 Dreyfus Money Market Fund 472,707 472,707 Goldman Sachs Financial Square Prime Obligation Fund 24,293 24,293 Providian Temp Cash Money Market Fund 1,194,207 1,194,207 TOTAL SHORT TERM INSTRUMENTS (Cost: $7,303,411) 7,303,411 Total Investments in Securities - 103.09% (Cost $266,840,642) 243,534,101 Other Assets, Less Liabilities - (3.09%) (7,301,529) ------------ NET ASSETS - 100.00% $236,232,572 ============ /1/ Non-income earning securities. See notes to financial statements. 72 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Industrial Sector Index Fund April 30, 2002 Security Shares Value - ----------------------------------------------------------------- COMMON STOCKS - 99.96% General Electric Co. 641,073 $20,225,853 3M Co. 27,214 3,423,520 Tyco International Ltd. 137,460 2,536,137 Boeing Co. (The) 56,030 2,498,938 United Technologies Corp. 33,414 2,344,660 Automatic Data Processing Inc. 43,823 2,227,961 First Data Corp. 27,069 2,151,715 Honeywell International Inc. 56,802 2,083,497 Illinois Tool Works Inc. 22,539 1,625,062 Emerson Electric Co. 30,310 1,618,251 Lockheed Martin Corp. 25,322 1,592,754 United Parcel Service Inc. 25,569 1,535,163 Caterpillar Inc. 25,729 1,405,318 General Dynamics Corp. 13,609 1,321,298 Waste Management Inc. 45,762 1,205,371 Concord EFS Inc./1/ 37,425 1,183,524 Raytheon Co. 26,606 1,125,434 FedEx Corp./1/ 21,058 1,088,067 Union Pacific Corp. 17,857 1,014,278 Masco Corp. 34,925 981,393 Paychex Inc. 23,785 887,894 Agilent Technologies Inc./1/ 29,276 879,745 Northrop Grumman Corp. 6,954 839,070 Deere & Co. 18,654 834,953 Burlington Northern Santa Fe Corp. 29,150 801,333 Ingersoll-Rand Co. "A" 12,466 622,677 Dover Corp. 15,910 592,807 Danaher Corp. 8,186 585,954 CSX Corp. 15,882 574,452 Textron Inc. 11,635 572,209 Norfolk Southern Corp. 26,572 569,438 Fiserv Inc./1/ 12,765 567,532 Cintas Corp. 9,770 505,793 PACCAR Inc. 6,774 484,138 Eaton Corp. 5,517 466,793 IMS Health Inc. 20,306 418,507 Sabre Holdings Corp./1/ 8,994 418,221 Parker Hannifin Corp. 8,031 401,148 Moody's Corp. 9,057 394,704 Solectron Corp./1/ 54,054 394,594 ITT Industries Inc. 5,504 384,509 SPX Corp./1/ 2,784 374,866 Rockwell International Corp. 17,438 374,394 Cooper Industries Inc. 8,503 372,431 Sanmina-SCI Corp./1/ 35,219 366,278 ChoicePoint Inc./1/ 6,489 359,750 Equifax Inc. 13,112 358,220 Vulcan Materials Co. 7,444 342,573 Temple-Inland Inc. 6,297 333,363 Grainger (W.W.) Inc. 5,812 325,879 American Standard Companies Inc./1/ 4,296 320,911 L-3 Communications Holdings Inc./1/ 2,485 317,533 Robert Half International Inc./1/ 11,959 314,043 Donnelley (R.R.) & Sons Co. 9,769 312,217 D&B/1/ 8,029 309,197 Convergys Corp./1/ 10,811 299,140 Sherwin-Williams Co. (The) 9,204 282,839 Certegy Inc./1/ 7,058 273,850 Ceridian Corp./1/ 11,658 259,740 Waters Corp./1/ 9,475 255,351 DST Systems Inc./1/ 5,102 252,141 Avnet Inc. 9,471 242,647 Thermo Electron Corp./1/ 12,276 232,016 Hubbell Inc. "B" 6,690 230,337 Sealed Air Corp./1/ 5,003 223,484 Deluxe Corp. 5,000 219,400 Jabil Circuit Inc./1/ 10,725 218,897 Accenture Ltd./1/ 10,124 217,059 Fluor Corp. 4,986 206,071 Vishay Intertechnology Inc./1/ 9,329 205,145 Arrow Electronics Inc./1/ 7,741 204,362 Teleflex Inc. 3,587 202,701 Molex Inc. 5,999 201,686 Manpower Inc. 4,989 200,807 Diebold Inc. 5,181 195,945 Expeditors International Washington Inc. 3,291 190,450 Navistar International Corp. 4,658 185,854 Republic Services Inc. "A"/1/ 9,327 184,675 Smurfit-Stone Container Corp./1/ 11,354 184,389 Molex Inc. "A" 6,216 182,253 American Power Conversion Corp./1/ 14,133 181,609 Pall Corp. 8,581 178,485 TMP Worldwide Inc./1/ 5,602 169,012 Bemis Co. 3,067 163,256 Iron Mountain Inc./1/ 5,145 158,466 Owens-Illinois Inc./1/ 9,848 157,765 Pactiv Corp./1/ 7,401 152,979 Sonoco Products Co. 5,285 152,737 Tech Data Corp./1/ 3,213 152,103 CH Robinson Worldwide Inc. 4,804 151,182 Schedules of Investments 73 Schedule of Investments (Continued) iShares Dow Jones U.S. Industrial Sector Index Fund April 30, 2002 Security Shares Value - ----------------------------------------------------------------- Allied Waste Industries Inc./1/ 12,354 $ 149,978 Goodrich Co. 4,328 138,150 Millipore Corp. 3,413 136,349 Viad Corp. 4,468 136,185 Actuant Corp. "A"/1/ 3,098 136,002 NCO Group Inc./1/ 4,818 134,133 Tektronix Inc./1/ 6,070 133,540 Symbol Technologies Inc. 15,205 128,634 PSS World Medical Inc./1/ 12,327 122,037 Pentair Inc. 2,401 116,593 Thomas & Betts Corp. 4,842 113,787 Martin Marietta Materials Inc. 2,915 113,568 Ball Corp. 2,324 110,506 PerkinElmer Inc. 8,428 107,878 CheckFree Corp./1/ 5,257 107,033 Kadant Inc./1/ 6,438 102,364 Catalina Marketing Corp./1/ 2,817 98,849 AVX Corp. 4,955 98,753 Jacobs Engineering Group Inc./1/ 2,458 96,993 Crown Cork & Seal Co. Inc./1/ 8,600 96,836 Titan Corp. (The)/1/ 4,184 95,646 Cummins Inc. 2,146 91,312 AptarGroup Inc. 2,377 88,306 United Stationers Inc./1/ 2,263 88,280 Cymer Inc./1/ 1,672 79,035 Getty Images Inc./1/ 2,202 76,652 Acxiom Corp./1/ 4,508 74,968 Harsco Corp. 1,746 74,205 Integrated Circuit Systems Inc./1/ 3,700 73,630 CSG Systems International Inc./1/ 2,804 73,521 UCAR International Inc./1/ 5,549 72,137 Roper Industries Inc. 1,560 71,744 Lafarge North America Inc. 1,633 71,493 Crane Co. 2,334 64,372 National Instruments Corp./1/ 1,670 64,178 Alliant Techsystems Inc./1/ 588 63,328 Shaw Group Inc. (The)/1/ 1,969 60,114 Coherent Inc./1/ 1,954 59,792 Macrovision Corp./1/ 2,683 59,643 Donaldson Co. Inc. 1,361 58,727 Terex Corp./1/ 2,334 58,467 Plexus Corp./1/ 2,297 57,402 Aeroflex Inc./1/ 4,029 56,325 AGCO Corp./1/ 2,478 56,300 Airborne Inc. 2,691 55,811 CNF Inc. 1,746 55,191 Garmin Ltd./1/ 2,334 52,538 Ingram Micro Inc. "A"/1/ 3,510 52,159 Technitrol Inc. 2,031 51,587 Cognex Corp./1/ 2,072 51,075 MPS Group Inc./1/ 5,547 49,923 GATX Corp. 1,556 49,823 Swift Transportation Co. Inc./1/ 2,552 49,636 Varian Inc./1/ 1,447 48,822 Photon Dynamics Inc./1/ 1,001 48,488 Corporate Executive Board Co. (The)/1/ 1,253 47,614 Copart Inc./1/ 3,073 47,293 Flowserve Corp./1/ 1,363 47,023 Electro Scientific Industries Inc./1/ 1,547 46,503 Zomax Inc./1/ 8,057 46,328 FreeMarkets Inc./1/ 2,544 45,181 Veeco Instruments Inc./1/ 1,506 44,623 Pioneer-Standard Electronics Inc. 3,037 44,401 Orbotech Ltd./1/ 1,708 44,340 Global Payments Inc. 1,153 44,298 York International Corp. 1,176 42,818 PRG-Schultz International Inc./1/ 3,090 42,395 Newport Corp. 2,041 41,861 Monaco Coach Corp./1/ 1,400 40,208 USG Corp./1/ 5,664 39,931 Benchmark Electronics Inc./1/ 1,300 39,520 Audiovox Corp. "A"/1/ 5,262 39,307 Ryder System Inc. 1,366 38,740 Kennametal Inc. 968 38,391 Dionex Corp./1/ 1,547 38,103 FMC Corp./1/ 968 37,462 FuelCell Energy Inc./1/ 2,126 36,355 Navigant Consulting Co./1/ 5,600 36,288 Casella Waste Systems Inc. "A"/1/ 2,886 35,642 Littelfuse Inc./1/ 1,293 34,795 Zygo Corp./1/ 2,009 34,374 U.S. Industries Inc./1/ 9,466 34,078 EGL Inc./1/ 1,978 33,923 Tetra Tech Inc./1/ 2,362 33,682 Presstek Inc./1/ 4,366 32,745 Yellow Corp./1/ 1,200 32,364 Power-One Inc./1/ 3,855 32,228 Checkpoint Systems Inc./1/ 1,868 32,223 C&D Technologies Inc. 1,375 31,625 Pittston Brink's Group 1,144 31,483 Acuity Brands Inc. 1,688 31,312 NDCHealth Corp. 968 31,141 74 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Industrial Sector Index Fund April 30, 2002 Security Shares Value - ----------------------------------------------------------------- Anaren Microwave Inc./1/ 2,439 $ 30,805 eFunds Corp./1/ 1,896 30,146 Chemed Corp. 778 29,875 American Superconductor Corp./1/ 3,784 29,212 Three-Five Systems Inc./1/ 2,068 28,952 BE Aerospace Inc./1/ 2,200 28,600 Elcor Corp. 1,037 27,978 Trinity Industries Inc. 1,176 27,636 Precision Castparts Corp. 778 27,518 Spherion Corp./1/ 2,154 27,399 Stericycle Inc./1/ 400 27,012 Methode Electronics Inc. "A" 2,351 26,966 Regal-Beloit Corp. 1,029 26,908 AAR Corp. 2,100 26,754 Arkansas Best Corp./1/ 1,100 26,565 Mueller Industries Inc./1/ 778 26,522 Alexander & Baldwin Inc. 968 26,301 Dycom Industries Inc./1/ 1,735 26,251 CTS Corp. 1,516 25,999 Wabash National Corp. 2,600 25,454 DDi Corp./1/ 4,134 24,887 Briggs & Stratton Corp. 588 24,784 Carlisle Companies Inc. 588 23,808 ProBusiness Services Inc./1/ 1,200 23,544 Quanta Services Inc./1/ 1,401 23,481 USFreightways Corp. 698 23,348 Multex.com Inc./1/ 5,190 23,044 Astec Industries Inc./1/ 1,200 22,380 Helix Technology Corp. 820 22,189 Tollgrade Communications Inc./1/ 1,097 22,061 Arbitron Inc./1/ 633 21,756 Capstone Turbine Corp./1/ 7,083 21,603 Artesyn Technologies Inc./1/ 2,763 21,469 Hunt (J.B.) Transport Services Inc./1/ 790 20,690 Timken Co. (The) 775 20,654 Vicor Corp./1/ 1,403 19,446 Bowne & Co. Inc. 1,217 19,350 Werner Enterprises Inc. 1,044 18,531 Atlas Air Worldwide Holdings Inc./1/ 1,478 18,431 TeleTech Holdings Inc./1/ 1,498 18,351 EMCOR Group Inc./1/ 300 18,255 MasTec Inc./1/ 2,075 16,144 G&K Services Inc. "A" 390 16,087 Curtiss-Wright Corp. 200 15,060 Hughes Supply Inc. 300 12,516 Plug Power Inc./1/ 1,190 12,447 Esterline Technologies Corp./1/ 500 11,625 MSC Industrial Direct Co. Inc. "A"/1/ 475 10,094 Landstar System Inc./1/ 100 9,790 Albany International Corp. "A" 375 9,442 Granite Construction Inc. 398 9,198 Forrester Research Inc./1/ 500 9,125 MedQuist Inc./1/ 302 8,722 Overseas Shipholding Group Inc. 375 8,565 Texas Industries Inc. 200 7,756 Insituform Technologies Inc. "A"/1/ 300 7,455 Roadway Corp. 200 6,100 Viasys Healthcare Inc./1/ 300 6,054 Wallace Computer Services Inc. 254 5,525 Kaman Corp. "A" 200 3,590 Waste Connections Inc./1/ 100 3,530 Park Electrochemical Corp. 100 3,025 Stewart & Stevenson Services Inc. 100 1,889 TOTAL COMMON STOCKS (COST: $94,414,461) 84,597,203 SHORT TERM INSTRUMENTS - 2.21% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,354,582 1,354,582 Dreyfus Money Market Fund 122,414 122,414 Goldman Sachs Financial Square Prime Obligation Fund 83,979 83,979 Providian Temp Cash Money Market Fund 309,256 309,256 TOTAL SHORT TERM INSTRUMENTS (COST: $1,870,231) 1,870,231 TOTAL INVESTMENTS IN SECURITIES - 102.17% (COST $96,284,692) 86,467,434 OTHER ASSETS, LESS LIABILITIES - (2.17%) (1,833,047) ----------- NET ASSETS - 100.00% $84,634,387 =========== /1/ Non-income earning securities. See Notes to Financial Statements. Schedules of Investments 75 Schedule of Investments iShares Dow Jones U.S. Technology Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 100.03% Microsoft Corp./1/ 409,219 $ 21,385,785 Intel Corp. 589,432 16,863,649 International Business Machines Corp. 150,865 12,636,452 Cisco Systems Inc./1/ 637,354 9,337,236 Dell Computer Corp./1/ 201,998 5,320,627 Texas Instruments Inc. 151,982 4,700,803 Oracle Corp./1/ 367,588 3,690,583 Applied Materials Inc./1/ 143,634 3,493,179 Motorola Inc. 194,978 3,002,661 Hewlett-Packard Co. 143,232 2,449,267 Sun Microsystems Inc./1/ 285,628 2,336,437 Electronic Data Systems Corp. 38,261 2,076,042 QUALCOMM Inc./1/ 66,962 2,019,574 EMC Corp./1/ 193,217 1,766,003 Compaq Computer Corp. 148,997 1,512,320 Maxim Integrated Products Inc./1/ 28,250 1,406,850 Lucent Technologies Inc./1/ 298,351 1,372,415 Analog Devices Inc./1/ 31,930 1,180,133 Micron Technology Inc./1/ 47,507 1,125,916 Xilinx Inc./1/ 29,290 1,105,990 Linear Technology Corp. 27,764 1,078,909 Veritas Software Corp./1/ 34,792 986,005 KLA-Tencor Corp./1/ 16,376 965,693 Pitney Bowes Inc. 21,372 899,761 Siebel Systems Inc./1/ 36,335 878,944 Adobe Systems Inc. 20,793 830,888 Apple Computer Inc./1/ 30,768 746,739 Computer Associates International Inc. 40,041 744,763 SunGard Data Systems Inc./1/ 24,441 727,364 Altera Corp./1/ 34,096 701,014 Lexmark International Inc. "A"/1/ 11,310 676,112 Intuit Inc./1/ 17,037 667,510 Computer Sciences Corp./1/ 14,162 635,166 Novellus Systems Inc./1/ 12,457 590,462 Broadcom Corp. "A"/1/ 16,273 561,418 Xerox Corp./1/ 62,945 557,063 Corning Inc. 82,991 555,210 Affiliated Computer Services Inc. "A"/1/ 9,990 540,159 PeopleSoft Inc./1/ 22,739 526,863 Teradyne Inc./1/ 15,844 522,060 Brocade Communications Systems Inc./1/ 20,348 520,705 Microchip Technology Inc./1/ 11,631 517,579 Network Appliance Inc./1/ 29,048 506,888 National Semiconductor Corp./1/ 15,540 489,821 Yahoo! Inc./1/ 31,781 469,088 JDS Uniphase Corp./1/ 105,052 455,926 Symantec Corp./1/ 12,474 441,704 Cadence Design Systems Inc./1/ 21,440 439,091 LSI Logic Corp./1/ 32,188 413,616 Rockwell Collins Inc. 16,017 381,525 Unisys Corp./1/ 28,041 378,553 QLogic Corp./1/ 8,052 368,057 BEA Systems Inc./1/ 33,160 355,475 NVIDIA Corp./1/ 9,877 343,818 Atmel Corp./1/ 38,045 342,405 Amdocs Ltd./1/ 15,732 341,856 Advanced Micro Devices Inc./1/ 29,860 333,835 NCR Corp./1/ 8,532 331,553 BMC Software Inc./1/ 21,422 309,762 Check Point Software Technologies Ltd./1/ 15,838 287,460 Lam Research Corp./1/ 10,946 280,874 Tellabs Inc./1/ 32,684 277,487 Scientific-Atlanta Inc. 13,757 275,140 Agere Systems Inc./1/ 63,907 270,966 Mercury Interactive Corp./1/ 7,263 270,692 ADC Telecommunications Inc./1/ 68,830 267,749 International Rectifier Corp./1/ 5,572 256,981 Integrated Device Technology Inc./1/ 9,163 256,930 Compuware Corp./1/ 32,684 256,243 Rational Software Corp./1/ 17,068 248,681 Juniper Networks Inc./1/ 24,289 245,562 Synopsys Inc./1/ 5,323 240,121 Fairchild Semiconductor International Corp. "A"/1/ 8,755 235,860 76 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Technology Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Cypress Semiconductor Corp./1/ 10,579 $ 235,594 Conexant Systems Inc./1/ 22,407 228,551 PMC-Sierra Inc./1/ 14,426 224,469 Network Associates Inc./1/ 12,323 218,733 RF Micro Devices Inc./1/ 12,541 218,213 KPMG Consulting Inc./1/ 12,389 216,807 CIENA Corp./1/ 28,703 214,985 Intersil Corp. "A"/1/ 7,863 211,122 Harris Corp. 5,788 209,583 Emulex Corp./1/ 7,191 208,467 Marvell Technology Group Ltd./1/ 5,710 205,560 Semtech Corp./1/ 6,188 197,892 Comverse Technology Inc./1/ 16,206 194,958 Citrix Systems Inc./1/ 16,502 191,423 Storage Technology Corp./1/ 9,150 188,307 Autodesk Inc. 9,646 177,390 Applied Micro Circuits Corp./1/ 26,244 177,147 3Com Corp./1/ 30,605 176,591 Reynolds & Reynolds Co. (The) "A" 6,051 175,237 VeriSign Inc./1/ 18,656 172,568 WebMD Corp./1/ 24,881 171,679 IKON Office Solutions Inc. 12,485 162,305 Polycom Inc./1/ 7,852 161,908 Palm Inc./1/ 49,851 158,028 Avaya Inc./1/ 24,712 151,732 Henry (Jack) & Associates Inc. 6,395 148,876 Amkor Technology Inc./1/ 7,396 148,660 Overture Services Inc./1/ 4,296 146,880 KEMET Corp./1/ 7,542 146,089 Advent Software Inc./1/ 2,794 137,968 Adaptec Inc./1/ 9,159 134,637 Varian Semiconductor Equipment Associates Inc./1/ 2,858 133,526 Micrel Inc./1/ 5,957 130,756 Cerner Corp./1/ 2,454 130,332 Zebra Technologies Corp. "A"/1/ 2,270 128,641 Advanced Fibre Communications Inc./1/ 7,215 127,994 Crown Castle International Corp./1/ 17,206 125,604 Level 3 Communications Inc./1/ 30,445 124,216 Axcelis Technologies Inc./1/ 8,540 122,976 Sybase Inc./1/ 8,702 122,350 UTStarcom Inc./1/ 4,957 121,446 Maxtor Corp./1/ 17,316 120,000 Andrew Corp./1/ 7,157 118,735 Novell Inc./1/ 31,710 117,327 Peregrine Systems Inc./1/ 16,776 114,916 Macromedia Inc./1/ 5,132 114,905 Lattice Semiconductor Corp./1/ 9,622 114,021 Mentor Graphics Corp./1/ 5,631 108,678 Credence Systems Corp./1/ 5,308 107,434 Gateway Inc./1/ 19,516 106,948 TriQuint Semiconductor Inc./1/ 10,504 106,511 NetIQ Corp./1/ 4,738 106,273 Retek Inc./1/ 4,465 105,370 Fair Isaac and Co. Inc. 1,870 104,234 Perot Systems Corp. "A"/1/ 5,850 104,130 Vitesse Semiconductor Corp./1/ 17,212 102,928 Quantum Corp./1/ 13,699 100,688 Western Digital Corp./1/ 16,188 100,204 Avocent Corp./1/ 3,778 94,450 Parametric Technology Corp./1/ 23,025 93,021 SanDisk Corp./1/ 5,641 92,287 LTX Corp./1/ 4,284 90,864 Extreme Networks Inc./1/ 9,970 89,630 Openwave Systems Inc./1/ 15,315 87,602 Electronics For Imaging Inc./1/ 4,693 84,052 EarthLink Inc./1/ 11,336 82,526 Elantec Semiconductor Inc./1/ 1,996 82,515 Black Box Corp./1/ 1,760 82,350 Amphenol Corp. "A"/1/ 1,861 81,605 i2 Technologies Inc./1/ 25,895 81,569 American Management Systems Inc./1/ 3,555 81,338 Photronics Inc./1/ 2,426 80,228 Manugistics Group Inc./1/ 5,067 79,856 Finisar Corp./1/ 12,422 79,377 Cirrus Logic Inc./1/ 6,520 79,218 Ariba Inc./1/ 21,067 79,001 Ascential Software Corp./1/ 22,875 78,690 Kulicke & Soffa Industries Inc./1/ 4,305 78,093 Schedules of Investments 77 Schedule of Investments (Continued) iShares Dow Jones U.S. Technology Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ ATMI Inc./1/ 2,531 $ 77,195 American Tower Corp./1/ 15,464 77,165 Edwards (J.D.) & Co./1/ 6,863 76,179 Cree Inc./1/ 6,396 75,409 Keane Inc./1/ 4,725 73,899 Internet Security Systems Inc./1/ 3,689 72,304 Plantronics Inc./1/ 3,372 71,014 CACI International Inc. "A"/1/ 2,334 70,426 Silicon Storage Technology Inc./1/ 7,044 69,876 CommScope Inc./1/ 4,369 69,380 Exar Corp./1/ 3,432 68,434 Intergraph Corp./1/ 3,985 67,745 Powerwave Technologies Inc./1/ 5,648 67,437 Hyperion Solutions Corp./1/ 2,872 67,205 Wind River Systems Inc./1/ 6,044 65,819 RealNetworks Inc./1/ 9,357 65,780 Documentum Inc./1/ 3,379 65,620 Oak Technology Inc./1/ 4,482 63,779 JDA Software Group Inc./1/ 2,042 61,750 Silicon Laboratories Inc./1/ 2,069 61,160 webMethods Inc./1/ 4,101 61,023 HNC Software Inc./1/ 3,123 59,712 ONI Systems Inc./1/ 11,326 59,235 Brooks Automation Inc./1/ 1,631 58,145 Loral Space & Communications Ltd./1/ 29,353 57,825 GlobeSpanVirata Inc./1/ 9,662 57,006 Zoran Corp./1/ 1,559 56,451 Rambus Inc./1/ 8,422 56,259 Borland Software Corp./1/ 5,141 56,037 Vignette Corp./1/ 21,623 55,571 Sycamore Networks Inc./1/ 16,373 55,341 InterDigital Communications Corp./1/ 4,824 54,752 Legato Systems Inc./1/ 7,824 53,986 FileNET Corp./1/ 3,119 53,803 Avant! Corp./1/ 3,198 53,247 Micromuse Inc./1/ 6,439 52,542 Actel Corp./1/ 2,131 51,783 Mercury Computer Systems Inc./1/ 1,780 51,531 Power Integrations Inc./1/ 2,417 51,120 Asyst Technologies Inc./1/ 3,108 50,971 Foundry Networks Inc./1/ 8,634 49,127 Advanced Digital Information Corp./1/ 5,433 48,897 TIBCO Software Inc./1/ 5,826 48,880 Mykrolis Corp./1/ 3,307 48,745 Cable Design Technologies Corp./1/ 3,873 48,684 Informatica Corp./1/ 6,110 48,452 McDATA Corp. "A"/1/ 7,132 48,426 Iomega Corp./1/ 3,843 48,422 Alpha Industries Inc./1/ 3,895 47,714 Red Hat Inc./1/ 10,391 47,695 ADTRAN Inc./1/ 1,909 47,458 Riverstone Networks Inc./1/ 10,095 47,446 DuPont Photomasks Inc./1/ 1,217 47,439 Cohu Inc. 1,684 47,169 Echelon Corp./1/ 2,982 47,116 Silicon Image Inc./1/ 4,875 47,044 Sonus Networks Inc./1/ 16,880 46,420 DSP Group Inc./1/ 2,157 45,772 Kopin Corp./1/ 5,731 45,504 Arris Group Inc./1/ 5,218 45,292 InFocus Corp./1/ 3,441 44,527 MICROS Systems Inc./1/ 1,542 43,176 S1 Corp./1/ 4,801 43,065 Systems & Computer Technology Corp./1/ 2,739 42,591 Silicon Graphics Inc./1/ 15,104 42,291 Verity Inc./1/ 3,121 41,634 Tekelec/1/ 3,920 41,474 Harmonic Inc./1/ 5,147 41,433 PRI Automation Inc./1/ 2,221 41,288 ESS Technology Inc./1/ 2,573 41,091 CNET Networks Inc./1/ 9,996 40,984 Dendrite International Inc./1/ 3,063 40,585 Quest Software Inc./1/ 3,015 39,195 Interwoven Inc./1/ 9,211 38,870 PanAmSat Corp./1/ 1,612 37,866 Aspen Technology Inc./1/ 2,792 37,832 E.piphany Inc./1/ 6,241 37,571 78 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Technology Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ Transaction Systems Architects Inc. "A"/1/ 3,196 $ 37,074 Read-Rite Corp./1/ 10,348 36,735 Trimble Navigation Ltd./1/ 2,211 36,680 Agile Software Corp./1/ 3,993 36,576 Concurrent Computer Corp./1/ 5,227 35,805 Sapient Corp./1/ 7,336 35,800 Hutchinson Technology Inc./1/ 1,991 35,659 SonicWALL Inc./1/ 4,697 34,852 Roxio Inc./1/ 1,617 34,361 Inter-Tel Inc. 1,674 34,334 C-COR.net Corp./1/ 2,975 32,546 Centillium Communications Inc./1/ 2,723 31,641 Redback Networks Inc./1/ 13,990 31,617 General Cable Corp. 2,687 30,847 Integrated Silicon Solution Inc./1/ 2,292 30,713 DMC Stratex Networks Inc./1/ 7,260 30,492 CIBER Inc./1/ 4,353 30,471 Ultratech Stepper Inc./1/ 1,682 28,712 REMEC Inc./1/ 3,585 28,680 Imagistics International Inc./1/ 1,647 28,658 Electroglas Inc./1/ 1,680 28,241 Inktomi Corp./1/ 12,160 28,211 Liberate Technologies/1/ 5,527 28,132 RSA Security Inc./1/ 4,596 28,036 Actuate Corp./1/ 4,883 27,589 Corvis Corp./1/ 22,830 27,396 ANADIGICS Inc./1/ 2,687 27,246 MatrixOne Inc./1/ 3,826 26,399 DiamondCluster International Inc. "A"/1/ 2,015 25,389 Computer Network Technology Corp./1/ 2,627 25,062 SERENA Software Inc./1/ 1,820 25,025 Alliance Semiconductor Corp./1/ 2,337 24,912 FSI International Inc./1/ 2,021 24,110 IDX Systems Corp./1/ 1,379 23,815 InfoSpace Inc./1/ 20,150 23,575 Commerce One Inc./1/ 20,983 23,291 Answerthink Inc./1/ 3,557 22,943 Aspect Communications Corp./1/ 4,497 21,541 AXT Inc./1/ 1,829 21,216 Netegrity Inc./1/ 2,771 21,198 Transmeta Corp./1/ 8,971 21,172 EMCORE Corp./1/ 2,339 20,700 M-Systems Flash Disk Pioneers Ltd./1/ 2,367 20,569 MRO Software Inc./1/ 1,422 20,562 BroadVision Inc./1/ 19,970 20,369 F5 Networks Inc./1/ 1,564 20,363 RadiSys Corp./1/ 1,354 19,863 Covansys Corp./1/ 2,324 18,592 Vitria Technology Inc./1/ 8,146 18,328 Entrust Inc./1/ 4,212 17,648 Viewpoint Corp./1/ 2,922 17,532 Keynote Systems Inc./1/ 1,891 17,265 Enterasys Networks Inc./1/ 15,660 17,226 Portal Software Inc./1/ 11,347 16,794 Akamai Technologies Inc./1/ 7,317 16,756 Siliconix Inc./1/ 523 16,569 New Focus Inc./1/ 5,551 16,375 Stratos Lightwave Inc./1/ 5,709 15,757 Packeteer Inc./1/ 2,200 15,400 Handspring Inc./1/ 5,901 15,343 Avanex Corp./1/ 4,743 14,940 MetaSolv Inc./1/ 2,454 14,479 Nuance Communications Inc./1/ 2,550 14,280 MRV Communications Inc./1/ 6,895 14,066 Oplink Communications Inc./1/ 10,905 13,958 Kana Software Inc./1/ 1,350 13,891 Allen Telecom Inc./1/ 2,092 13,786 StorageNetworks Inc./1/ 4,570 13,294 Terayon Communication Systems Inc./1/ 5,536 13,286 WatchGuard Technologies Inc./1/ 2,056 13,220 PLX Technology Inc./1/ 1,746 12,990 Symmetricom Inc./1/ 2,023 12,947 TranSwitch Corp./1/ 7,680 12,826 PC-Tel Inc./1/ 1,551 12,718 InterVoice-Brite Inc./1/ 2,785 12,254 McDATA Corp. "B"/1/ 1,744 12,121 AudioCodes Ltd./1/ 3,563 11,900 Schedules of Investments 79 Schedule of Investments (Continued) iShares Dow Jones U.S. Technology Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ SeeBeyond Technology Corp./1/ 3,323 $ 11,431 SpeechWorks International Inc./1/ 2,332 11,427 NMS Communications Corp./1/ 3,331 11,026 SBA Communications Corp./1/ 3,761 10,866 Digital River Inc./1/ 1,999 9,875 OpenTV Corp./1/ 2,315 9,816 hi/fn Inc./1/ 917 9,720 Stellent Inc./1/ 1,740 9,170 Netro Corp./1/ 3,190 8,900 Ditech Communications Corp./1/ 2,665 8,126 Internap Network Services Corp./1/ 11,367 6,593 MicroStrategy Inc./1/ 3,371 5,832 SpectraSite Holdings Inc./1/ 12,289 4,916 Universal Access Global Holdings Inc./1/ 4,199 3,611 TOTAL COMMON STOCKS (Cost: $231,355,304) 141,115,921 SHORT TERM INSTRUMENTS - 2.90% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 2,926,324 2,926,324 Dreyfus Money Market Fund 276,191 276,191 Goldman Sachs Financial Square Prime Obligation Fund 189,476 189,476 Providian Temp Cash Money Market Fund 697,745 697,745 TOTAL SHORT TERM INSTRUMENTS (Cost: $4,089,736) 4,089,736 TOTAL INVESTMENTS IN SECURITIES - 102.93% (Cost $235,445,040) 145,205,657 Other Assets, Less Liabilities - (2.93%) (4,132,781) ------------ NET ASSETS - 100.00% $141,072,876 ============ /1/ Non-income earning securities. See notes to financial statements. 80 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Telecommunications Sector Index Fund April 30, 2002 Security Shares Value - ----------------------------------------------------------------- COMMON STOCKS - 99.99% Verizon Communications Inc. 270,794 $10,861,547 SBC Communications Inc. 335,191 10,411,032 BellSouth Corp. 150,249 4,560,057 Telephone & Data Systems Inc. 29,636 2,548,696 AT&T Corp. 191,552 2,513,162 Alltel Corp. 50,317 2,490,691 AT&T Wireless Services Inc./1/ 274,675 2,458,341 Citizens Communications Co./1/ 258,179 2,393,319 Broadwing Inc./1/ 336,408 2,220,293 CenturyTel Inc. 79,639 2,206,000 WorldCom Corp./1/ 747,700 1,853,548 Sprint Corp. (FON Group) 96,970 1,536,975 BCE Inc. 69,000 1,206,810 Qwest Communications International Inc. 198,574 998,827 Sprint Corp. (PCS Group)/1/ 81,147 909,658 Nextel Communications Inc. "A"/1/ 115,411 635,915 Time Warner Telecom Inc. "A"/1/ 105,323 397,068 Motorola Inc. 20,900 321,860 Allegiance Telecom Inc./1/ 103,435 209,973 Nextel Partners Inc. "A"/1/ 23,490 119,564 IDT Corp. "B"/1/ 6,504 113,885 United States Cellular Corp./1/ 2,536 100,172 IDT Corp./1/ 4,208 84,160 Western Wireless Corp. "A"/1/ 12,129 76,898 WorldCom Inc.- MCI Group 14,383 53,951 AirGate PCS Inc./1/ 3,009 43,029 Touch America Holdings Inc./1/ 12,000 40,680 Triton PCS Holdings Inc. "A"/1/ 4,611 37,119 Leap Wireless International Inc./1/ 4,535 33,650 Aether Systems Inc./1/ 4,042 13,460 Wireless Facilities Inc./1/ 1,767 7,987 TOTAL COMMON STOCKS (Cost: $73,706,059) 51,458,327 SHORT TERM INSTRUMENTS - 9.48% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3,486,831 3,486,831 Dreyfus Money Market Fund 330,151 330,151 Goldman Sachs Financial Square Prime Obligation Fund 226,495 226,495 Providian Temp Cash Money Market Fund 834,067 834,067 TOTAL SHORT TERM INSTRUMENTS (Cost: $4,877,544) 4,877,544 TOTAL INVESTMENTS IN SECURITIES - 109.47% (Cost $78,583,603) 56,335,871 Other Assets, Less Liabilities - (9.47%) (4,872,741) ----------- NET ASSETS - 100.00% $51,463,130 =========== /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 81 Schedule of Investments iShares Dow Jones U.S. Utilities Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------- COMMON STOCKS-99.94% Duke Energy Corp. 417,876 $ 16,017,187 Southern Co. 352,883 10,004,233 Dominion Resources Inc. 132,771 8,818,650 Exelon Corp. 161,669 8,778,627 American Electric Power Co. Inc. 163,332 7,480,606 TXU Corp. 134,595 7,324,660 Progress Energy Inc. 110,188 5,717,655 FPL Group Inc. 89,267 5,667,562 Entergy Corp. 111,456 5,171,558 FirstEnergy Corp. 151,046 5,029,832 Public Service Enterprise Group Inc. 105,578 4,893,540 Xcel Energy Inc. 186,044 4,731,099 Consolidated Edison Inc. 107,626 4,691,417 PG&E Corp./1/ 196,474 4,617,139 DTE Energy Co. 82,551 3,742,862 Reliant Energy Inc. 133,243 3,381,707 Edison International/1/ 165,412 3,002,228 Ameren Corp. 69,665 2,909,210 Cinergy Corp. 80,684 2,866,702 PPL Corp. 73,799 2,812,480 Sempra Energy 105,187 2,689,632 Constellation Energy Group Inc. 83,110 2,652,871 Allegheny Energy Inc. 63,279 2,652,656 KeySpan Corp. 70,610 2,492,533 Mirant Corp./1/ 202,373 2,444,666 NiSource Inc. 104,771 2,315,439 TECO Energy Inc. 70,838 1,972,130 Pinnacle West Capital Corp. 42,998 1,884,172 AES Corp. (The)/1/ 233,706 1,874,321 Dynegy Inc. "A" 97,779 1,760,022 Calpine Corp./1/ 154,815 1,702,965 SCANA Corp. 53,167 1,698,686 American Water Works Co. Inc. 38,439 1,679,784 DPL Inc. 64,191 1,670,250 Wisconsin Energy Corp. 59,150 1,537,900 Northeast Utilities 67,967 1,359,340 CMS Energy Corp. 67,309 1,303,102 Energy East Corp. 59,038 1,298,246 Potomac Electric Power Co. 55,290 1,263,929 NSTAR 26,940 1,233,852 Equitable Resources Inc. 32,453 1,166,685 ALLETE Inc. 38,121 1,164,215 Questar Corp. 41,360 1,153,944 Alliant Energy Corp. 40,126 1,133,559 Nicor Inc. 22,753 1,064,385 Aquila Inc. 65,714 1,054,053 Conectiv 42,082 1,049,525 MDU Resources Group Inc. 35,104 1,022,580 National Fuel Gas Co. 40,106 955,325 OGE Energy Corp. 39,536 935,026 Puget Energy Inc. 44,031 912,763 Vectren Corp. 34,375 857,312 Hawaiian Electric Industries Inc. 17,969 848,856 Great Plains Energy Inc. 31,387 737,281 IDACORP Inc. 19,003 719,073 Peoples Energy Corp. 17,966 700,674 RGS Energy Group Inc. 17,548 696,305 Philadelphia Suburban Corp. 28,508 687,043 WGL Holdings Inc. 24,623 667,283 AGL Resources Inc. 25,919 620,501 Piedmont Natural Gas Co. 16,419 611,608 Cleco Corp. 22,811 565,257 DQE Inc. 28,367 553,724 ONEOK Inc. 24,410 533,603 PNM Resources Inc. 18,365 532,585 Western Resources Inc. 28,508 495,754 Black Hills Corp. 13,424 467,961 Reliant Resources Inc./1/ 29,544 455,864 Energen Corp. 15,857 446,375 El Paso Electric Co./1/ 25,590 399,204 Southern Union Co./1/ 22,048 385,840 Avista Corp. 23,957 383,072 Sierra Pacific Resources 51,820 367,404 Northwest Natural Gas Co. 12,758 362,327 UniSource Energy Corp. 16,981 342,677 NRG Energy Inc./1/ 25,807 323,104 NUI Corp. 7,459 199,901 TOTAL COMMON STOCKS (Cost: $181,990,448) 180,718,098 82 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Utilities Sector Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------- SHORT TERM INSTRUMENTS - 9.54% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 12,364,569 $ 12,364,569 Dreyfus Money Market Fund 1,157,716 1,157,716 Goldman Sachs Financial Square Prime Obligation Fund 794,231 794,231 Providian Temp Cash Money Market Fund 2,924,755 2,924,755 TOTAL SHORT TERM INSTRUMENTS (Cost: $17,241,271) 17,241,271 TOTAL INVESTMENTS IN SECURITIES - 109.48% (Cost $199,231,719) 197,959,369 Other Assets, Less Liabilities - (9.48%) (17,141,503) ------------ NET ASSETS - 100.00% $180,817,866 ============ /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 83 Schedule of Investments iShares Dow Jones U.S. Chemicals Index Fund April 30, 2002 Security Shares Value - -------------------------------------------------------------- COMMON STOCKS - 99.99% Du Pont (E.I.) de Nemours & Co. 57,740 $ 2,569,430 Dow Chemical Co. (The) 61,089 1,942,630 Air Products & Chemicals Inc. 15,526 746,024 PPG Industries Inc. 10,181 532,568 Avery Dennison Corp. 8,149 521,944 Praxair Inc. 8,704 496,998 Rohm & Haas Co. "A" 11,580 429,734 Ecolab Inc. 9,021 396,112 Engelhard Corp. 12,060 366,865 Eastman Chemical Co. 6,444 284,180 Sigma-Aldrich Corp. 5,924 280,679 International Flavors & Fragrances Inc. 7,935 255,507 Ashland Inc. 4,206 171,731 RPM Inc. 9,820 166,449 Lubrizol Corp. 4,310 148,609 Cabot Corp. 4,971 148,136 Lyondell Chemical Co. 9,615 142,110 Crompton Corp. 11,669 140,611 Valspar Corp. (The) 2,988 137,597 OM Group Inc. 1,735 115,811 IMC Global Inc. 8,681 109,381 Hercules Inc./1/ 8,499 103,688 Cytec Industries Inc./1/ 2,985 98,475 Fuller (H.B.) Co. 3,040 94,574 Millennium Chemicals Inc. 6,571 89,694 Great Lakes Chemical Corp. 3,105 79,923 Ferro Corp. 2,196 62,191 Georgia Gulf Corp. 2,364 52,079 WD-40 Co. 1,826 49,923 Wellman Inc. 2,700 44,820 Schulman (A.) Inc. 2,199 44,640 MacDermid Inc. 1,839 40,458 TOTAL COMMON STOCKS (Cost: $10,825,280) 10,863,571 SHORT TERM INSTRUMENTS - 0.10% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 11,311 11,311 TOTAL SHORT TERM INSTRUMENTS (Cost: $11,311) 11,311 TOTAL INVESTMENTS IN SECURITIES - 100.09% (Cost $10,836,591) 10,874,882 Other Assets, Less Liabilities - (0.09%) (10,245) ----------- NET ASSETS - 100.00% $10,864,637 =========== /1/ Non-income earning securities. See notes to financial statements. 84 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Financial Services Index Fund April 30, 2002 Security Shares Value - --------------------------------------------------------------- COMMON STOCKS - 99.87% Citigroup Inc. 190,620 $ 8,253,846 Bank of America Corp. 58,105 4,211,450 Wells Fargo & Co. 63,120 3,228,588 Fannie Mae 36,935 2,915,280 JP Morgan Chase & Co. 73,325 2,573,708 Wachovia Corp. 50,267 1,912,157 American Express Co. 43,543 1,785,698 Bank One Corp. 43,145 1,763,336 Morgan Stanley Dean Witter & Co. 36,934 1,762,490 U.S. Bancorp 72,305 1,713,629 Freddie Mac 25,735 1,681,782 FleetBoston Financial Corp. 38,589 1,362,192 Washington Mutual Inc. 35,816 1,351,338 Fifth Third Bancorp 18,012 1,235,443 Merrill Lynch & Co. Inc. 29,209 1,225,025 Marsh & McLennan Companies Inc. 10,171 1,028,085 Bank of New York Co. Inc. (The) 27,350 1,000,736 MBNA Corp. 27,815 986,042 Household International Inc. 16,895 984,810 Mellon Financial Corp. 17,287 652,757 BB&T Corp. 16,943 645,189 SunTrust Banks Inc. 9,196 625,144 Goldman Sachs Group Inc. (The) 7,898 621,967 State Street Corp. 12,036 615,160 National City Corp. 19,255 600,756 PNC Financial Services Group (The) 10,485 578,248 USA Education Inc. 5,787 554,684 Lehman Brothers Holdings Inc. 8,798 519,082 Capital One Financial Corp. 7,933 475,107 KeyCorp 15,721 441,917 Schwab (Charles) Corp. (The) 38,410 437,490 Hancock (John) Financial Services Inc. 11,025 425,565 Comerica Inc. 6,542 411,165 Northern Trust Corp. 7,698 408,918 Golden West Financial Corp. 5,007 342,429 SouthTrust Corp. 12,592 335,955 AmSouth Bancorp 13,453 305,518 Regions Financial Corp. 8,400 294,588 Charter One Financial Inc. 8,297 293,548 M&T Bank Corp. 3,259 278,253 Synovus Financial Corp. 9,562 258,556 Union Planters Corp. 5,073 254,208 North Fork Bancorp Inc. 5,976 230,793 Marshall & Ilsley Corp. 3,613 229,967 Bear Stearns Companies Inc. (The) 3,697 228,992 Franklin Resources Inc. 5,403 226,386 National Commerce Financial Corp. 7,578 212,108 Countrywide Credit Industries Inc. 4,516 210,942 Huntington Bancshares Inc. 9,262 187,926 Zions Bancorporation 3,402 183,980 First Tennessee National Corp. 4,676 180,774 Stilwell Financial Inc. 8,096 172,931 Compass Bancshares Inc. 4,728 169,121 T. Rowe Price Group Inc. 4,535 159,042 GreenPoint Financial Corp. 3,159 156,213 Banknorth Group Inc. 5,654 149,209 BISYS Group Inc. (The)/1/ 4,346 148,633 Golden State Bancorp Inc. 4,304 141,989 TCF Financial Corp. 2,684 139,702 Sovereign Bancorp Inc. 9,107 131,414 Popular Inc. 4,301 126,492 AmeriCredit Corp./1/ 3,105 120,536 Edwards (A.G.) Inc. 2,945 120,509 Commerce Bancorp Inc. 2,421 119,573 Legg Mason Inc. 2,350 118,064 Hibernia Corp. "A" 5,866 117,027 Federated Investors Inc. "B" 3,595 115,256 Astoria Financial Corp. 3,407 109,331 Mercantile Bankshares Corp. 2,571 105,822 Principal Financial Group (The)/1/ 3,700 102,860 First Virginia Banks Inc. 1,781 101,927 Valley National Bancorp 2,834 100,834 Associated Banc-Corp 2,687 100,666 SEI Investment Co. 2,920 98,375 New York Community Bancorp Inc. 3,215 95,357 UnionBanCal Corp. 1,970 95,348 Allied Capital Corp. 3,650 95,265 Commerce Bancshares Inc. 2,102 93,266 Neuberger Berman Inc. 2,121 92,157 FirstMerit Corp. 3,168 89,971 Schedules of Investments 85 Schedule of Investments (Continued) iShares Dow Jones U.S. Financial Services Index Fund April 30, 2002 Security Shares Value - --------------------------------------------------------------- E*TRADE Group Inc./1/ 11,703 $ 88,241 Investors Financial Services Corp. 1,187 87,411 City National Corp. 1,506 83,206 Investment Technology Group Inc./1/ 1,785 82,110 Eaton Vance Corp. 2,139 78,138 Bank of Hawaii Corp. 2,737 77,950 Wilmington Trust Corp. 1,206 76,147 Waddell & Reed Financial Inc. "A" 2,946 75,860 Fulton Financial Corp. 3,051 75,299 Providian Financial Corp. 10,530 74,763 Webster Financial Corp. 1,815 71,928 Cullen/Frost Bankers Inc. 1,905 71,895 Roslyn Bancorp Inc. 3,017 69,451 Independence Community Bank Corp. 1,975 64,365 Colonial BancGroup Inc. (The) 4,022 64,352 Sky Financial Group Inc. 2,732 63,710 BancorpSouth Inc. 2,821 61,780 Greater Bay Bancorp 1,838 61,555 Washington Federal Inc. 2,323 60,677 People's Bank 2,266 60,230 Hudson City Bancorp Inc. 1,528 57,407 IndyMac Bancorp Inc./1/ 2,244 56,661 Westamerica Bancorp 1,280 56,640 First Midwest Bancorp Inc. 1,843 56,083 Silicon Valley Bancshares/1/ 1,710 54,635 Trustmark Corp. 2,111 54,400 Hudson United Bancorp 1,706 54,148 Doral Financial Corp. 1,531 53,493 Old National Bancorp 2,127 52,473 Affiliated Managers Group Inc./1/ 817 51,960 Raymond James Financial Inc. 1,531 51,197 LaBranche & Co. Inc./1/ 1,853 50,772 Commercial Federal Corp. 1,715 50,421 Whitney Holding Corp. 1,366 49,859 Citizens Banking Corp. 1,424 47,277 United Bancshares Inc. 1,398 44,736 Staten Island Bancorp Inc. 2,107 42,035 American Capital Strategies Ltd. 1,307 41,915 Park National Corp. 416 41,912 Downey Financial Corp. 769 40,849 Southwest Bancorp of Texas Inc./1/ 1,143 40,039 Chittenden Corp. 1,181 39,032 Community First Bankshares Inc. 1,410 38,747 Jeffries Group Inc. 808 37,564 South Financial Group Inc. (The) 1,532 35,282 Provident Financial Group Inc. 1,127 34,114 Metris Companies Inc. 2,359 30,761 MAF Bancorp Inc. 830 30,760 Total System Services Inc. 1,366 30,394 Net.B@nk Inc./1/ 1,869 29,997 Republic Bancorp Inc. 2,003 29,644 East West Bancorp Inc. 822 29,428 UCBH Holdings Inc. 724 28,562 W.P. Stewart & Co. Ltd. 971 27,596 Texas Regional Bancshares Inc. "A" 545 27,250 Ameritrade Holding Corp. "A"/1/ 4,760 25,561 Provident Bankshares Corp. 947 24,679 AMCORE Financial Inc. 922 22,127 Sterling Bancshares Inc. 1,568 21,450 Knight Trading Group Inc./1/ 3,711 20,819 Anchor BanCorp Wisconsin Inc. 878 19,316 Dime Community Bancshares 803 18,666 FirstFed Financial Corp./1/ 634 18,132 Harbor Florida Bancshares Inc. 837 17,016 CMGI Inc./1/ 12,520 16,026 Pacific Northwest Bancorp 570 15,994 First Sentinel Bancorp Inc. 1,077 15,843 Bay View Capital Corp./1/ 2,184 15,288 PFF Bancorp Inc. 464 15,219 GBC Bancorp 430 13,846 SWS Group Inc. 597 12,000 BSB Bancorp Inc. 366 10,954 Ocwen Financial Corp./1/ 1,458 10,935 Safeguard Scientifics Inc./1/ 3,958 10,370 OceanFirst Financial Corp. 279 8,895 Medallion Financial Corp. 556 2,858 TOTAL COMMON STOCKS (Cost: $60,785,998) 60,013,702 86 2002 iShares Annual Report to Shareholders Schedule of Investments (Continued) iShares Dow Jones U.S. Financial Services Index Fund April 30, 2002 Security Shares Value - --------------------------------------------------------------- SHORT TERM INSTRUMENTS - 1.20% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 531,090 $ 531,090 Dreyfus Money Market Fund 45,167 45,167 Goldman Sachs Financial Square Prime Obligation Fund 30,987 30,987 Providian Temp Cash Money Market Fund 114,107 114,107 TOTAL SHORT TERM INSTRUMENTS (Cost: $721,351) 721,351 TOTAL INVESTMENTS IN SECURITIES - 101.07% (Cost $61,507,349) 60,735,053 Other Assets, Less Liabilities - (1.07%) (642,807) ----------- NET ASSETS - 100.00% $60,092,246 =========== /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 87 Schedule of Investments iShares Dow Jones U.S. Internet Index Fund April 30, 2002 Security Shares Value - --------------------------------------------------------------- COMMON STOCKS - 100.03% eBay Inc./1/ 34,036 $ 1,807,312 Yahoo! Inc./1/ 100,574 1,484,472 Amazon.com Inc./1/ 68,774 1,147,838 BEA Systems Inc./1/ 104,882 1,124,335 Check Point Software Technologies Ltd./1/ 50,097 909,260 TMP Worldwide Inc./1/ 23,205 700,095 E*TRADE Group Inc./1/ 88,116 664,395 WebMD Corp./1/ 79,899 551,303 VeriSign Inc./1/ 59,224 547,822 Overture Services Inc./1/ 13,878 474,489 CheckFree Corp./1/ 22,272 453,458 Expedia Inc. "A"/1/ 4,975 402,159 Macromedia Inc./1/ 16,340 365,852 DoubleClick Inc./1/ 34,920 270,979 EarthLink Inc./1/ 36,306 264,308 i2 Technologies Inc./1/ 81,767 257,566 Ariba Inc./1/ 67,698 253,867 Internet Security Systems Inc./1/ 11,781 230,907 Hotel Reservations Network Inc. "A"/1/ 3,667 230,728 RealNetworks Inc./1/ 29,276 205,810 webMethods Inc./1/ 13,193 196,312 Ameritrade Holding Corp. "A"/1/ 35,837 192,445 FreeMarkets Inc./1/ 10,180 180,797 Vignette Corp./1/ 68,159 175,169 TIBCO Software Inc./1/ 18,665 156,599 CNET Networks Inc./1/ 32,350 132,635 Interwoven Inc./1/ 28,986 122,321 Agile Software Corp./1/ 13,273 121,581 CMGI Inc./1/ 94,521 120,987 Priceline.com Inc./1/ 23,302 117,652 Ticketmaster "B"/1/ 4,707 110,756 Inktomi Corp./1/ 39,351 91,294 InfoSpace Inc./1/ 66,478 77,779 Commerce One Inc./1/ 63,392 70,365 Homestore.com Inc./1/ 26,046 66,157 BroadVision Inc./1/ 63,931 65,210 Akamai Technologies Inc./1/ 24,116 55,226 Portal Software Inc./1/ 35,161 52,038 Internet Capital Group Inc./1/ 63,034 28,996 Art Technology Group Inc./1/ 15,224 25,119 TOTAL COMMON STOCKS (Cost: $26,955,085) 14,506,393 SHORT TERM INSTRUMENTS - 9.44% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 977,665 977,665 Dreyfus Money Market Fund 92,681 92,681 Goldman Sachs Financial Square Prime Obligation Fund 63,583 63,583 Providian Temp Cash Money Market Fund 234,142 234,142 TOTAL SHORT TERM INSTRUMENTS (Cost: $1,368,071) 1,368,071 TOTAL INVESTMENTS IN SECURITIES - 109.47% (Cost $28,323,156) 15,874,464 Other Assets, Less Liabilities - (9.47%) (1,372,975) ----------- NET ASSETS - 100.00% $14,501,489 =========== /1/ Non-income earning securities. See notes to financial statements. 88 2002 iShares Annual Report to Shareholders Schedule of Investments iShares Dow Jones U.S. Real Estate Index Fund April 30, 2002 Security Shares Value - ------------------------------------------------------------------ COMMON STOCKS - 99.87% Equity Office Properties Trust 342,341 $ 9,801,223 Equity Residential Properties Trust 225,789 6,367,250 Simon Property Group Inc. 116,910 3,945,712 Archstone-Smith Trust 143,121 3,858,542 Plum Creek Timber Co. Inc. 114,609 3,489,844 Prologis Trust 145,077 3,220,709 Boston Properties Inc. 75,108 2,927,710 Vornado Realty Trust 66,234 2,920,919 Apartment Investment & Management Co. "A" 57,861 2,840,975 Duke Realty Corp. 102,111 2,685,519 AvalonBay Communities Inc. 54,786 2,611,649 Public Storage Inc. 64,678 2,455,824 Host Marriott Corp. 192,870 2,297,082 General Growth Properties Inc. 47,574 2,175,559 Kimco Realty Corp. 67,036 2,151,856 AMB Property Corp. 70,151 1,967,034 Liberty Property Trust 60,741 1,940,675 Health Care Property Investors Inc. 46,089 1,881,814 Rouse Co. (The) 57,322 1,854,940 Crescent Real Estate Equities Co. 85,235 1,672,311 Hospitality Properties Trust 48,427 1,646,518 Security Capital Group Inc. "B"/1/ 62,282 1,602,516 Mack-Cali Realty Corp. 47,468 1,556,950 New Plan Excel Realty Trust 78,689 1,538,370 Catellus Development Corp./1/ 73,114 1,491,526 United Dominion Realty Trust Inc. 86,061 1,437,219 Arden Realty Inc. 49,864 1,403,672 Camden Property Trust 33,836 1,346,673 Weingarten Realty Investors 37,525 1,335,890 BRE Properties Inc. "A" 38,006 1,240,896 Highwoods Properties Inc. 44,081 1,239,558 Annaly Mortgage Management Inc. 66,564 1,211,465 First Industrial Realty Trust Inc. 32,768 1,103,299 Developers Diversified Realty Corp. 47,603 1,052,026 Post Properties Inc. 30,710 1,043,833 CenterPoint Properties Corp. 18,947 1,036,401 Healthcare Realty Trust Inc. 34,135 1,034,290 La Quinta Corp./1/ 119,635 954,687 Reckson Associates Realty Corp. 37,626 918,074 Federal Realty Investment Trust 33,342 898,567 Cousins Properties Inc. 33,243 897,561 Prentiss Properties Trust 29,108 895,071 Shurgard Storage Centers Inc. "A" 25,330 892,882 Chelsea Property Group Inc. 14,603 882,751 HRPT Properties Trust 101,294 879,232 SL Green Realty Corp. 24,922 874,762 iStar Financial Inc. 27,474 854,441 St. Joe Co. (The) 26,050 801,037 CarrAmerica Realty Corp. 24,586 789,702 Macerich Co. (The) 26,196 768,853 Health Care REIT Inc. 27,021 761,992 LNR Property Corp. 20,470 749,202 Nationwide Health Properties Inc. 39,411 733,045 CBL & Associates Properties Inc. 19,935 729,621 FelCor Lodging Trust Inc. 32,936 708,124 Meristar Hospitality Corp. 37,092 650,965 Brandywine Realty Trust 26,723 638,412 Kilroy Realty Corp. 22,654 637,710 Home Properties of NY Inc. 17,139 617,347 Colonial Properties Trust 16,042 583,608 Manufactured Home Communities Inc. 16,509 555,033 Glenborough Realty Trust Inc. 22,525 505,686 Capital Automotive REIT 20,182 488,404 Mills Corp. 15,257 419,873 Koger Equity Inc. 22,357 409,580 RFS Hotel Investors Inc. 21,059 319,676 JDN Realty Corp. 25,047 317,345 Equity Inns Inc. 30,650 246,426 TOTAL COMMON STOCKS (Cost: $104,181,778) 106,767,918 SHORT TERM INSTRUMENTS - 2.23% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,737,326 1,737,326 Dreyfus Money Market Fund 152,437 152,437 Goldman Sachs Financial Square Prime Obligation Fund 104,577 104,577 Providian Temp Cash Money Market Fund 385,104 385,104 TOTAL SHORT TERM INSTRUMENTS (Cost: $2,379,444) 2,379,444 TOTAL INVESTMENTS IN SECURITIES - 102.10% (Cost $106,561,222) 109,147,362 Other Assets, Less Liabilities - (2.10%) (2,242,383) ------------ NET ASSETS - 100.00% $106,904,979 ============ /1/ Non-income earning securities. See notes to financial statements. Schedules of Investments 89 Schedule of Investments iShares Cohen & Steers Realty Majors Index Fund April 30, 2002 Security Shares Value - --------------------------------------------------------------- COMMON STOCKS - 100.01% Equity Residential Properties Trust 251,232 $ 7,084,742 Equity Office Properties Trust 233,943 6,697,788 Simon Property Group Inc. 182,939 6,174,191 Archstone-Smith Trust 183,739 4,953,604 Vornado Realty Trust 104,511 4,608,935 Public Storage Inc. 120,483 4,574,740 Prologis Trust 184,912 4,105,046 Apartment Investment & Management Co. "A" 78,605 3,859,506 Boston Properties Inc. 96,062 3,744,497 Duke Realty Corp. 138,311 3,637,579 AvalonBay Communities Inc. 72,617 3,461,652 Kimco Realty Corp. 106,018 3,403,178 Host Marriott Corp. 278,109 3,312,278 Rouse Co. (The) 91,026 2,945,601 General Growth Properties Inc. 64,298 2,940,348 AMB Property Corp. 89,131 2,499,233 Liberty Property Trust 77,499 2,476,093 Health Care Property Investors Inc. 59,053 2,411,134 CarrAmerica Realty Corp. 66,175 2,125,541 Weingarten Realty Investors 54,402 1,936,711 Arden Realty Inc. 67,539 1,901,223 Highwoods Properties Inc. 56,243 1,581,553 Cousins Properties Inc. 52,832 1,426,464 Post Properties Inc. 39,036 1,326,834 CenterPoint Properties Corp. 24,086 1,317,504 Reckson Associates Realty Corp. 52,820 1,288,808 SL Green Realty Corp. 31,711 1,113,056 Macerich Co. (The) 35,936 1,054,722 Nationwide Health Properties Inc. 49,992 929,851 Taubman Centers Inc. 53,299 796,820 TOTAL COMMON STOCKS (cost: $90,339,827) 89,689,232 SHORT TERM INSTRUMENTS - 0.12% Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 91,482 91,482 Dreyfus Money Market Fund 4,232 4,232 Goldman Sachs Financial Square Prime Obligation Fund 2,903 2,903 Providian Temp Cash Money Market Fund 10,692 10,692 TOTAL SHORT TERM INSTRUMENTS (Cost: $109,309) 109,309 TOTAL INVESTMENTS IN SECURITIES - 100.13% (Cost $90,449,136) 89,798,541 Other Assets, Less Liabilities - (0.13%) (114,657) ----------- NET ASSETS - 100.00% $89,683,884 =========== See notes to financial statements. 90 2002 iShares Annual Report to Shareholders Statements of Assets and Liabilities iShares Trust April 30, 2002
iShares Dow Jones U.S. --------------------------------------------------------- Basic Consumer Consumer Total Materials Cyclical Non-Cyclical Market Sector Sector Sector Index Fund Index Fund Index Fund Index Fund - ------------------------------------------------------------------------------------------- ASSETS Investments at cost $138,901,620 $60,818,202 $135,904,579 $110,581,544 ------------ ----------- ------------ ------------ Investments in securities, at value (including securities on loan/1/) (Note 1) $123,530,529 $59,591,521 $133,884,910 $116,358,891 Receivables: Investment securities sold 7,729 - - 18,707 Dividends and interest 91,811 89,842 9,550 78,272 iShares sold - - - 13,053 ------------ ----------- ------------ ------------ Total Assets 123,630,069 59,681,363 133,894,460 116,468,923 ------------ ----------- ------------ ------------ LIABILITIES Payables: Collateral for securities on loan (Note 5) 2,453,178 1,625,866 4,419,043 1,434,876 iShares redeemed - 4,183 - - Advisory fees (Note 2) 36,968 62,567 113,720 60,278 ------------ ----------- ------------ ----------- Total Liabilities 2,490,146 1,692,616 4,532,763 1,495,154 ------------ ----------- ------------ ----------- NET ASSETS $121,139,923 $57,988,747 $129,361,697 $114,973,769 ============ =========== ============ =========== NET ASSETS CONSIST OF: Paid-in capital 140,414,776 59,418,949 132,558,315 110,019,685 Undistributed net investment income 135,983 60,137 - 159,446 Undistributed net realized loss (4,039,745) (263,658) (1,176,949) (982,709) Net unrealized appreciation (depreciation) (15,371,091) (1,226,681) (2,019,669) 5,777,347 ------------ ----------- ------------ ------------ NET ASSETS $121,139,923 $57,988,747 $129,361,697 $114,973,769 ============ =========== ============ ============ iShares outstanding 2,400,000 1,450,000 2,350,000 2,400,000 ============ =========== ============ ============ Net asset value per iShare $ 50.47 $ 39.99 $ 55.05 $ 47.91 ============ =========== ============ ============
/1/ Securities on loan with market values of $2,323,182, $1,557,022, $4,242,860 and $1,364,244, respectively. See Note 5. See notes to financial statements. Financial Statements 91 Statements of Assets and Liabilities (Continued) iShares Trust April 30, 2002
iShares Dow Jones U.S. ----------------------------------------------------------- Energy Financial Healthcare Industrial Sector Sector Sector Sector Index Fund Index Fund Index Fund Index Fund - ------------------------------------------------------------------------------------------------ ASSETS Investments at cost $111,511,232 $121,668,160 $266,840,642 $96,284,692 ------------ ----------- ------------ ----------- Investments in securities, at value (including securities on loan/1/) (Note 1) $107,206,795 $125,221,075 $243,534,101 $86,467,434 Receivables: Investment securities sold - 36,338 - 3,482,718 Dividends and interest 48,897 151,141 170,647 34,712 ------------ ------------ ------------ ----------- Total Assets 107,255,692 125,408,554 243,704,748 89,984,864 ------------ ------------ ------------ ----------- LIABILITIES Payables: Investment securities purchased - 218,693 260,142 3,465,598 Collateral for securities on loan (Note 5) 2,356,904 3,277,077 6,967,069 1,804,215 Advisory fees (Note 2) 102,002 117,133 244,965 80,664 ------------ ------------ ------------ ----------- Total Liabilities 2,458,906 3,612,903 7,472,176 5,350,477 ------------ ------------ ------------ ----------- NET ASSETS $104,796,786 $121,795,651 $236,232,572 $84,634,387 ============ ============ ============ =========== NET ASSETS CONSIST OF: Paid-in capital 111,755,057 119,041,564 261,308,703 99,433,293 Undistributed net investment income - 249,526 - - Undistributed net realized loss (2,653,834) (1,048,354) (1,769,590) (4,981,648) Net unrealized appreciation (depreciation) (4,304,437) 3,552,915 (23,306,541) (9,817,258) ------------ ------------ ------------ ----------- NET ASSETS $ 104,796,786 $121,795,651 $236,232,572 $84,634,387 ============ ============ ============ =========== iShares outstanding 2,150,000 1,500,000 4,150,000 1,850,000 ============ ============ ============ =========== Net asset value per iShare $ 48.74 $ 81.20 $ 56.92 $ 45.75 ============ ============ ============ ===========
/1/ Securities on loan with market values of $2,282,306, $3,127,046, $6,732,269 and $1,708,666, respectively. See Note 5. See notes to financial statements. 92 2002 iShares Annual Report to Shareholders Statements of Assets and Liabilities (Continued) iShares Trust April 30, 2002
iShares Dow Jones U.S. ------------------------------------------------------------------------ Technology Telecommunications Utilities Sector Sector Sector Chemicals Index Fund Index Fund Index Fund Index Fund - ---------------------------------------------------------------------------------------------------------- ASSETS Investments at cost $235,445,040 $ 78,583,603 $ 199,231,719 $ 10,836,591 ------------ ------------- -------------- ------------- Investments in securities, at value (including securities on loan/1/) (Note 1) $145,205,657 $ 56,335,871 $ 197,959,369 $ 10,874,882 Receivables: Investment securities sold 79,355 3,031,466 - - Dividends and interest 5,611 220,679 281,670 22,445 ------------ ------------- -------------- ------------- Total Assets 145,290,623 59,588,016 198,241,039 10,897,327 ------------ ------------- -------------- ------------- LIABILITIES Payables: Investment securities purchased - 3,204,801 201,181 22,844 Collateral for securities on loan (Note 5) 4,070,684 4,865,990 17,063,181 - Advisory fees (Note 2) 147,063 54,095 158,811 9,846 ------------ ------------- -------------- ------------- Total Liabilities 4,217,747 8,124,886 17,423,173 32,690 ------------ ------------- -------------- ------------- NET ASSETS $141,072,876 $ 51,463,130 $ 180,817,866 $ 10,864,637 ============ ============= ============== ============= NET ASSETS CONSIST OF: Paid-in capital 246,927,950 90,510,761 187,938,372 11,141,045 Undistributed net investment income - 188,391 389,691 19,875 Undistributed net realized loss (15,615,691) (16,988,290) (6,237,847) (334,574) Net unrealized appreciation (depreciation) (90,239,383) (22,247,732) (1,272,350) 38,291 ------------ ------------- -------------- ------------- NET ASSETS $141,072,876 $ 51,463,130 $ 180,817,866 $ 10,864,637 ============ ============= ============== ============= iShares outstanding 3,250,000 2,300,000 2,750,000 250,000 ============ ============= ============== ============= Net asset value per iShare $ 43.41 $ 22.38 $ 65.75 $ 43.46 ============ ============= ============== =============
/1/ Securities on loan with market values of $3,782,505, $4,224,768, $16,315,582 and $--, respectively. See Note 5. See notes to financial statements. Financial Statements 93 Statements of Assets and Liabilities (Continued) iShares Trust April 30, 2002
iShares Dow Jones U.S. iShares Cohen & Steers --------------------------------------- ---------------------- Financial Real Realty Services Internet Estate Majors Index Fund Index Fund Index Fund Index Fund - -------------------------------------------------------------------------------------------------------- ASSETS Investments at cost $ 61,507,349 $ 28,323,156 $ 106,561,222 $90,449,136 ------------ ------------ ------------- ----------- Investments in securities, at value (including securities on loan/1/) (Note 1) $ 60,735,053 $ 15,874,464 $ 109,147,362 $89,798,541 Receivables: Investment securities sold - 10,567 550,574 - Dividends and interest 84,329 324 236,372 90,171 Other assets - 669 - - ------------ ------------ ------------- ----------- Total Assets 60,819,382 15,886,024 109,934,308 89,888,712 ------------ ------------ ------------- ----------- LIABILITIES Payables: Investment securities purchased - - 673,922 78,802 Collateral for securities on loan (Note 5) 665,707 1,366,000 2,246,719 62,376 iShares redeemed - - - 19,604 Advisory fees (Note 2) 61,429 18,535 108,688 44,046 ------------ ------------ ------------- ----------- Total Liabilities 727,136 1,384,535 3,029,329 204,828 ------------ ------------ ------------- ----------- NET ASSETS $ 60,092,246 $ 14,501,489 $ 106,904,979 $89,683,884 ============ ============ ============= =========== NET ASSETS CONSIST OF: Paid-in capital 61,078,785 53,779,310 105,162,331 90,416,305 Undistributed net investment income 107,072 - 121,105 30,173 Undistributed net realized loss (321,315) (26,829,129) (964,597) (111,999) Net unrealized appreciation (depreciation) (772,296) (12,448,692) 2,586,140 (650,595) ------------ ------------ ------------- ----------- NET ASSETS $ 60,092,246 $ 14,501,489 $ 106,904,979 $89,683,884 ============ ============ ============= =========== iShares outstanding 650,000 1,450,000 1,250,000 1,000,000 ============ ============ ============= =========== Net asset value per iShare $ 92.45 $ 10.00 $ 85.52 $ 89.68 ============ ============ ============= ===========
/1/ Securities on loan with market values of $641,312, $1,248,887, $2,097,522 and $56,867, respectively. See Note 5. See notes to financial statements. 94 2002 iShares Annual Report to Shareholders Statements of Operations iShares Trust Year Ended April 30, 2002
iShares Dow Jones U.S. ------------------------------------------------------- Basic Consumer Consumer Total Materials Cyclical Non-Cyclical Market Sector Sector Sector Index Fund Index Fund Index Fund Index Fund - --------------------------------------------------------------------------------------------- NET INVESTMENT INCOME Dividends $ 1,173,203/1/ $ 491,053 $ 290,135 $ 707,415 Interest 1,324 580 441 469 Securities lending income 9,508 946 6,474 3,259 ------------ ---------- ----------- ----------- Total investment income 1,184,035 492,579 297,050 711,143 ------------ ---------- ----------- ----------- EXPENSES (NOTE 2) Advisory fees 175,899 146,380 323,311 206,929 ------------ ---------- ----------- ----------- Total expenses 175,899 146,380 323,311 206,929 ------------ ---------- ----------- ----------- Net investment income (loss) 1,008,136 346,199 (26,261) 504,214 ------------ ---------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (3,591,113) (340,679) (904,976) (675,468) In-kind redemptions - 1,546,082 (755,794) 1,420,736 ------------ ---------- ----------- ----------- Net realized gain (loss) (3,591,113) 1,205,403 (1,660,770) 745,268 ------------ ---------- ----------- ----------- Net change in unrealized appreciation (depreciation) on investments (8,864,130) (1,894,605) (2,197,507) 7,027,878 ------------ ---------- ----------- ----------- Net realized and unrealized gain (loss) (12,455,243) (689,202) (3,858,277) 7,773,146 ------------ ---------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(11,447,107) $ (343,003) $(3,884,538) $ 8,277,360 ============ ========== =========== ===========
/1/ Net of foreign withholding tax of $21. See notes to financial statements. Financial Statements 95 Statements of Operations (Continued) iShares Trust Year Ended April 30, 2002
iShares Dow Jones U.S. -------------------------------------------------------- Energy Financial Healthcare Industrial Sector Sector Sector Sector Index Fund Index Fund Index Fund Index Fund - ---------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME Dividends $ 1,343,737 $ 1,697,915/1/ $ 1,895,561 $ 581,449 Interest 945 1,712 2,230 969 Securities lending income 5,884 4,710 22,059 3,496 ----------- ----------- ------------ ------------ Total investment income 1,350,566 1,704,337 1,919,850 585,914 ----------- ----------- ------------ ------------ EXPENSES (NOTE 2) Advisory fees 421,146 489,233 1,099,711 303,207 ----------- ----------- ------------ ------------ Total expenses 421,146 489,233 1,099,711 303,207 ----------- ----------- ------------ ------------ Net investment income 929,420 1,215,104 820,139 282,707 ----------- ----------- ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (2,080,775) (856,999) (1,459,757) (4,230,340) In-kind redemptions (253,467) (151,649) 730,236 (418,981) ----------- ----------- ------------ ------------ Net realized loss (2,334,242) $(1,008,648) (729,521) (4,649,321) ----------- ----------- ------------ ------------ Net change in unrealized appreciation (depreciation) on investments (7,643,808) 689,174 (20,575,403) (8,322,529) ----------- ----------- ------------ ------------ Net realized and unrealized loss (9,978,050) (319,474) (21,304,924) (12,971,850) ----------- ----------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(9,048,630) $ 895,630 $(20,484,785) $(12,689,143) =========== =========== ============ ============
(1) Net of foreign withholding tax of $191. See notes to financial statements. 96 2002 iShares Annual Report to Shareholders Statements of Operations (Continued) iShares Trust Year Ended April 30, 2002
iShares Dow Jones U.S. ------------------------------------------------------------- Technology Telecommunications Utilities Sector Sector Sector Chemicals Index Fund Index Fund Index Fund Index Fund - -------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME Dividends $ 211,973 $ 860,203 $ 2,507,497 $ 296,111 Interest - 602 1,554 318 Securities lending income 18,170 15,328 13,052 - ------------ -------------- ----------- ----------- Total investment income 230,143 876,133 2,522,103 296,429 ------------ -------------- ----------- ----------- EXPENSES (NOTE 2) Advisory fees 739,702 319,221 433,942 66,519 ------------ -------------- ----------- ----------- Total expenses 739,702 319,221 433,942 66,519 ------------ -------------- ----------- ----------- Net investment income (loss) (509,559) 556,912 2,088,161 229,910 ------------ -------------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (12,040,792) (13,656,759) (6,889,012) (176,982) In-kind redemptions 993,404 (137,480) 1,296,638 (788,452) ------------ -------------- ----------- ----------- Net realized loss (11,047,388) (13,794,239) (5,592,374) (965,434) ------------ -------------- ----------- ----------- Net change in unrealized appreciation (depreciation) on investments (35,941,517) (15,468,776) (1,957,867) (188,723) ------------ -------------- ----------- ----------- Net realized and unrealized loss (46,988,905) (29,263,015) (7,550,241) (1,154,157) ------------ -------------- ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(47,498,464) $ (28,706,103) $(5,462,080) $ (924,247) ============ ============== =========== ===========
See notes to finanacial statements. Financial Statements 97 Statements of Operations (Continued) iShares Trust Year Ended April 30, 2002
iShares Cohen iShares Dow Jones U.S. & Steers -------------------------------------------- --------------- Financial Real Realty Services Internet Estate Majors Index Fund Index Fund Index Fund Index Fund - ---------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME Dividends $ 975,047/(1)/ $ - $ 5,067,105 $ 2,809,143 Interest 821 6,875 2,890 1,757 Securities lending income 2,086 3,663 18,183 3,663 --------------------------------------------------------------- Total investment income 977,954 10,538 5,088,178 2,814,563 --------------------------------------------------------------- EXPENSES (NOTE 2) Advisory fees 285,099 105,372 464,974 160,198 --------------------------------------------------------------- Total expenses 285,099 105,372 464,974 160,198 --------------------------------------------------------------- Net investment income (loss) 692,855 (94,834) 4,623,204 2,654,365 --------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (226,261) (21,194,817) (1,627,684) (546,235) In-kind redemptions 2,361,344 172,876 10,373,315 3,990,659 --------------------------------------------------------------- Net realized gain (loss) 2,135,083 (21,021,941) 8,745,631 3,444,424 --------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments (1,226,479) 7,048,231 1,157,394 (553,278) --------------------------------------------------------------- Net realized and unrealized gain (loss) 908,604 (13,973,710) 9,903,025 2,891,146 --------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,601,459 $(14,068,544) $14,526,229 $ 5,545,511 ===============================================================
/(1)/ Net of foreign withholding tax of $172. See notes to financial statements. 98 2002 iShares Annual Report to Shareholders Statements of Changes in Net Assets iShares Trust
iShares Dow Jones U.S. iShares Dow Jones U.S. Total Market Basic Materials Sextor Index Fund Index Fund ------------------------------------ -------------------------------------- For the period For the period For the June 12, 2000/1/ For the June 12, 2000/1/ year ended to year ended to April 30, 2002 April 30, 2001 April 30, 2002 April 30, 2001 - -------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $ 1,008,136 $ 313,830 $ 346,199 $ 138,261 Net realized gain (loss) (3,591,113) (445,124) 1,205,403 (25,222) Net change in unrealized appreciation (depreciation) (8,864,130) (6,506,961) (1,894,605) 667,924 --------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (11,447,107) (6,638,255) (343,003) 780,963 --------------------------------------------------------------------------- Distributions to iShareholders: From net investment income (935,453) (243,544) (290,722) (133,601) From net realized gain - (6,982) - (17,539) Return of Capital - - - - --------------------------------------------------------------------------- Total distributions to iShareholders (935,453) (250,526) (290,722) (151,140) --------------------------------------------------------------------------- iShares Transactions: iShares sold 66,897,889 73,513,375 71,382,916 15,892,905 iShares redeemed - - (22,571,247) (6,711,925) --------------------------------------------------------------------------- Net increase in net assets from iShares transactions 66,897,889 73,513,375 48,811,669 9,180,980 --------------------------------------------------------------------------- Increase in net assets 54,515,329 66,624,594 48,177,944 9,810,803 NET ASSETS: Beginning of period 66,624,594 - 9,810,803 - --------------------------------------------------------------------------- End of period $121,139,923 $ 66,624,594 $ 57,988,747 $ 9,810,803 =========================================================================== Undistributed net investment income included in net assets at end of period $ 135,983 $ 69,451 $ 60,137 $ 4,660 =========================================================================== iSHARES ISSUED AND REDEEMED: iShares sold 1,250,000 1,150,000 1,800,000 450,000 iShares redeemed - - (600,000) (200,000) --------------------------------------------------------------------------- Net increase in iShares outstanding 1,250,000 1,150,000 1,200,000 250,000 ===========================================================================
iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund -------------------------------------- For the period For the June 12, 2000/1/ year ended to April 30, 2002 April 30, 2001 - ------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $ (26,261) $ 25,842 Net realized gain (loss) (1,660,770) 31,598 Net change in unrealized appreciation (depreciation) (2,197,507) 177,838 -------------------------------------- Net increase (decrease) in net assets resulting from operations (3,884,538) 235,278 -------------------------------------- Distributions to iShareholders: From net investment income - (29,891) From net realized gain - (47,006) Return of Capital (34,142) - -------------------------------------- Total distributions to iShareholders (34,142) (76,897) -------------------------------------- iShares Transactions: iShares sold 112,522,207 38,392,976 iShares redeemed (9,181,366) (8,611,821) -------------------------------------- Net increase in net assets from iShares transactions 103,340,841 29,781,155 -------------------------------------- Increase in net assets 99,422,161 29,939,536 NET ASSETS: Beginning of period 29,939,536 - -------------------------------------- End of period $ 129,361,697 $ 29,939,536 ====================================== Undistributed net investment income included in net assets at end of period $ - $ 8 ====================================== iSHARES ISSUED AND REDEEMED: iShares sold 2,050,000 650,000 iShares redeemed (200,000) (150,000) -------------------------------------- Net increase in iShares outstanding 1,850,000 500,000 ======================================
/1/ Commencement of operations. See notes to financial statements. Financial Statements 99 iShares TRUST Statements of Changes in Net Assets (Continued)
Ishares Dow Jones U.S. Ishares Dow Jones U.S. Consumer Non-cyclical Energy Sector Sector Index Fund Index Fund ---------------------------------- ------------------------------------ For the period For the period For the June 12, 2000/(1)/ For the June 12, 2000/(1)/ year ended to year ended to April 30, 2002 April 30, 2001 April 30, 2002 April 30, 2001 - ------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income $ 504,214 $ 146,054 $ 929,420 $ 298,024 Net realized gain (loss) 745,268 1,070,519 (2,334,242) 1,007,929 Net change in unrealized appreciation (depreciation) 7,027,878 (1,250,531) (7,643,808) 3,339,371 --------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 8,277,360 (33,958) (9,048,630) 4,645,324 --------------------------------------------------------------------- Distributions to iShareholders: From net investment income (384,121) (106,701) (943,167) (314,652) From net realized gain - - - - --------------------------------------------------------------------- Total distributions to iShareholders (384,121) (106,701) (943,167) (314,652) --------------------------------------------------------------------- iShares Transactions: iShares sold 107,938,159 28,572,900 96,976,914 73,508,220 iShares redeemed (15,049,846) (14,240,024) (36,344,362) (23,682,861) --------------------------------------------------------------------- Net increase in net assets from iShares transactions 92,888,313 14,332,876 60,632,552 49,825,359 --------------------------------------------------------------------- Increase in net assets 100,781,552 14,192,217 50,640,755 54,156,031 NET ASSETS: Beginning of period 14,192,217 - 54,156,031 - --------------------------------------------------------------------- End of period $114,973,769 $ 14,192,217 $104,796,786 $ 54,156,031 ===================================================================== Undistributed net investment income included in net assets at end of period $ 159,446 $ 39,353 $ - $ - ===================================================================== iSHARES ISSUED AND REDEEMED: iShares sold 2,400,000 700,000 1,950,000 1,400,000 iShares redeemed (350,000) (350,000) (750,000) (450,000) --------------------------------------------------------------------- Net increase in iShares outstanding 2,050,000 350,000 1,200,000 950,000 ===================================================================== iShares Dow Jones U.S. Financial Sector Index Fund -------------------------------- For the period For the May 22, 2000/(1)/ year ended to April 30, 2002 April 30, 2001 - --------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income $ 1,215,104 $ 1,082,856 Net realized gain (loss) (1,008,648) 10,111,817 Net change in unrealized appreciation (depreciation) 689,174 2,863,741 -------------------------------- Net increase (decrease) in net assets resulting from operations 895,630 14,058,414 -------------------------------- Distributions to iShareholders: From net investment income (1,042,235) (940,451) From net realized gain - (98,422) -------------------------------- Total distributions to iShareholders (1,042,235) (1,038,873) -------------------------------- iShares Transactions: iShares sold 80,797,659 168,937,183 iShares redeemed (16,104,168) (124,707,959) -------------------------------- Net increase in net assets from iShares transactions 64,693,491 44,229,224 -------------------------------- Increase in net assets 64,546,886 57,248,765 NET ASSETS: Beginning of period 57,248,765 - ------------------------------- End of period $ 121,795,651 $ 57,248,765 =============================== Undistributed net investment income included in net assets at end of period $ 249,526 $ 109,062 =============================== iSHARES ISSUED AND REDEEMED: iShares sold 1,000,000 2,200,000 iShares redeemed (200,000) (1,500,000) ------------------------------- Net increase in iShares outstanding 800,000 700,000 ===============================
/(1)/ Commencement of operations. See notes to financial statements. 100 2002 iShares Annual Report to Shareholders Statements of Changes in Net Assets (Continued) iShares Trust
iShares Dow Jones U.S. iShares Dow Jones U.S. Healthcare Sector Industrial Sector Index Fund Index Fund --------------------------------- ------------------------------------- For the period For the period For the June 12, 2000/1/ For the June 12, 2000/1/ year ended to year ended to April 30, 2002 April 30, 2001 April 30, 2002 April 30, 2001 - -------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $ 820,139 $ 120,460 $ 282,707 $ 98,215 Net realized gain (loss) (729,521) 844,329 (4,649,321) (607,911) Net change in unrealized appreciation (depreciation) (20,575,403) (2,731,138) (8,322,529) (1,494,729) ------------------------------------------------------------------- Net decrease in net assets resulting from operations (20,484,785) (1,766,349) (12,689,143) (2,004,425) ------------------------------------------------------------------- Distributions to iShareholders: From net investment income (847,090) (129,486) (298,793) (105,375) From net realized gain - (64,628) - (52,511) ------------------------------------------------------------------- Total distributions to iShareholders (847,090) (194,114) (298,793) (157,886) ------------------------------------------------------------------- iShares Transactions: iShares sold 155,320,839 120,097,866 62,661,232 56,492,920 iShares redeemed (6,025,821) (9,867,974) (10,929,414) (8,440,104) ------------------------------------------------------------------- Net increase in net assets from iShares transactions 149,295,018 110,229,892 51,731,818 48,052,816 ------------------------------------------------------------------- Increase in net assets 127,963,143 108,269,429 38,743,882 45,890,505 NET ASSETS: Beginning of period 108,269,429 - 45,890,505 - ------------------------------------------------------------------- End of period $236,232,572 $108,269,429 $ 84,634,387 $ 45,890,505 =================================================================== Undistributed net investment income included in net assets at end of period $ - $ - $ - $ - =================================================================== iSHARES ISSUED AND REDEEMED: iShares sold 2,500,000 1,900,000 1,250,000 1,000,000 iShares redeemed (100,000) (150,000) (250,000) (150,000) ------------------------------------------------------------------- Net increase in iShares outstanding 2,400,000 1,750,000 1,000,000 850,000 =================================================================== iShares Dow Jones U.S. Technology Sector Index Fund ----------------------------------- For the period For the May 15, 2000/1/ year ended to April 30, 2002 April 30, 2001 ----------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $ (509,559) $ (510,486) Net realized gain (loss) (11,047,388) 868,638 Net change in unrealized appreciation (depreciation) (35,941,517) (54,297,866) ------------------------------ Net decrease in net assets resulting from operations (47,498,464) (53,939,714) ------------------------------ DISTRIBUTIONS TO iSHAREHOLDERS: From net investment income - - From net realized gain - - ------------------------------ Total distributions to iShareholders - - ------------------------------ iSHARES TRANSACTIONS: iShares sold 83,384,237 201,179,722 iShares redeemed (5,803,186) (36,249,719) ------------------------------ Net increase in net assets from iShares transactions 77,581,051 164,930,003 ------------------------------ Increase in net assets 30,082,587 110,990,289 NET ASSETS: Beginning of period 110,990,289 - ------------------------------ End of period $141,072,876 $110,990,289 ============================== Undistributed net investment income included in net assets at end of period $ - $ - ============================== iSHARES ISSUED AND REDEEMED: iShares sold 1,600,000 2,200,000 iShares redeemed (100,000) (450,000) ------------------------------ Net increase in iShares outstanding 1,500,000 1,750,000 ==============================
/(1)/ Commencement of operations. See notes to financial statements. Financial Statements 101 iShares Trust Statements of Changes in Net Assets (Continued)
iShares Dow Jones U.S. iShares Dow Jones U.S. Telecommunications Utilities Sector Sector Index Fund Index Fund ----------------------------------- ------------------------------------- For the period For the period For the May 22, 2000/(1)/ For the June 12, 2000/(1)/ year ended to year ended to April 30, 2002 April 30, 2001 April 30, 2002 April 30, 2001 - ----------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE)IN NET ASSETS Operations: Net investment income $ 556,912 $ 363,262 $ 2,088,161 $ 742,044 Net realized gain loss) (13,794,239) (7,525,427) (5,592,374) 5,010,474 Net change in unrealized appreciation (depreciation) (15,468,776) (6,778,956) (1,957,867) 685,517 ----------------------------------------------------------------------- Net increase (decrease)in net assets resulting from operations (28,706,103) (13,941,121) (5,462,080) 6,438,035 ----------------------------------------------------------------------- DIstributions to iShareholders: From net investment income (478,411) (253,372) (1,742,945) (697,569) From net realized gain - (675,599) - (55,156) ----------------------------------------------------------------------- Total distributions to iShareholders (478,411) (928,971) (1,742,945) (752,725) ----------------------------------------------------------------------- iShares transactions: iShares sold 36,062,400 110,589,888 189,252,377 80,926,328 iShares redeemed (11,017,662) (40,116,890) (44,205,167) (43,635,957) ----------------------------------------------------------------------- Net increase (decrease) in net assets from iShares transactions 25,044,738 70,472,998 145,047,210 37,290,371 ----------------------------------------------------------------------- Increase (decrease) in net assets (4,139,776) 55,602,906 137,842,185 42,975,681 NET ASSETS: Beginning of period 55,602,906 - 42,975,681 - ----------------------------------------------------------------------- End of period $ 51,463,130 $ 55,602,906 $180,817,866 $ 42,975,681 ======================================================================= Undistributed net investment income included in net assets at end of period $ 188,391 $ 109,890 $ 389,691 $ 44,475 ======================================================================= iSHARES ISSUED AND REDEEMED: iShares sold 1,200,000 2,200,000 2,950,000 1,050,000 iShares redeemed (350,000) (750,000) (700,000) (550,000) ----------------------------------------------------------------------- Net increase (decrease) in iShares outstanding 850,000 1,450,000 2,250,000 500,000 ======================================================================= iShares Dow Jones U.S. Chemicals Index Fund -------------------------------- For the period For the June 12, 2000/(1)/ year ended to April 30, 2002 April 30, 2001 - ---------------------------------------------------------------------------------- INCREASE (DECREASE)IN NET ASSETS Operations: Net investment income $ 229,910 $ 280,575 Net realized gain (loss) (965,434) 50,257 Net change in unrealized appreciation (depreciation) (188,723) 227,014 -------------------------------- Net increase (decrease) in net assets resulting from operations (924,247) 557,846 -------------------------------- Distributions to ishareholders: From net investment income (235,918) (254,692) From net realized gain - (101,848) -------------------------------- Total distributions to iShareholders (235,918) (356,540) -------------------------------- iShares Transactions: iShares sold 18,559,201 24,295,870 iShares redeemed (25,412,619) (5,618,956) -------------------------------- Net increase (decrease) in net assets from iShares transactions (6,853,418) 18,676,914 -------------------------------- Increase (decrease) in net assets (8,013,583) 18,878,220 NET ASSETS: Beginning of period 18,878,220 - -------------------------------- End of period $10,864,637 $ 18,878,220 ================================ Undistributed net investment income included in net assets at end of period $ 19,875 $ 25,883 ================================ iSHARES ISSUED AND REDEEMED: iShares sold 450,000 600,000 iShares redeemed (650,000) (150,000) -------------------------------- Net increase (decrease) in iShares outstanding (200,000) 450,000 ================================
- -------------------------------------------------------------------------------- /(1)/ Commencement of operations. See notes to financial statements. 102 2002 iShares Annual Report to Shareholders Statements of Changes in Net Assets (Continued) iShares Trust
iShares Dow Jones U.S. iShares Dow Jones U.S. Financial Services Internet Index Fund Index Fund -------------------------------- ------------------------------- For the period For the period For the June 12, 2000/1/ For the May 15, 2000/1/ year ended to year ended to April 30, 2002 April 30, 2001 April 30, 2002 April 30, 2001 - ---------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income (loss) $ 692,855 $ 525,418 $ (94,834) $ (251,690) Net realized gain (loss) 2,135,083 7,596,460 (21,021,941) (2,082,701) Net change in unrealized appreciation (depreciation) (1,226,479) 454,183 7,048,231 (19,496,923) ------------------------------------------------------------------ Net increase (decrease)in net assets resulting from operations 1,601,459 8,576,061 (14,068,544) (21,831,314) ------------------------------------------------------------------ DISTRIBUTIONS TO iShareholders: From net investment income (635,045) (476,156) - - From net realized gain - (32,617) - (982,729) Return of Capital - - - - ------------------------------------------------------------------ Total distributions to iShareholders (635,045) (508,773) - (982,729) ------------------------------------------------------------------ iShares Transactions: iShares sold 48,659,380 81,665,512 19,707,314 151,589,668 iShares redeemed (27,000,210) (52,266,138) (9,388,258) (110,524,648) ------------------------------------------------------------------ Net increase in net assets from iShares transactions 21,659,170 29,399,374 10,319,056 41,065,020 ------------------------------------------------------------------ Increase (decrease) in net assets 22,625,584 37,466,662 (3,749,488) 18,250,977 NET ASSETS: Beginning of period 37,466,662 - 18,250,977 - ------------------------------------------------------------------ End of period $60,092,246 $37,466,662 $14,501,489 $ 18,250,977 ================================================================== Undistributed net investment income included in net assets at end of period $ 107,072 $ 49,262 $ - $ - ================================================================== iSHARES ISSUED AND REDEEMED: iShares sold 550,000 950,000 1,350,000 2,700,000 iShares redeemed (300,000) (550,000) (800,000) (1,800,000) ------------------------------------------------------------------ Net increase in iShares outstanding 250,000 400,000 550,000 900,000 ================================================================== iShares Dow Jones U.S. Real Estate Index Fund -------------------------------- For the period For the June 12, 2000/1/ year ended to April 30, 2002 April 30, 2001 - ------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income (loss) $ 4,623,204 $ 1,740,899 Net realized gain (loss) 8,745,631 819,823 Net change in unrealized appreciation (depreciation) 1,157,394 1,428,746 ------------------------------- Net increase (decrease)in net assets resulting from operations 14,526,229 3,989,468 ------------------------------- DISTRIBUTIONS TO iShareholders: From net investment income (4,234,903) (1,129,858) From net realized gain - (69,748) Return of Capital (539,945) - ------------------------------- Total distributions to iShareholders (4,774,848) (1,199,606) ------------------------------- iShares Transactions: iShares sold 236,774,649 66,197,350 iShares redeemed (193,669,617) (14,938,646) ------------------------------- Net increase in net assets from iShares transactions 43,105,032 51,258,704 ------------------------------- Increase (decrease) in net assets 52,856,413 54,048,566 NET ASSETS: Beginning of period 54,048,566 - ------------------------------- End of period $106,904,979 $54,048,566 =============================== Undistributed net investment income included in net assets at end of period $ 121,105 $ 445,898 =============================== iSHARES ISSUED AND REDEEMED: iShares sold 2,950,000 900,000 iShares redeemed (2,400,000) (200,000) ------------------------------- Net increase in iShares outstanding 550,000 700,000 ===============================
/1/ Commencement of operations. See notes to financial statements. Financial Statements 103 Statements of Changes in Net Assets (Continued) iShares Trust
iShares Cohen & Steers Realty Majors Index Fund -------------------------------------- For the period For the January 29, 2001/(1)/ year ended to April 30, 2002 April 30, 2001 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income $ 2,654,365 $ 527,692 Net realized gain (loss) 3,444,424 (12,962) Net change in unrealized appreciation (depreciation) (553,278) (97,317) ------------ ------------ Net increase in net assets resulting from operations 5,545,511 417,413 ------------ ------------ DISTRIBUTIONS TO iSHAREHOLDERS: From net investment income (2,506,725) (218,800) Return of Capital (226,211) - ------------ ------------ Total distributions to iShareholders (2,732,936) (218,800) ------------ ------------ iSHARES TRANSACTIONS: iShares sold 110,242,135 39,848,642 iShares redeemed (63,418,081) - ------------ ------------ Net increase in net assets from iShares transactions 46,824,054 39,848,642 ------------ ------------ INCREASE IN NET ASSETS 49,636,629 $ 40,047,255 NET ASSETS: Beginning of period 40,047,255 - ------------ ------------ End of period $ 89,683,884 $ 40,047,255 ============ ============ Undistributed net investment income included in net assets at end of period $ 30,173 $ 310,674 ============ ============ iSHARES ISSUED AND REDEEMED: iShares sold 1,250,000 500,000 iShares redeemed (750,000) - ------------ ------------ Net increase in iShares outstanding 500,000 500,000 ============ ============
/(1)/ Commencement of operations. See notes to financial statements. 104 2002 iShares Annual Report to Shareholders Financial Highlights iShares Trust (For a share outstanding throughout each period)
iShares Dow Jones iShares Dow Jones U.S. Basic U.S. Total Market Materials Sector Index Fund Index Fund ------------------------------------ ------------------------------------ Period from Period from Jun. 12, 2000/(1)/ Jun. 12, 2000/(1)/ Year ended to Year ended to Apr. 30, 2002 Apr. 30, 2001 Apr. 30, 2002 Apr. 30, 2001 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 57.93 $ 67.15 $ 39.24 $ 36.04 ---------------------------------------------------------------------- Income from investment operations: Net investment income 0.57 0.42 0.55 0.55 Net realized and unrealized gain (loss) (7.46) (9.27) 0.73 3.25 ---------------------------------------------------------------------- Total from investment operations (6.89) (8.85) 1.28 3.80 ---------------------------------------------------------------------- Less distributions from: Net investment income (0.57) (0.36) (0.53) (0.53) Net realized gain - (0.01) - (0.07) Return of Capital - - - - ---------------------------------------------------------------------- Total distributions (0.57) (0.37) (0.53) (0.60) ---------------------------------------------------------------------- Net asset value, end of period $ 50.47 $ 57.93 $ 39.99 $ 39.24 ====================================================================== Total return (11.93)% (13.20)%/(2)/ 3.38% 10.80%/(2)/ ====================================================================== Ratios/Supplemental data: Net assets, end of period (000s) $ 121,140 $ 66,625 $ 57,989 $ 9,811 Ratio of expenses to average net assets/(3)/ 0.20% 0.20% 0.60% 0.60% Ratio of net investment income (loss) to average net assets/(3)/ 1.15% 0.98% 1.42% 1.77% Portfolio turnover rate/(4)/ 5% 5% 9% 16% iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund ------------------------------------ Period from Jun. 12, 2000/(1)/ Year ended to Apr. 30, 2002 Apr. 30, 2001 ------------------------------------- Net asset value, beginning of period $ 59.88 $ 59.63 ------------------------------ Income from investment operations: Net investment income 0.02 0.09 Net realized and unrealized gain (loss) (4.80) 0.45 ------------------------------ Total from investment operations (4.78) 0.54 ------------------------------ Less distributions from: Net investment income - (0.10) Net realized gain - (0.19) Return of Capital (0.05) - ------------------------------ Total distributions (0.05) (0.29) ------------------------------ Net asset value, end of period $ 55.05 $ 59.88 ============================== Total return (7.98)% 0.98%/(2)/ ============================== Ratios/Supplemental data: Net assets, end of period (000s) $ 129,362 $ 29,940 Ratio of expenses to average net assets/(3)/ 0.60% 0.60% Ratio of net investment income (loss) to average net assets/(3)/ (0.05)% 0.16% Portfolio turnover rate/(4)/ 4% 25%
/(1)/ Commencement of operations. /(2)/ Not annualized. /(3)/ Annualized for periods of less than one year. /(4)/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. See notes to financial statements. Financial Highlights 105 Financial Highlights (Continued) iShares Trust (For a share outstanding throughout each period)
iShares Dow Jones U.S. iShares Dow Jones U.S. Consumer Non-Cyclical Energy Sector Sector Index Fund Index Fund ------------------------------- ------------------------------- Period from Period from Jun. 12, 2000/1/ Jun. 12, 2000/1/ Year ended to Year ended to Apr. 30, 2002 Apr. 30, 2001 Apr. 30, 2002 Apr. 30, 2001 - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 40.55 $ 40.83 $ 57.01 $ 50.79 --------------------------------------------------------------- Income from investment operations: Net investment income 0.49 0.42 0.63 0.40 Net realized and unrealized gain (loss) 7.41 (0.39) (8.26) 6.24 --------------------------------------------------------------- Total from investment operations 7.90 0.03 (7.63) 6.64 --------------------------------------------------------------- Less distributions from: Net investment income (0.54) (0.31) (0.64) (0.42) Net realized gain - - - - --------------------------------------------------------------- Total distributions (0.54) (0.31) (0.64) (0.42) --------------------------------------------------------------- Net asset value, end of period $ 47.91 $ 40.55 $ 48.74 $ 57.01 =============================================================== Total return 19.65% 0.06%/2/ (13.34)% 13.13%/2/ =============================================================== Ratios/Supplemental data: Net assets, end of period (000s) $114,974 $14,192 $104,797 $54,156 Ratio of expenses to average net assets/3/ 0.60% 0.60% 0.60% 0.60% Ratio of net investment ncome to average net assets/3/ 1.46% 1.21% 1.32% 0.94% Portfolio turnover rate/4/ 8% 38% 18% 20% iShares Dow Jones U.S. Financial Sector Index Fund ---------------------------------- Period from May 22, 2000/1/ Year ended to Apr. 30, 2002 Apr. 30, 2001 - ------------------------------------------------------------------------------ Net asset value, beginning of period $ 81.78 $ 71.80 -------------------------- Income from investment operations: Net investment income 1.11 1.77 Net realized and unrealized gain (loss) (0.61) 10.17 -------------------------- Total from investment operations 0.50 11.94 -------------------------- Less distributions from: Net investment income (1.08) (1.57) Net realized gain - (0.39) -------------------------- Total distributions (1.08) (1.96) -------------------------- Net asset value, end of period $ 81.20 $ 81.78 ========================== Total return 0.66% 16.69%/2/ ========================== Ratios/Supplemental data: Net assets, end of period (000s) $121,796 $57,249 Ratio of expenses to average net assets/3/ 0.60% 0.60% Ratio of net investment income to average net assets/3/ 1.49% 1.46% Portfolio turnover rate/4/ 4% 11%
/1/ Commencement of operations. /2/ Not annualized. /3/ Annualized for periods of less than one year. /4/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. See notes to financial statements. 106 2002 iShares Annual Report to Shareholders Financial Highlights (Continued) iSHARES TRUST (For a share outstanding throughout each period)
iShares Dow Jones U.S. iShares Dow Jones U.S. Healthcare Sector Industrial Sector Index Fund Index Fund ----------------------------------- ----------------------------------- Period from Period from Jun. 12, 2000/1/ Jun. 12, 2000/1/ Year ended to Year ended to Apr. 30, 2002 Apr. 30, 2001 Apr. 30, 2002 Apr. 30, 2001 - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 61.87 $ 59.53 $ 53.99 $ 58.11 ------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.26 0.13 0.29 0.22 Net realized and unrealized gain (loss) (4.94) 2.44 (8.23) (3.98) ------------------------------------------------------------------- Total from investment operations (4.68) 2.57 (7.94) (3.76) ------------------------------------------------------------------- Less distributions from: Net investment income (0.27) (0.14) (0.30) (0.23) Net realized gain - (0.09) - (0.13) ------------------------------------------------------------------- Total distributions (0.27) (0.23) (0.30) (0.36) ------------------------------------------------------------------- Net asset value, end of period $ 56.92 $ 61.87 $ 45.75 $ 53.99 =================================================================== Total return (7.60)% 4.29%/2/ (14.72)% (6.46)%/2/ =================================================================== Ratios/Supplemental data: Net assets, end of period (000s) $236,233 $108,269 $84,634 $45,891 Ratio of expenses to average net assets/3/ 0.60% 0.60% 0.60% 0.60% Ratio of net investment income (loss) to average net assets/3/ 0.45% 0.29% 0.56% 0.44% Portfolio turnover rate/4/ 3% 5% 27% 23% iShares Dow Jones U.S. Technology Sector Index Fund ---------------------------------- Period from May 15, 2000/1/ Year ended to Apr. 30, 2002 Apr. 30, 2001 - ------------------------------------------------------------------------------- Net asset value, beginning of period $ 63.42 $ 116.57 ----------------------------- Income from investment operations: Net investment income (loss) (0.16) (0.29) Net realized and unrealized gain (loss) (19.85) (52.86) ----------------------------- Total from investment operations (20.01) (53.15) ----------------------------- Less distributions from: Net investment income - - Net realized gain - - ----------------------------- Total distributions - - ----------------------------- Net asset value, end of period $ 43.41 $ 63.42 ============================= Total return (31.55)% (45.60)%/2/ ============================= Ratios/Supplemental data: Net assets, end of period (000s) $141,073 $110,990 Ratio of expenses to average net assets/3/ 0.60% 0.60% Ratio of net investment income (loss) to average net assets/3/ (0.41)% (0.47)% Portfolio turnover rate/4/ 8% 11%
/1/ Commencement of operations. /2/ Not annualized. /3/ Annualized for periods of less than one year. /4/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. See notes to financial statements. Financial Highlights 107 Financial Highlights (Continued) iShares Trust (For a share outstanding throughout each period)
iShares Dow Jones U.S. Telecommunications iShares Dow Jones iShares Dow Jones Sector U.S. Utilities Sector U.S. Chemicals Index Fund Index Fund Index Fund ------------------------------- -------------------------------- ------------------------------- Period from Period from Period from May 22, 2000/1/ Jun. 12, 2000/1/ Jun. 12, 2000/1/ Year ended to Year ended to Year ended to Apr. 30, 2002 Apr. 30, 2001 Apr. 30, 2002 Apr. 30, 2001 Apr. 30, 2002 Apr. 30, 2001 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 38.35 $ 56.81 $ 85.95 $ 69.81 $ 41.95 $ 40.26 -------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.29 0.35 1.89 1.82 0.86 0.65 Net realized and unrealized gain (loss) (15.98) (17.95) (20.25) 16.19 1.49 1.88 -------------------------------------------------------------------------------------------------- Total from investment operations (15.69) (17.60) (18.36) 18.01 2.35 2.53 -------------------------------------------------------------------------------------------------- Less distributions from: Net investment income (0.28) (0.27) (1.84) (1.73) (0.84) (0.59) Net realized gain - (0.59) - (0.14) - (0.25) -------------------------------------------------------------------------------------------------- Total distributions (0.28) (0.86) (1.84) (1.87) (0.84) (0.84) -------------------------------------------------------------------------------------------------- Net asset value, end of period $ 22.38 $ 38.35 $ 65.75 $ 85.95 $ 43.46 $ 41.95 ================================================================================================== Total return (41.12)% (31.06)%/2/ (21.38)% 25.90%/2/ 5.80% 6.53%/2/ ================================================================================================== Ratios/Supplemental data: Net assets, end of period (000s) $ 51,463 $ 55,603 $ 180,818 $ 42,976 $ 10,865 $ 18,878 Ratio of expenses to average net assets/3/ 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% Ratio of net investment income to average net assets/3/ 1.05% 0.80% 2.89% 2.59% 2.07% 1.90% Portfolio turnover rate/4/ 43% 43% 8% 11% 26% 16%
/1/ Commencement of operations. /2/ Not annualized. /3/ Annualized for periods of less than one year. /4/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. See notes to financial statements. 108 2002 iShares Annual Report to Shareholders Financial Highlights (Continued) iShares Trust (For a share outstanding throughout each period)
iShares Dow Jones U.S. Financial iShares Dow Jones Services U.S. Internet Index Fund Index Fund ---------------------------------- ------------------------------------ Period from Period from Jun. 12, 2000/(1)/ May 15, 2000/(1)/ Year ended to Year ended to Apr. 30, 2002 Apr. 30, 2001 Apr. 30, 2002 Apr. 30, 2001 - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 93.67 $ 85.58 $ 20.28 $ 67.97 ------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) 1.22 1.29 (0.07) (0.28) Net realized and unrealized gain (loss) (1.26) 8.10 (10.21) (45.77) ------------------------------------------------------------------------ Total from investment operations (0.04) 9.39 (10.28) (46.05) ------------------------------------------------------------------------ Less distributions from: Net investment income (1.18) (1.17) - - Net realized gain - (0.13) - (1.64) Return of Capital - - - - ------------------------------------------------------------------------ Total distributions (1.18) (1.30) - (1.64) ------------------------------------------------------------------------ Net asset value, end of period $ 92.45 $ 93.67 $ 10.00 $ 20.28 ======================================================================== Total return 0.00%/(5)/ 11.03%/(2)/ (50.69)% (68.45)%/(2)/ ======================================================================== Ratios/Supplemental data: Net assets, end of period (000s) $ 60,092 $ 37,467 $ 14,501 $ 18,251 Ratio of expenses to average net assets/(3)/ 0.60% 0.60% 0.60% 0.60% Ratio of net investment income (loss) to average net assets/(3)/ 1.46% 1.33% (0.54)% (0.53)% Portfolio turnover rate/(4)/ 3% 5% 46% 74% iShares Dow Jones U.S. Real Estate Index Fund ---------------------------------------- Period from Jun. 12, 2000/(1)/ Year ended to Apr. 30, 2002 Apr. 30, 2001 - ------------------------------------------------------------------------------- Net asset value, beginning of period $ 77.21 $ 68.97 ---------------------------------------- Income from investment operations: Net investment income (loss) 4.56 3.51 Net realized and unrealized gain (loss) 8.71 7.51 ---------------------------------------- Total from investment operations 13.27 11.02 ---------------------------------------- Less distributions from: Net investment income (4.54) (2.64) Net realized gain - (0.14) Return of Capital (0.42) - ---------------------------------------- Total distributions (4.96) (2.78) ---------------------------------------- Net asset value, end of period $ 85.52 $ 77.21 ======================================== Total return 17.83% 16.32%/(2)/ ======================================== Ratios/Supplemental data: Net assets, end of period (000s) $ 106,905 $ 54,049 Ratio of expenses to average net assets/(3)/ 0.60% 0.60% Ratio of net investment income (loss) to average net assets/(3)/ 5.97% 6.37% Portfolio turnover rate/(4)/ 10% 30% - -------------------------------------------------------------------------------
/(1)/ Commencement of operations. /(2)/ Not annualized. /(3)/ Annualized for periods of less than one year. /(4)/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. /(5)/ Rounds to less than 0.01%. See notes to financial statements. Financial Highlights 109 Financial Highlights (Continued) iShares Trust (For a share outstanding throughout each period) iShares Cohen & Steers Realty Majors Index Fund ----------------------------------- Period from Jan. 29, 2001/(1)/ Year ended to Apr. 30, 2002 Apr. 30, 2001 - ----------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 80.09 $ 79.86 ------------- ------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 4.79 1.11 Net realized and unrealized gain (loss) 9.98 (0.39) ------------- ------------- Total from investment operations 14.77 0.72 ------------- ------------- LESS DISTRIBUTIONS FROM: Net investment income (4.77) (0.49) Return of Capital (0.41) - ------------- ------------- Total distributions (5.18) (0.49) ------------- ------------- NET ASSET VALUE, END OF PERIOD $ 89.68 $ 80.09 ============= ============= TOTAL RETURN 19.05% 0.91%/(2)/ ============= ============= RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s) $ 89,684 $ 40,047 Ratio of expenses to average net assets/(3)/ 0.35% 0.35% Ratio of net investment income to average net assets/(3)/ 5.80% 6.01% Portfolio turnover rate/(4)/ 15% 2% /(1)/ Commencement of operations. /(2)/ Not annualized. /(3)/ Annualized for periods of less than one year. /(4)/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. See notes to financial statements. 110 2002 iShares Annual Report to Shareholders Notes to the Financial Statements iShares Trust 1. SIGNIFICANT ACCOUNTING POLICIES iShares Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open end management investment company. The Trust was established as a Delaware business trust pursuant to an Agreement and Declaration of Trust dated December 16, 1999. As of April 30, 2002, the Trust offered 55 investment portfolios or funds. The funds offered by the Trust, along with their respective exchange trading symbols are: iShares S&P Series ------------------ . iShares S&P 100 Index Fund (OEF) . iShares S&P 500 Index Fund (IVV) . iShares S&P 500/BARRA Growth Index Fund (IVW) . iShares S&P 500/BARRA Value Index Fund (IVE) . iShares S&P Midcap 400 Index Fund (IJH) . iShares S&P Midcap 400/BARRA Growth Index Fund (IJK) . ishares S&P Midcap 400/BARRA Value Index Fund (IJJ) . iShares S&P SmallCap 600 INDEX FUND (IJR) . iShares S&P SmallCap 600/BARRA Growth Index Fund (IJT) . iShares S&P SmallCap 600/BARRA Value Index Fund (IJS) . iShares S&P Global 100 Index Fund (IOO) . iShares S&P Global Energy Sector Index Fund (IXC) . iShares S&P Global Financials Sector Index Fund (IXG) . iShares S&P Global Healthcare Sector Index Fund (IXJ) . iShares S&P Global Technology Sector Index Fund (IXN) . iShares S&P Global Telecommunications Sector Index Fund (IXP) . iShares S&P Europe 350 Index Fund (IEV) . iShares S&P/TSE 60 Index Fund (IKC) . iShares S&P Latin America 40 Index Fund (ILF) . iShares S&P/Topix 150 Index Fund (ITF) iShares Nasdaq Series --------------------- . iShares Nasdaq Biotechnology Index Fund (ibb) iShares Dow Jones Series ------------------------ . iShares Dow Jones U.S. Total Market Index Fund (IYY) . iShares Dow Jones U.S. Basic Materials Sector Index Fund (IYM) . iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund (IYC) . iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund (IYK) . iShares Dow Jones U.S. Energy Sector Index Fund (IYE) . iShares Dow Jones U.S. Financial Sector Index Fund (IYF) . iShares Dow Jones U.S. Healthcare Sector Index Fund (IYH) . iShares Dow Jones U.S. Industrial Sector Index Fund (IYJ) . iShares Dow Jones U.S. Technology Sector Index Fund (IYW) . iShares Dow Jones U.S. Telecommunications Sector Index Fund (IYZ) . iShares Dow Jones U.S. Utilities Sector Index Fund (IDU) . iShares Dow Jones U.S. Chemicals Index Fund (IYD) . iShares Dow Jones U.S. Financial Services Index Fund (IYG) . iShares Dow Jones U.S. Internet Index Fund (IYV) . iShares Dow Jones U.S. Real Estate Index Fund (IYR) iShares MSCI Series ------------------- . iShares MSCI EAFE Index Fund (EFA) iShares Russell Series ---------------------- . iShares Russell 3000 Index Fund (IWV) . iShares Russell 3000 Growth Index FunD (IWZ) . iShares Russell 3000 Value Index Fund (IWW) . iShares Russell 2000 Index Fund (IWM) . iShares Russell 2000 Growth Index Fund (IWO) . iShares Russell 2000 Value Index Fund (IWN) . iShares Russell 1000 Index Fund (IWB) . iShares Russell 1000 Growth Index Fund (IWF) . iShares Russell 1000 Value Index Fund (IWD) . iShares Russell Midcap Index Fund (IWR) . iShares Russell Midcap Growth Index Fund (IWP) . iShares Russell Midcap Value Index Fund (IWS) iShares Goldman Sachs Series ---------------------------- . iShares Goldman Sachs Technology Index Fund (IGM) . iShares Goldman Sachs Networking Index Fund (IGN) . iShares Goldman Sachs Semiconductor Index Fund (IGW) . iShares Goldman Sachs Software Index Fund (IGV) . iShares Goldman Sachs Natural Resources Index Fund (IGE) iShares Cohen & Steers Series ----------------------------- . iShares Cohen & Steers Realty Majors Index Fund (ICF) Notes to the Financial Statements 111 Notes to the Financial Statements (Continued) iShares Trust The investment objective of each fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of its underlying index, as indicated in the name of each fund. The investment advisor uses a "passive" or index approach to achieve each fund's investment objective. These financial statements relate only to the iShares Dow Jones Series Funds and the iShares Cohen & Steers Realty Majors Index Fund (each a "Fund", collectively the "Funds"). Each of the Funds is classified as a non-diversified fund under the 1940 Act, except for the iShares Dow Jones U.S. Total Market Index Fund, which is classified as a diversified fund. Non-diversified funds generally hold stocks of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence. The following significant accounting policies are consistently followed by the Trust in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") for investment companies. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. Actual results could differ from those estimates. SECURITY VALUATION Equity securities are valued at the last sales price on the primary securities exchange or national securities market on which such securities are traded. Securities not listed on an exchange or national securities market, or securities for which there were no sales prices, are valued at the latest quoted bid prices. U.S. Government obligations are valued at the latest quoted bid price. Debt securities maturing in 60 days or less are valued at amortized cost, which approximates market value. Mutual fund shares are valued at net asset value. Any securities, including restricted securities or other assets for which market quotations are not readily available, or for which a significant event has occurred since the time of the most recent market quotation, are valued in accordance with fair value pricing policies approved by the Board of Trustees of the Trust. SECURITY TRANSACTIONS AND INCOME RECOGNITION Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, and interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method. EQUALIZATION As of March 12, 2002, certain of the Funds began using the accounting practice of equalization. This accounting method is used to keep the continuing shareholders' per share equity in undistributed net investment income from being affected by the continuous sales and redemptions of capital stock. Equalization is calculated on a per share basis whereby a portion of the proceeds from sales and costs of repurchases of capital stock is applied to undistributed net investment income. For the period from March 12, 2002 through April 30, 2002, the amounts of undistributed net investment income included in the price of capital shares issued or redeemed from the iShares Dow Jones U.S. Utilities Sector Index Fund, the iShares Dow Jones U.S. Real Estate Index Fund and the iShares Cohen & Steers Realty Majors Index Fund were $39,000, $1,500 and $203,000 respectively. DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders from net investment income, if any, are declared and distributed at least annually by each Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. 112 2002 iShares Annual Report to Shareholders Notes to the Financial Statements (Continued) iShares Trust At April 30, 2002, the components of distributable earnings on a tax basis were as follows:
------------------------------------------------------------------------------------------ Total Undistributed Undistributed Distributable iShares Index Fund Ordinary Income Long Term Gain Earnings ------------------------------------------------------------------------------------------ Dow Jones U.S. Total Market $130,727 $ - $130,727 Dow Jones U.S. Basic Materials Sector 60,137 - 60,137 Dow Jones U.S. Consumer Non-Cyclical Sector 159,446 - 159,446 Dow Jones U.S. Financial Sector 228,354 - 228,354 Dow Jones U.S. Telecommunications Sector 188,391 - 188,391 Dow Jones U.S. Utilities Sector 389,691 - 389,691 Dow Jones U.S. Chemicals 19,875 - 19,875 Dow Jones U.S. Financial Services 107,072 - 107,072 ------------------------------------------------------------------------------------------
For the year ended April 30, 2002, the tax characterization of distributions paid for each Fund, excluding the iShares Dow Jones U.S. Real Estate Index Fund, was equal to the book characterization of distributions paid. The iShares Dow Jones U.S. Real Estate Index Fund distributed $94,773 from Long-Term Capital Gains, $4,140,130 from Ordinary Income and $539,945 as a Return of Capital on a tax basis for the year ended April 30, 2002. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for all Funds. FEDERAL INCOME TAXES Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its net income and any net gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ending April 30, 2002. From November 1, 2001 to April 30, 2002, certain of the Funds incurred net realized capital losses. As permitted by tax regulations, the Funds have elected to defer these losses and treat them as arising in the year ending April 30, 2003. ------------------------------------------------------------------ Deferred Net Realized iShares Index Fund Capital Losses ------------------------------------------------------------------ Dow Jones U.S. Total Market $ 775,662 Dow Jones U.S. Basic Materials Sector - Dow Jones U.S. Consumer Cyclical Sector 355,715 Dow Jones U.S. Consumer Non-Cyclical Sector 452,580 Dow Jones U.S. Energy Sector 1,274,852 Dow Jones U.S. Financial Sector 416,953 Dow Jones U.S. Healthcare Sector 511,698 Dow Jones U.S. Industrial Sector 413,918 ------------------------------------------------------------------ ------------------------------------------------------------------ Deferred Net Realized iShares Index Fund Capital Losses ------------------------------------------------------------------ Dow Jones U.S. Technology Sector $1,987,752 Dow Jones U.S. Telecommunications Sector 2,158,275 Dow Jones U.S. Utilities Sector 5,208,432 Dow Jones U.S. Chemicals 69,252 Dow Jones U.S. Financial Services 48,706 Dow Jones U.S. Internet 1,660,355 Dow Jones U.S. Real Estate 885,620 ------------------------------------------------------------------ Notes to the Financial Statements 113 Notes to the Financial Statements (Continued) iShares Trust The following Funds had tax basis net capital loss carryforwards at April 30, 2002, the tax year end of the Funds: -------------------------------------------------------------------- Expiring Expiring iShares Index Fund 2009 2010 -------------------------------------------------------------------- Dow Jones U.S. Total Market $ - $2,220,191 Dow Jones U.S. Basic Materials Sector - 67,181 Dow Jones U.S. Consumer Cyclical Sector - 214,348 Dow Jones U.S. Consumer Non-Cyclical Sector 12,169 410,794 Dow Jones U.S. Energy Sector 369 643,271 Dow Jones U.S. Financial Sector - 146,667 Dow Jones U.S. Healthcare Sector - 154,330 Dow Jones U.S. Industrial Sector - 4,102,570 Dow Jones U.S. Technology Sector - 3,803,426 Dow Jones U.S. Telecommunications Sector - 10,282,380 Dow Jones U.S. Utilities Sector - 173,950 Dow Jones U.S. Chemicals - 240,662 Dow Jones U.S. Financial Services - 138,646 Dow Jones U.S. Internet - 11,854,796 Cohen & Steers Realty Majors - 66,455 -------------------------------------------------------------------- Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year, or until their respective expiration dates, whichever occurs first. For the year ended April 30, 2002, certain Funds realized net capital gains or losses resulting from in-kind redemptions of large blocks of 50,000 iShares ("Creation Units"). Because such gains or losses are not taxable to the Funds, and are not distributed to existing Fund shareholders, the gains or losses are reclassed from accumulated net realized gains or losses to paid-in-capital at the end of the Funds' tax year end. The in-kind gains or losses for the year ended April 30, 2002 are disclosed in the Funds' Statements of Operations. REPURCHASE AGREEMENTS Each Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities, which are delivered to the Funds' custodian or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest. None of the Funds held repurchase agreements at April 30, 2002. 2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES Pursuant to an Investment Advisory Agreement with the Trust, Barclays Global Fund Advisors ("BGFA") manages the investment of each Fund's assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses ("Covered Expenses") of the Trust, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the executions of portfolio 114 2002 iShares Annual Report to Shareholders Notes to the Financial Statements (Continued) iShares Trust transactions, distribution fees and extraordinary expenses. Expenses related to the organization and initial registration of the Trust were borne by BGFA. For its investment management services to each Fund, BGFA is entitled to an annual advisory fee based on the average daily net assets of each Fund as follows: ------------------------------------------------------------ Advisory iShares Index Fund Fee ------------------------------------------------------------ Dow Jones U.S. Total Market 0.20% Dow Jones U.S. Basic Materials Sector 0.60 Dow Jones U.S. Consumer Cyclical Sector 0.60 Dow Jones U.S. Consumer Non-Cyclical Sector 0.60 Dow Jones U.S. Energy Sector 0.60 Dow Jones U.S. Financial Sector 0.60 Dow Jones U.S. Healthcare Sector 0.60 Dow Jones U.S. Industrial Sector 0.60 ------------------------------------------------------------ ------------------------------------------------------------ Advisory iShares Index Fund Fee ------------------------------------------------------------ Dow Jones U.S. Technology Sector 0.60% Dow Jones U.S. Telecommunications Sector 0.60 Dow Jones U.S. Utilities Sector 0.60 Dow Jones U.S. Chemicals 0.60 Dow Jones U.S. Financial Services 0.60 Dow Jones U.S. Internet 0.60 Dow Jones U.S. Real Estate 0.60 Cohen & Steers Realty Majors 0.35 ------------------------------------------------------------ Investors Bank & Trust Company ("Investors Bank") serves as administrator, custodian, transfer agent and securities lending agent for the Funds. As compensation for its services, Investors Bank receives certain out-of-pocket costs, transaction fees, and asset-based fees, which are accrued daily and paid monthly. These fees are Covered Expenses as defined above. SEI Investments Distribution Company serves as each Fund's underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Trust. The distributor will deliver the Prospectus and Statement of Additional Information, if so requested, to persons purchasing Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. Barclays Global Investors Services ("BGIS"), a subsidiary of Barclays Global Investors, N.A., may serve as a broker-dealer for the Funds. For the year ended April 30, 2002, BGIS received the following amounts in brokerage commissions: ------------------------------------------------------------ Commissions Paid to iShares Index Fund Bgis ------------------------------------------------------------ Dow Jones U.S. Total Market $254 Dow Jones U.S. Financial Sector 188 Dow Jones U.S. Industrial Sector 4 Dow Jones U.S. Technology Sector 6 Dow Jones U.S. Telecommunications Sector 316 Dow Jones U.S. Utilities Sector 856 Dow Jones U.S. Financial Services 21 Cohen & Steers Realty Majors 800 ------------------------------------------------------------ Notes to the Financial Statements 115 Notes to the Financial Statements (Continued) iShares Trust Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each Fund may invest in the institutional shares of the Institutional Money Market Fund ("IMMF") of Barclays Global Investors Funds. The IMMF is a feeder fund in a master/feeder fund structure that invests substantially all of its assets in the Money Market Master Portfolio of Master Investment Portfolio, which is managed by BGFA, the Funds' investment advisor. The IMMF is an open-end money market fund available only to institutional investors, including investment companies managed by BGFA. The IMMF seeks a high level of income consistent with liquidity and the preservation of capital. While the IMMF does not directly charge an advisory fee, the master portfolio in which it invests does charge an advisory fee. Income distributions from the IMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds are recorded as either interest income or securities lending income in the accompanying Statements of Operations. Pursuant to Rule 17a-7 of the 1940 Act, certain Funds executed cross trades for the year ended April 30, 2002. Cross trading is the buying or selling of portfolio securities between funds to which BGFA serves as investment advisor. In management's opinion, all transactions were in compliance with the requirements and restrictions set forth by Rule 17a-7. As of April 30, 2002, certain trustees and officers of the Trust are also employees of BGFA and its affiliates or employees of Investors Bank. 3. INVESTMENT PORTFOLIO TRANSACTIONS Purchases and sales of investments (excluding in-kind transactions and short-term securities) for the year ended April 30, 2002, were as follows: ------------------------------------------------------------------------- iShares Index Fund Purchases Sales ------------------------------------------------------------------------- Dow Jones U.S. Total Market $ 4,295,954 $4,233,894 Dow Jones U.S. Basic Materials Sector 2,396,973 2,306,667 Dow Jones U.S. Consumer Cyclical Sector 2,547,761 2,551,323 Dow Jones U.S. Consumer Non-Cyclical Sector 3,060,209 2,970,577 Dow Jones U.S. Energy Sector 13,259,299 13,122,098 Dow Jones U.S. Financial Sector 3,682,101 3,495,380 Dow Jones U.S. Healthcare Sector 4,870,901 4,770,318 Dow Jones U.S. Industrial Sector 13,638,296 13,586,496 Dow Jones U.S. Technology Sector 9,288,652 9,781,237 Dow Jones U.S. Telecommunications Sector 23,083,707 23,068,911 Dow Jones U.S. Utilities Sector 6,587,197 5,989,852 Dow Jones U.S. Chemicals 3,085,044 3,060,542 Dow Jones U.S. Financial Services 1,491,152 1,386,467 Dow Jones U.S. Internet 7,915,045 8,001,956 Dow Jones U.S. Real Estate 8,379,184 7,906,293 Cohen & Steers Realty Majors 7,599,557 6,828,733 ------------------------------------------------------------------------- 116 2002 iShares Annual Report to Shareholders Notes to the Financial Statements (Continued) iShares Trust In-kind transactions for the year ended April 30, 2002, were as follows: ------------------------------------------------------------------ In-kind In-kind iShares Index Fund Purchases Sales ------------------------------------------------------------------ Dow Jones U.S. Total Market $ 66,814,853 $ -- Dow Jones U.S. Basic Materials Sector 70,853,957 22,131,194 Dow Jones U.S. Consumer Cyclical Sector 110,543,425 7,238,576 Dow Jones U.S. Consumer Non-Cyclical Sector 105,964,012 13,097,088 Dow Jones U.S. Energy Sector 96,792,990 36,328,051 Dow Jones U.S. Financial Sector 81,027,793 16,441,974 Dow Jones U.S. Healthcare Sector 153,381,296 4,164,013 Dow Jones U.S. Industrial Sector 62,584,418 10,915,426 Dow Jones U.S. Technology Sector 83,408,310 5,804,787 Dow Jones U.S. Telecommunications Sector 36,044,186 10,985,864 Dow Jones U.S. Utilities Sector 186,093,079 41,346,564 Dow Jones U.S. Chemicals 18,487,410 25,370,602 Dow Jones U.S. Financial Services 45,865,140 24,313,293 Dow Jones U.S. Internet 19,700,236 9,384,310 Dow Jones U.S. Real Estate 238,206,480 195,789,034 Cohen & Steers Realty Majors 110,599,561 64,610,565 ------------------------------------------------------------------ At April 30, 2002, the aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:
----------------------------------------------------------------------------------------- Net Unrealized Tax Unrealized Unrealized Appreciation iShares Index Fund Cost Appreciation Depreciation (Depreciation) ----------------------------------------------------------------------------------------- Dow Jones U.S. Total Market $139,940,257 $ 7,015,009 $ (23,424,737) $ (16,409,728) Dow Jones U.S. Basic Materials Sector 61,014,679 1,029,436 (2,452,594) (1,423,158) Dow Jones U.S. Consumer Cyclical Sector 136,511,465 6,371,549 (8,998,104) (2,626,555) Dow Jones U.S. Consumer Non-Cyclical Sector 110,688,710 6,414,186 (744,005) 5,679,181 Dow Jones U.S. Energy Sector 112,246,573 1,410,076 (6,449,854) (5,039,778) Dow Jones U.S. Financial Sector 122,131,721 9,558,827 (6,469,473) 3,089,354 Dow Jones U.S. Healthcare Sector 267,944,204 15,411,006 (39,821,109) (24,410,103) Dow Jones U.S. Industrial Sector 96,749,852 3,465,006 (13,747,424) (10,282,418) Dow Jones U.S. Technology Sector 245,269,553 - (100,063,896) (100,063,896) Dow Jones U.S. Telecommunications Sector 83,131,238 - (26,795,367) (26,795,367) Dow Jones U.S. Utilities Sector 200,087,185 7,685,409 (9,813,225) (2,127,816) Dow Jones U.S. Chemicals 10,861,251 221,198 (207,567) 13,631 Dow Jones U.S. Financial Services 61,641,312 4,174,410 (5,080,669) (906,259) Dow Jones U.S. Internet 41,637,134 - (25,762,670) (25,762,670) Dow Jones U.S. Real Estate 106,519,094 4,408,460 (1,780,192) 2,628,268 Cohen & Steers Realty Majors 90,464,507 977,493 (1,643,459) (665,966) -----------------------------------------------------------------------------------------
Notes to the Financial Statements 117 Notes to the Financial Statements (Continued) iShares Trust 4. iSHARES TRANSACTIONS At April 30, 2002, there were an unlimited number of no par value shares of beneficial interest ("iShares") authorized. iShares are issued and redeemed by each Fund only in Creation Units or multiples thereof. Except when aggregated in Creation Units, iShares are not redeemable. Transactions in iShares for each Fund are disclosed in detail in the Statement of Changes in Net Assets. The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind contribution of a designated portfolio of equity securities constituting a substantial replication, or a portfolio sampling representation, of the stocks involved in the relevant Fund's underlying index and an amount of cash. A purchase transaction fee and a redemption transaction fee are charged to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units of iShares. 5. LOANS OF PORTFOLIO SECURITIES Each Fund may lend its investment securities to approved borrowers such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received is required to have a value of at least 102% of the market value of the loaned securities for securities denominated in U.S. Dollars and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The risks to the Funds of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. As of April 30, 2002, certain of the Funds had loaned securities which were collateralized by cash. The cash collateral received was invested in money market mutual funds. The market value of the securities on loan at April 30, 2002 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. 6. LEGAL PROCEEDINGS In April 2002, the judge overseeing an ongoing action in the U.S. District Court for the Northern District of Illinois granted leave for a United States patentholder named MOPEX, Inc. to amend its complaint to add the Trust, along with seven other parties, as a defendant. There are now a total of twenty defendants, including the Trust's investment advisor, other exchange traded funds, various fund service providers and market makers, and the Chicago Stock Exchange, Inc. In the action, the plaintiff alleges that the actions of the parties, now including the Trust, infringed their patent. In addition, the plaintiff alleges that the parties engaged in a "conspiracy" amongst themselves to infringe the patent. Although this is the only case to which the Trust has been named as a party, this action is one of three involving related issues. The Trust believes that it has valid defenses to all claims raised by the patentholder. However, a resolution of this case may impose increased costs on the Trust and thus raise the expense ratios of the Funds, adversely affecting performance. 118 2002 iShares Annual Report to Shareholders Report of Independent Accountants To the Shareholders and Board of Trustees of iShares Trust: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the funds comprising the iShares Dow Jones Series Funds and the iShares Cohen & Steers Realty Majors Index Fund (the "Funds"), as listed on the table of contents at April 30, 2002, the results of each of their operations for the periods then ended, and the changes in their net assets and their financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP San Francisco, California May 24, 2002 Report of Independent Accountants 119 Tax Information (Unaudited) iShares Trust For corporate shareholders, a portion of the income dividends paid by certain of the Funds during the year ended April 30, 2002 qualified for the dividends-received deduction. --------------------------------------------------------------- Dividends- Received iShares Index Fund Deduction --------------------------------------------------------------- Dow Jones U.S. Total Market 99.58% Dow Jones U.S. Basic Materials 100.00 Dow Jones U.S. Consumer Non-Cyclical Sector 100.00 Dow Jones U.S. Energy Sector 100.00 Dow Jones U.S. Financial Sector 100.00 Dow Jones U.S. Healthcare Sector 100.00 Dow Jones U.S. Industrial Sector 100.00 Dow Jones U.S. Telecommunications Sector 100.00 Dow Jones U.S. Utilities Sector 100.00 Dow Jones U.S. Chemicals 99.24 Dow Jones U.S. Financial Services 100.00 --------------------------------------------------------------- Shareholder Meeting Results (Unaudited) A special meeting of shareholders of the iShares Trust was held on November 15, 2001. At the meeting, the following matter was voted upon and approved by the shareholders. The matter voted upon was a Trust-wide proposal and the voting results are presented below. Proposal: To elect the six nominees specified below as Trustees, to hold office until their successors are duly elected and qualified. -------------------------------------------------------------- Trustee Votes For Votes Withheld -------------------------------------------------------------- Nathan Most 99,539,634 163,697 Richard K. Lyons 99,539,634 163,697 George G.C. Parker 99,539,634 163,697 John B. Carroll 99,539,634 163,697 W. Allen Reed 99,539,634 163,697 Garrett F. Bouton 99,539,634 163,697 -------------------------------------------------------------- Messrs. Most, Lyons, and Parker previously served as Trustees of the Trust and were reelected. Messrs. Carroll, Reed and Bouton were newly elected. 120 2002 iShares Annual Report to Shareholders iShares Trust Supplemental Information (Unaudited) The charts below present information about the differences between the daily closing price on secondary markets for shares of an iShares Fund and that Fund's net asset value. Net asset value, or "NAV", is the price per share at which each Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares as of the close of regular trading (normally 4:00 p.m. Eastern time) every day the New York Stock Exchange is open. The "Closing Price" of each iShares Fund is the price of the last reported trade for shares of such Fund on any major U.S. market. Each Fund's Closing Price may be at, above or below its NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The trading price of each Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand. Premiums or discounts are the differences (generally expressed as a percentage) between the NAV and Closing Price of a Fund on a given day. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV. One reason for differences is that timing discrepancies can exist between the determination of NAV and Closing Price of a Fund. Trading activity varies and it is important to note that the date/time of the last trade (which is recorded as the Closing Price) may not take place at the time when the Funds normally calculate NAV. Each Fund normally trades on its respective stock exchange until 4:00 p.m. (Eastern Time). Price Discovery, the constant flow of information among investors, corporations and financial institutions, causes market prices to change and evolve throughout the trading day, even after non-U.S. markets are closed. Price Discovery between the time that each Fund calculates its NAV and the date/time of the last trade may contribute to any difference between the NAV and Closing Price of each Fund. The following information shows the frequency distributions of premiums and discounts for each of the iShares Funds included in this report. The information shown for each Fund is for each full calendar quarter completed after the inception date of such Fund through March 31, 2002, the date of the most recent quarter-end. The specific periods covered for each Fund is disclosed in the chart for such Fund. The vertical column of the chart shows the premium or discount expressed as a percentage of NAV. The horizontal column indicates the number of trading days in the period covered by the chart. Each bar in the chart shows the number of trading days in which the iShares Fund traded within the premium/discount range indicated. All data presented here represents past performance, which cannot be used to predict future results. Supplemental Information 121 Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Total Market Index PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 [BAR CHART] PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 0 GT 1.00%_LT 1.50% 1 GT 0.50%_LT 1.00% 19 LT 0.50%_GT (0.50)% 400 LT (0.50)%_GT (1.00)% 12 LT (1.00)%_GT (1.50)% 1 LT(1.50)%_GT (2.00)% 0 LT (2.00)%_GT (2.50)% 0 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Dow Jones U.S. Basic Materials Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 [BAR CHART] PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 1 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 2 GT 2.50%_LT 3.00% 1 GT 2.00%_LT 2.50% 6 GT 1.50%_LT 2.00% 6 GT 1.00%_LT 1.50% 13 GT 0.50%_LT 1.00% 40 LT 0.50%_GT (0.50)% 298 LT (0.50)%_GT (1.00)% 29 LT (1.00)%_GT (1.50)% 19 LT(1.50)%_GT (2.00)% 4 LT (2.00)%_GT (2.50)% 8 LT (2.50)%_GT (3.00)% 2 LT (3.00)%_GT (3.50)% 1 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 1 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 1 LT (5.50)%_GT (6.00)% 1 LT (6.00)% 0 122 2002 iShares Annual Report to Shareholders Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 [BAR CHART] PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 1 GT 3.00%_LT 3.50% 2 GT 2.50%_LT 3.00% 1 GT 2.00%_LT 2.50% 3 GT 1.50%_LT 2.00% 3 GT 1.00%_LT 1.50% 4 GT 0.50%_LT 1.00% 31 LT 0.50%_GT (0.50)% 348 LT (0.50)%_GT (1.00)% 18 LT (1.00)%_GT (1.50)% 13 LT(1.50)%_GT (2.00)% 2 LT (2.00)%_GT (2.50)% 3 LT (2.50)%_GT (3.00)% 1 LT (3.00)%_GT (3.50)% 2 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 1 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Dow Jones U.S. Consumer Non-cyclical Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 [BAR CHART] PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 1 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 4 GT 3.50%_LT 4.00% 2 GT 3.00%_LT 3.50% 1 GT 2.50%_LT 3.00% 1 GT 2.00%_LT 2.50% 3 GT 1.50%_LT 2.00% 1 GT 1.00%_LT 1.50% 6 GT 0.50%_LT 1.00% 39 LT 0.50%_GT (0.50)% 343 LT (0.50)%_GT (1.00)% 21 LT (1.00)%_GT (1.50)% 5 LT(1.50)%_GT (2.00)% 3 LT (2.00)%_GT (2.50)% 2 LT (2.50)%_GT (3.00)% 1 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 Supplemental Information 123 Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Energy Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 1 GT 1.00%_LT 1.50% 2 GT 0.50%_LT 1.00% 19 LT 0.50%_GT (0.50)% 402 LT (0.50)%_GT (1.00)% 6 LT (1.00)%_GT (1.50)% 1 LT(1.50)%_GT (2.00)% 0 LT (2.00)%_GT (2.50)% 2 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Dow Jones U.S. Financial Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 1 GT 1.00%_LT 1.50% 1 GT 0.50%_LT 1.00% 18 LT 0.50%_GT (0.50)% 394 LT (0.50)%_GT (1.00)% 16 LT (1.00)%_GT (1.50)% 2 LT(1.50)%_GT (2.00)% 1 LT (2.00)%_GT (2.50)% 0 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 124 2002 iShares Annual Report to Shareholders Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Healthcare Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 1 GT 1.50%_LT 2.00% 0 GT 1.00%_LT 1.50% 1 GT 0.50%_LT 1.00% 15 LT 0.50%_GT (0.50)% 415 LT (0.50)%_GT (1.00)% 1 LT (1.00)%_GT (1.50)% 0 LT(1.50)%_GT (2.00)% 0 LT (2.00)%_GT (2.50)% 0 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Dow Jones U.S. Industrial Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 1 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 1 GT 3.00%_LT 3.50% 1 GT 2.50%_LT 3.00% 2 GT 2.00%_LT 2.50% 3 GT 1.50%_LT 2.00% 3 GT 1.00%_LT 1.50% 6 GT 0.50%_LT 1.00% 39 LT 0.50%_GT (0.50)% 320 LT (0.50)%_GT (1.00)% 20 LT (1.00)%_GT (1.50)% 8 LT(1.50)%_GT (2.00)% 7 LT (2.00)%_GT (2.50)% 2 LT (2.50)%_GT (3.00)% 3 LT (3.00)%_GT (3.50)% 3 LT (3.50)%_GT (4.00)% 3 LT (4.00)%_GT (4.50)% 1 LT (4.50)%_GT (5.00)% 1 LT (5.00)%_GT (5.50)% 1 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 Supplemental Information 125 Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Technology Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 1 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 1 GT 1.50%_LT 2.00% 1 GT 1.00%_LT 1.50% 2 GT 0.50%_LT 1.00% 37 LT 0.50%_GT (0.50)% 354 LT (0.50)%_GT (1.00)% 27 LT (1.00)%_GT (1.50)% 6 LT(1.50)%_GT (2.00)% 2 LT (2.00)%_GT (2.50)% 1 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 1 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Dow Jones U.S. Telecommunications Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 1 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 0 GT 1.00%_LT 1.50% 1 GT 0.50%_LT 1.00% 49 LT 0.50%_GT (0.50)% 357 LT (0.50)%_GT (1.00)% 24 LT (1.00)%_GT (1.50)% 1 LT(1.50)%_GT (2.00)% 0 LT (2.00)%_GT (2.50)% 0 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 126 2002 iShares Annual Report to Shareholders Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Utilities Sector Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 1 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 0 GT 1.00%_LT 1.50% 1 GT 0.50%_LT 1.00% 7 LT 0.50%_GT (0.50)% 397 LT (0.50)%_GT (1.00)% 15 LT (1.00)%_GT (1.50)% 6 LT(1.50)%_GT (2.00)% 1 LT (2.00)%_GT (2.50)% 2 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 5 iShares Dow Jones U.S. Chemicals Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 1 GT 4.50%_LT 5.00% 1 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 1 GT 3.00%_LT 3.50% 1 GT 2.50%_LT 3.00% 5 GT 2.00%_LT 2.50% 5 GT 1.50%_LT 2.00% 11 GT 1.00%_LT 1.50% 19 GT 0.50%_LT 1.00% 35 LT 0.50%_GT (0.50)% 257 LT (0.50)%_GT (1.00)% 50 LT (1.00)%_GT (1.50)% 10 LT(1.50)%_GT (2.00)% 5 LT (2.00)%_GT (2.50)% 7 LT (2.50)%_GT (3.00)% 2 LT (3.00)%_GT (3.50)% 1 LT (3.50)%_GT (4.00)% 2 LT (4.00)%_GT (4.50)% 1 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 1 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 Supplemental Information 127 Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Financial Services Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 1 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 1 GT 1.00%_LT 1.50% 5 GT 0.50%_LT 1.00% 24 LT 0.50%_GT (0.50)% 365 LT (0.50)%_GT (1.00)% 26 LT (1.00)%_GT (1.50)% 5 LT(1.50)%_GT (2.00)% 3 LT (2.00)%_GT (2.50)% 3 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Dow Jones U.S. Internet Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 1 GT 2.00%_LT 2.50% 6 GT 1.50%_LT 2.00% 7 GT 1.00%_LT 1.50% 29 GT 0.50%_LT 1.00% 92 LT 0.50%_GT (0.50)% 216 LT (0.50)%_GT (1.00)% 51 LT (1.00)%_GT (1.50)% 23 LT(1.50)%_GT (2.00)% 3 LT (2.00)%_GT (2.50)% 0 LT (2.50)%_GT (3.00)% 3 LT (3.00)%_GT (3.50)% 1 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 1 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 128 2002 iShares Annual Report to Shareholders Supplemental Information (Unaudited) (Continued) iShares Trust iShares Dow Jones U.S. Real Estate Index Fund PERIOD COVERED: JULY 1, 2000 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 0 GT 1.00%_LT 1.50% 3 GT 0.50%_LT 1.00% 6 LT 0.50%_GT (0.50)% 411 LT (0.50)%_GT (1.00)% 11 LT (1.00)%_GT (1.50)% 1 LT(1.50)%_GT (2.00)% 0 LT (2.00)%_GT (2.50)% 1 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 iShares Cohen & Steers Realty Majors Index Fund PERIOD COVERED: APRIL 1, 2001 THROUGH MARCH 31, 2002 PERCENT PREMIUMS/DISCOUNTS NUMBER OF DAYS GT 6.00% 0 GT 5.50%_LT 6.00% 0 GT 5.00%_LT 5.50% 0 GT 4.50%_LT 5.00% 0 GT 4.00%_LT 4.50% 0 GT 3.50%_LT 4.00% 0 GT 3.00%_LT 3.50% 0 GT 2.50%_LT 3.00% 0 GT 2.00%_LT 2.50% 0 GT 1.50%_LT 2.00% 0 GT 1.00%_LT 1.50% 1 GT 0.50%_LT 1.00% 4 LT 0.50%_GT (0.50)% 236 LT (0.50)%_GT (1.00)% 6 LT (1.00)%_GT (1.50)% 0 LT(1.50)%_GT (2.00)% 0 LT (2.00)%_GT (2.50)% 0 LT (2.50)%_GT (3.00)% 0 LT (3.00)%_GT (3.50)% 0 LT (3.50)%_GT (4.00)% 0 LT (4.00)%_GT (4.50)% 0 LT (4.50)%_GT (5.00)% 0 LT (5.00)%_GT (5.50)% 0 LT (5.50)%_GT (6.00)% 0 LT (6.00)% 0 Supplemental Information 129 Trustees Information (Unaudited) iShares Trust The Board of Trustees has responsibility for the overall management and operations of the Trust, including general supervision of the duties performed by BGFA and other service providers. Each Trustee serves until his or her successor is duly elected and qualified. iShares Trust, iShares, Inc., Barclays Global Investors Funds and Master Investment Portfolio are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Trustee also serves as a Director for iShares, Inc. and oversees 77 portfolios within the fund complex. In addition, Richard K. Lyons serves as a Trustee for Barclays Global Investors Funds and Master Investment Portfolio and oversees 100 portfolios within the fund complex. Additional information about the Funds' Trustees may be found in the Funds' Statement of Additional Information, which is available without charge upon request by calling toll-free 1-800-474-2737. Interested Trustees
Position(s), Principal Occupation(s) Name, Age and Address Length of Service During Past 5 Years Other Directorships Held - ---------------------------------------------------------------------------------------------------------------------- *Garrett F. Bouton (56) Chairman (since Managing Director and Chief Chairman of the Board of Directors Barclays Global February 28, Executive Officer (since 1999) for (since 1998) of BGFA; Director Investors 2002), Trustee Barclays Global Investors, N.A. (since 1998) of BGI; Director of 45 Fremont Street (since January 1, ("BGI") Global Individual Investor various Barclays subsidiaries San Francisco, CA 94105 2002) and Business; Global H.R. Director (since 1997). President. (from 1996-1999) for BGI. *Nathan Most (87) Trustee (since Consultant to BGI (1998-present), None. P.O. Box 193 February 15, 2000) American Stock Exchange (1996-2000) Burlingame, CA 94011 and the Hong Kong Stock Exchange (1998 to present); Consultant to the Amsterdam Stock Exchange (1997-1998); Consultant to the Pacific Stock Exchange (1997-1998); Formerly Senior Vice President American Stock Exchange (New Product Development) (1976-1996).
_____________________ * Garrett F. Bouton and Nathan Most are deemed to be "interested persons" (as defined in the 1940 Act) of the Trust due to their affiliations with BGFA, the Funds' investment advisor and BGI, the parent company of BGFA. 130 2002 iShares Annual Report to Shareholders Trustees Information (Unaudited) (Continued) iShares Trust Independent Trustees
Position(s), Principal Occupation(s) Name, Age and Address Length of Service During Past 5 Years Other Directorships Held - ----------------------------------------------------------------------------------------------------------------------- John B. Carroll (65) Trustee (since Retired Vice President of Former Trustee and member of the 520 Main Street January 1, 2002) Investment Management (1984-2000) Executive Committee (since 1991) of Ridgefield, CT 06877 of Verizon Corporation; Advisory The Common Fund Institutional Board member of Ibbotson Associates Funds, a non- profit organization; (1992-1998); former Vice Chairman Member of the Board of Managers of and Executive Committee Member JP Morgan Private Equity Funds. (1994-1998) of the Committee on Investment of Employee Benefit Assets of the Financial Executive Institute. Richard K. Lyons (41) Trustee (since Professor, University of Board of Trustees: Matthews Asian Haas School of Business, February 15, 2000) California, Berkeley: Haas School Funds since 1995 (oversees 6 UC Berkeley of Business (since 1993); portfolios). Berkeley, CA 94720 Consultant for IMF World Bank, Federal Reserve Bank, and Citibank N.A. (since 2000) George G. C. Parker (60) Trustee (since Dean Witter Distinguished Professor Board of Directors: Affinity Group Graduate School of February 15, 2000) of Finance (since 1994); Associate (since 1998); Bailard, Biehl and Business (Room K301) Dean for Academic Affairs, Director Kaiser, Inc. (since 1985); Stanford University of MBA Program, and Professor, California Casualty Group of 521 Memorial Way Stanford University: Graduate Insurance Companies (since 1978); Stanford, CA 94305 School of Business (1993-2001). Continental Airlines, Inc. (since 1996); Community First Financial Group (since 1995); Dresdner/RCM Mutual Funds (oversees 10 portfolios) (1994-2002); Tyon Ranch Company (since 1999). W. Allen Reed (54) Trustee (since President and Chief Executive Director (since 1994) of General General Motors Investment January 1, 2002) Officer (since 1994) of General Motors Investment Management Management Corp. Motors Investment Management Corporation; Director (1995-1998) 767 Fifth Avenue Corporation. of Taubman Centers, Inc. (a real New York, NY 10153 estate investment trust); Director (since 1992) of FLIR Systems (an imaging technology company); Director (since 1994) of General Motors Acceptance Corporation; Director (since 1994) of GMAC Insurance Holdings, Inc.; Director (since 1995) of Global Emerging Markets Fund; Director (since 2000) of Temple Inland Industries; Chairman (since 1995) of the Investment Advisory Committee of Howard Hughes Medical Institute.
Trustees Information 131 Trustees Information (Unaudited) (Continued) iSHARES TRUST Officers Who are Not Trustees
Principal Occupation(s) Directorships Held by Name, Age and Address Position During Past 5 Years Officers - ---------------------------------------------------------------------------------------------------------------------------------- Lee T. Kranefuss (39) Vice President Chief Executive Officer of the Board of Trustees for Barclays Barclays Global Investors Individual Investor Business of Global Investors Funds and Master 45 Fremont Street BGI.; The Boston Consulting Group Investment Portfolio (since 2001). San Francisco, CA 94105 (until 1997). Michael Latham (35) Secretary, Treasurer Director of Mutual Fund Delivery in None. Barclays Global Investors and Principal the U.S. Individual Investor 45 Fremont Street Financial Officer Business of BGI (since 2000); Head San Francisco, CA 94105 of Operations, BGI Europe (1997-2000); Manager, Portfolio Accounting Group of BGI (1994-1997). Donna M. Mccarthy (34) Assistant Treasurer Unit Director (formerly Director), None. Investors Bank & Trust Co. Mutual Fund Administration at 200 Clarendon Street Investors Bank & Trust Co. ("IBT"); Boston, MA 02116 Manager, Business Assurance Group, Coopers & Lybrand (1988-1994). Sandra I. Madden (34) Assistant Secretary Associate Counsel, Mutual Fund None. Investors Bank & Trust Co. Administration, IBT (since 1999); 200 Clarendon Street Associate, Scudder Kemper Boston, MA 02116 Investments, Inc. (1996-1999). Susan C. Mosher (45) Assistant Secretary Senior Director & Senior Counsel, None. Investors Bank & Trust Co. Mutual Fund Administration, IBT 200 Clarendon Street (since 1995). Boston, MA 02116
132 2002 iShares Annual Report to Shareholders iShares are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an adviser to iShares. Barclays Global Investors Services (BGIS) assists in the marketing of iShares. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., neither of which is affiliated with SEI. IBT serves as administrator, custodian, securities lending agent and transfer agent for the iShares Dow Jones Series and the iShares Cohen & Steers Series. iShares are not sponsored, endorsed, issued, sold or promoted by Dow Jones & Company, Inc. or Cohen & Steers Capital Management, Inc., nor do these companies make any representation regarding the advisability of investing in iShares. (c)2002 Barclays Global Investors. All rights reserved. iShares is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. This report is intended for the Funds' shareholders. It may not be distributed to prospective Investors unless it is preceded or accompanied by the current prospectus. iShares(R) 45 Fremont Street San Francisco, CA 94105 BGI-F-015-01000 iShares(R) Industrial strength investment tools from BARCLAYS GLOBAL INVESTORS 1-800-iShares 1-800-474-2737 www.iShares.com -----END PRIVACY-ENHANCED MESSAGE-----