0001193125-12-142537.txt : 20120330 0001193125-12-142537.hdr.sgml : 20120330 20120330122557 ACCESSION NUMBER: 0001193125-12-142537 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20120131 FILED AS OF DATE: 20120330 DATE AS OF CHANGE: 20120330 EFFECTIVENESS DATE: 20120330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: iSHARES INC CENTRAL INDEX KEY: 0000930667 IRS NUMBER: 510396525 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-09102 FILM NUMBER: 12727233 BUSINESS ADDRESS: STREET 1: 400 HOWARD STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: (415) 670-2000 MAIL ADDRESS: STREET 1: 400 HOWARD STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FORMER COMPANY: FORMER CONFORMED NAME: ISHARES INC DATE OF NAME CHANGE: 20000516 FORMER COMPANY: FORMER CONFORMED NAME: WEBS INDEX FUND INC DATE OF NAME CHANGE: 19970211 FORMER COMPANY: FORMER CONFORMED NAME: FOREIGN FUND INC DATE OF NAME CHANGE: 19950524 0000930667 S000033806 iShares Emerging Markets Local Currency Bond Fund C000104446 iShares Emerging Markets Local Currency Bond Fund LEMB N-Q 1 d319892dnq.htm FORM N-Q Form N-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-Q

 

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-09102

 

 

iShares, Inc.

(Exact name of Registrant as specified in charter)

 

 

c/o: State Street Bank and Trust Company

200 Clarendon Street, Boston, MA 02116

(Address of principal executive offices) (Zip code)

The Corporation Trust Incorporated

351 West Camden Street, Baltimore, MD 21201

(Name and address of agent for service)

Registrant’s telephone number, including area code: (415) 670-2000

Date of fiscal year end: October 31, 2012

Date of reporting period: January 31, 2012

 

 

 

Item 1. Schedules of Investments.

Schedule of Investments (Unaudited)

iSHARES® EMERGING MARKETS LOCAL CURRENCY BOND FUND

January 31, 2012

 

Security

      Principal a
(000s)		        Value  

FOREIGN GOVERNMENT BONDS & NOTES—97.09%

          

BRAZIL—13.02%

          

Brazil (Federative Republic of)

          

0.00%, 01/01/15

        2,706         $ 1,151,617   

10.00%, 01/01/13

        4,548           2,387,643   

10.00%, 01/01/21

        849           450,612   
         

 

 

  
            3,989,872   

CHILE—0.35%

          

Chile (Republic of)

          

5.50%, 08/05/20

        50,000           105,641   
         

 

 

  
            105,641   

COLOMBIA—4.15%

          

Colombia (Republic of)

          

9.25%, 05/14/14

        1,500,000           883,995   

9.85%, 06/28/27

        486,000           386,851   
         

 

 

  
            1,270,846   

CZECH REPUBLIC—4.19%

          

Czech (Republic of)

          

2.80%, 09/16/13

        8,400           442,968   

4.60%, 08/18/18

        9,150           523,356   

5.70%, 05/25/24

        5,010           318,428   
         

 

 

  
            1,284,752   

EGYPT—1.77%

          

Egypt (Arab Republic of)

          

11.60%, 10/05/13

        3,462           542,687   
         

 

 

  
            542,687   

HUNGARY—3.72%

          

Hungary (Republic of)

          

5.50%, 02/12/16

        173,910           688,593   

6.00%, 10/24/12

        74,850           327,514   

6.00%, 11/24/23

        35,760           124,317   
         

 

 

  
            1,140,424   

INDONESIA—4.35%

          

Indonesia (Republic of)

          

9.50%, 06/15/15

        1,548,000           197,643   

9.50%, 07/15/31

        3,762,000           560,195   

10.00%, 07/15/17

        1,623,000           223,203   

10.00%, 09/15/24

        2,328,000           351,888   
         

 

 

  
            1,332,929   

ISRAEL—4.17%

          

Israel (State of)

          

3.50%, 09/30/13

        2,328           632,106   

6.00%, 02/28/19

        2,145           644,781   
         

 

 

  
            1,276,887   

Schedule of Investments (Unaudited) (Continued)

iSHARES® EMERGING MARKETS LOCAL CURRENCY BOND FUND

January 31, 2012

 

MALAYSIA—4.41%

  

Malaysia (Federation of)

          

3.70%, 02/25/13

        1,776           588,970   

5.73%, 07/30/19

        2,013           762,267   
         

 

 

  
            1,351,237   

MEXICO—8.04%

          

United Mexican States

          

6.25%, 06/16/16

        11,585           932,800   

6.50%, 06/10/21

        8,805           705,065   

8.50%, 11/18/38

        4,963           433,205   

9.00%, 06/20/13

        4,838           393,616   
         

 

 

  
            2,464,686   

PERU—0.99%

          

Peru (Republic of)

          

8.20%, 08/12/26

        684           303,732   
         

 

 

  
            303,732   

PHILIPPINES—3.95%

          

Philippines (Republic of the)

          

7.00%, 01/27/16

        26,514           675,540   

8.13%, 12/16/35

        18,360           534,664   
         

 

 

  
            1,210,204   

POLAND—4.35%

          

Poland (Republic of)

          

5.25%, 04/25/13

        1,602           499,845   

5.75%, 04/25/14

        1,017           321,350   

5.75%, 09/23/22

        1,629           510,742   
         

 

 

  
            1,331,937   

RUSSIA—4.46%

          

Russian Federation (The)

          

7.85%, 03/10/18(b)

        40,000           1,365,878   
         

 

 

  
            1,365,878   

SOUTH AFRICA—4.37%

          

South Africa (Republic of)

          

6.25%, 03/31/36

        2,985           291,299   

8.25%, 09/15/17

        7,779           1,047,885   
         

 

 

  
            1,339,184   

SOUTH KOREA—21.87%

          

South Korea (Republic of)

          

4.25%, 12/10/12

        1,562,790           1,401,405   

4.75%, 03/10/12

        674,790           601,491   

4.75%, 09/17/13

        1,396,960           1,268,873   

5.25%, 09/10/15

        1,648,970           1,555,362   

5.50%, 09/10/17

        768,000           749,924   

5.50%, 12/10/29

        1,050,030           1,123,593   
         

 

 

  
            6,700,648   

Schedule of Investments (Unaudited) (Continued)

iSHARES® EMERGING MARKETS LOCAL CURRENCY BOND FUND

January 31, 2012

 

THAILAND—4.36%

  

Thailand (Kingdom of)

      

3.63%, 05/22/15

      27,009         888,375   

6.15%, 07/07/26

      10,593         446,602   
     

 

 

  
        1,334,977   

TURKEY—4.57%

      

Turkey (Republic of)

      

10.00%, 01/09/13

      1,356         769,981   

10.00%, 06/17/15

      1,101         630,776   
     

 

 

  
        1,400,757   

TOTAL FOREIGN GOVERNMENT BONDS & NOTES

      

(Cost: $29,175,262)

         29,747,278   

Security

    Shares      Value  

SHORT-TERM INVESTMENTS—0.04%

      

MONEY MARKET FUNDS—0.04%

      

BlackRock Cash Funds: Treasury, SL Agency Shares

      

0.01%(c)(d)

      12,958         12,958   
     

 

 

  
        12,958   
     

 

 

  

TOTAL SHORT-TERM INVESTMENTS

      

(Cost: $12,958)

         12,958   
     

 

 

  

TOTAL INVESTMENTS IN SECURITIES—97.13%

      

(Cost: $29,188,220)

         29,760,236   

Other Assets, Less Liabilities—2.87%

         877,610   
     

 

 

  

NET ASSETS—100.00%

       $ 30,637,846   
     

 

 

  

 

(a)

Principal amounts shown are in the local currency of the issuer.

(b)

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.

(c)

Affiliated issuer. See Note 2.

(d)

The rate quoted is the annualized seven-day yield of the fund at period end.

See accompanying notes to schedules of investments.

Notes to Schedules of Investments (Unaudited)

iSHARES® , INC.

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation.

This schedule of investments relates only to the iShares Emerging Markets Local Currency Bond Fund (the “Fund”).

1. SIGNIFICANT ACCOUNTING POLICIES

SECURITY VALUATION

The securities and other assets of the Fund are valued pursuant to the pricing policy and procedures approved by the Board of Directors of the Company using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

  •  

Level 1 – Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date (a “Level 1 Price”);

 

  •  

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (a “Level 2 Price”); and

 

  •  

Level 3 – Inputs that are unobservable for the asset or liability (a “Level 3 Price”).

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3 of the fair value hierarchy.

The level of a value determined for a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Fund’s perceived risk of that instrument.

Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 Prices, include active listed equities and exchange-traded financial futures contracts. The Fund does not adjust the quoted price for such instruments, even in situations where the Fund holds a large position and a sale could reasonably impact the quoted price.

Investments that trade in markets that are not considered to be active, but whose values are based on inputs such as quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified within Level 2. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

Investments whose values are classified as Level 3 Prices have significant unobservable inputs, as they may trade infrequently or not at all. Investments whose values are classified as Level 3 Prices may include unlisted securities related to corporate actions, securities whose trading have been suspended or which have been de-listed from their primary trading exchange, less liquid corporate debt securities (including distressed debt instruments), collateralized debt obligations, and less liquid mortgage securities (backed by either commercial or residential real estate). When observable prices are not available for these securities, the Fund uses one or more valuation techniques (e.g., the market approach or the income approach) for which sufficient and reliable data is available. Within Level 3 of the fair value hierarchy, the use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

The inputs used by the Fund in estimating the value of Level 3 Prices may include the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 Prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Fund in the absence of market information. The fair value measurement of Level 3 Prices does not include transaction costs that may have been capitalized as part of the security’s cost basis. Assumptions used by the Fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of operations.

Fair value pricing could result in a difference between the prices used to calculate the Fund’s net asset value and the prices used by the Fund’s underlying index, which in turn could result in a difference between the Fund’s performance and the performance of the Fund’s underlying index.

The following table summarizes the value of each of the Fund’s investments according to the fair value hierarchy as of January 31, 2012. The breakdown of the Fund’s investments into major categories is disclosed in its schedule of investments.

 

        Investments  
Investment Type      Level 1        Level 2      Level 3      Total  

Foreign Government Bonds & Notes

      $ —           $ 29,747,278       $ —         $ 29,747,278   

Short-Term Investments

        12,958           —           —           12,958   
    

 

 

       

 

 

     

 

 

     

 

 

  
     $ 12,958         $ 29,747,278       $ —         $ 29,760,236   
    

 

 

       

 

 

     

 

 

     

 

 

  

 

FOREIGN CURRENCY TRANSLATION

The accounting records of the Fund are maintained in U.S. dollars. Foreign currencies, as well as investment securities and other assets and liabilities denominated in foreign currencies, are translated into U.S. dollars using exchange rates deemed appropriate by the investment adviser. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

FEDERAL INCOME TAXES

As of January 31, 2012, the cost of investments for federal income tax purposes was $29,188,215. Net unrealized appreciation was $572,021, of which $806,592 represented gross unrealized appreciation on securities and $234,571 represented gross unrealized depreciation on securities.

RECENT ACCOUNTING STANDARD

In May 2011, the Financial Accounting Standards Board issued amended guidance to improve disclosure about fair value measurements which will require the following disclosures for fair value measurements categorized as Level 3: quantitative information about the unobservable inputs and assumptions used in the fair value measurement, a description of the valuation policies and procedures and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, the amounts and reasons for all transfers in and out of Level 1 and Level 2 will be required to be disclosed. The amended guidance is effective for financial statements for fiscal years beginning after December 15, 2011, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Fund’s financial statements and disclosures.

2. TRANSACTIONS WITH AFFILIATES

The Fund may invest its positive cash balances in certain money market funds managed by BlackRock Fund Advisors (“BFA”) or an affiliate.

The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but Barclays is not.

3. LOANS OF PORTFOLIO SECURITIES

The 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 by the Fund is required to have a value of at least 102% of the current value of the loaned securities plus the interest accrued on such securities, if any, for securities traded on U.S. exchanges 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 value of the securities on loan plus accrued interest, if any. The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. Any securities lending cash collateral may be reinvested in certain short-term instruments either directly on behalf of the fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. The Fund could suffer a loss if the value of an investment purchased with cash collateral falls below the value of the cash collateral received.

As of January 31, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA.

Item 2. Controls and Procedures.

 

  (a)

The President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) have concluded that, based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to achieve the purposes described in Section 4(a) of the certifications filed with this Form N-Q.

 

  (b)

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

 

  (a)

Certifications of the President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) as required by Rule 30a-2(a) under the Investment Company Act of 1940 are filed with this Form N-Q as exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

iShares, Inc.

 

By:

  

/s/    Michael Latham

 

Michael Latham, President

(Principal Executive Officer)

Date:

  

March 18, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:

  

/s/    Michael Latham

 

Michael Latham, President

(Principal Executive Officer)

Date:

  

March 18, 2012

By:

  

/s/    Jack Gee

 

Jack Gee, Treasurer and Chief Financial Officer

(Principal Financial Officer)

Date:

  

March 18, 2012

 EX-99.CERT 2 d319892dex99cert.htm CERTIFICATIONS Certifications

EX-99.CERT

Form N-Q Exhibit for Item 3(a)

I, Michael Latham, certify that:

 

  1.

I have reviewed this report on Form N-Q for the iShares Emerging Markets Local Currency Bond Fund of iShares, Inc.;

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the schedule of investments included in this report fairly presents in all material respects the investments of the Registrant as of the end of the fiscal quarter for which the report is filed;

 

  4.

The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

  5.

The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

 

  (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date:

  

March 18, 2012

     

/s/    Michael Latham

  

President (Principal Executive Officer)

      

Michael Latham

[Signature]

  

[Title]

EX-99.CERT

Form N-Q Exhibit for Item 3(a)

I, Jack Gee, certify that:

 

  1.

I have reviewed this report on Form N-Q for iShares Emerging Markets Local Currency Bond Fund of iShares, Inc.;

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the schedule of investments included in this report fairly presents in all material respects the investments of the Registrant as of the end of the fiscal quarter for which the report is filed;

 

  4.

The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

  5.

The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

 

  (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date:

  

March 18, 2012

     

/s/    Jack Gee

  

Treasurer and Chief Financial Officer

(Principal Financial Officer)

      

Jack Gee

[Signature]

  

[Title]