-----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, HzhTUIvwT/eslK22rRiXoN0vFwjgI5WjVCMnVQGuD7X3X/k4+m539yo5WN6lLtWr OJoy34mug2Vc8CUPOtis7A== 0001021408-02-004138.txt : 20020415 0001021408-02-004138.hdr.sgml : 20020415 ACCESSION NUMBER: 0001021408-02-004138 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020131 FILED AS OF DATE: 20020326 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: 02586608 BUSINESS ADDRESS: STREET 1: 45 FREMONT STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 N-30D 1 dn30d.txt GOLDMAN SACHS & MSCI - ISHARES TRUST SEMIANNUAL iShares Goldman Sachs Series iShares MSCI Series SEMI-ANNUAL REPORT January 31, 2002 i|Shares The way you invest now. ------------------------- Only better. BARCLAYS GLOBAL INVESTORS TABLE OF CONTENTS Shareholder Letter............................................... 1 Market Overview.................................................. 3 Managers' Discussion & Analysis.................................. 4 Schedules of Investments......................................... 16 iShares Goldman Sachs Technology Index Fund................... 16 iShares Goldman Sachs Networking Index Fund................... 19 iShares Goldman Sachs Semiconductor Index Fund................ 20 iShares Goldman Sachs Software Index Fund..................... 21 iShares Goldman Sachs Natural Resources Index Fund............ 22 iShares MSCI EAFE Index Fund.................................. 24 Financial Statements............................................. 35 Financial Highlights............................................. 39 Notes to the Financial Statements................................ 41 To Our Shareholders The iShares Funds' semi-annual period ended January 31, 2002 was one of continued market volatility. Significant events during this period included: - - The Federal Reserve Board lowered short-term interest rates five times during the six-month period, bringing the federal funds rate to 1.75% and the discount rate to 1.25%. - - The terrorist attacks on September 11 that tragically took the lives of approximately 3,000 people and affected lives around the world also resulted in the U.S. equity markets remaining closed for four days, the longest period since World War I. - - On December 31, 2001, the unemployment rate stood at 5.8%, the highest since April 1995. As you read through this report and review the performance of the iShares in your portfolio, we encourage you to keep long-term goals in mind when making investment decisions. While one fund's recent performance may be better than another's, it is important to remember that past performance is no guarantee of future results. Even as market conditions change, you should maintain your investment strategy as long as it remains appropriate for your short- or long-term objectives. One trait many successful investors share is the ability to stay focused on their personal financial goals and fundamental long-term market opinions, while ignoring temporary market swings. We trust that the iShares are fulfilling your expectations as a simple, cost-effective way for you to invest in your future, and will continue to do so. We also encourage you to consider the appropriateness of other iShares as part of your long-term investment program. iShares offer investors a wide range of indexed investment choices based on market capitalization, investment style, and sector exposure. We appreciate your confidence and look forward to helping you meet your investment goals. iShares Funds March 2002 - -------------------------------------------------------------------------------- iShares Shareholder Letter page 1 THIS PAGE INTENTIONALLY LEFT BLANK. Market Overview Stock markets entered the six-month period ending January 31, 2002 amid the same familiar themes of corporate earnings warnings, layoffs, and weak economic indicators. In response to the bleak economic signs and weak markets, the Federal Reserve Board (the "Fed") continued its campaign to stimulate the sagging economy. After six rate cuts in the first six months of 2001, the Fed lowered short-term rates an additional five times during the reporting period. By January 31, 2002, the federal funds rate stood at 1.75%, its lowest level in 40 years. Despite these actions, discouraging economic signs and poor earnings growth weighed on the markets for much of the six-month period. The terrorist attacks on U.S. soil on September 11 accelerated the broad market sell off. After remaining closed for four days following the attack, U.S. 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. Certain market segments began to rally in the fourth quarter as third quarter economic figures were released, and several revealed positive news: inventories declined, factory orders climbed, 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 a potential economic recovery in the New Year. In January, additional positive news helped to boost consumer confidence. Newly-released figures showed that fourth quarter 2001 GDP had grown 0.2%, ahead of the expected 1% decline expected by many analysts. By the end of January, the jobless rate declined to 5.6%, ending eight straight months of increases. The Fed left short-term rates unchanged at its January meeting, citing improvements in the economy while cautioning that weak profits and business investment still posed a significant risk. Technology companies struggled in the weak economic environment. Global chip sales fell 4% in December, down 43% from December 2000. PC shipments slid 6.7% during the fourth quarter. However, because technology stocks had been among the hardest hit during the market declines earlier in the year, many investors projected that these companies' share prices would be among the first to benefit from a recovery. Renewed investor interest helped tech stocks to rise the most during the last few months of the reporting period. The global slowdown that the United States participated in continued to take its toll in Europe and Asia during the period. In Europe, economies continued to slide, although authorities were reluctant to describe the condition as a recession. By year-end, Germany appeared to be approaching recession, with France and Italy close behind. In the UK, however, economic conditions were markedly better. Because the Bank of England had pursued a more proactive monetary policy, and fiscal policy was also loosened before the economic slowdown was fully appreciated, the UK ended the year with one of the strongest rates of growth of any of the major industrial countries. In Asia, Japan found itself in its fourth recession in a decade. The country has, in effect, been in a prolonged slump for the entire ten years, alleviated periodically by massive injections of government spending. Consequently, Japan now stands at a point where any additional government spending would threaten its international credit standing. Similarly, monetary easing has been overused to the point where nominal interest rates can no longer be cut. After another dismal year, Japan's main equity indices stood near a seventeen-year low by January 31. - -------------------------------------------------------------------------------- iShares Market Overview page 3 Managers' Discussion & Analysis iShares Goldman Sachs Technology Index Fund Performance as of 1/31/02 - -------------------------------------------------------------------------------- Total Returns - -------------------------------------------------------------------------------- Inception to 1/31/02 -------------------- Fund Inception Date Nav Market Index ---- -------------- --- ------ ----- iShares Goldman Sachs Technology Index Fund 03/13/01 (11.21)% (6.02)% (10.84)% - -------------------------------------------------------------------------------- Total returns represent the iShares Fund's change in value during the periods noted above. A Fund's "net asset value" is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate "market" returns 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. Also, market price returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. 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. 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. 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 management, administration, distribution, transaction or other expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance is no guarantee of future results. Top 10 Index Holdings --------------------- Intel Corp. 9.33% Microsoft Corp. 8.34% International Business Machines Corp. 7.78% Cisco Systems Inc. 6.31% AOL Time Warner Inc. 4.87% Oracle Corp. 4.17% Dell Computer Corp. 3.12% Texas Instruments Inc. 2.35% Hewlett-Packard Co. 1.86% EMC Corp. 1.58% The iShares Goldman Sachs Technology Index Fund seeks investment results that correspond to the performance, before fees and expenses, of the Goldman Sachs Technology Sector Index (the "Index"). For the six-month period ending January 31, 2002 (the "reporting period"), the Fund declined 7.75%, and the Index declined 7.52%. During the reporting period, the Federal Reserve Board (the "Fed") continued its campaign to bolster the sagging U.S. economy. Despite the Fed's efforts, however, earnings disappointments, weak economic indicators and job cuts continued through the third quarter, dragging down equity markets. Against this backdrop, the terrorist attacks on September 11 dealt the economic outlook and the markets a further blow. Toward year-end, however, markets seemed to respond to the Fed's efforts. Contributing to investor sentiment, many economic indicators revealed encouraging news. Factory orders grew as inventories declined, housing starts climbed, and consumer confidence rose. - -------------------------------------------------------------------------------- page 4 i|Shares The technology sector, which had been hurt severely earlier in the year, benefited from signs of a possible recovery. Although renewed investor interest in these stocks was not sufficient to deliver positive Index returns for the period, it did help to mitigate the losses for many stocks in this sector. Within the Index, top-weighting Intel Corp. (9.33% of the Index as of January 31, 2002) had the strongest performance, gaining 17.71% over the reporting period. Other positive contributors included International Business Machines Corp. (7.78% of the Index as of January 31, 2002), Cisco Systems Inc. (6.31% of the Index as of January 31, 2002), and Dell Computer Corp. (3.12% of the Index as of January 31, 2002), which gained 2.81%, 3.02%, and 2.08%, respectively. AOL Time Warner Inc. (4.87% of assets as of January 31, 2002) suffered the largest decline, falling 42.11%, while EMC Corp. (1.58% of the Index as of January 31), declined 16.84% over the reporting period. - -------------------------------------------------------------------------------- iShares Managers' Discussion & Analysis page 5 Managers' Discussion & Analysis iShares Goldman Sachs Networking Index Fund Performance as of 1/31/02 - -------------------------------------------------------------------------------- Total Returns - --------------------------------------------------------------------------------
Inception to 1/31/02 ---------------------------- Fund Inception Date NAV Market Index ---- -------------- -------- -------- -------- iShares Goldman Sachs Networking Index Fund 07/10/01 (18.50)% (25.42)% (17.63)% - -----------------------------------------------------------------------------------------------------
Total returns represent the iShares Fund's change in value during the periods noted above. A Fund's "net asset value" is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate "market" returns 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. Also, market price returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. 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. 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. 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 management, administration, distribution, transaction or other expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance is no guarantee of future results. Top 10 Index Holdings --------------------- Cisco Systems Inc. 9.39% Lucent Technologies Inc. 9.04% Nortel Networks Corp. 8.79% Motorola Inc. 7.43% QUALCOMM Inc. 7.23% Agilent Technologies Inc. 6.87% JDS Uniphase Corp. 4.03% Amdocs Ltd. 3.95% Broadcom Corp. "A" 3.87% Corning Inc. 3.70% The Ishares Goldman Sachs Networking Index Fund seeks investment results that correspond to the performance, before fees and expenses, of the Goldman Sachs Technology Industry Multimedia Networking Index (the "Index"). For the six-month period ending January 31, 2002 (the "reporting period"), the Fund declined 22.15%, while the Index declined 21.28%. During the reporting period, the Federal Reserve Board (the "Fed") continued its campaign to bolster the sagging U.S. economy. Despite the Fed's efforts, however, earnings disappointments, weak economic indicators and job cuts continued through the third quarter, dragging down equity markets. Against this backdrop, the terrorist attacks on September 11 dealt the economic outlook and the markets a further blow. Toward year-end, however, markets seemed to respond to the Fed's efforts. Contributing to investor sentiment, many economic indicators revealed encouraging news. Factory orders grew as inventories declined, housing starts climbed, and consumer confidence rose. - -------------------------------------------------------------------------------- page 6 i|Shares The technology sector bore the brunt of the market declines early in the reporting period. As hints of economic recovery surfaced, this group benefited from renewed investor interest. However, for most companies, the gains were not sufficient to offset earlier losses. Within the Index's ten largest weightings, only two logged positive returns for the reporting period. Top Index weighting Cisco Systems Inc. (9.39% of the Index as of January 31, 2002) gained 3.02%, while Agilent Technologies Inc. (6.87% of the Index as of January 31, 2002) returned 6.08%. On the other side of the performance spectrum for the reporting period, companies suffering the largest losses included Corning Inc. (3.7% of the Index as of January 31, 2002), which declined 49.11%, QUALCOMM Inc. (7.23% of the Index as of January 31, 2002), which fell 30.33%, and Motorola Inc. (7.43% of the Index as of January 31, 2002), which lost 28.42%. JDS Uniphase Corp. (4.03% of the Index as of January 31, 2002) and Amdocs Ltd. (3.95% of the Index as of January 31, 2002) also suffered large declines, falling 24.24% and 19.57%, respectively. - -------------------------------------------------------------------------------- iShares Managers' Discussion & Analysis page 7 Managers' Discussion & Analysis iShares Goldman Sachs Semiconductor Index Fund Performance as of 1/31/02 - -------------------------------------------------------------------------------- Total Returns - --------------------------------------------------------------------------------
Inception to 1/31/02 ------------------------ Fund Inception Date NAV Market Index ---- -------------- ------ ------- ------- iShares Goldman Sachs Semiconductor Index Fund 07/10/01 5.71% (4.56)% 5.90% - -------------------------------------------------------------------------------------------------
Total returns represent the iShares Fund's change in value during the periods noted above. A Fund's "net asset value" is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate "market" returns 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. Also, market price returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. 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. 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. 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 management, administration, distribution, transaction or other expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance is no guarantee of future results. Top 10 Index Holdings --------------------- Intel Corp. 8.99% Applied Materials Inc. 8.88% Texas Instruments Inc. 8.71% STMicroelectronics NV-NY Shares 7.15% Motorola Inc. 6.88% Micron Technology Inc. 5.16% Maxim Intergrated Products Inc. 4.58% Analog Devices Inc. 4.05% Xilinx Inc. 3.70% Linear Technology Corp. 3.34% The iShares Goldman Sachs Semiconductor Index Fund seeks investment results that correspond to the performance, before fees and expenses, of the Goldman Sachs Technology Industry Semiconductor Index (the "Index"). For the six-month period ending January 31, 2002 (the "reporting period"), the Fund declined 6.13%, compared with a decline of 5.98% for the Index. During most of the reporting period, the Federal Reserve Board (the "Fed") continued its campaign to revive the slowing economy. Despite the Fed's efforts, markets slumped as Corporate America delivered additional warnings of missed earnings targets and layoffs. By year-end, however, the effects of the monetary stimulus began to take hold. Newly released economic indicators revealed encouraging news: factory orders grew as inventories diminished, housing starts climbed, and consumer spending rebounded. - -------------------------------------------------------------------------------- page 8 i|Shares For the technology sector, the economy continued to weigh on earnings levels. Even as economic indicators began to turn positive, figures for the technology sector remained weak. Although semiconductor chip sales rose in November, they fell in December, representing a decline of 43% since December 2000. However, investor optimism about economic recovery translated into renewed interest in technology companies, particularly those that were the hardest hit in previous months. Within the Index, stocks delivered mixed results during the reporting period. Top weighting Intel Corp. (8.99% of the Index as of January 31, 2002) gained 17.71% for the reporting period. Maxim Integrated Products Inc. (4.58% of the Index as of January 31, 2002) and Xilinx Inc. (3.70% of the Index as of January 31, 2002) also posted strong returns, rising 20.19% and 8.37%, respectively. However, Motorola Inc. (6.88% of the Index as of January 31, 2002) fell 28.42%, while Micron Technology Inc. (5.16% of the Index as of January 31, 2002) declined 19.64%. Texas Instruments Inc. (8.71% of the Index as of January 31, 2002) also struggled during the reporting period, declining 9.40%. - -------------------------------------------------------------------------------- iShares Managers' Discussion & Analysis page 9 Managers' Discussion & Analysis iShares Goldman Sachs Software Index Fund Performance as of 1/31/02 - -------------------------------------------------------------------------------- Total Returns - -------------------------------------------------------------------------------- Inception to 1/31/02 -------------------------- Fund Inception Date NAV Market Index ---- -------------- ------- -------- ------- iShares Goldman Sachs Software Index Fund 07/10/01 (6.33)% (12.31)% (6.03)% - -------------------------------------------------------------------------------- Total returns represent the iShares Fund's change in value during the periods noted above. A Fund's "net asset value" is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate "market" returns 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. Also, market price returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. 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. 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. 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 management, administration, distribution, transaction or other expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance is no guarantee of future results. Top 10 Index Holdings --------------------- Oracle Corp. 9.87% Computer Associates International Inc. 8.24% Microsoft Corp. 8.07% Veritas Software Corp. 7.26% Siebel Systems Inc. 6.96% PeopleSoft Inc. 4.19% Check Point Software Technologies Ltd. 3.75% Intuit Inc. 3.54% Amdocs Ltd. 3.43% Adobe Systems Inc. 3.40% The iShares Goldman Sachs Software Index Fund seeks investment results that correspond to the performance, before fees and expenses, of the Goldman Sachs Technology Industry Software Index (the "Index"). For the six-month period ending January 31, 2002 (the "reporting period"), the Fund declined 4.70%, compared with a decline of 4.43% for the Index. During the reporting period, the Federal Reserve Board (the "Fed") continued its campaign to bolster the sagging U.S. economy. Despite the Fed's efforts, however, earnings disappointments, weak economic indicators and job cuts continued through the third quarter, dragging down equity markets. Against this backdrop, the terrorist attack on September 11 dealt the economic outlook and the markets a further blow. Toward year-end, however, markets seemed to respond to the Fed's efforts. Contributing to investor sentiment, many economic indicators revealed encouraging news. Factory orders grew as inventories declined, housing starts climbed, and consumer confidence rose. - -------------------------------------------------------------------------------- page 10 i|Shares The technology sector, which had been hurt severely earlier in the year, benefited from signs of a possible recovery. Although renewed investor interest in these stocks was not sufficient to deliver positive returns for the reporting period, it did help to mitigate the losses for many stocks in this sector. Within the Index, performance was mixed over the reporting period. Intuit Inc. (3.54% of the Index as of January 31, 2002) posted the strongest returns, gaining 14.17%. Index holdings Computer Associates International Inc. (8.24% of the Index as of January 31, 2002), Veritas Software Corp. (7.26% of the Index as of January 31, 2002) and Siebel Systems Inc. (6.96% of the Index as of January 31, 2002) also delivered positive returns, rising 0.05%, 0.33%, and 2.70%, respectively. On the negative side, PeopleSoft Inc. (4.19% of the Index as of January 31, 2002) fell 25.60% and Amdocs Ltd. (3.43% of the Index as of January 31, 2002) fell 19.57%. - -------------------------------------------------------------------------------- iShares Managers' Discussion & Analysis page 11 Managers' Discussion & Analysis Ishares Goldman Sachs Natural Resources Index Fund Performance as of 1/31/02 - -------------------------------------------------------------------------------- Total Returns - --------------------------------------------------------------------------------
Inception To 1/31/02 ------------------------- Fund Inception Date NAV Market Index ---- -------------- ------- ------- ------- iShares Goldman Sachs Natural Resources Index Fund 10/22/01 (1.75)% (4.31)% (1.78)% - ------------------------------------------------------------------------------------------------------
Total returns represent the iShares Fund's change in value during the periods noted above. A Fund's "net asset value" is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate "market" returns 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. Also, market price returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. 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. 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. 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 management, administration, distribution, transaction or other expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance is no guarantee of future results. Top 10 Index Holdings --------------------- Exxon Mobile Corp. 7.71% BP Amoco PLC ADR 7.71% Royal Dutch Petroleum Co. - NY Shares 7.71% ChevronTexaco Corp. 7.16% Schlumberger Ltd. 4.45% Alcoa Inc. 4.17% Phillips Petroleum Co. 3.05% International Paper Co. 2.76% El Paso Corp. 2.65% Conoco Inc. 2.41% The iShares Goldman Sachs Natural Resources Index Fund seeks investment results that correspond to the performance, before fees and expenses, of the Goldman Sachs Natural Resources Index (the "Index"). For the period since the Fund's inception on October 22, 2001 through January 31, 2002 (the "reporting period"), the Fund declined 1.75%, compared to a decline of 1.78% for the Index. The Fund's inception came at a time when market and economic conditions finally appeared to be improving, following four quarters of market downturns. Low interest rates, rising stock prices, and falling energy prices helped trigger a rebound in consumer confidence, which in turn appeared to move the economy closer to recovery. Other hints of economic recovery included low inflation, fewer jobless claims, declining inventories, and stabilizing manufacturing conditions. By January, news of a 0.2% fourth quarter GDP growth rate far surpassed the anticipated 1% decline anticipated by some analysts. In November, crude oil prices reached a low of $17.50 per barrel, from a high of $32 per barrel earlier in the year. In an effort to stabilize oil prices, OPEC cut production, helping the price to settle at $20 per barrel by year end. Oil companies, which had suffered - -------------------------------------------------------------------------------- page 12 i|Shares early in the year, responded to signs that oil prices may have hit bottom. Within the sector, the oil service and exploration companies rebounded the most. Suggestions of an economic recovery contributed to increased demand for raw materials during the quarter, and basic materials companies performed well. Within the Index, oil service and exploration company Schlumberger Ltd. (4.45% of the Index as of January 31, 2002) logged the biggest gains since the Fund's inception, returning 17.41%. Basic materials companies International Paper Co. (2.76% of the Index as of January 31, 2002) and Alcoa Inc. (4.17% of the Index as of January 31, 2002) also did well, gaining 14.46% and 9.71%, respectively. By comparison, the large diversified oil companies generally failed to finish the period in positive territory. Exxon Mobil Corp., BP Amoco PLC, and Royal Dutch Petroleum (each at 7.71% of the Index as of January 31, 2002) declined 4.48%, 2.94%, and 1.28% since the Fund's inception, respectively. - -------------------------------------------------------------------------------- iShares Managers' Discussion & Analysis page 13 Managers' Discussion & Analysis iShares MSCI EAFE Index Fund Performance as of 1/31/02 - -------------------------------------------------------------------------------- Total Returns - --------------------------------------------------------------------------------
Inception To 1/31/02 ---------------------------- Fund Inception Date NAV Market Index ---- -------------- -------- -------- -------- iShares MSCI EAFE Index Fund 08/14/01 (11.23)% (10.67)% (11.30)% - --------------------------------------------------------------------------------------
Total returns represent the iShares Fund's change in value during the periods noted above. A Fund's "net asset value" is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate "market" returns 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. Also, market price returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. 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. 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. 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 management, administration, distribution, transaction or other expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance is no guarantee of future results. Top 10 Index Holdings --------------------- BP Amoco PLC 2.96% GlaxoSmithKline PLC 2.53% Vodafone Group PLC 2.49% Nokia OYJ 1.85% Royal Dutch Petroleum Co. 1.79% HSBC Holdings PLC 1.69% Novartis AG 1.68% Total SA "B" 1.51% Nestle SA 1.46% AstraZeneca PLC 1.37% The iShares MSCI EAFE Index Fund seeks investment results that correspond to the performance, before fees and expenses, of the Morgan Stanley Capital International Europe, Australasia and Far East ("MSCI EAFE") Index. The MSCI EAFE Index measures the performance of equities in developed European and Asian markets. From the Fund's inception date on August 14, 2001, through January 31, 2002 (the "reporting period"), the Fund declined 11.23%, compared to a decline of 11.30% for the MSCI EAFE Index. The markets of the MSCI EAFE Index were fairly weak as the reporting period began. As it became more apparent that the global economy was slowing, investors increasingly favored stocks considered relatively "defensive," such as consumer staples, utilities and financials. Conversely, information-technology and telecommunications stocks were among the Index's worst performers on a sector basis, as demand for technology and telecommunications products and services declined on a worldwide basis. - -------------------------------------------------------------------------------- page 14 i|Shares Individual countries within the Index reflected these trends. In August 2001, for example, the best-performing country in the MSCI EAFE Index was Belgium, which is heavily concentrated in financials such as Fortis Group and Dexia and utilities such as Electrabel SA. Meanwhile, the worst performing country in the MSCI EAFE Index for August 2001 was Finland, which is dominated by the wireless- telephone maker Nokia OYJ. The events of September 11 heightened the generally negative sentiment that weighed on EAFE markets through the late summer. The terrorist attacks on the United States drove down stocks in Europe and Asia, and fell especially hard on the shares of airlines, insurers and tourism-related companies. Within weeks, however, many investors had become more optimistic about the prospects for a fairly quick economic recovery. The information-technology sector was a prime beneficiary of this newfound optimism; it was among the best-performing sectors in developed markets in both October and November 2001. The Index's rally began to lose momentum in December. In January, the Index posted a loss, reflecting renewed concerns among investors about the economy. Worries about the extent of irregular accounting practices (a fallout of the Enron scandal) also had a negative impact on markets as the reporting period ended. - -------------------------------------------------------------------------------- iShares Managers' Discussion & Analysis page 15 iShares Goldman Sachs Technology Index Fund Schedule of Investments January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------- COMMON STOCKS - 100.01% - --------------------------------------------------------------- Intel Corp. 120,649 $ 4,227,541 Microsoft Corp./(1)/ 59,307 3,778,449 International Business Machines Corp. 32,684 3,526,277 Cisco Systems Inc./(1)/ 144,488 2,857,973 AOL Time Warner Inc./(1)/ 83,844 2,205,936 Oracle Corp./(1)/ 109,551 1,890,850 Dell Computer Corp./(1)/ 51,409 1,411,177 Texas Instruments Inc. 34,106 1,064,448 Hewlett-Packard Co. 38,204 844,690 EMC Corp./(1)/ 43,659 716,008 Applied Materials Inc./(1)/ 16,076 701,717 Sun Microsystems Inc./(1)/ 63,848 687,004 QUALCOMM Inc./(1)/ 15,077 665,348 Automatic Data Processing Inc. 12,143 655,722 First Data Corp. 7,516 621,799 Electronic Data Systems Corp. 9,345 585,090 Motorola Inc. 43,842 583,537 STMicroelectronics NV-NY Shares 17,616 551,557 Nortel Networks Corp. 63,015 456,229 Lucent Technologies Inc. 67,245 439,782 Compaq Computer Corp. 33,364 412,045 Micron Technology Inc./(1)/ 11,816 398,790 Computer Associates International Inc. 11,359 391,431 Maxim Integrated Products Inc./(1)/ 6,362 353,027 Veritas Software Corp./(1)/ 7,897 336,017 Siebel Systems Inc./(1)/ 9,099 322,014 eBay Inc./(1)/ 5,407 319,121 Analog Devices Inc./(1)/ 7,127 312,163 Concord EFS Inc./(1)/ 9,940 289,751 Xilinx Inc./(1)/ 6,576 285,070 Agilent Technologies Inc./(1)/ 9,096 276,064 Paychex Inc. 7,372 270,552 Linear Technology Corp. 6,237 258,025 Flextronics International Ltd./(1)/ 9,580 212,676 KLA-Tencor Corp./(1)/ 3,636 208,270 PeopleSoft Inc./(1)/ 5,963 193,738 Yahoo! Inc./(1)/ 11,190 192,916 Altera Corp./(1)/ 7,573 190,234 NVIDIA Corp./(1)/ 2,860 188,016 Solectron Corp./(1)/ 15,859 185,871 ASM Lithography Holding NV "R"/(1)/ 9,188 174,113 Check Point Software Technologies Ltd./(1)/ 4,770 174,105 Accenture Ltd./(1/) 6,736 173,654 Apple Computer Inc./(1)/ 6,894 170,420 SunGard Data Systems Inc./(1)/ 5,495 164,795 Intuit Inc./(1)/ 4,189 164,418 Brocade Communications System Inc./(1)/ 4,515 164,346 JDS Uniphase Corp./(1)/ 23,149 162,043 Amdocs Ltd./(1)/ 4,382 158,848 Celestica Inc./(1)/ 3,749 158,208 Adobe Systems Inc. 4,670 157,379 Fiserv Inc./(1)/ 3,696 156,858 Broadcom Corp. "A"/(1)/ 3,646 154,846 Sanmina Corp./(1)/ 10,236 150,265 Computer Sciences Corp./(1)/ 3,341 148,675 Corning Inc. 18,638 148,545 Electronic Arts Inc./(1)/ 2,710 143,820 Lexmark International Group Inc. "A"/(1)/ 2,568 142,652 BEA Systems Inc./(1)/ 7,841 142,157 VeriSign Inc./(1)/ 4,601 141,987 Tellabs Inc./(1)/ 8,075 124,840 Novellus Systems Inc./(1)/ 2,835 121,083 LSI Logic Corp./(1)/ 7,231 119,890 Sabre Holdings Corp./(1)/ 2,644 118,134 Network Appliance Inc./(1)/ 6,506 116,783 Cadence Design Systems Inc./(1)/ 4,829 114,447 Symantec Corp./(1)/ 1,373 108,000 Affiliated Computer Services Inc. "A"/(1)/ 1,122 107,319 Convergys Corp./(1)/ 3,382 107,176 Advanced Micro Devices Inc./(1)/ 6,674 107,118 Amazon.com Inc./(1)/ 7,317 103,828 Teradyne Inc./(1)/ 3,459 103,286 DST Systems Inc./(1)/ 2,357 102,954 Compuware Corp./(1)/ 7,335 99,756 Microchip Technology Inc./(1)/ 2,639 99,464 National Semiconductor Corp./(1)/ 3,470 97,889 Juniper Networks Inc./(1)/ 6,342 97,159 CDW Computer Centers Inc./(1)/ 1,685 93,315 Marvell Technology Group Ltd./(1)/ 2,294 92,081 Jabil Circuit Inc./(1)/ 3,899 90,457 QLogic Corp./(1)/ 1,842 90,129 Rational Software Corp./(1)/ 3,837 90,093 BMC Software Inc./(1)/ 4,798 84,781 Ciena Corp./(1)/ 6,452 81,940 Network Associates Inc./(1)/ 2,717 81,483 Scientific-Atlanta Inc. 3,071 81,320 L-3 Communications Holdings Inc./(1)/ 770 78,940 Unisys Corp./(1)/ 6,266 78,325 PMC - Sierra Inc./(1)/ 3,253 77,649 Comverse Technology Inc./(1)/ 3,632 77,616 - -------------------------------------------------------------------------------- page 16 i|Shares iShares Goldman Sachs Technology Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------- ADC Telecommunications Inc./(1)/ 15,616 $ 76,206 Emulex Corp./(1)/ 1,609 74,030 Agere Systems Inc./(1)/ 14,316 73,298 Bisys Group Inc./(1)/ 1,164 71,668 PerkinElmer Inc. 2,423 71,479 Atmel Corp./(1)/ 9,183 70,709 Symbol Technologies Inc. 4,514 69,967 AVX Corp. 3,427 68,060 Conexant Systems Inc./(1)/ 5,022 65,487 ChoicePoint Inc./(1)/ 1,241 65,277 Citrix Systems Inc./(1)/ 3,688 63,618 Integrated Device Technology Inc./(1)/ 2,062 62,994 TIBCO Software Inc./(1)/ 3,922 62,791 Polycom Inc./(1)/ 1,784 62,404 Mercury Interactive Corp./(1)/ 1,627 62,021 i2 Technologies Inc./(1)/ 8,291 61,602 Avnet Inc. 2,311 61,588 ATI Technologies Inc./(1)/ 4,500 61,380 Arrow Electronics Inc./(1)/ 1,971 60,628 Synopsys Inc./(1)/ 1,164 60,388 Applied Micro Circuits Corp./(1)/ 5,888 59,881 RF Micro Devices Inc./(1)/ 3,250 59,508 American Power Conversion Corp./(1)/ 3,862 58,664 Amkor Technology Inc./(1)/ 3,183 57,390 Expedia Inc. "A"/(1)/ 1,016 57,201 Lam Research Corp./(1)/ 2,455 57,103 UTStarcom Inc./(1)/ 2,112 54,743 Intersil Holding Corp./(1)/ 1,789 53,169 Vishay Intertechnology Inc./(1)/ 2,833 52,722 Ceridian Corp./(1)/ 2,889 51,915 Fairchild Semiconductor Corp. "A"/(1)/ 1,951 51,487 Cypress Semiconductor Corp./(1)/ 2,365 51,462 KPMG Consulting Inc./(1)/ 3,095 51,377 International Rectifier Corp./(1)/ 1,232 51,301 Storage Technology Corp./(1)/ 2,073 50,726 Vitesse Semiconductor Corp./(1)/ 3,946 49,601 Ticketmaster "B"/(1)/ 1,923 48,613 Avaya Inc./(1)/ 5,652 48,607 Lattice Semiconductor Corp./(1)/ 2,158 48,210 Semtech Corp./(1)/ 1,390 48,108 Certegy Inc./(1)/ 1,364 47,317 Finisar Corp./(1)/ 3,862 45,456 Harris Corp. 1,290 45,137 Autodesk Inc. 1,091 44,731 Cognos Inc./(1)/ 1,680 44,285 Tektronix Inc./(1)/ 1,784 43,672 Micrel Inc./(1)/ 1,824 43,046 Enterasys Networks Inc./(1)/ 3,834 42,251 Quest Software Inc./(1)/ 1,755 41,822 Palm Inc./(1)/ 11,170 41,776 Overture Services Inc./(1/ 1,138 41,628 3Com Corp./(1)/ 6,850 40,963 McDATA Corporation "A"/(1)/ 1,592 39,482 National Instruments Corp./(1)/ 1,018 39,336 Riverstone Networks Inc./(1)/ 2,292 39,124 Research in Motion Ltd./(1)/ 1,527 39,106 Internet Security Systems Inc./(1)/ 944 38,629 Amphenol Corp. "A"/(1)/ 835 38,410 CSG Systems International Inc./(1)/ 1,033 38,335 Reynolds & Reynolds Co. "A" 1,420 37,914 Jack Henry & Associates Inc. 1,719 37,440 Novell Inc./(1)/ 7,155 37,421 Adaptec Inc./(1)/ 2,091 37,115 Advent Software Inc./(1)/ 674 36,362 Parametric Technology Corp./(1)/ 5,173 35,590 Sybase Inc./(1)/ 1,946 35,242 Edwards (J.D.) & Co./(1)/ 2,265 35,198 Perot Systems Corp. "A"/(1)/ 1,951 34,143 Gateway Inc./(1)/ 6,362 33,146 Cerner Corp./(1)/ 684 33,106 NetIQ Corp./(1)/ 1,069 32,070 West Corp./(1)/ 1,267 31,713 Pixar Inc./(1)/ 971 31,538 Integrated Circuit Systems Inc./(1)/ 1,302 31,443 Extreme Networks Inc./(1)/ 2,255 31,435 Maxtor Corp./(1)/ 4,744 31,310 Macrovision Corp./(1)/ 1,016 30,886 Mentor Graphics Corp./(1)/ 1,238 30,467 KEMET Corp./(1)/ 1,686 30,348 Peregrine Systems Inc./(1)/ 3,758 30,026 DoubleClick Inc./(1)/ 2,635 29,749 Silicon Laboratories Inc./(1)/ 961 29,599 Cirrus Logic Inc./(1)/ 1,559 29,434 Quantum DLT & Storage Group/(1)/ 3,065 29,148 Titan Corp. (The)/(1)/ 1,302 29,087 Andrew Corp./(1)/ 1,595 28,694 TriQuint Semiconductor Inc./(1)/ 2,564 28,230 Advanced Fibre Communications Inc./(1)/ 1,624 28,176 Ingram Micro Inc. "A"/(1)/ 1,554 27,972 Priceline.com Inc./(1)/ 4,439 27,966 - -------------------------------------------------------------------------------- iShares Schedules of Investments page 17 iShares Goldman Sachs Technology Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------- Wind River Systems Inc./(1)/ 1,528 $ 27,535 Red Hat Inc./(1)/ 3,374 27,397 Cree Inc./(1)/ 1,430 27,370 Keane Inc./(1/) 1,487 27,212 EarthLink Inc./(1)/ 2,851 27,170 Activision Inc./(1)/ 1,023 26,884 Axcelis Technologies Inc./(1)/ 1,909 26,230 Sycamore Networks Inc./(1)/ 5,391 25,392 Genesis Microchip Inc./(1)/ 419 25,337 Fair Isaac and Co. Inc. 441 25,186 CheckFree Corp./(1)/ 1,737 25,169 Ariba Inc./(1)/ 5,085 24,662 Acxiom Corp./(1)/ 1,720 24,149 Retek Inc./(1)/ 988 23,860 Manugistics Group Inc./(1)/ 1,357 23,680 GlobespanVirata Inc./(1)/ 1,446 23,483 Ascential Software Corp./(1)/ 5,085 23,035 webMethods Inc./(1)/ 974 22,986 Powerwave Technologies Inc./(1)/ 1,238 22,829 Openwave Systems Inc./(1)/ 3,446 22,296 THQ Inc./(1)/ 492 22,160 Macromedia Inc./(1)/ 1,161 20,677 RealNetworks Inc./(1)/ 3,174 20,663 SanDisk Corp./(1)/ 1,340 20,649 Informatica Corp./(1)/ 1,551 19,620 Exult Inc./(1)/ 2,018 19,534 Plexus Corp./(1)/ 789 19,212 Foundry Networks Inc./(1)/ 2,346 18,111 Vignette Corp./(1)/ 4,835 17,986 Tekelec/(1)/ 1,196 16,959 Newport Corp. 712 16,846 CNET Networks Inc./(1)/ 2,745 16,607 Sonus Networks Inc./(1)/ 4,003 16,292 Micromuse Inc./(1)/ 1,445 15,736 ONI Systems Inc./(1)/ 2,775 15,734 Inktomi Corp./(1)/ 2,544 15,188 Redback Networks Inc./(1)/ 3,150 15,183 Handspring Inc./(1)/ 2,605 14,770 Interwoven Inc./(1)/ 2,057 14,728 Rambus Inc./(1)/ 1,989 14,281 Corvis Corp./(1)/ 7,102 14,275 Agile Software Corp./(1)/ 958 13,977 Sapient Corp./(1)/ 2,508 13,794 Commerce One Inc./(1)/ 5,640 12,746 BroadVision Inc./(1)/ 5,604 12,721 RSA Security Inc./(1)/ 1,124 12,600 InfoSpace Inc./(1)/ 6,005 12,430 E.piphany Inc./(1)/ 1,387 12,136 CMGI Inc./(1)/ 6,917 11,482 StorageNetworks Inc./(1)/ 1,923 9,884 - --------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $59,259,769) 45,319,014 - --------------------------------------------------------------- SHORT TERM INSTRUMENTS - 6.71% - --------------------------------------------------------------- Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 961,673 961,673 Dreyfus Money Market Fund 993,931 993,931 Goldman Sachs Financial Square Prime Obligation Fund 420,619 420,619 Providian Temp Cash Money Market Fund 661,610 661,610 - --------------------------------------------------------------- TOTAL SHORT TERM INSTRUMENTS (Cost: $3,037,833) 3,037,833 - --------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 106.72% (Cost $62,297,602) 48,356,847 - --------------------------------------------------------------- Other Assets, Less Liabilities -- (6.72%) (3,043,124) - --------------------------------------------------------------- NET ASSETS -- 100.00% $45,313,723 =============================================================== /(1)/ Non-income earning securities. See notes to financial statements. - -------------------------------------------------------------------------------- page 18 i|Shares iShares Goldman Sachs Networking Index Fund Schedule of Investments January 31, 2002 (Unaudited) Security Shares Value - ----------------------------------------------------------------- COMMON STOCKS - 100.04% - ----------------------------------------------------------------- Cisco Systems Inc./(1)/ 252,830 $ 5,000,977 Lucent Technologies Inc. 737,206 4,821,327 Nortel Networks Corp. 646,923 4,683,723 Motorola Inc. 297,620 3,961,322 QUALCOMM Inc./(1)/ 87,361 3,855,241 Agilent Technologies Inc./(1)/ 120,625 3,660,969 JDS Uniphase Corp./(1)/ 307,228 2,150,596 Amdocs Ltd./(1)/ 58,138 2,107,502 Broadcom Corp. "A"/(1)/ 48,604 2,064,212 Corning Inc. 247,461 1,972,264 Tellabs Inc./(1)/ 107,271 1,658,410 Juniper Networks Inc./(1)/ 84,569 1,295,597 Marvell Technology Group Ltd./(1)/ 30,550 1,226,277 Ciena Corp./(1)/ 85,854 1,090,346 Scientific-Atlanta Inc. 40,868 1,082,185 Comverse Technology Inc./(1)/ 48,705 1,040,826 PMC - Sierra Inc./(1)/ 43,200 1,031,184 ADC Telecommunications Inc./(1)/ 207,251 1,011,385 Agere Systems Inc./(1)/ 190,332 974,500 Conexant Systems Inc./(1)/ 66,662 869,272 Polycom Inc./(1)/ 23,534 823,219 Applied Micro Circuits Corp./(1)/ 78,002 793,280 Vitesse Semiconductor Corp./(1)/ 52,262 656,933 Avaya Inc./(1)/ 75,086 645,740 Enterasys Networks Inc./(1)/ 50,721 558,945 3Com Corp./(1)/ 91,004 544,204 Riverstone Networks Inc./(1)/ 30,414 519,167 Research in Motion Ltd./(1)/ 20,132 515,581 Extreme Networks Inc./(1)/ 29,885 416,597 Advanced Fibre Communications Inc./(1)/ 21,460 372,331 Sycamore Networks Inc./(1)/ 71,609 337,278 Openwave Systems Inc./(1)/ 45,498 294,372 Foundry Networks Inc./(1)/ 31,217 240,995 Sonus Networks Inc./(1)/ 53,395 217,318 Micromuse Inc./(1)/ 19,264 209,785 ONI Systems Inc./(1)/ 36,565 207,324 Redback Networks Inc./(1)/ 41,443 199,755 Corvis Corp./(1)/ 94,784 190,516 - ----------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $58,453,929) 53,301,455 - ----------------------------------------------------------------- SHORT TERM INSTRUMENTS - 10.26% - ----------------------------------------------------------------- Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 2,786,840 $ 2,786,840 Dreyfus Money Market Fund 924,120 924,120 Goldman Sachs Financial Square Prime Obligation Fund 554,946 554,946 Providian Temp Cash Money Market Fund 1,201,356 1,201,356 - ----------------------------------------------------------------- TOTAL SHORT TERM INSTRUMENTS (Cost: $5,467,262) 5,467,262 - ----------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 110.30% (Cost $63,921,191) 58,768,717 - ----------------------------------------------------------------- Other Assets, Less Liabilities -- (10.30%) (5,486,013) - ----------------------------------------------------------------- NET ASSETS -- 100.00% $53,282,704 ================================================================= /(1)/ Non-income earning securities. See notes to financial statements. - -------------------------------------------------------------------------------- iShares Schedules of Investments page 19 iShares Goldman Sachs Semiconductor Index Fund Schedule of Investments January 31, 2002 (Unaudited) Security Shares Value - ----------------------------------------------------------------- COMMON STOCKS - 100.00% - ----------------------------------------------------------------- Intel Corp. 53,386 $ 1,870,645 Applied Materials Inc./(1)/ 42,327 1,847,574 Texas Instruments Inc. 58,118 1,813,863 STMicroelectronics NV-NY Shares 47,554 1,488,916 Motorola Inc. 107,672 1,433,114 Micron Technology Inc./(1)/ 31,851 1,074,971 Maxim Integrated Products Inc./(1)/ 17,177 953,152 Analog Devices Inc./(1)/ 19,237 842,581 Xilinx Inc./(1)/ 17,761 769,939 Linear Technology Corp. 16,832 696,340 KLA-Tencor Corp./(1)/ 9,859 564,724 Altera Corp./(1)/ 20,482 514,508 NVIDIA Corp./(1)/ 7,692 505,672 ASM Lithography Holding NV "R"/(1)/ 24,802 469,998 Broadcom Corp. "A"/(1)/ 9,883 419,731 Novellus Systems Inc./(1)/ 7,625 325,664 LSI Logic Corp./(1)/ 19,482 323,012 Advanced Micro Devices Inc./(1)/ 18,044 289,606 Teradyne Inc./(1)/ 9,361 279,519 Microchip Technology Inc./(1)/ 7,092 267,297 National Semiconductor Corp./(1)/ 9,406 265,343 Marvell Technology Group Ltd./(1)/ 6,212 249,350 QLogic Corp./(1)/ 4,929 241,176 PMC - Sierra Inc./(1)/ 8,782 209,626 Agere Systems Inc./(1)/ 38,693 198,108 Atmel Corp./(1)/ 24,751 190,583 Conexant Systems Inc./(1)/ 13,531 176,444 Integrated Device Technology Inc./(1)/ 5,541 169,278 ATI Technologies Inc./(1)/ 12,148 165,699 RF Micro Devices Inc./(1)/ 8,840 161,860 Applied Micro Circuits Corp./(1)/ 15,862 161,317 Lam Research Corp./(1)/ 6,673 155,214 Intersil Holding Corp./(1)/ 4,814 143,072 International Rectifier Corp./(1)/ 3,362 139,994 Fairchild Semiconductor Corp. "A"/(1)/ 5,304 139,973 Cypress Semiconductor Corp./(1)/ 6,398 139,220 Vitesse Semiconductor Corp./(1)/ 10,631 133,632 Lattice Semiconductor Corp./(1)/ 5,816 129,929 Semtech Corp./(1)/ 3,743 129,545 Micrel Inc./(1)/ 4,938 116,537 Adaptec Inc./(1)/ 5,617 99,702 Integrated Circuit Systems Inc./(1)/ 3,512 84,815 Cirrus Logic Inc./(1)/ 4,222 79,711 Silicon Laboratories Inc./(1)/ 2,587 79,680 TriQuint Semiconductor Inc./(1)/ 6,904 76,013 Axcelis Technologies Inc./(1)/ 5,154 70,816 Genesis Microchip Inc./(1)/ 1,118 67,605 SanDisk Corp./(1)/ 3,628 55,907 Rambus Inc./(1)/ 5,346 38,384 - ----------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $21,299,066) 20,819,359 - ----------------------------------------------------------------- SHORT TERM INSTRUMENTS - 9.59% - ----------------------------------------------------------------- Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,019,922 1,019,922 Dreyfus Money Market Fund 336,595 336,595 Goldman Sachs Financial Square Prime Obligation Fund 202,130 202,130 Providian Temp Cash Money Market Fund 437,574 437,574 - ----------------------------------------------------------------- TOTAL SHORT TERM INSTRUMENTS (Cost: $1,996,221) 1,996,221 - ----------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 109.59% (Cost $23,295,287) 22,815,580 - ----------------------------------------------------------------- Other Assets, Less Liabilities -- (9.59%) (1,996,720) - ----------------------------------------------------------------- NET ASSETS -- 100.00% $20,818,860 ================================================================= /(1)/ Non-income earning securities. See notes to financial statements. - -------------------------------------------------------------------------------- page 20 i|Shares iShares Goldman Sachs Software Index Fund Schedule of Investments January 31, 2002 (Unaudited) Security Shares Value - ----------------------------------------------------------------- COMMON STOCKS - 100.01% - ----------------------------------------------------------------- Oracle Corp./(1)/ 157,938 $ 2,726,010 Computer Associates International Inc. 66,038 2,275,669 Microsoft Corp./(1)/ 34,955 2,226,983 Veritas Software Corp./(1)/ 47,076 2,003,084 Siebel Systems Inc./(1)/ 54,289 1,921,288 PeopleSoft Inc./(1)/ 35,563 1,155,442 Check Point Software Technologies Ltd./(1)/ 28,340 1,034,410 Intuit Inc./(1)/ 24,890 976,932 Amdocs Ltd./(1)/ 26,084 945,545 Adobe Systems Inc. 27,867 939,118 Electronic Arts Inc./(1)/ 16,106 854,745 BEA Systems Inc./(1)/ 46,691 846,508 Cadence Design Systems Inc./(1)/ 28,725 680,782 Symantec Corp./(1)/ 8,182 643,596 Compuware Corp./(1)/ 43,669 593,898 Rational Software Corp./(1)/ 22,785 534,992 BMC Software Inc./(1)/ 28,668 506,564 Network Associates Inc./(1)/ 16,261 487,667 Citrix Systems Inc./(1)/ 22,031 380,035 TIBCO Software Inc./(1)/ 23,353 373,882 i2 Technologies Inc./(1)/ 49,428 367,250 Synopsys Inc./(1)/ 6,969 361,552 Cognos Inc./(1)/ 10,032 264,444 Autodesk Inc. 6,440 264,040 Quest Software Inc./(1)/ 10,486 249,881 Internet Security Systems Inc./(1)/ 5,615 229,766 Novell Inc./(1)/ 42,526 222,411 Advent Software Inc./(1)/ 3,973 214,343 Parametric Technology Corp./(1)/ 30,824 212,069 Sybase Inc./(1)/ 11,590 209,895 Edwards (J.D.) & Co./(1)/ 13,407 208,345 NetIQ Corp./(1)/ 6,326 189,780 Mentor Graphics Corp./(1)/ 7,575 186,421 Peregrine Systems Inc./(1)/ 22,462 179,471 Wind River Systems Inc./(1)/ 9,128 164,487 Red Hat Inc./(1)/ 19,982 162,254 Activision Inc./(1)/ 6,116 160,728 Fair Isaac and Co. Inc. 2,630 150,199 Ariba Inc./(1)/ 30,361 147,251 Retek Inc./(1)/ 5,986 144,562 Manugistics Group Inc./(1)/ 7,988 139,391 webMethods Inc./(1)/ 5,833 137,659 THQ Inc./(1)/ 2,901 130,661 Informatica Corp./(1)/ 9,205 116,443 Vignette Corp./(1)/ 28,851 107,326 Micromuse Inc./(1)/ 8,655 94,253 Inktomi Corp./(1)/ 15,152 90,457 Interwoven Inc./(1)/ 12,254 87,739 Agile Software Corp./(1)/ 5,626 82,083 Commerce One Inc./(1)/ 33,494 75,696 BroadVision Inc./(1)/ 33,314 75,623 E.piphany Inc./(1)/ 8,328 72,870 - ----------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $29,718,323) 27,606,500 - ----------------------------------------------------------------- SHORT TERM INSTRUMENTS - 7.77% - ----------------------------------------------------------------- Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 1,091,799 1,091,799 Dreyfus Money Market Fund 362,465 362,465 Goldman Sachs Financial Square Prime Obligation Fund 217,665 217,665 Providian Temp Cash Money Market Fund 471,204 471,204 - ----------------------------------------------------------------- TOTAL SHORT TERM INSTRUMENTS (Cost: $2,143,133) 2,143,133 - ----------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 107.78% (Cost $31,861,456) 29,749,633 - ----------------------------------------------------------------- Other Assets, Less Liabilities -- (7.78%) (2,146,256) - ----------------------------------------------------------------- NET ASSETS -- 100.00% $27,603,377 ================================================================= /(1)/ Non-income earning securities. See notes to financial statements. - -------------------------------------------------------------------------------- iShares Schedules of Investments page 21 iShares Goldman Sachs Natural Resources Index Fund Schedule of Investments January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------- COMMON STOCKS - 99.97% - --------------------------------------------------------------- BP Amoco PLC ADR 45,983 $ 2,148,327 Royal Dutch Petroleum Co. - NY Shares 42,977 2,147,561 Exxon Mobil Corp. 54,993 2,147,477 ChevronTexaco Corp. 23,797 1,994,189 Schlumberger Ltd. 21,956 1,238,099 Alcoa Inc. 32,399 1,161,504 Phillips Petroleum Co. 14,546 850,505 International Paper Co. 18,387 768,209 El Paso Corp. 19,456 738,355 Conoco Inc. 23,854 671,729 Weyerhaeuser Co. 8,250 481,140 Alcan Aluminum Ltd. 12,242 475,724 Anadarko Petroleum Corp. 9,477 465,605 Baker Hughes Inc. 12,814 451,053 Transocean Sedco Forex Inc. 12,161 372,613 Occidental Petroleum Corp. 14,249 369,762 Barrick Gold Corp. 20,419 351,003 Williams Companies Inc. 19,649 347,394 Marathon Oil Corp. 11,803 331,074 Unocal Corp. 9,295 324,860 Burlington Resources Inc. 7,649 261,902 Suncor Energy Inc. 8,473 259,528 PanCanadian Energy Corp. 9,700 258,020 Apache Corp. 5,232 253,700 GlobalSantaFe Corp. 8,885 252,334 MeadWestvaco Corp./(1)/ 7,592 245,058 Dynegy Inc. "A" 10,091 240,670 TransCanada PipeLines Ltd. 18,108 233,955 Petro-Canada 10,191 233,578 Willamette Industries Inc. 4,201 232,945 Halliburton Co. 16,356 224,895 Devon Energy Corp. 5,929 220,677 Alberta Energy Co. Ltd. 5,626 220,595 Kinder Morgan Inc. 4,264 220,449 Georgia-Pacific Corp. 8,778 219,450 Plum Creek Timber Co. Inc. 6,973 210,585 Amerada Hess Corp. 3,384 207,642 Kerr-McGee Corp. 3,822 202,375 BJ Services Co./(1)/ 6,257 193,967 Valero Energy Corp. 4,060 186,516 Talisman Energy Inc. 5,154 184,771 Enbridge Inc. 6,184 169,132 Weatherford International Inc./(1)/ 4,382 168,663 Nabors Industries Inc./(1)/ 5,363 167,915 Newmont Mining Corp. 7,468 163,101 Noble Drilling Corp./(1)/ 5,038 161,065 Placer Dome Inc. 12,460 153,756 EOG Resources Inc. 4,410 149,896 Smurfit-Stone Container Corp./(1)/ 9,317 147,302 Diamond Offshore Drilling Inc. 5,031 144,792 Murphy Oil Corp. 1,726 136,354 Abitibi-Consolidated Inc. 16,781 135,255 Inco Ltd./(1)/ 6,904 125,515 Westcoast Energy Inc. 4,687 123,127 Ashland Inc. 2,632 123,072 ENSCO International Inc. 5,139 122,308 Canadian Natural Resources Ltd. 4,621 120,331 Sunoco Inc. 3,009 116,027 Ocean Energy Inc. 6,526 110,681 Phelps Dodge Corp. 3,010 104,959 Temple-Inland Inc. 1,880 104,077 Smith International Inc./(1)/ 1,882 103,604 Bowater Inc. 2,088 100,099 Nexen Inc. 4,600 89,976 Domtar Inc. 8,593 89,797 Noranda Corp. 9,050 89,414 Boise Cascade Corp. 2,212 78,747 XTO Energy Inc. 4,680 75,769 Questar Corp. 3,118 74,676 Tidewater Inc. 2,141 73,329 Packaging Corporation of America/(1)/ 4,035 72,388 Noble Affiliates Inc. 2,164 70,330 Consol Energy Inc. 3,005 68,664 Pride International Inc./(1)/ 5,022 65,537 Pioneer Natural Resources Co./(1)/ 3,756 65,429 Rowan Companies Inc./(1)/ 3,586 64,656 Patterson-UTI Energy Inc./(1)/ 2,924 63,392 National-Oilwell Inc./(1)/ 3,098 59,017 Helmerich & Payne Inc. 1,926 58,550 Cameco Corp. 2,123 55,729 Newfield Exploration Co./(1)/ 1,684 54,040 Varco International Inc./(1)/ 3,670 53,215 Freeport-McMoRan Copper & Gold Inc./(1)/ 3,378 52,528 Pogo Producing Co. 2,052 52,244 Rayonier Inc. 1,039 51,690 Precision Drilling Corp./(1)/ 2,017 50,344 Peabody Energy Corp. 1,979 50,168 Hanover Compressor Co./(1)/ 3,028 47,237 Goldcorp Inc. 3,125 44,437 Forest Oil Corp./(1)/ 1,781 43,902 - -------------------------------------------------------------------------------- page 22 i|Shares iShares Goldman Sachs Natural Resources Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------- Pennzoil-Quaker State Co. 2,994 $ 41,437 Arch Coal Inc. 2,004 39,880 Grant Prideco Inc./(1)/ 4,141 39,132 Spinnaker Exploration Co./(1)/ 1,036 38,311 Chesapeake Energy Corp./(1)/ 6,234 36,718 Tom Brown Inc./(1)/ 1,486 36,630 Stone Energy Corp./(1)/ 998 34,391 Louisiana-Pacific Corp. 3,942 34,059 Fording Inc. 2,025 33,757 Houston Exploration Co./(1)/ 1,158 33,733 Key Energy Services Inc./(1)/ 3,862 33,329 Potlatch Corp. 1,077 31,265 Freeport McMoRan Copper & Gold Inc. "B"/(1)/ 2,123 31,017 Global Industries Ltd./(1)/ 3,543 29,832 Vintage Petroleum Inc. 2,367 27,647 Stillwater Mining Co./(1)/ 1,474 23,083 Cable Design Technologies Corp./(1)/ 1,679 21,491 Wausau-Mosinee Paper Corp. 1,929 21,007 - --------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $28,519,295) 27,852,750 - --------------------------------------------------------------- SHORT TERM INSTRUMENTS - 5.17% - --------------------------------------------------------------- Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 738,129 738,129 Dreyfus Money Market Fund 241,873 241,873 Goldman Sachs Financial Square Prime Obligation Fund 145,249 145,249 Providian Temp Cash Money Market Fund 314,435 314,435 - --------------------------------------------------------------- TOTAL SHORT TERM INSTRUMENTS (Cost: $1,439,686) 1,439,686 - --------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 105.14% (Cost $29,958,981) 29,292,436 - --------------------------------------------------------------- Other Assets, Less Liabilities -- (5.14%) (1,431,277) - --------------------------------------------------------------- NET ASSETS -- 100.00% $27,861,159 =============================================================== /(1)/ Non-income earning securities. See notes to financial statements. - -------------------------------------------------------------------------------- iShares Schedules of Investments page 23 iShares MSCI EAFE Index Fund Schedule of Investments January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS - 99.55% - --------------------------------------------------------------------- AUSTRALIA - 4.16% - --------------------------------------------------------------------- Amcor Ltd. 108,962 $ 414,087 AMP Ltd. 195,091 1,914,779 Aristocrat Leisure Ltd. 58,867 189,410 Australia and New Zealand Banking Group Ltd. 236,371 2,125,897 Australian Gas & Light Co. Ltd. 72,713 360,700 Boral Ltd. 125,173 219,453 Brambles Industries Ltd. 121,088 599,446 BRL Hardy Ltd. 30,702 171,686 Broken Hill Proprietary Co. Ltd. 657,556 3,724,989 BT Office Trust 295,195 226,769 Coca-Cola Amatil Ltd. 82,904 267,589 Cochlear Ltd. 8,428 181,068 Coles Myer Ltd. 189,071 818,148 Commonwealth Bank of Australia 214,011 3,550,314 Computershare Ltd. 60,329 103,319 CSL Ltd. 27,004 647,067 CSR Ltd. 168,947 596,670 Deutsche Office Trust 200,337 132,984 Foster's Brewing Group Ltd. 374,444 922,106 Futuris Corp. Ltd. 126,549 114,780 General Property Trust 286,853 405,524 Goodman Fielder Ltd. 284,531 227,796 Harvey Normand Holdings Ltd. 78,561 147,286 Iluka Resources Limited 73,788 170,495 James Hardie Industries NV 72,971 233,974 Leighton Holdings Ltd. 33,454 171,612 Lend Lease Corp. Ltd. 70,176 476,551 M.I.M. Holdings Ltd. 430,258 285,605 Macquarie Bank Ltd. 26,832 505,357 Macquarie Infrastructure Group 183,481 313,312 Mayne Nickless Ltd. 108,411 374,083 Mirvac Group 222,138 426,705 National Australia Bank Ltd. 258,344 4,529,261 News Corp. Ltd. 243,294 1,688,898 Normandy Mining Ltd. 404,630 432,590 NRMA Insurance Group Ltd. 241,402 408,790 Origin Energy Ltd. 212,205 316,122 Pacific Dunlop Ltd. 430,043 246,243 PaperlinX Ltd. 82,560 217,529 QBE Insurance Group Ltd. 70,219 269,697 Rio Tinto Ltd. 58,523 1,135,972 Santos Ltd. 171,957 512,329 Sons of Gwalia Ltd. 34,787 137,489 Southcorp Ltd. 126,721 448,250 Stockland Trust Group 115,541 245,883 Suncorp-Metway Ltd. 70,520 533,202 TAB Ltd. 129,430 191,505 TABCORP Holdings Ltd. 37,023 189,302 Telstra Corp. Ltd. 350,923 976,198 Transurban Group/(1)/ 80,711 175,199 Wesfarmers Ltd. 53,019 822,065 Westfield Holdings Ltd. 70,477 635,547 Westfield Trust 292,142 497,372 Westpac Banking Corp. Ltd. 266,299 2,131,963 WMC Ltd. 205,196 998,135 Woodside Petroleum Ltd. 98,900 658,981 Woolworths Ltd. 176,042 1,056,498 - --------------------------------------------------------------------- 40,474,581 - --------------------------------------------------------------------- BELGIUM - 0.99% - --------------------------------------------------------------------- AGFA Gevaert NV 17,501 198,727 Bekaert NV 4,859 178,158 Colruyt NV 3,956 158,297 Compagnie Maritime Belge SA 5,676 275,107 Delhaize-Le Lion SA 8,471 403,284 Dexia 117,089 1,663,226 Electrabel SA 2,150 430,896 Fortis Group 122,292 2,821,521 Groupe Bruxelles Lambert SA 15,394 832,266 Interbrew 26,531 685,213 KBC Bankverzekerings Holding NV 15,136 486,168 Omega Pharma SA 4,515 204,065 Solvay SA 7,095 445,277 UCB SA 11,782 484,332 Umicore mines SA 8,428 338,475 - --------------------------------------------------------------------- 9,605,012 - --------------------------------------------------------------------- DENMARK - 0.78% - --------------------------------------------------------------------- A/S Dampskibsselskabet Svendborg "B" 43 423,604 Carlsberg A/S "B" 4,300 179,907 Coloplast A/S 4,300 271,605 D/S 1912 "B" 43 318,949 Danisco A/S 12,900 455,997 Danske Bank A/S 107,500 1,638,354 - -------------------------------------------------------------------------------- page 24 i|Shares iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- DENMARK (continued) - --------------------------------------------------------------------- GN Store Nord A/S 34,400 $ 187,384 Group 4 Falck A/S 4,300 468,456 H. Lundbeck A/S 12,900 312,470 ISS A/S/(1)/ 8,600 401,676 NEG Micon A/S/(1)/ 4,300 94,688 Novo Nordisk A/S "B" 38,700 1,385,932 Novozymes A/S "B" 8,600 162,963 Tele Danmark A/S 21,500 693,962 Topdanmark A/S/(1)/ 8,600 209,310 Vestas Wind Systems A/S 17,200 367,788 - --------------------------------------------------------------------- 7,573,045 - --------------------------------------------------------------------- FINLAND - 2.33% - --------------------------------------------------------------------- Comptel OYJ 139,621 312,514 Nokia OYJ 803,670 18,493,893 Sampo OYJ "A" 31,390 245,103 Sonera Group OYJ 110,467 523,050 Stora Enso OYJ 106,339 1,350,314 Tietoenator OYJ 18,963 444,045 UPM-Kymmene OYJ 37,754 1,290,666 - --------------------------------------------------------------------- 22,659,585 - --------------------------------------------------------------------- FRANCE - 9.74% - --------------------------------------------------------------------- Accor SA 32,723 1,155,017 Air France 15,308 237,214 Air Liquide 15,351 2,094,676 Alcatel SA "A" 178,106 2,698,626 Alstom 35,905 395,964 Altran Technologies SA 10,406 463,602 Atos Origin SA/(1)/ 3,397 250,919 Aventis SA 111,413 7,735,549 AXA AG 230,695 4,262,044 BIC SA 6,966 237,481 BNP Parisbas SA 67,381 6,264,870 Bouygues SA 25,542 757,083 Business Objects SA/(1)/ 10,578 421,179 Cap Gemini SA 18,103 1,224,967 Carrefour Supermarche SA 82,775 4,061,860 Castorama Dubois Investissement SA 12,040 598,071 Club Mediterranee SA 2,451 99,996 Compagnie de Saint Gobain 12,599 1,795,084 Compagnie Generale des Etablissements Michelin "B" 22,962 $ 813,055 Dassault Systemes SA 6,278 288,882 Essilor International SA 15,050 460,604 Etablissements Economiques du Casino Guichard-Perrachon SA 6,708 462,857 European Aeronautic Defence and Space Co. 53,793 602,035 France Telecom SA 56,545 1,809,412 Groupe Danone 21,457 2,475,282 Imerys SA 2,279 228,571 Lafarge SA 22,532 1,912,615 Lagardere S.C.A. 20,425 785,468 L'Oreal SA 55,169 3,742,588 LVMH 35,217 1,415,861 Pechiney SA "A" 13,287 706,914 Pernod Ricard 9,761 718,474 Pinault-Printemps-Redoute SA 10,277 1,059,038 PSA Peugeot Citroen 31,003 1,223,220 Publicis Groupe 13,287 326,919 Renault SA 20,726 792,226 Sanofi-Synthelabo SA 62,307 4,173,180 Schneider SA 26,402 1,193,294 Societe Generale "A" 50,482 2,972,648 Societe Television Francaise 1 19,866 463,480 Sodexho Alliance SA 16,684 666,739 STMicroelectronics NV 81,829 2,532,542 Suez SA 136,439 3,876,177 Technip SA 2,845 341,426 Thales/Ex Thomson CSF 12,771 417,792 Thomson Multimedia/(1)/ 16,039 479,548 Total SA "B" 104,103 14,599,405 Union du Credit Bail Immobilier 4,816 234,875 Usinor SA 43,602 484,226 Valeo SA 12,083 497,746 Vinci SA 10,320 615,692 Vivendi Universal SA 147,189 6,300,249 Zodiac SA 12,040 231,765 - --------------------------------------------------------------------- 94,659,007 - --------------------------------------------------------------------- GERMANY - 7.07% - --------------------------------------------------------------------- Adidas AG 8,600 584,819 Aixtron AG 8,600 172,507 - -------------------------------------------------------------------------------- iShares Schedules of Investments page 25 iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- GERMANY (continued) - --------------------------------------------------------------------- Allianz AG 25,800 $ 5,808,210 Altana AG 12,900 646,344 BASF AG 90,300 3,497,473 Bayer AG 111,800 3,578,506 Bayerische Hypo-Und Vereinsbank AG 64,500 1,976,235 Beiersdorf AG 4,300 510,856 Buderus AG 17,200 395,210 Continental AG 17,200 255,131 DaimlerChrysler AG 141,900 5,735,470 Deutsche Bank AG 81,700 5,072,573 Deutsche Boerse AG 4,300 154,330 Deutsche Lufthansa AG 34,400 502,859 Deutsche Post AG 55,900 717,532 Deutsche Telekom AG 313,900 4,634,545 Epcos AG 8,600 339,386 Fresenius Medical Care AG 4,300 242,101 Gehe AG 4,300 176,393 Heidelberger Zement AG 8,600 421,937 Infineon Technologies AG 55,900 1,203,583 Karstadtquelle AG 8,600 321,321 Linde AG 17,200 740,371 MAN AG 12,900 295,407 Marschollek, Lautenschlaeger and Partner AG 8,600 503,896 Merck KGaA 8,600 264,831 Metro AG 21,500 696,318 Muenchener Rueckversicherungs- Gesellschaft AG 12,900 3,065,135 Preussag AG 25,800 757,400 RWE AG 48,676 1,813,230 SAP AG 34,400 4,797,603 Schering AG 30,100 1,680,197 SGL Carbon AG/(1)/ 4,300 89,955 Siemens AG 141,900 8,374,143 Software AG 4,300 134,192 Thyssen Krupp AG 64,500 907,883 Veba AG 103,200 5,279,144 Volkswagen AG 43,000 2,054,527 WCM Beteiligungs & Grundbesi AG/(1)/ 34,400 340,274 - --------------------------------------------------------------------- 68,741,827 - --------------------------------------------------------------------- GREECE - 0.33% - --------------------------------------------------------------------- Hellenic Telecommunications Organization SA 202,444 $ 1,601,332 National Bank of Greece SA 340,216 1,588,809 - --------------------------------------------------------------------- 3,190,141 - --------------------------------------------------------------------- HONG KONG - 1.78% - --------------------------------------------------------------------- Bank of East Asia Ltd. 240,800 484,730 Cathay Pacific Airways Ltd. 215,000 317,017 Cheung Kong Infrastructure Holdings Ltd. 86,000 131,769 Cheung Kong Ltd 258,000 2,472,698 CLP Holdings Ltd. 322,500 1,244,624 Giordano International Ltd. 258,000 116,616 Hang Lung Properties Limited 215,000 217,773 Hang Seng Bank Ltd. 133,300 1,457,022 Henderson Land Development Co. Ltd. 86,000 359,463 Hong Kong & China Gas Co. Ltd. 602,000 756,413 Hong Kong Exchanges & Clearing Ltd. 172,000 251,412 Hongkong Electric Holdings Ltd. 236,500 852,086 Hutchison Whampoa Ltd. 387,000 3,585,013 Hysan Development Co. Ltd. 129,000 130,664 Johnson Electric Holdings Ltd. 279,500 311,782 Li & Fung Ltd. 258,000 330,808 MTR Corp. Ltd. 215,000 286,681 New World Development Co. Ltd. 215,000 190,210 Pacific Century Cyberworks Ltd./(1)/ 1,419,000 372,913 Shangri-La Asia Ltd. 172,000 129,017 Sun Hung Kai Properties Ltd. 215,000 1,729,782 Swire Pacific Ltd. "A" 172,000 926,237 Television Broadcasts Ltd. 43,000 185,248 Wharf Holdings Ltd. 215,000 465,862 - --------------------------------------------------------------------- 17,305,840 - --------------------------------------------------------------------- IRELAND - 0.93% - --------------------------------------------------------------------- Allied Irish Bank PLC 174,064 2,000,518 Bank of Ireland 174,451 1,644,515 CRH PLC 92,966 1,457,419 DCC PLC 21,371 206,059 Elan Corporation PLC/(1)/ 54,610 1,516,187 Green Property PLC 25,413 153,146 Independent News & Media PLC 83,936 140,903 Irish Life & Permanent PLC 54,137 577,918 - -------------------------------------------------------------------------------- page 26 i|Shares iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- IRELAND (continued) - --------------------------------------------------------------------- Kerry Group PLC "A" 20,210 $ 265,331 Ryanair Holdings PLC 88,752 531,021 Smurfit (Jefferson) Group PLC 204,680 435,232 Waterford Wedgwood PLC 140,567 94,391 - --------------------------------------------------------------------- 9,022,640 - --------------------------------------------------------------------- ITALY - 3.67% - --------------------------------------------------------------------- Alitalia SpA/(1)/ 172,000 137,118 Alleanza Assicurazioni SpA 55,900 551,023 Arnoldo Mondadori Editore SpA 21,500 127,714 Assicurazioni Generali SpA 169,850 4,423,251 Autogrill SpA 23,650 238,215 Autostrade SpA 146,200 1,034,599 Banca di Roma SpA 134,375 306,563 Banca Fideuram SpA 45,150 341,275 Banca Intesa SpA 591,250 1,547,360 Banca Monte dei Paschi di Siena SpA 182,750 470,417 Banca Nazionale del Lavoro SpA/(1)/ 279,500 632,844 Banca Popolare di Milano SCRL 73,100 279,417 Bipop Carire SpA 236,500 353,260 Bulgari SpA 25,800 183,242 Enel SpA 407,984 2,311,107 ENI SpA 485,900 6,320,636 Fiat SpA 38,700 572,714 Fiat SpA - Rights/(1)/ 64,500 11,384 Fiat SpA - RNC 10,750 105,503 IntesaBci SpA 139,750 261,067 Italcementi SpA 21,500 162,697 Italgas SpA 36,550 343,607 Luxottica Group SpA 21,500 352,417 Mediaset SpA 98,900 716,046 Mediobanca Banca SpA 79,550 842,355 Mediolanum SpA 36,550 289,483 Parmalat Finanziaria SpA 75,250 226,089 Pirelli SpA 118,250 201,060 Riunione Adriatica di Sicurta SpA 64,500 719,085 San Paolo - IMI SpA 141,900 1,370,655 Seat-Paginne Gialle SpA/(1)/ 752,500 505,304 Snia SpA 86,000 142,889 Telecom Italia Mobile SpA 602,000 2,985,198 Telecom Italia SpA 324,650 1,635,002 Telecom Italia SpA "A" 382,700 3,054,137 Unicredito Italiano SpA 516,000 1,976,796 - --------------------------------------------------------------------- 35,731,529 - --------------------------------------------------------------------- JAPAN - 18.87% - --------------------------------------------------------------------- Acom Co. Ltd. 8,600 514,296 Aderans Co. Ltd. 4,300 129,217 Advantest Corp. 12,900 698,157 AEON Credit Service Co. Ltd. 4,300 224,683 AIFUL Corporation 6,450 385,722 Ajinomoto Co. Inc. 86,000 757,944 All Nippon Airways Co. Ltd./(1)/ 86,000 203,794 Alps Electric Co Ltd 43,000 351,009 Amada Co. Ltd. 43,000 199,288 Asahi Bank Ltd. (The) 344,000 205,712 Asahi Breweries Ltd. 86,000 694,304 Asahi Glass Co. Ltd. 129,000 609,448 Asahi Kasei Corp. 215,000 610,729 Bank of Fukuoka Ltd. 86,000 256,504 Bank of Yokohama Ltd. 172,000 579,864 Bellsystem24 Inc. 860 261,005 Benesse Corporation 17,200 393,436 Bridgestone Corp. 129,000 1,398,244 Canon Inc. 129,000 4,233,303 Capcom Co. Ltd. 4,300 108,645 Central Japan Railway Co. 172 951,448 Chiba Bank Ltd. (The) 129,000 418,515 Chubu Electric Power Co. Inc. 94,600 1,513,316 Chugai Pharmaceutical Co. Ltd. 43,000 446,473 Citizen Watch Co. Ltd. 43,000 214,720 Coca Cola West Japan Co. Ltd. 8,600 138,217 Credit Saison Co Ltd 21,500 377,686 CSK Corp. 12,900 251,684 Dai Nippon Printing Co. Ltd. 86,000 775,944 Daicel Chemical Industries Ltd. 43,000 109,929 Daiei Inc. (The)/(1)/ 86,000 79,077 Daiichi Pharmaceutical Co. Ltd. 43,000 827,694 Daikin Industries Ltd. 43,000 652,512 Daimaru Inc. (The) 43,000 138,537 Dainippon Ink & Chemical Inc. 129,000 198,647 - -------------------------------------------------------------------------------- iShares Schedules of Investments page 27 iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- JAPAN (continued) - --------------------------------------------------------------------- Dainippon Screen Manufacturing Co. Ltd. 43,000 $ 115,717 Daito Trust Construction Co. Ltd. 17,200 232,076 Daiwa Bank Holdings Inc./(1)/ 194,000 111,666 Daiwa House Industry Co. Ltd. 86,000 451,939 Daiwa Securities Group Inc. 215,000 1,007,705 Denso Corp. 86,000 1,221,458 Dowa Mining Co. Ltd. 43,000 158,145 East Japan Railway Co. 473 2,050,757 Ebara Corporation 43,000 249,112 Eisai Co. Ltd. 43,000 977,162 FamilyMart Co. Ltd. 8,600 131,788 Fanuc Ltd. 17,200 729,015 Fast Retailing Co. Ltd. 4,300 203,790 Fuji Electric Co. Ltd. 86,000 167,150 Fuji Machine Mfg. Co. Ltd. 8,600 102,859 Fuji Photo Film Co. 86,000 2,738,627 Fuji Soft ABC Inc. 4,300 140,146 Fuji Television Network Inc. 43 168,111 Fujikura Ltd. 43,000 157,182 Fujisawa Pharmaceutical Co. Ltd. 43,000 856,624 Fujitsu Ltd. 258,000 1,571,813 Furukawa Electric Co. Ltd. 86,000 426,870 Gunma Bank Ltd. 43,000 186,113 Heavy Industries Co. Ltd. 215,000 314,997 Hino Motors Ltd./(1)/ 43,000 111,215 Hirose Electric Co. Ltd. 4,300 267,434 Hitachi Cable Ltd. 43,000 156,219 Hitachi Ltd. 387,000 2,427,148 Hitachi Software Engineering Co. Ltd. 4,300 131,789 Hitachi Zosen Corp./(1)/ 172,000 74,579 Hokuriku Bank Ltd. (The)/(1)/ 86,000 88,718 Honda Motor Co. Ltd. 86,000 3,420,074 Hoya Corp. 17,200 988,735 Isetan Co. Ltd. 43,000 388,617 Ito En Ltd. 4,300 154,932 Itochu Corp. 215,000 461,261 Itochu Techno-Science Corp. 4,300 157,503 Ito-Yokado Co. Ltd. 43,000 1,594,320 Japan Airlines Co. Ltd. 86,000 196,716 Japan Energy Corp. 172,000 185,141 Japan Tobacco Inc. 129 688,514 JGC Engineering & Construction 43,000 $ 302,148 Joyo Bank Ltd. 129,000 336,548 JSR Corp. 43,000 289,291 Jusco Co. Ltd. 43,000 821,266 Kajima Corp. 129,000 327,866 Kamigumi Co. Ltd. 43,000 155,897 Kanebo Ltd./(1)/ 86,000 122,791 Kaneka Corp. 43,000 256,185 Kansai Electric Power Co. Inc. 111,800 1,521,866 Kao Corp. 86,000 1,581,463 Kawasaki Heavy Industries Ltd./(1)/ 215,000 189,652 Kawasaki Kisen Kaisha Ltd. 129,000 168,758 Kawasaki Steel Corp. 430,000 443,588 Keihin Electric Express Railway Co. Ltd. 43,000 153,648 Keio Electric Railway Co. Ltd. 86,000 363,866 Keyence Corp. 4,300 705,550 Kikkoman Corp. 43,000 221,149 Kinden Corp. 43,000 168,431 Kinki Nippon Railway Co. Ltd. 258,000 786,874 Kirin Brewery Co. Ltd. 129,000 857,270 Komatsu Ltd. 129,000 393,437 Konami Company Ltd. 12,900 321,113 Konica Corp. 43,000 233,361 Kubota Corp. 172,000 448,731 Kuraray Co. Ltd. 43,000 231,435 Kyocera Corp. 25,800 1,504,318 Kyowa Hakko Kogyo Co. Ltd. 43,000 195,431 Kyushu Electric Power Co. Inc. 60,200 832,518 Lawson Inc. 12,900 287,363 Mabuchi Motor Co. Ltd. 4,300 343,614 Marubeni Corp./(1)/ 215,000 126,958 Marui Co. Ltd. 43,000 466,722 Matsushita Communication Industrial Co. Inc. 12,900 461,903 Matsushita Electric Industrial Co. Ltd. 301,000 3,867,820 Matsushita Electric Works Ltd. 86,000 670,516 Meiji Dairies Corp. 43,000 91,289 Meiji Seika Inc. 43,000 148,505 Meitec Corp. 8,600 196,718 Minebea Co. Ltd. 43,000 225,969 Mitsubishi Chemical Corp. 258,000 586,305 Mitsubishi Corp. 172,000 1,080,022 - -------------------------------------------------------------------------------- page 28 i|Shares iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- JAPAN (continued) - --------------------------------------------------------------------- Mitsubishi Electric Corp. 258,000 $ 904,522 Mitsubishi Estate Co. Ltd. 129,000 790,731 Mitsubishi Gas Chemical Co. Inc. 43,000 63,644 Mitsubishi Heavy Industries Ltd. 473,000 1,234,010 Mitsubishi Materials Corp. 172,000 262,283 Mitsubishi Rayon Co. 86,000 243,647 Mitsubishi Tokyo Financial/(1)/ 602 3,402,071 Mitsui & Co. Ltd. 215,000 1,067,174 Mitsui Chemicals Inc. 94,000 309,880 Mitsui Engineering & Shipbuilding Co. Ltd./(1)/ 129,000 107,044 Mitsui Fudosan Co. Ltd. 129,000 838,952 Mitsui Marine & Fire Insurance Co. Ltd. 139,160 633,512 Mitsui Mining & Smelting Co. 129,000 380,898 Mitsui O.S.K. Lines Ltd. 129,000 264,218 Mitsui Trust Holdings Inc./(1)/ 129,000 139,823 Mitsukoshi Ltd. 43,000 110,252 Mizuho Holding Inc. 860 1,491,460 Murata Manufacturing Co. Ltd. 38,700 2,120,508 Namco Ltd./(1)/ 8,600 147,860 NEC Corp. 258,000 2,025,042 NGK Insulators Ltd. 43,000 270,006 Nichirei Corp. 43,000 103,183 Nidec Corp. 4,300 234,648 Nikko Cordial Corp. 215,000 753,769 Nikon Corp. 43,000 297,005 Nintendo Co. Ltd. 17,200 2,480,194 Nippon Express Co. Ltd. 129,000 446,469 Nippon Meat Packers Inc. 43,000 399,543 Nippon Mitusubishi Oil Corp. 215,000 846,993 Nippon Sanso Corp. 43,000 109,611 Nippon Sheet Glass Co. Ltd. 43,000 123,432 Nippon Steel Corp. 946,000 1,315,318 Nippon System Development Co. Ltd. 4,300 136,610 Nippon Telegraph & Telephone Corp. 516 1,558,318 Nippon Unipac Holding 129 570,869 Nippon Yusen Kabushiki Kaisha 172,000 534,868 Nishimatsu Construction Co. Ltd. 43,000 111,215 Nishin Flour Milling Co. Ltd. 43,000 225,006 Nissan Chemical Industries Ltd. 43,000 229,181 Nissan Motor Co. Ltd. 387,000 2,062,633 Nissin Food Products 12,900 $ 249,273 Nitto Denko Corp. 21,500 478,938 NKK Corp./(1)/ 559,000 405,331 Nomura Securities Co. Ltd. 301,000 3,300,826 NSK Ltd. 86,000 324,005 NTT Data Corp. 215 654,121 NTT DoCoMo Inc. 561 5,871,052 Obayashi Corp. 129,000 345,217 Oji Paper Co. Ltd. 129,000 526,514 Oki Electric Industry Co. Ltd. 86,000 214,080 Okumura Corp. 43,000 108,003 Olympus Optical Co. Ltd. 43,000 594,011 Omron Corp. 43,000 522,334 Oracle Corp. Japan 4,300 255,220 Oriental Land Co. Ltd. 8,600 485,367 Orix Corp. 12,900 1,027,949 Osaka Gas Co. Ltd. 344,000 763,714 Pioneer Electronic Corp. 22,500 495,329 Promise Co. Ltd. 12,900 578,583 Ricoh Co. Ltd. 86,000 1,427,170 Rohm Co. Ltd. 17,200 2,248,761 SAIZERIYA Co. Ltd. 4,630 153,670 Sankyo Co. Ltd. 43,000 641,586 Sanyo Electric Co. Ltd. 258,000 987,443 Sapporo Breweries Ltd. 43,000 106,395 Secom Co. Ltd. 21,500 973,948 Sega Enterprises Ltd./(1)/ 12,900 230,951 Seino Transportation Co. Ltd. 43,000 151,717 Seiyu Ltd. (The)/(1)/ 43,000 93,538 Sekisui Chemical Co. Ltd. 86,000 227,573 Sekisui House Ltd. 86,000 591,439 Seven-Eleven Japan Co. Ltd. 43,000 1,362,885 Seventy Seven Bank Ltd. 43,000 173,256 Sharp Corp. 129,000 1,319,167 Shimamura Co. Ltd. 4,300 242,683 Shimano Inc. 12,900 161,038 Shimizu Corp. 86,000 273,222 Shin-Etsu Chemical Co. Ltd. 55,900 1,846,970 Shionogi & Co. Ltd. 43,000 610,729 Shiseido Co. 43,000 362,580 Shizuoka Bank Ltd. 129,000 783,017 Showa Denko K.K./(1)/ 172,000 201,859 - -------------------------------------------------------------------------------- iShares Schedules of Investments page 29 iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- JAPAN (continued) - --------------------------------------------------------------------- Showa Shell Sekiyu K.K. 43,000 $ 235,292 SMC Corp. 8,600 861,447 Softbank Corp. 34,400 509,409 Sony Corp. 137,600 6,037,833 Stanley Electric Co. Ltd. 43,000 286,397 Sumitomo Bank Ltd. (The) 516,000 1,866,888 Sumitomo Chemical Co. Ltd. 172,000 572,158 Sumitomo Corp. 86,000 397,939 Sumitomo Electric Industries 86,000 533,578 Sumitomo Forestry Co. Ltd. 43,000 219,863 Sumitomo Metal Industries Ltd/(1)/ 602,000 189,028 Sumitomo Metal Mining Co. Ltd. 86,000 313,074 Sumitomo Osaka Cement Co. Ltd. 86,000 102,856 Sumitomo Realty & Development Co. Ltd. 43,000 179,362 Sumitomo Trust & Banking Co. Ltd. (The) 129,000 407,898 Suruga Bank Ltd. (The) 43,000 196,076 Suzuken Co. Ltd. 8,600 127,931 Taiheiyo Cement Corp. 129,000 173,570 Taisei Corp. 129,000 256,504 Taisho Pharmaceutical Co. Ltd. 43,000 633,227 Taiyo Yuden Co. Ltd. 43,000 571,191 Takara Shuzo Co. Ltd. 43,000 298,614 Takashimaya Co. Ltd. 43,000 221,467 Takeda Chemical Industries 129,000 5,120,462 Takefuji Corp. 17,200 1,020,878 TDK Corp. 17,200 767,588 Teijin Ltd. 129,000 416,580 Teikoku Oil Co. Ltd. 43,000 154,611 Terumo Corp. 25,800 290,064 THK Co. Ltd. 12,900 181,482 Tobu Railway Co. Ltd. 129,000 299,899 Toda Corporation 43,000 114,432 Toho Co. Ltd. 4,300 438,116 Tohoku Electric Power Co. Inc. 68,800 879,450 Tokio Marine & Fire Insurance Co. Ltd. 172,000 1,213,735 Tokyo Electric Power Co. Inc. 193,500 3,811,428 Tokyo Electronics Ltd. 30,100 1,541,283 Tokyo Gas Co. Ltd. 430,000 1,076,806 Tokyu Corp. 172,000 475,718 TonenGeneral Sekiyu K.K. 86,000 597,872 Toppan Printing Co. Ltd. 86,000 $ 671,798 Toray Industries Inc. 172,000 405,008 Toshiba Corp. 430,000 1,369,335 Tosoh Corporation 86,000 198,643 Tostem Corp. 43,480 541,165 Toto Ltd. 43,000 180,325 Toyo Information Systems 4,300 81,966 Toyo Seikan Kaisha Ltd. 43,000 486,330 Toyobo Co. Ltd. 86,000 102,220 Toyota Industries Corporation 17,200 249,434 Toyota Motor Corp. 369,800 9,536,994 Trans Cosmos Inc. 8,600 195,432 Trend Micro Inc./(1)/ 21,500 525,546 UBE Industries Ltd. 129,000 120,538 UFJ Holdings Inc./(1)/ 387 729,015 West Japan Railway Company 172 658,299 World Co. Ltd. 4,300 112,824 Yakult Honsha Co. Ltd. 43,000 360,009 YAMADA DENKI CO., LTD. 4,300 265,827 Yamaha Corp. 43,000 310,830 Yamanouchi Pharmaceutical Co. Ltd. 43,000 1,041,451 Yamato Transport Co. Ltd. 43,000 684,659 Yasuda Fire & Marine Insurance Co. Ltd. (The) 129,000 650,908 Yokogawa Electric 43,000 293,793 - --------------------------------------------------------------------- 183,443,816 - --------------------------------------------------------------------- NETHERLANDS - 6.01% - --------------------------------------------------------------------- ABN AMRO Holding NV 218,096 3,779,560 Aegon NV 152,951 3,568,393 Akzo Nobel NV 44,118 1,892,596 ASM Lithography Holding NV/(1)/ 69,961 1,299,141 Burhmann NV 21,500 220,446 Elsevier NV 108,145 1,264,323 Hagemeyer NV 18,748 321,026 Heineken NV 37,711 1,451,198 IHC Caland NV 7,353 353,223 ING Groep NV 280,876 7,036,534 Koninklijke Ahold NV 93,439 2,397,150 Koninklijke Vendex KBB NV 15,007 166,791 Numico NV 25,284 588,359 - -------------------------------------------------------------------------------- page 30 i|Shares iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- NETHERLANDS (continued) - --------------------------------------------------------------------- Oce NV 21,801 $ 228,036 Philips Electronics NV 212,291 5,771,577 QIAGEN NV/(1)/ 17,200 335,388 Royal Dutch Petroleum Co. 357,803 17,681,014 Royal KPN NV/(1)/ 263,633 1,259,638 TNT Post Group NV 58,265 1,207,356 Unilever NV - CVA 95,890 5,374,098 Vedior NV 20,812 237,579 VNU NV 34,013 1,052,675 Wolters Kluwer NV - CVA 47,257 983,319 - --------------------------------------------------------------------- 58,469,420 - --------------------------------------------------------------------- PORTUGAL - 0.35% - --------------------------------------------------------------------- Banco Comercial Portugues SA "R"/(1)/ 222,740 778,521 Electricidade de Portugal SA 236,500 478,463 Portugal Telecom SA/(1)/ 188,813 1,406,053 PT Multimedia Servicos de Telecomunicacoes e media, SGPS, SA/(1)/ 50,826 334,293 Sonae SGPS SA 596,410 415,877 - --------------------------------------------------------------------- 3,413,207 - --------------------------------------------------------------------- SINGAPORE - 0.96% - --------------------------------------------------------------------- Capitaland Ltd./(1)/ 129,000 148,931 Chartered Semiconductor Manufacturing Ltd./(1)/ 172,000 427,110 City Developments Ltd. 43,000 165,081 Creative Technology Ltd. 23,650 359,319 Datacraft Asia Ltd. 43,000 98,900 DBS Group Holdings Ltd. 172,000 1,386,234 Fraser & Neave Ltd. 43,000 195,525 Keppel Corp. Ltd. 86,000 187,325 Neptune Orient Lines Ltd./(1)/ 215,000 126,442 Oversea-Chinese Banking Corp Ltd. - Ordinary Shares 172,000 1,208,266 SembCorp Industries Ltd. 172,000 174,219 Singapore Airlines Ltd. 86,000 604,133 Singapore Press Holdings Ltd. 43,000 550,275 Singapore Technologies Engineering Ltd. 258,000 327,350 Singapore Telecommunications Ltd. 1,032,000 966,571 United Overseas Bank Ltd. 258,000 $ 2,093,386 Venture Manufacturing Ltd. 43,000 360,607 - --------------------------------------------------------------------- 9,379,674 - --------------------------------------------------------------------- SPAIN - 3.01% - --------------------------------------------------------------------- Altadis SA 44,291 713,032 Amadeus Global Travel Distribution SA "A"/(1)/ 42,365 268,433 Banco Bilbao Vizcaya SA 517,378 5,879,380 Banco Santander Central Hispano SA 724,335 5,624,679 Endesa SA 154,499 2,241,178 Gas Natural SDG SA 19,145 342,328 Iberdrola SA 105,223 1,250,091 Inditex/(1)/ 36,206 689,782 Repsol YPF SA 198,445 2,374,692 Telefonica SA/(1)/ 703,015 8,261,270 Telefonica SA - Bonus Rights/(1)/ 703,015 163,381 Terra Networks SA/(1)/ 81,614 655,540 Union Electrica Fenosa SA 36,765 572,247 Zeltia SA Rights/(1)/ 27,907 216,226 - --------------------------------------------------------------------- 29,252,259 - --------------------------------------------------------------------- SWEDEN - 2.33% - --------------------------------------------------------------------- ASSA Abloy AB "B" 51,600 688,648 Atlas Copco AB "A" 21,500 503,149 Atlas Copco AB "B" 12,900 284,310 Drott AB "B" 30,100 302,698 Electrolux AB "B" 60,200 913,752 Gambro AB "A" 34,400 202,069 Gambro AB "B" 25,800 151,552 Hennes & Mauritz AB "B" 79,550 1,435,488 Hoganas AB "B" 8,600 138,214 Holmen AB "B" 13,373 297,876 Modern Times Group MTG AB "B"/(1)/ 8,600 198,835 Nobel Biocare AB 4,300 193,985 Nordea AB 363,350 1,792,842 Sandvik AB 43,000 921,430 Sapa AB 17,200 247,331 Securitas AB "B" 51,600 969,925 Skandia Forsakrings AB 146,200 831,308 Skandinaviska Enskilda Banken (SEB) "A" 86,000 759,776 Skanska AB "B" 77,400 491,026 - -------------------------------------------------------------------------------- iShares Schedules of Investments page 31 iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- SWEDEN (continued) - --------------------------------------------------------------------- SKF AB "B" 12,900 $ 272,791 SSAB Svenskt Stal AB "A" 25,800 258,243 SSAB Svenskt Stal AB "B" 25,800 241,269 Svenska Cellulosa AB "B" 38,700 1,109,351 Svenska Handelsbanken AB "A" 103,200 1,474,284 Svenska Handelsbanken AB "B" 17,200 234,398 Swedish Match AB 90,343 517,945 Tele2 AB "B"/(1)/ 12,900 390,395 Telefonakfiebolaget Ericsson AB "B" 1,118,000 4,854,468 Telia AB 163,400 635,789 Trelleborg AB "B" 34,400 273,194 Volvo AB "A" 25,800 375,847 Volvo AB "B" 43,000 658,739 - --------------------------------------------------------------------- 22,620,927 - --------------------------------------------------------------------- SWITZERLAND - 7.72% - --------------------------------------------------------------------- ABB Ltd. 194,102 1,672,422 Adecco SA 15,910 832,257 Ascom Holding AG 4,300 48,478 Ciba Specialty Chemicals AG 11,309 718,414 Clariant AG - Registered 22,575 428,582 Compagnie Financiere Richemont AG 73,100 1,443,294 Credit Suisse Group/(1)/ 171,828 6,599,501 Forbo Holding AG 860 249,927 Gebruder Sulzer AG 774 132,926 Georg Fischer AG 860 150,961 Givaudan - Foreign Registered 1,333 422,816 Holcim Ltd. "B" 5,160 1,098,674 Kudelski SA - Bearer/(1)/ 5,332 286,393 Kuoni Reisen Holding AG 817 210,943 Lonza AG 688 430,025 Nestle SA 63,253 13,708,083 Novartis AG 482,890 16,543,908 PubliGroupe SA 430 70,331 Roche Holding AG - Bearer 8,643 694,207 Roche Holding AG - Genusschein 117,476 7,805,881 Serono SA 1,118 894,713 SGS Societe Generale de Surveillance Holding SA 1,247 225,813 Swatch Group (The) AG/(1)/ 22,360 378,783 Swatch Group (The) AG "B"/(1)/ 6,450 507,703 Swiss Reinsurance 45,580 4,126,936 Swisscom AG 4,171 1,203,618 Syngenta AG/(1)/ 17,415 938,959 Synthes-Stratec Inc. 860 557,626 Tecan AG 2,580 145,435 UBS AG - Registered/(1)/ 211,861 9,591,223 Unaxis Holding AG "R" 1,247 120,373 Valora Holding AG 860 138,151 Zurich Financial Services AG 13,803 2,697,063 - --------------------------------------------------------------------- 75,074,419 - --------------------------------------------------------------------- UNITED KINGDOM - 28.52% - --------------------------------------------------------------------- Aegis Group PLC 160,906 213,764 Aggreko PLC 37,754 157,400 Airtours PLC 64,027 240,690 AMEC PLC 43,602 272,979 Amey PLC 52,976 283,220 AMVESCAP PLC 126,979 1,717,366 Arm Holdings PLC/(1)/ 169,936 787,738 Associated British Ports Holdings PLC 49,063 283,246 AstraZeneca PLC 286,767 13,171,380 AWG PLC/(1)/ 45,752 343,337 BAA PLC 174,838 1,560,377 BAE Systems PLC 262,042 1,259,112 Balfour Beatty PLC 79,206 231,155 Barclays PLC 278,382 8,785,123 Barratt Developments PLC 44,505 261,022 Bass PLC 146,028 1,481,761 BBA Group PLC 67,682 244,867 Berkeley Group PLC (The) 24,811 270,695 BG Group PLC 588,971 2,388,866 Billiton PLC 348,343 1,868,268 BOC Group PLC 77,873 1,124,751 Boots Co. PLC 144,566 1,332,089 BP Amoco PLC 3,725,778 28,854,660 BPB Industries PLC 86,774 389,971 Brambles Industries PLC/(1)/ 119,712 550,687 British Airways PLC 91,332 263,959 British American Tobacco PLC 279,156 2,445,993 British Land Co. PLC 92,106 637,502 British Sky Broadcasting Group PLC/(1)/ 125,775 1,190,938 - -------------------------------------------------------------------------------- page 32 i|Shares iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- UNITED KINGDOM (continued) - --------------------------------------------------------------------- BT Group PLC/(1)/ 1,416,764 $ 4,494,967 BTG PLC/(1)/ 18,318 165,164 Bunzl PLC 86,172 572,380 Cable & Wireless PLC 457,993 1,721,687 Cadbury Schweppes PLC 338,109 2,040,353 Canary Wharf Finance PLC/(1)/ 105,436 652,649 Capita Group PLC 93,267 560,190 Carlton Communications PLC 100,706 293,900 Celltech Group PLC/(1)/ 46,784 481,997 Centrica PLC 675,616 2,191,293 CGU PLC 376,852 4,399,144 Chub PLC 139,535 335,233 Close Brothers Group PLC 22,317 270,609 CMG PLC 103,716 360,216 Compass Group PLC 373,670 2,746,063 Corus Group PLC/(1)/ 585,273 643,098 Daily Mail and General Trust "A" 54,825 495,881 De La Rue PLC 33,196 197,038 Diageo PLC 562,483 6,550,227 Dixons Group PLC 325,080 1,019,906 Electrocomponents PLC 74,261 503,230 EMI Group PLC 129,774 586,890 Exel PLC 37,797 411,307 FirstGroup PLC 82,130 330,803 FKI PLC 100,663 227,619 George Wimpey PLC 85,828 276,555 GKN PLC 119,712 461,442 GlaxoSmithKline PLC 1,025,765 24,484,805 Granada Compass PLC 456,660 797,054 Great Portland Estates PLC 35,217 122,932 Great Universal Stores PLC 167,700 1,567,760 Hammerson PLC 47,945 337,437 Hanson PLC 128,699 829,388 Hays PLC 263,762 719,437 HBOS PLC 587,595 7,000,431 Hilton Group PLC 264,536 805,644 HSBC Holdings PLC 1,463,978 16,406,948 IMI PLC 70,219 259,501 Imperial Chemical Industries PLC 114,251 533,644 Imperial Tobacco Group PLC 88,193 1,134,215 International Power PLC/(1)/ 191,909 555,308 Invensys PLC 586,047 948,341 J Sainsbury PLC 212,033 1,174,642 Johnson Matthey PLC 40,635 516,845 Kelda Group PLC 68,370 336,251 Kidde PLC 118,121 107,667 Kingfisher PLC 207,008 1,151,937 Land Securities PLC 91,203 1,087,204 Lattice Group PLC 587,810 1,366,541 Legal & General Group PLC 869,761 1,939,045 Lloyds TSB Group PLC 927,983 9,927,841 Logica PLC 75,637 570,810 Man Group PLC 45,236 825,973 Marks & Spencer PLC 471,108 2,549,966 Misys PLC 97,223 441,742 National Grid Group PLC 246,562 1,564,559 Next PLC 56,631 748,316 Novar PLC 102,856 177,344 Nycomed Amersham PLC "A" 103,802 964,539 P&O Princess Cruises PLC 118,551 668,070 Pace Micro Technology PLC 24,639 118,740 Pearson PLC 132,655 1,533,545 Peninsular & Oriental Steam Navigation Co. PLC 137,471 427,906 Pilkington PLC 215,473 315,927 Provident Financial PLC 39,001 373,700 Prudential Corp. PLC 334,454 3,530,831 Railtrack Group PLC 33,856 33,494 Rank Group PLC 92,622 335,755 Reckitt Benckiser PLC 91,074 1,333,433 Reed International PLC 212,678 1,747,788 Rentokil Initial PLC 313,857 1,165,445 Reuters Group PLC 240,026 2,042,093 Rexam PLC 77,314 467,649 Rio Tinto PLC 169,248 3,324,725 RMC Group PLC 49,149 406,339 Rolls Royce PLC 134,203 299,662 Royal Bank of Scotland Group PLC Warrants (Expires 12/19/02) 449,661 11,343,373 Royal Sun Alliance Industries Group PLC 239,725 1,130,711 Safeway PLC 173,204 739,235 Sage Group PLC 179,826 611,840 Schroders PLC 21,500 258,879 - -------------------------------------------------------------------------------- iShares Schedules of Investments page 33 iShares MSCI EAFE Index Fund Schedule of Investments (continued) January 31, 2002 (Unaudited) Security Shares Value - --------------------------------------------------------------------- COMMON STOCKS (continued) - --------------------------------------------------------------------- UNITED KINGDOM (continued) - --------------------------------------------------------------------- Scottish & Southern Energy PLC 148,350 $ 1,304,056 Scottish Newcastle Breweries PLC 117,347 935,338 Scottish Power PLC 314,545 1,907,023 Securicor PLC 110,768 190,986 Serco Group PLC 63,253 333,432 Severn Trent PLC 60,372 619,429 Shell Transport & Trading Co. PLC 1,614,220 10,961,684 Signet Group PLC 244,240 358,984 Slough Estates PLC 69,187 343,202 Smith & Nephew PLC 155,402 860,912 Smiths Group PLC 91,160 881,207 Spirent PLC 136,955 327,103 SSL International PLC 29,541 222,937 Stagecoach Holdings PLC 215,344 213,040 Tate & Lyle PLC 76,798 355,997 Taylor Woodrow PLC 117,734 316,139 Telewest Communications PLC/(1)/ 278,640 142,747 Tesco PLC 1,148,358 3,809,792 3i Group PLC 111,069 1,202,377 Unilever PLC 489,168 3,937,020 United Business Media PLC 52,847 374,923 United Utilities PLC 92,751 789,107 Vodafone Group PLC ADR 11,257,830 24,223,473 Whitebread PLC 54,137 465,941 Wolseley PLC 98,341 758,829 WPP Group PLC 168,818 1,646,212 - --------------------------------------------------------------------- 277,247,854 - --------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $1,023,381,217) 967,864,783 - --------------------------------------------------------------------- PREFERRED STOCKS - 0.29% - --------------------------------------------------------------------- AUSTRALIA - 0.16% - --------------------------------------------------------------------- News Corp. Ltd. 265,138 1,561,106 - --------------------------------------------------------------------- 1,561,106 - --------------------------------------------------------------------- GERMANY - 0.12% - --------------------------------------------------------------------- Fresenius Medical Care AG 4,300 179,725 MAN AG 8,600 155,477 Prosieben Satellite Media AG 12,900 54,972 Volkswagen AG 17,200 $ 545,209 Wella AG 4,300 211,006 - --------------------------------------------------------------------- 1,146,389 - --------------------------------------------------------------------- ITALY - 0.01% - --------------------------------------------------------------------- Fiat SpA - PFD 15,050 156,126 - --------------------------------------------------------------------- 156,126 - --------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost: $3,123,843) 2,863,621 - --------------------------------------------------------------------- SHORT TERM INSTRUMENTS - 6.17% - --------------------------------------------------------------------- Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 31,128,523 31,128,523 Dreyfus Money Market Fund 11,031,012 11,031,012 Goldman Sachs Financial Square Prime Obligation Fund 4,773,755 4,773,755 Providian Temp Cash Money Market Fund 13,040,316 13,040,316 - --------------------------------------------------------------------- TOTAL SHORT TERM INSTRUMENTS (Cost: $59,973,606) 59,973,606 - --------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 106.01% (Cost $1,086,478,666) 1,030,702,010 - --------------------------------------------------------------------- Other Assets, Less Liabilities -- (6.01%) (58,442,924) - --------------------------------------------------------------------- NET ASSETS -- 100.00% $ 972,259,086 ===================================================================== /(1)/ Non-income earning securities. See notes to financial statements. - -------------------------------------------------------------------------------- page 34 iShares iShares Trust Statements of Assets and Liabilities January 31, 2002 (Unaudited)
iShares Goldman Sachs iShares MSCI ------------------------------------------------------------------------ -------------- Technology Networking Semiconductor Software Natural Resources EAFE Index Fund Index Fund Index Fund Index Fund Index Fund Index Fund - --------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments at cost $ 62,297,602 $63,921,191 $23,295,287 $31,861,456 $29,958,981 $1,086,478,666 ---------------------------------------------------------------------------------------- Foreign currency, at cost $ - $ - $ - $ - $ - $ 657,340 ---------------------------------------------------------------------------------------- Investments in securities, at value (including securities on loan/(1)/ (Note 1) $ 48,356,847 $58,768,717 $22,815,580 $29,749,633 $29,292,436 $1,030,702,010 Foreign currency, at value - - - - - 636,963 Receivables: Investment securities sold 26,749 - 7,801 13,202 9,906 - Dividends and interest 3,540 1,190 2,394 413 9,456 639,042 ---------------------------------------------------------------------------------------- Total Assets 48,387,136 58,769,907 22,825,775 29,763,248 29,311,798 1,031,978,015 ---------------------------------------------------------------------------------------- LIABILITIES Payables: Collateral for securities on loan (Note 5) 3,002,952 5,452,782 1,986,085 2,138,729 1,427,177 59,188,120 Advisory fees (Note 2) 70,461 34,421 20,830 21,142 23,462 530,809 ---------------------------------------------------------------------------------------- Total Liabilities 3,073,413 5,487,203 2,006,915 2,159,871 1,450,639 59,718,929 ---------------------------------------------------------------------------------------- NET ASSETS $ 45,313,723 $53,282,704 $20,818,860 $27,603,377 $27,861,159 $ 972,259,086 ======================================================================================== Net assets consist of: Paid-in capital $ 62,387,871 $61,554,709 $22,024,082 $31,354,754 $29,006,526 $1,028,628,779 Undistributed (distributions in excess of) net investment income (accumulated net investment loss) (121,815) (43,521) (39,377) (51,261) (6,790) 106,520 Undistributed net realized loss (3,011,578) (3,076,010) (686,138) (1,588,293) (472,032) (671,369) Net unrealized depreciation (13,940,755) (5,152,474) (479,707) (2,111,823) (666,545) (55,804,844) ---------------------------------------------------------------------------------------- NET ASSETS $ 45,313,723 $53,282,704 $20,818,860 $27,603,377 $27,861,159 $ 972,259,086 ======================================================================================== iShares outstanding 900,000 1,800,000 300,000 600,000 300,000 8,600,000 ======================================================================================== Net asset value per iShare $ 50.35 $ 29.60 $ 69.40 $ 46.01 $ 92.87 $ 113.05 ======================================================================================== - ---------------------------------------------------------------------------------------------------------------------------------
/(1)/ Securities on loan with market values of $2,836,168, $4,970,027, $1,912,424, $2,042,716, $1,379,810 and $55,505,483, respectively. See Note 5. See notes to financial statements. - -------------------------------------------------------------------------------- iShares Financial Statements page 35 iShares Trust Statements of Operations For the six months ended January 31, 2002 (Unaudited)
iShares Goldman Sachs iShares MSCI ----------------------------------------------------------------------- --------------- Technology Networking Semiconductor Software Natural Resources EAFE Index Fund Index Fund Index Fund Index Fund Index Fund/(2)/ Index Fund/(3)/ - --------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME Dividends/(1)/ $ 65,386 $ 19,905 $ 24,558 $ 5,423 $ 140,491 $ 2,056,590 Interest - 469 224 171 161 8,353 Securities lending income 7,889 2,591 2,682 2,054 1,012 73,329 ------------------------------------------------------------------------------------ Total investment income 73,275 22,965 27,464 7,648 141,664 2,138,272 ------------------------------------------------------------------------------------ EXPENSES (NOTE 2) Advisory fees 195,090 66,486 66,841 58,909 36,546 924,258 ------------------------------------------------------------------------------------ Total expenses 195,090 66,486 66,841 58,909 36,546 924,258 ------------------------------------------------------------------------------------ Net investment income (loss) (121,815) (43,521) (39,377) (51,261) 105,118 1,214,014 ------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (1,442,713) (2,618,321) (212,320) (410,357) (472,032) (647,645) In-kind redemptions (1,561,022) (432,914) (473,818) (1,177,936) - - Foreign currency transactions - - - - - (23,724) ------------------------------------------------------------------------------------ Net realized loss (3,003,735) (3,051,235) (686,138) (1,588,293) (472,032) (671,369) ------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) on: Investments (109,234) (5,364,765) (2,848,569) (984,303) (666,545) (55,776,656) Translation of assets and liabilities in foreign currencies - - - - - (28,188) ------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) (109,234) (5,364,765) (2,848,569) (984,303) (666,545) (55,804,844) ------------------------------------------------------------------------------------ Net realized and unrealized loss (3,112,969) (8,416,000) (3,534,707) (2,572,596) (1,138,577) (56,476,213) ------------------------------------------------------------------------------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,234,784) $(8,459,521) $ (3,574,084) $(2,623,857) $(1,033,459) $(55,262,199) ==================================================================================== - ------------------------------------------------------------------------------------------------------------------------ /(1)/ Net of foreign withholding tax of: $ -- $ -- $ -- $ -- $ 3,554 $ 228,496 - ------------------------------------------------------------------------------------------------------------------------
/(2)/ For the period from October 22, 2001 (commencement of operations) to January 31, 2002. /(3)/ For the period from August 14, 2001 (commencement of operations) to January 31, 2002. See notes to financial statements. - -------------------------------------------------------------------------------- page 36 i|Shares iShares Trust Statements of Changes in Net Assets
iShares Goldman Sachs iShares Goldman Sachs Technology Networking Index Fund Index Fund ------------------------------------------- ----------------------------------------- For the six For the period For the six For the period months ended March 13, 2001/(1)/ months ended July 10, 2001/(1)/ January 31, 2002 to January 31, 2002 to (Unaudited) July 31, 2001 (Unaudited) July 31, 2001 - ------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment loss $ (121,815) $ (120,312) $ (43,521) $ (5,292) Net realized gain (loss) (3,003,735) 1,437,130 (3,051,235) (20,359) Net change in unrealized appreciation (depreciation) (109,234) (13,831,521) (5,364,765) 212,291 ------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (3,234,784) (12,514,703) (8,459,521) 186,640 ------------------------------------------------------------------------------------- iShares Transactions: iShares sold 69,955,543 135,257,842 38,291,130 24,529,460 iShares redeemed (100,549,485) (43,600,690) (1,265,005) - ------------------------------------------------------------------------------------- Net increase (decrease) in net assets from iShares transactions (30,593,942) 91,657,152 37,026,125 24,529,460 ------------------------------------------------------------------------------------- Increase (decrease) in net assets (33,828,726) 79,142,449 28,566,604 24,716,100 NET ASSETS: Beginning of period 79,142,449 - 24,716,100 - ------------------------------------------------------------------------------------- End of period $ 45,313,723 $ 79,142,449 $53,282,704 $24,716,100 ===================================================================================== Accumulated net investment loss included in net assets at end of period $ (121,815) $ - $ (43,521) $ - ===================================================================================== iSHARES ISSUED AND REDEEMED: iShares sold 1,400,000 2,250,000 1,200,000 650,000 iShares redeemed (1,950,000) (800,000) (50,000) - ------------------------------------------------------------------------------------- Net increase (decrease) in iShares outstanding (550,000) 1,450,000 1,150,000 650,000 ===================================================================================== iShares Goldman Sachs Semiconductor Index Fund -------------------------------------- For the six For the period months ended July 10, 2001/(1)/ January 31, 2002 to (Unaudited) July 31, 2001 - -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets Operations: Net investment loss $ (39,377) $ (5,545) Net realized gain (loss) (686,138) - Net change in unrealized appreciation (depreciation) (2,848,569) 2,368,862 -------------------------------------- Net increase (decrease) in net assets resulting from operations (3,574,084) 2,363,317 -------------------------------------- iShares Transactions: iShares sold 3,487,437 30,904,191 iShares redeemed (12,362,001) - -------------------------------------- Net increase (decrease) in net assets from iShares transactions (8,874,564) 30,904,191 -------------------------------------- Increase (decrease) in net assets (12,448,648) 33,267,508 NET ASSETS: Beginning of period 33,267,508 - -------------------------------------- End of period $ 20,818,860 $33,267,508 ====================================== Accumulated net investment loss included in net assets at end of period $ (39,377) $ - ====================================== iSHARES ISSUED AND REDEEMED: iShares sold 50,000 450,000 iShares redeemed (200,000) - -------------------------------------- Net increase (decrease) in iShares outstanding (150,000) 450,000 ====================================== - --------------------------------------------------------------------------------
/(1)/ Commencement of operations. See notes to financial statements. - -------------------------------------------------------------------------------- iShares Financial Statements page 37 iShares Trust Statements of Changes in Net Assets (continued)
iShares Goldman Sachs iShares Goldman Sachs iShares MSCI Software Natural Resources EAFE Index Fund Index Fund Index Fund ----------------------------------------- --------------------- ------------------------- For the six For the period For the period For the period months ended July 10, 2001/(1)/ October 22, 2001/(1)/ August 14, 2001/(1)/ January 31, 2002 to to January 31, to January 31, (Unaudited) July 31, 2001 2002 (Unaudited) 2002 (Unaudited) - --------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) $ (51,261) $ (5,889) $ 105,118 $ 1,214,014 Net realized loss (1,588,293) - (472,032) (671,369) Net change in unrealized appreciation (depreciation) (984,303) (1,127,520) (666,545) (55,804,844) ------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations (2,623,857) (1,133,409) (1,033,459) (55,262,199) ------------------------------------------------------------------------------------------- Distributions to iShareholders: From net investment income - - (111,908) (1,107,494) ------------------------------------------------------------------------------------------- Total distributions to iShareholders - - (111,908) (1,107,494) ------------------------------------------------------------------------------------------- iShares Transactions: iShares sold 26,437,785 27,689,151 29,006,526 1,028,628,779 iShares redeemed (22,766,293) - - - ------------------------------------------------------------------------------------------- Net increase in net assets from iShares transactions 3,671,492 27,689,151 29,006,526 1,028,628,779 ------------------------------------------------------------------------------------------- Increase in net assets 1,047,635 26,555,742 27,861,159 972,259,086 NET ASSETS: Beginning of period 26,555,742 - - - ------------------------------------------------------------------------------------------- End of period $27,603,377 $26,555,742 $27,861,159 $ 972,259,086 =========================================================================================== Undistributed (distributions in excess of) net investment income (accumulated net investment loss) included in net assets at end of period $ (51,261) $ - $ (6,790) $ 106,520 =========================================================================================== iSHARES ISSUED AND REDEEMED: iShares sold 600,000 550,000 300,000 8,600,000 iShares redeemed (550,000) - - - ------------------------------------------------------------------------------------------- Net increase in iShares outstanding 50,000 550,000 300,000 8,600,000 =========================================================================================== - ---------------------------------------------------------------------------------------------------------------------------------
/(1)/ Commencement of operations. See notes to financial statements. - -------------------------------------------------------------------------------- page 38 i|Shares iShares Trust Financial Highlights (For a share outstanding throughout each period)
iShares Goldman Sachs iShares Goldman Sachs Technology Networking Index Fund Index Fund ---------------------------------------- ---------------------------------------- Six months Period from Six months Period from ended Mar. 13, 2001/(1)/ ended Jul. 10, 2001/(1)/ Jan. 31, 2002 to Jan. 31, 2002 tO (Unaudited) Jul. 31, 2001 (Unaudited) Jul. 31, 2001 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 54.58 $ 56.71 $ 38.02 $ 36.32 ------------------------------------------------------------------------------------ Income from investment operations: Net investment loss (0.14) (0.08) (0.02) (0.01) Net realized and unrealized gain (loss) (4.09) (2.05) (8.40) 1.71 ------------------------------------------------------------------------------------ Total from investment operations (4.23) (2.13) (8.42) 1.70 ------------------------------------------------------------------------------------ Net asset value, end of period $ 50.35 $ 54.58 $ 29.60 $ 38.02 ==================================================================================== Total return (not annualized) (7.75)% (3.76)% (22.15)% 4.68% ==================================================================================== Ratios/supplemental data: Net assets, end of period (000s) $45,314 $79,142 $53,283 $24,716 Ratio of expenses to average net assets/(2)/ 0.50% 0.50% 0.50% 0.50% Ratio of net investment loss to average net assets/(2)/ (0.31)% (0.33)% (0.33)% (0.50)% Portfolio turnover rate/(3)/ 5% 0%/(4)/ 29% 9% - -------------------------------------------------------------------------------------------------------------------------------- iShares Goldman Sachs Semiconductor Index Fund -------------------------------------- Six months Period from ended Jul. 10, 2001 (1) Jan. 31, 2002 to (Unaudited) Jul. 31, 2001 - -------------------------------------------------------------------------------- Net asset value, beginning of period $ 73.93 $ 65.65 -------------------------------------- Income from investment operations: Net investment loss (0.13) (0.01) Net realized and unrealized gain (loss) (4.40) 8.29 -------------------------------------- Total from investment operations (4.53) 8.28 -------------------------------------- Net asset value, end of period $ 69.40 $ 73.93 ====================================== Total return (not annualized) (6.13)% 12.61% ====================================== Ratios/Supplemental data: Net assets, end of period (000s) $20,819 $33,268 Ratio of expenses to average net assets/(2)/ 0.50% 0.50% Ratio of net investment loss to average net assets/(2)/ (0.29)% (0.38)% Portfolio turnover rate/(3)/ 1% 0%/(4)/ - --------------------------------------------------------------------------------
/(1)/ Commencement of operations. /(2)/ Annualized for periods of less than one year. /(3)/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. /(4)/ Rounds to less than 1%. See notes to financial statements. - -------------------------------------------------------------------------------- iShares Financial Highlights page 39 iShares Trust Financial Highlights (continued) (For a share outstanding throughout each period)
iShares Goldman Sachs iShares Goldman Sachs iShares MSCI Software Natural Resources EAFE Index Fund Index Fund Index Fund ---------------------------------------- --------------------- ----------------------- Period from Period from Six months Period from Oct. 22, 2001/(1)/ Aug. 14, 2001/(1)/ ended Jul. 10, 2001/(1)/ to to Jan. 31, 2002 to Jan. 31, 2002 Jan. 31, 2002 (Unaudited) Jul. 31, 2001 (Unaudited) (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 48.28 $ 49.12 $ 94.92 $ 127.63 -------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.09) (0.01) 0.35 0.26 Net realized and unrealized loss (2.18) (0.83) (2.03) (14.59) -------------------------------------------------------------------------------------- Total from investment operations (2.27) (0.84) (1.68) (14.33) -------------------------------------------------------------------------------------- Less distributions from: Net investment income -- -- (0.37) (0.25) -------------------------------------------------------------------------------------- Total distributions -- -- (0.37) (0.25) -------------------------------------------------------------------------------------- Net asset value, end of period $ 46.01 $ 48.28 $ 92.87 $ 113.05 ====================================================================================== Total return (not annualized) (4.70)% (1.71)% (1.75)% (11.23)% ====================================================================================== Ratios/Supplemental data: Net assets, end of period (000s) $27,603 $26,556 $27,861 $972,259 Ratio of expenses to average net assets/(2)/ 0.50% 0.50% 0.50% 0.35% Ratio of net investment income (loss) to average net assets/(2)/ (0.44)% 0.50% 1.42% 0.46% Portfolio turnover rate/(3)/ 8% 0%/(4)/ 7% 1% - ------------------------------------------------------------------------------------------------------------------------------
/(1)/ Commencement of operations. /(2)/ Annualized for periods of less than one year. /(3)/ Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. /(4)/ Rounds to less than 1%. See notes to financial statements. - -------------------------------------------------------------------------------- page 40 i|Shares iShares Trust Notes to the Financial Statements (Unaudited) 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 January 31, 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 Cohen & Steers Series - ----------------------------- . iShares Cohen & Steers Realty Majors Index Fund (ICF) 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 Growth 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) 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 try to achieve each fund's investment objective. These financial statements relate only to the iShares Goldman Sachs Index Funds and the iShares MSCI EAFE Index Fund (each a "Fund", collectively the "Funds"). - -------------------------------------------------------------------------------- iShares Notes to the Financial Statements page 41 iShares Trust Notes to the Financial Statements (Unaudited) (continued) Each of the Funds is classified as a non-diversified fund under the 1940 Act. 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 iShares MSCI EAFE Index Fund invests in the securities of non-U.S. issuers, that may trade in non-U.S. markets, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; lesser regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets; and the risk of war. 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 was no sale price, 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 at fair value as determined in good faith in accordance with 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. FOREIGN CURRENCY TRANSLATION The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the prevailing rates of exchange on the valuation date. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of such transactions. Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Funds as a component of realized and unrealized gains and losses from investments for financial reporting purposes. 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. - -------------------------------------------------------------------------------- page 42 iShares iShares Trust Notes to the Financial Statements (Unaudited) (continued) 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 six months ended January 31, 2002. For the period ended July 31, 2001, the iShares Goldman Sachs Technology Index Fund incurred net realized capital losses in the amount of $6,226. As permitted by tax regulations, the Fund has elected to defer these losses and treat it as arising in the year ending July 31, 2002. For the six months ended January 31, 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 reclassified 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 six months ended January 31, 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 January 31, 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 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 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 ---------------------------------------- Goldman Sachs Technology 0.50% Goldman Sachs Networking 0.50 Goldman Sachs Semiconductor 0.50 Goldman Sachs Software 0.50 Goldman Sachs Natural Resources 0.50 MSCI EAFE 0.35 ---------------------------------------- - -------------------------------------------------------------------------------- iShares Notes to the Financial Statements page 43 iShares Trust Notes to the Financial Statements (Unaudited) (continued) 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 six months ended January 31, 2002, BGIS did not receive any brokerage commissions from the Funds. 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, 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 a management fee, the master portfolio in which it invests its assets in, 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 six months ended January 31, 2002. Cross trading is the buying or selling of portfolio securities between funds to which BGFA serves as investment advisor. All transactions were in compliance with the requirements and restrictions set forth by the Rule 17a-7. As a result of using an index approach to investing, the iShares MSCI EAFE Index Fund held shares of Barclays PLC, with current market value of $8,785,123, as of January 31, 2002. Barclays PLC is an affiliate of BGFA, the Funds' investment advisor. As of January 31, 2002, certain trustees of the Trust are also employees of BGFA and its affiliates. Certain of the officers of the Trust are also employees of Investors Bank. 3. INVESTMENT PORTFOLIO TRANSACTIONS Purchases and sales of investments (excluding in-kind transactions and short-term securities) for the six months ended January 31, 2002, were as follows: ------------------------------------------------------ iShares Index Fund Purchases Sales ------------------------------------------------------ Goldman Sachs Technology $3,762,715 $3,896,186 Goldman Sachs Networking 8,023,328 8,059,227 Goldman Sachs Semiconductor 167,760 233,355 Goldman Sachs Software 1,780,831 1,828,580 Goldman Sachs Natural Resources 2,018,140 2,025,273 MSCI EAFE 9,399,932 7,440,372 ------------------------------------------------------ - -------------------------------------------------------------------------------- page 44 i|Shares iShares Trust Notes to the Financial Statements (Unaudited) (continued) In-kind transactions for the six months ended January 31, 2002 were as follows: ------------------------------------------------------------ In-kind In-kind ishares Index Fund Purchases Sales ------------------------------------------------------------ Goldman Sachs Technology $ 69,949,097 $100,549,845 Goldman Sachs Networking 38,296,694 1,264,640 Goldman Sachs Semiconductor 3,985,484 12,830,033 Goldman Sachs Software 26,443,112 22,770,551 Goldman Sachs Natural Resources 28,998,460 -- MSCI EAFE 1,025,216,869 -- ------------------------------------------------------------ At January 31, 2002 the aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:
------------------------------------------------------------------------------------------ Tax Unrealized Unrealized Net Unrealized iShares Index Fund Cost Appreciation Depreciation Depreciation ------------------------------------------------------------------------------------------ Goldman Sachs Technology $ 62,297,602 $ 670,957 $(14,611,712) $ (13,940,755) Goldman Sachs Networking 63,921,191 1,102,008 (6,254,482) (5,152,474) Goldman Sachs Semiconductor 23,295,287 1,165,950 (1,645,657) (479,707) Goldman Sachs Software 31,861,456 817,516 (2,929,339) (2,111,823) Goldman Sachs Natural Resources 29,958,981 962,043 (1,628,588) (666,545) MSCI EAFE 1,086,478,666 18,382,739 (74,159,395) (55,776,656) ------------------------------------------------------------------------------------------
4. iSHARES TRANSACTIONS At January 31, 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 Statements of Changes in Net Assets. The consideration for 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. - -------------------------------------------------------------------------------- iShares Notes to the Financial Statements page 45 iShares Trust Notes to the Financial Statements (Unaudited) (continued) 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 lease 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 January 31, 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 January 31, 2002 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. 6. POSSIBLE CLAIM A United States patentholder has notified the Trust that it believes that the manner of the Trust's operation results in the Trust, possibly in conjunction with others, engaging in acts of infringement of such patent and has suggested that the Trust, or one or more of its service providers, enter into a license agreement with it and pay it substantial fees. Payment of such fees by the Trust could materially adversely affect the expense ratios of the Funds. In August 2000, the American Stock Exchange LLC commenced an action seeking a declaratory judgement that its activities with respect to exchange traded funds, including the Trust, do not infringe the patentholder's patents. The patentholder has counterclaimed, alleging that such activities infringe its patent. The Trust is not a party to this action. The Trust believes that it has valid defenses to any potential patent infringement claim by the patentholder. 7. SHAREHOLDER MEETING RESULTS 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. - -------------------------------------------------------------------------------- page 46 i|Shares 45 Fremont Street www.ishares.com 1-800-iSHARES i|Shares ------------------------- BARCLAYS GLOBAL INVESTORS San Francisco, CA 1-800-474-2737 94105 iShares are not sponsored, endorsed, issued, sold or iShares are distributed by SEI promoted by Goldman, Sachs & Investments Distribution Co. Co. or Morgan Stanley Capital Barclays Global Fund Advisors International Inc. Nor do these serves as an adviser to iShares companies make any representation and is a subsidiary of Barclays regarding the advisability of Global Investors, N.A., neither of investing in iShares. which is affiliated with SEI. (C) 2002 Barclays Global Investors. Investors Bank & Trust Co. serves All rights reserved, iShares is a This report is intended for the as administrator, custodian, secur- registered trademark of Barclays Funds' sharesholders, it may not be ties lending agent and transfer Global Investors, N.A. All other distributed to prospective Not FDIC insured agent for the iShares Goldman trademarks, servicemarks or regis- investors unless it is preceded or Have no bank Sachs Series and the iShares MSCI tered trademarks are the property accompanied by the current guarantee Series. of their respective owners. prospectus. May lose value BGI-F-014-01000 (1/02)
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