Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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: August 31, 2012
Date of reporting period: February 29, 2012
Table of Contents
| Item 1. Reports to Stockholders. |
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI Japan Index Fund | EWJ | NYSE Arca
Table of Contents
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Table of Contents
iSHARES® MSCI JAPAN INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 |
Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (10.85)% | (11.74)% | (10.16)% | (6.20)% | (6.15)% | (5.70)% | 3.88% | 3.85% | 4.42% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 |
Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (10.85)% |
(11.74)% | (10.16)% | (27.40)% | (27.18)% | (25.44)% | 46.30% | 45.83% | 54.09% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Japan Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Japan IndexSM (the “Index”). The Index consists of stocks traded primarily on the Tokyo Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 3.36%, net of fees, while the total return for the Index was 3.82%.
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 to February 29, 2012.
ACTUAL EXPENSES
The first line in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses
Paid (9/1/11 to 2/29/12) |
|||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,033.60 | 0.52 | % | $ | 2.63 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| a | Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| SCHEDULE OF INVESTMENTS |
7 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
February 29, 2012
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 6,482,037,285 | ||
| Affiliated (Note 2) |
37,285,194 | |||
|
|
|
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| Total cost of investments |
$ | 6,519,322,479 | ||
|
|
|
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| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 5,071,776,779 | ||
| Affiliated (Note 2) |
37,285,194 | |||
|
|
|
|||
| Total fair value of investments |
5,109,061,973 | |||
| Foreign currencies, at valueb |
2,281,613 | |||
| Receivables: |
||||
| Investment securities sold |
36,893 | |||
| Dividends and interest |
6,959,526 | |||
| Capital shares sold |
1,137,267 | |||
|
|
|
|||
| Total Assets |
5,119,477,272 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Collateral for securities on loan (Note 5) |
35,442,492 | |||
| Capital shares redeemed |
81,383 | |||
| Investment advisory fees (Note 2) |
2,064,083 | |||
|
|
|
|||
| Total Liabilities |
37,587,958 | |||
|
|
|
|||
| NET ASSETS |
$ | 5,081,889,314 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 7,458,339,147 | ||
| Distributions in excess of net investment income |
(3,690,039 | ) | ||
| Accumulated net realized loss |
(962,210,247 | ) | ||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(1,410,549,547 | ) | ||
|
|
|
|||
| NET ASSETS |
$ | 5,081,889,314 | ||
|
|
|
|||
| Shares outstandingc |
507,600,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 10.01 | ||
|
|
|
|||
| a | Securities on loan with values of $33,735,728. See Note 5. |
| b | Cost of foreign currencies: $2,361,423. |
| c | $0.001 par value, number of shares authorized: 2,124,600,000. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
13 |
Table of Contents
Statement of Operations (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
Six months ended February 29, 2012
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 70,217,878 | ||
| Interest — affiliated (Note 2) |
471 | |||
| Securities lending income — affiliated (Note 2) |
619,965 | |||
|
|
|
|||
| Total investment income |
70,838,314 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
15,249,020 | |||
|
|
|
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| Total expenses |
15,249,020 | |||
|
|
|
|||
| Net investment income |
55,589,294 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(109,422,224 | ) | ||
| In-kind redemptions — unaffiliated |
(79,003,844 | ) | ||
| Foreign currency transactions |
(1,136,436 | ) | ||
|
|
|
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| Net realized loss |
(189,562,504 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
222,111,512 | |||
| Translation of assets and liabilities in foreign currencies |
(460,297 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
221,651,215 | |||
|
|
|
|||
| Net realized and unrealized gain |
32,088,711 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 87,678,005 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $5,285,216. |
See notes to financial statements.
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES® MSCI JAPAN INDEX FUND
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 55,589,294 | $ | 90,153,430 | ||||
| Net realized loss |
(189,562,504 | ) | (34,907,354 | ) | ||||
| Net change in unrealized appreciation/depreciation |
221,651,215 | (73,435,639 | ) | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
87,678,005 | (18,189,563 | ) | |||||
|
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|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(62,475,745 | ) | (93,105,502 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(62,475,745 | ) | (93,105,502 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
100,900,477 | 4,949,223,864 | ||||||
| Cost of shares redeemed |
(2,238,722,311 | ) | (1,586,188,582 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
(2,137,821,834 | ) | 3,363,035,282 | |||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
(2,112,619,574 | ) | 3,251,740,217 | |||||
| NET ASSETS |
||||||||
| Beginning of period |
7,194,508,888 | 3,942,768,671 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 5,081,889,314 | $ | 7,194,508,888 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (3,690,039 | ) | $ | 3,196,412 | |||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
10,200,000 | 471,600,000 | ||||||
| Shares redeemed |
(237,000,000 | ) | (155,400,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
(226,800,000 | ) | 316,200,000 | |||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
15 |
Table of Contents
iSHARES® MSCI JAPAN INDEX FUND
(For a share outstanding throughout each period)
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 9.80 | $ | 9.43 | $ | 10.24 | $ | 11.62 | $ | 14.07 | $ | 13.80 | ||||||||||||
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| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.09 | 0.16 | 0.12 | 0.13 | 0.14 | 0.10 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.23 | 0.37 | (0.77 | ) | (1.39 | ) | (2.39 | ) | 0.27 | |||||||||||||||
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| Total from investment operations |
0.32 | 0.53 | (0.65 | ) | (1.26 | ) | (2.25 | ) | 0.37 | |||||||||||||||
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| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.11 | ) | (0.16 | ) | (0.16 | ) | (0.12 | ) | (0.20 | ) | (0.10 | ) | ||||||||||||
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| Total distributions |
(0.11 | ) | (0.16 | ) | (0.16 | ) | (0.12 | ) | (0.20 | ) | (0.10 | ) | ||||||||||||
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| Net asset value, end of period |
$ | 10.01 | $ | 9.80 | $ | 9.43 | $ | 10.24 | $ | 11.62 | $ | 14.07 | ||||||||||||
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| Total return |
3.36 | %c | 5.54 | % | (6.41 | )% | (10.68 | )% | (16.13 | )% | 2.68 | % | ||||||||||||
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| Ratios/Supplemental data: |
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| Net assets, end of period (000s) |
$ | 5,081,889 | $ | 7,194,509 | $ | 3,942,769 | $ | 6,164,170 | $ | 7,499,536 | $ | 11,780,006 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.51 | % | 0.54 | % | 0.56 | % | 0.52 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.91 | % | 1.53 | % | 1.20 | % | 1.46 | % | 1.11 | % | 0.68 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 4 | % | 5 | % | 4 | % | 4 | % | 3 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
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.
These financial statements relate only to the following fund (the “Fund”):
| iShares MSCI Index Fund | Diversification Classification | |
| Japan |
Non-diversified |
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
The investment objective of the Fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of its underlying index. The investment adviser uses a “passive” or index approach to try to achieve the Fund’s investment objective.
The Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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; less 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.
Pursuant to the Company’s organizational documents, the Fund’s officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| NOTES TO FINANCIAL STATEMENTS |
17 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of the Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Fund’s assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment 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.
As of February 29, 2012, the value of each of the Fund’s investments was classified as Level 1. The breakdown of the Fund’s investments into major categories is disclosed in its Schedule of Investments.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Fund may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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 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.
The 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 Fund as a component of realized and unrealized gains and losses from investments for financial reporting purposes.
FOREIGN TAXES
The Fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Fund invests. These foreign taxes, if any, are paid by the Fund and are reflected in its Statement of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Fund’s Statement of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Fund.
FEDERAL INCOME TAXES
The Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of the 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 ordinary income and any net capital 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 is required.
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
| NOTES TO FINANCIAL STATEMENTS |
19 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
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. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of the Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Fund, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
For its investment advisory services to the Fund, BFA is entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.59% | First $7 billion | |
| 0.54 | Over $7 billion, up to and including $11 billion | |
| 0.49 | Over $11 billion, up to and including $24 billion | |
| 0.44 | Over $24 billion, up to and including $48 billion | |
| 0.40 | Over $48 billion |
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Fund, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. The Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by the Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the six months ended February 29, 2012, BTC earned securities lending agent fees from the Fund of $333,828.
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for the Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Fund.
The Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest — affiliated” in the Statement of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but Barclays is not.
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 29, 2012, aggregated $56,611,652 and $93,272,128, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 29, 2012, aggregated $99,582,732 and $2,209,866,948, respectively.
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by the Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of the Fund are not redeemable. Transactions in capital shares for the Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
| 5. | 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 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. 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 a 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Statement of Assets and Liabilities. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| NOTES TO FINANCIAL STATEMENTS |
21 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES® MSCI JAPAN INDEX FUND
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Fund. Because such gains or losses are not taxable to the Fund and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Fund’s tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
The Fund had tax basis net capital loss carryforwards as of August 31, 2011, the tax year-end of the Fund, as follows:
| Expiring 2012 |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||||||||||||||
| $5,594,562 |
$ | 8,733,802 | $ | 68,122,871 | $ | 27,817,841 | $ | 44,443,527 | $ | 116,295,478 | $ | 173,577,101 | $ | 139,228,194 | $ | 583,813,376 | ||||||||||||||||
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by funds for taxable years beginning after December 22, 2010 are not subject to expiration and must be utilized prior to the losses incurred in the tax years preceding enactment.
The Fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 29, 2012, the cost of investments for federal income tax purposes was $6,617,004,175. Net unrealized depreciation was $1,507,942,202, of which $92,540,853 represented gross unrealized appreciation on securities and $1,600,483,055 represented gross unrealized depreciation on securities.
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Fund’s financial statements.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited)
iSHARES® MSCI JAPAN INDEX FUND
Section 19(a) Notice
The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report distributions for federal income tax purposes.
| Total Cumulative
Distributions for the Fiscal Year-to-Date |
% Breakdown of the Total
Cumulative Distributions for the Fiscal Year-to-Date |
|||||||||||||||||||||||||||
| Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
|||||||||||||||||||||
| $0.09582 |
$ | — | $0.01011 | $ | 0.10593 | 90 | % | — | % | 10 | % | 100 | % | |||||||||||||||
| 23 |
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Notes:
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
25 |
Table of Contents
Notes:
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
For more information visit www.iShares.com
or call 1-800-474-2737
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iS-SAR-81-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI Austria Investable Market Index Fund | EWO | NYSE Arca
iShares MSCI Belgium Investable Market Index Fund | EWK | NYSE Arca
iShares MSCI Emerging Markets Eastern Europe Index Fund | ESR | NYSE Arca
iShares MSCI EMU Index Fund | EZU | NYSE Arca
iShares MSCI France Index Fund | EWQ | NYSE Arca
iShares MSCI Germany Index Fund | EWG | NYSE Arca
iShares MSCI Italy Index Fund | EWI | NYSE Arca
iShares MSCI Netherlands Investable Market Index Fund | EWN | NYSE Arca
iShares MSCI Spain Index Fund | EWP | NYSE Arca
iShares MSCI Sweden Index Fund | EWD | NYSE Arca
iShares MSCI Switzerland Index Fund | EWL | NYSE Arca
iShares MSCI United Kingdom Index Fund | EWU | NYSE Arca
Table of Contents
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Table of Contents
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (24.30)% | (24.14)% | (23.88)% | (11.44)% | (11.38)% | (12.52)% | 10.39% | 10.39% | 10.24% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (24.30)% | (24.14)% | (23.88)% | (45.54)% | (45.33)% | (48.77)% | 168.83% | 168.77% | 165.14% | ||||||||
Index performance reflects the performance of the MSCI Austria IndexSM through January 31, 2008 and the MSCI Austria Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Austria Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Austria Investable Market IndexSM (the “Index”). The Index consists of stocks traded primarily on the Vienna Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (9.91)%, net of fees, while the total return for the Index was (9.48)%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (9.27)% | (9.29)% | (5.11)% | (10.84)% | (10.88)% | (10.89)% | 4.76% | 4.77% | 3.95% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (9.27)% | (9.29)% | (5.11)% | (43.65)% | (43.77)% | (43.80)% | 59.14% | 59.39% | 47.25% | ||||||||
Index performance reflects the performance of the MSCI Belgium IndexSM through November 30, 2007 and the MSCI Belgium Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Belgium Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Belgium Investable Market IndexSM (the “Index”). The Index consists of stocks traded primarily on the Brussels Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (2.48)%, net of fees, while the total return for the Index was 2.17%.
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Return | |||||||||||||||||||||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||||||||||||||||||||
| (11.52)% | (12.01)% | (10.57)% | 8.90% | 8.64% | 9.17% | 22.90% | 22.18% | 23.62% | ||||||||||||||||||||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (9/30/09). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (10/2/09), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Eastern Europe Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Eastern Europe IndexSM (the “Index”). The Index is a free float-adjusted market capitalization index designed to measure equity market performance of the following four emerging market countries: the Czech Republic, Hungary, Poland and Russia. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 1.33%, net of fees, while the total return for the Index was 0.73%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMU INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (15.06)% | (15.49)% | (15.05)% | (6.19)% | (6.29)% | (6.10)% | 4.47% | 4.41% | 4.65% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (15.06)% | (15.49)% | (15.05)% | (27.36)% | (27.72)% | (27.01)% | 54.86% | 53.94% | 57.49% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI EMU Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI EMU IndexSM (the “Index”). The Index consists of stocks from Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 1.43%, net of fees, while the total return for the Index was 1.59%.
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI FRANCE INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (15.11)% | (15.40)% | (15.11)% | (5.35)% | (5.40)% | (5.22)% | 4.45% | 4.40% | 4.64% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (15.11)% | (15.40)% | (15.11)% | (24.03)% | (24.24)% | (23.52)% | 54.51% | 53.76% | 57.35% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI France Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI France IndexSM (the “Index”). The Index consists of stocks traded primarily on the Paris Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (1.00)%, net of fees, while the total return for the Index was (0.86)%.
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GERMANY INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (9.02)% | (9.53)% | (9.03)% | (1.04)% | (1.19)% | (0.96)% | 6.94% | 6.89% | 7.09% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (9.02)% | (9.53)% | (9.03)% | (5.09)% | (5.79)% | (4.70)% | 95.60% | 94.65% | 98.45% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Germany Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Germany IndexSM (the “Index”). The Index consists of stocks traded primarily on the Frankfurt Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 9.56%, net of fees, while the total return for the Index was 9.85%.
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI ITALY INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (25.05)% | (25.04)% | (24.88)% | (13.15)% | (13.21)% | (13.11)% | 1.63% | 1.59% | 1.56% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (25.05)% | (25.04)% | (24.88)% | (50.57)% | (50.75)% | (50.46)% | 17.52% | 17.08% | 16.69% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Italy Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Italy IndexSM (the “Index”). The Index consists of stocks traded primarily on the Milan Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 0.09%, net of fees, while the total return for the Index was 0.04%.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (13.85)% | (14.27)% | (13.24)% | (3.51)% | (3.59)% | (2.85)% | 3.85% | 3.82% | 4.41% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (13.85)% | (14.27)% | (13.24)% | (16.35)% | (16.72)% | (13.44)% | 45.88% | 45.50% | 53.90% | ||||||||
Index performance reflects the performance of the MSCI Netherlands IndexSM through January 31, 2008 and the MSCI Netherlands Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Netherlands Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Netherlands Investable Market IndexSM (the “Index”). The Index consists of stocks traded primarily on the Amsterdam Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 2.77%, net of fees, while the total return for the Index was 3.37%.
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SPAIN INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (19.02)% | (19.03)% | (21.21)% | (5.41)% | (5.47)% | (5.99)% | 8.25% | 8.22% | 7.89% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (19.02)% | (19.03)% | (21.21)% | (24.29)% | (24.52)% | (26.58)% | 121.01% | 120.31% | 113.73% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Spain Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Spain IndexSM (the “Index”). The Index consists of stocks traded primarily on the Madrid Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (6.71)%, net of fees, while the total return for the Index was (7.64)%.
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SWEDEN INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.64)% | (4.93)% | (4.66)% | 2.14% | 2.07% | 2.13% | 11.19% | 11.11% | 11.25% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.64)% | (4.93)% | (4.66)% | 11.19% | 10.79% | 11.09% | 188.81% | 186.84% | 190.42% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Sweden Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Sweden IndexSM (the “Index”). The Index consists of stocks traded primarily on the Stockholm Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 10.25%, net of fees, while the total return for the Index was 10.54%.
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SWITZERLAND INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||||||||||||||||||
| (2.56)% | (3.09)% | (2.61)% | 1.40% | 1.23% | 0.63% | 8.35% | 8.34% | 8.09% | ||||||||||||||||||||||||
| Cumulative Total Returns | ||||||||||||||||||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||||||||||||||||||
| (2.56)% | (3.09)% | (2.61)% | 7.20% | 6.33% | 3.19% | 123.00% | 122.87% | 117.73% | ||||||||||||||||||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Switzerland Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Switzerland IndexSM (the “Index”). The Index consists of stocks traded primarily on the Zurich Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (0.77)%, net of fees, while the total return for the Index was (0.53)%.
| FUND PERFORMANCE OVERVIEWS |
15 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI UNITED KINGDOM INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.73)% | (1.39)% | (0.22)% | (2.04)% | (2.11)% | (1.47)% | 5.53% | 5.54% | 6.22% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.73)% | (1.39)% | (0.22)% | (9.79)% | (10.12)% | (7.13)% | 71.28% | 71.45% | 82.89% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI United Kingdom Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI United Kingdom IndexSM (the “Index”). The Index consists of stocks traded primarily on the London Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 8.07%, net of fees, while the total return for the Index was 8.39%.
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 to February 29, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| iShares MSCI Index Fund | Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| Austria Investable Market |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 900.90 | 0.52 | % | $ | 2.46 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Belgium Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 975.20 | 0.52 | 2.55 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Emerging Markets Eastern Europe |
||||||||||||||||
| Actual |
1,000.00 | 1,013.30 | 0.69 | 3.45 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.40 | 0.69 | 3.47 | ||||||||||||
| SHAREHOLDER EXPENSES |
17 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid During Period a (9/1/11 to 2/29/12) |
||||||||||||
| EMU |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,014.30 | 0.52 | % | $ | 2.60 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| France |
||||||||||||||||
| Actual |
1,000.00 | 990.00 | 0.52 | 2.57 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Germany |
||||||||||||||||
| Actual |
1,000.00 | 1,095.60 | 0.52 | 2.71 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Italy |
||||||||||||||||
| Actual |
1,000.00 | 1,000.90 | 0.52 | 2.59 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Netherlands Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,027.70 | 0.52 | 2.62 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Spain |
||||||||||||||||
| Actual |
1,000.00 | 932.90 | 0.52 | 2.50 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Sweden |
||||||||||||||||
| Actual |
1,000.00 | 1,102.50 | 0.52 | 2.72 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Switzerland |
||||||||||||||||
| Actual |
1,000.00 | 992.30 | 0.52 | 2.58 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| United Kingdom |
||||||||||||||||
| Actual |
1,000.00 | 1,080.70 | 0.52 | 2.69 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| a | Expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRIA INVESTABLE MARKET INDEX FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BELGIUM INVESTABLE MARKET INDEX FUND
February 29, 2012
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND
February 29, 2012
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
February 29, 2012
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU INDEX FUND
February 29, 2012
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMU INDEX FUND
February 29, 2012
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI FRANCE INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE INDEX FUND
February 29, 2012
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI FRANCE INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GERMANY INDEX FUND
February 29, 2012
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GERMANY INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ITALY INDEX FUND
February 29, 2012
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ITALY INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
February 29, 2012
| 36 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI NETHERLANDS INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SPAIN INDEX FUND
February 29, 2012
| 38 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SPAIN INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SWEDEN INDEX FUND
February 29, 2012
| 40 | 2012 iSHARES ANNUAL-REPORT REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWEDEN INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SWITZERLAND INDEX FUND
February 29, 2012
| 42 | 2012 iSHARES ANNUAL-REPORT REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SWITZERLAND INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
February 29, 2012
| 44 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI UNITED KINGDOM INDEX FUND
February 29, 2012
| 46 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Austria Investable Market Index Fund |
iShares MSCI Belgium Investable Market Index Fund |
iShares MSCI Eastern Europe |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 130,117,097 | $ | 44,085,533 | $ | 35,354,723 | ||||||
| Affiliated (Note 2) |
3,908,415 | 489,898 | 5,470 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 134,025,512 | $ | 44,575,431 | $ | 35,360,193 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 77,441,903 | $ | 26,160,024 | $ | 30,565,734 | ||||||
| Affiliated (Note 2) |
3,908,415 | 489,898 | 5,470 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
81,350,318 | 26,649,922 | 30,571,204 | |||||||||
| Foreign currencies, at valueb |
12,216 | 37,226 | 36,084 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
664,161 | 135,866 | 160,089 | |||||||||
| Dividends and interest |
756,763 | 31,454 | 4,868 | |||||||||
| Capital shares sold |
17,668 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
82,801,126 | 26,854,468 | 30,772,245 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
667,910 | 144,831 | 162,688 | |||||||||
| Collateral for securities on loan (Note 5) |
3,838,454 | 485,819 | — | |||||||||
| Investment advisory fees (Note 2) |
29,375 | 10,605 | 15,768 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
4,535,739 | 641,255 | 178,456 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 78,265,387 | $ | 26,213,213 | $ | 30,593,789 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 224,157,494 | $ | 88,661,890 | $ | 37,689,863 | ||||||
| Undistributed (distributions in excess) of net investment income |
(529,528 | ) | 62,191 | (25,133 | ) | |||||||
| Accumulated net realized loss |
(92,680,800 | ) | (44,586,262 | ) | (2,284,788 | ) | ||||||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(52,681,779 | ) | (17,924,606 | ) | (4,786,153 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 78,265,387 | $ | 26,213,213 | $ | 30,593,789 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
4,700,000 | 2,200,000 | 1,050,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 16.65 | $ | 11.92 | $ | 29.14 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $3,652,476, $460,063 and $ —, respectively. See Note 5. |
| b | Cost of foreign currencies: $12,113, $35,760 and $33,575, respectively. |
| c | $0.001 par value, number of shares authorized: 100 million, 136.2 million and 200 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI EMU Index Fund |
iShares MSCI Index Fund |
iShares MSCI Germany Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,096,670,708 | $ | 395,648,038 | $ | 3,481,446,729 | ||||||
| Affiliated (Note 2) |
6,199,842 | 1,760,849 | 19,727,907 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,102,870,550 | $ | 397,408,887 | $ | 3,501,174,636 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 724,057,771 | $ | 270,308,090 | $ | 3,134,661,090 | ||||||
| Affiliated (Note 2) |
6,199,842 | 1,760,849 | 19,727,907 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
730,257,613 | 272,068,939 | 3,154,388,997 | |||||||||
| Foreign currencies, at valueb |
894,301 | 93,964 | 3,105,736 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
737,281 | 534,818 | 4,340,289 | |||||||||
| Dividends and interest |
347,609 | 38,624 | 6,249,994 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
732,236,804 | 272,736,345 | 3,168,085,016 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
989,003 | 349,217 | 5,322,205 | |||||||||
| Collateral for securities on loan (Note 5) |
6,104,939 | 1,752,408 | 18,452,871 | |||||||||
| Investment advisory fees (Note 2) |
297,915 | 111,810 | 1,224,264 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
7,391,857 | 2,213,435 | 24,999,340 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 724,844,947 | $ | 270,522,910 | $ | 3,143,085,676 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 1,284,633,065 | $ | 448,070,335 | $ | 3,718,245,378 | ||||||
| Undistributed (distributions in excess of) net investment income |
(219,976 | ) | (114,202 | ) | 2,166,114 | |||||||
| Accumulated net realized loss |
(186,983,554 | ) | (52,095,329 | ) | (230,250,200 | ) | ||||||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(372,584,588 | ) | (125,337,894 | ) | (347,075,616 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 724,844,947 | $ | 270,522,910 | $ | 3,143,085,676 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
22,900,000 | 12,200,000 | 136,500,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 31.65 | $ | 22.17 | $ | 23.03 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $5,762,003, $1,650,126 and $17,428,763, respectively. See Note 5. |
| b | Cost of foreign currencies: $869,568, $91,910 and $3,062,111, respectively. |
| c | $0.001 par value, number of shares authorized: 1 billion, 340.2 million and 382.2 million, respectively. |
See notes to financial statements.
| 48 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Italy Index Fund |
iShares MSCI Index Fund |
iShares MSCI Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 200,041,366 | $ | 100,706,687 | $ | 203,615,762 | ||||||
| Affiliated (Note 2) |
863,260 | 143,365 | 7,075,012 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 200,904,626 | $ | 100,850,052 | $ | 210,690,774 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 146,796,209 | $ | 67,578,012 | $ | 112,436,726 | ||||||
| Affiliated (Note 2) |
863,260 | 143,365 | 7,075,012 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
147,659,469 | 67,721,377 | 119,511,738 | |||||||||
| Foreign currencies, at valueb |
29,969 | 16,014 | 117,635 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
196,832 | 49,653 | 3,919,391 | |||||||||
| Dividends and interest |
2,662 | 101,527 | 39,445 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
147,888,932 | 67,888,571 | 123,588,209 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
— | — | 3,960,648 | |||||||||
| Collateral for securities on loan (Note 5) |
832,795 | 141,446 | 6,967,482 | |||||||||
| Investment advisory fees (Note 2) |
60,136 | 28,073 | 46,487 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
892,931 | 169,519 | 10,974,617 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 146,996,001 | $ | 67,719,052 | $ | 112,613,592 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 262,139,137 | $ | 157,362,931 | $ | 280,147,833 | ||||||
| Undistributed (distributions in excess of) net investment income |
(93,895 | ) | 57,962 | 896,266 | ||||||||
| Accumulated net realized loss |
(61,804,543 | ) | (56,575,923 | ) | (77,253,562 | ) | ||||||
| Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies |
(53,244,698 | ) | (33,125,918 | ) | (91,176,945 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 146,996,001 | $ | 67,719,052 | $ | 112,613,592 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
10,950,000 | 3,600,000 | 3,600,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 13.42 | $ | 18.81 | $ | 31.28 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $787,517, $134,199 and $6,609,606, respectively. See Note 5. |
| b | Cost of foreign currencies: $29,510, $15,609 and $115,997, respectively. |
| c | $0.001 par value, number of shares authorized: 63.6 million, 255 million and 127.8 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Sweden Index Fund |
iShares MSCI Switzerland Index Fund |
iShares MSCI United Kingdom Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 388,770,929 | $ | 539,544,423 | $ | 1,569,367,550 | ||||||
| Affiliated (Note 2) |
5,952 | 166,618 | 3,772,533 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 388,776,881 | $ | 539,711,041 | $ | 1,573,140,083 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 361,320,269 | $ | 547,525,705 | $ | 1,516,397,458 | ||||||
| Affiliated (Note 2) |
5,952 | 166,618 | 3,772,533 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
361,326,221 | 547,692,323 | 1,520,169,991 | |||||||||
| Foreign currencies, at valueb |
241,688 | 255,285 | 1,104,156 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
191,526 | — | 3,937,364 | |||||||||
| Due from custodian (Note 4) |
— | — | 581,949 | |||||||||
| Dividends and interest |
— | 5,755,009 | 8,751,293 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
361,759,435 | 553,702,617 | 1,534,544,753 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
145,817 | — | 4,531,059 | |||||||||
| Collateral for securities on loan (Note 5) |
— | — | 3,324,240 | |||||||||
| Investment advisory fees (Note 2) |
143,717 | 220,748 | 608,816 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
289,534 | 220,748 | 8,464,115 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 361,469,901 | $ | 553,481,869 | $ | 1,526,080,638 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 439,072,715 | $ | 588,743,664 | $ | 1,711,792,214 | ||||||
| Undistributed net investment income (accumulated net investment loss) |
(585,439 | ) | 1,532,667 | 10,879,886 | ||||||||
| Accumulated net realized loss |
(49,575,209 | ) | (45,055,336 | ) | (143,707,934 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
(27,442,166 | ) | 8,260,874 | (52,883,528 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 361,469,901 | $ | 553,481,869 | $ | 1,526,080,638 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
12,225,000 | 22,625,000 | 87,200,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 29.57 | $ | 24.46 | $ | 17.50 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $ — and $3,165,920, respectively. See Note 5. |
| b | Cost of foreign currencies: $233,193, $246,222 and $1,094,226, respectively. |
| c | $0.001 par value, number of shares authorized: 63.6 million, 318.625 million and 934.2 million, respectively. |
See notes to financial statements.
| 50 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Austria Investable Market Index Fund |
iShares MSCI Belgium Index Fund |
iShares MSCI Emerging Markets Eastern Europe Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 313,430 | $ | 123,004 | $ | 346,393 | ||||||
| Interest — affiliated (Note 2) |
10 | 7 | 14 | |||||||||
| Securities lending income — affiliated (Note 2) |
34,987 | 6,050 | 229 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
348,427 | 129,061 | 346,636 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
187,981 | 64,637 | 91,403 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
187,981 | 64,637 | 91,403 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
160,446 | 64,424 | 255,233 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(6,992,519 | ) | (1,273,216 | ) | (511,998 | ) | ||||||
| In-kind redemptions — unaffiliated |
(27,012,745 | ) | (1,517,461 | ) | (1,078,397 | ) | ||||||
| Foreign currency transactions |
(10,875 | ) | (102,797 | ) | (13,932 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(34,016,139 | ) | (2,893,474 | ) | (1,604,327 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
15,990,212 | 1,853,360 | 1,327,335 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(57,646 | ) | 54,673 | 3,686 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
15,932,566 | 1,908,033 | 1,331,021 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(18,083,573 | ) | (985,441 | ) | (273,306 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (17,923,127 | ) | $ | (921,017 | ) | $ | (18,073 | ) | |||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $9,732, $21,707 and $61,445, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI |
iShares MSCI France Index Fund |
iShares MSCI Germany Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 6,341,841 | $ | 2,339,641 | $ | 8,678,275 | ||||||
| Interest — affiliated (Note 2) |
93 | 33 | 100 | |||||||||
| Securities lending income — affiliated (Note 2) |
140,003 | 69,683 | 225,831 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
6,481,937 | 2,409,357 | 8,904,206 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,820,795 | 744,168 | 6,738,092 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,820,795 | 744,168 | 6,738,092 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
4,661,142 | 1,665,189 | 2,166,114 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(21,775,443 | ) | (5,885,735 | ) | (16,310,233 | ) | ||||||
| In-kind redemptions — unaffiliated |
(834,490 | ) | (21,138,584 | ) | (13,512,446 | ) | ||||||
| Foreign currency transactions |
(155,012 | ) | (51,250 | ) | (564,288 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(22,764,945 | ) | (27,075,569 | ) | (30,386,967 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
29,285,068 | 11,317,660 | 252,805,652 | |||||||||
| Translation of assets and liabilities in foreign currencies |
37,997 | (383 | ) | (270,818 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
29,323,065 | 11,317,277 | 252,534,834 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
6,558,120 | (15,758,292 | ) | 222,147,867 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 11,219,262 | $ | (14,093,103 | ) | $ | 224,313,981 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $918,551, $409,717 and $1,531,461, respectively. |
See notes to financial statements.
| 52 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Index Fund |
iShares MSCI Netherlands Investable Market Index Fund |
iShares MSCI Spain Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 1,531,690 | $ | 324,639 | $ | 3,976,884 | ||||||
| Interest — affiliated (Note 2) |
17 | 9 | 68 | |||||||||
| Securities lending income — affiliated (Note 2) |
28,508 | 2,555 | 102,219 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
1,560,215 | 327,203 | 4,079,171 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
299,474 | 214,038 | 335,850 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
299,474 | 214,038 | 335,850 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
1,260,741 | 113,165 | 3,743,321 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(14,173,043 | ) | (1,189,257 | ) | (14,729,774 | ) | ||||||
| In-kind redemptions — unaffiliated |
(136,239 | ) | (14,914,225 | ) | (24,086,807 | ) | ||||||
| Foreign currency transactions |
74,654 | (24,908 | ) | (40,997 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(14,234,628 | ) | (16,128,390 | ) | (38,857,578 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
13,414,457 | 13,892,419 | 19,807,742 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(423 | ) | (2,164 | ) | (990 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
13,414,034 | 13,890,255 | 19,806,752 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized loss |
(820,594 | ) | (2,238,135 | ) | (19,050,826 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 440,147 | $ | (2,124,970 | ) | $ | (15,307,505 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $265,593, $56,492 and $430,256, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Sweden Index Fund |
iShares MSCI Switzerland Index Fund |
iShares MSCI United Kingdom Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 178,506 | $ | 2,968,006 | $ | 24,380,537 | ||||||
| Interest — affiliated (Note 2) |
12 | 32 | 228 | |||||||||
| Securities lending income — affiliated (Note 2) |
-- | 475 | 5,988 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
178,518 | 2,968,513 | 24,386,753 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
763,957 | 1,283,293 | 3,313,878 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
763,957 | 1,283,293 | 3,313,878 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
(585,439 | ) | 1,685,220 | 21,072,875 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(2,628,386 | ) | (691,011 | ) | (12,539,241 | ) | ||||||
| In-kind redemptions — unaffiliated |
(10,324,025 | ) | 3,816,436 | -- | ||||||||
| Foreign currency transactions |
(13,942 | ) | (47,673 | ) | (627,520 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(12,966,353 | ) | 3,077,752 | (13,166,761 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
42,178,212 | (7,392,965 | ) | 104,683,621 | ||||||||
| Translation of assets and liabilities in foreign currencies |
7,639 | (356,273 | ) | 122,452 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
42,185,851 | (7,749,238 | ) | 104,806,073 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
29,219,498 | (4,671,486 | ) | 91,639,312 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 28,634,059 | $ | (2,986,266 | ) | $ | 112,712,187 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $31,501, $612,339 and $336,320, respectively. |
See notes to financial statements.
| 54 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Austria Investable Market Index Fund |
iShares MSCI Belgium Investable Market Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 |
Year ended August 31, 2011 |
Six months ended |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 160,446 | $ | 3,240,793 | $ | 64,424 | $ | 1,389,784 | ||||||||
| Net realized gain (loss) |
(34,016,139 | ) | 3,890,979 | (2,893,474 | ) | (4,660,818 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
15,932,566 | 5,563,324 | 1,908,033 | 8,534,470 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(17,923,127 | ) | 12,695,096 | (921,017 | ) | 5,263,436 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(801,120 | ) | (3,303,650 | ) | (711,977 | ) | (1,401,041 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(801,120 | ) | (3,303,650 | ) | (711,977 | ) | (1,401,041 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
19,788,322 | 153,911,553 | 1,356,110 | 70,362,308 | ||||||||||||
| Cost of shares redeemed |
(59,772,895 | ) | (136,848,453 | ) | (4,765,738 | ) | (101,865,045 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(39,984,573 | ) | 17,063,100 | (3,409,628 | ) | (31,502,737 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(58,708,820 | ) | 26,454,546 | (5,042,622 | ) | (27,640,342 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
136,974,207 | 110,519,661 | 31,255,835 | 58,896,177 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 78,265,387 | $ | 136,974,207 | $ | 26,213,213 | $ | 31,255,835 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (529,528 | ) | $ | 111,146 | $ | 62,191 | $ | 709,744 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,200,000 | 7,100,000 | 120,000 | 4,920,000 | ||||||||||||
| Shares redeemed |
(3,800,000 | ) | (6,200,000 | ) | (400,000 | ) | (7,440,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(2,600,000 | ) | 900,000 | (280,000 | ) | (2,520,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Eastern Europe Index Fund |
iShares MSCI EMU Index Fund |
|||||||||||||||
| Six months ended February 29,
2012 |
Year ended August 31, 2011 |
Six months ended February 29, 2012 |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 255,233 | $ | 671,515 | $ | 4,661,142 | $ | 29,284,564 | ||||||||
| Net realized gain (loss) |
(1,604,327 | ) | 4,507,041 | (22,764,945 | ) | (9,900,693 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
1,331,021 | (5,857,166 | ) | 29,323,065 | 6,777,116 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(18,073 | ) | (678,610 | ) | 11,219,262 | 26,160,987 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(410,153 | ) | (575,285 | ) | (7,237,084 | ) | (27,791,723 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(410,153 | ) | (575,285 | ) | (7,237,084 | ) | (27,791,723 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
2,566,106 | 76,250,166 | 112,063,056 | 558,259,495 | ||||||||||||
| Cost of shares redeemed |
(3,755,616 | ) | (55,616,346 | ) | (129,432,961 | ) | (642,368,122 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(1,189,510 | ) | 20,633,820 | (17,369,905 | ) | (84,108,627 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(1,617,736 | ) | 19,379,925 | (13,387,727 | ) | (85,739,363 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
32,211,525 | 12,831,600 | 738,232,674 | 823,972,037 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 30,593,789 | $ | 32,211,525 | $ | 724,844,947 | $ | 738,232,674 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (25,133 | ) | $ | 129,787 | $ | (219,976 | ) | $ | 2,355,966 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
100,000 | 2,250,000 | 3,900,000 | 14,400,000 | ||||||||||||
| Shares redeemed |
(150,000 | ) | (1,650,000 | ) | (4,400,000 | ) | (17,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(50,000 | ) | 600,000 | (500,000 | ) | (3,400,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 56 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI France Index Fund |
iShares MSCI Germany Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,665,189 | $ | 11,923,061 | $ | 2,166,114 | $ | 91,494,830 | ||||||||
| Net realized gain (loss) |
(27,075,569 | ) | (2,882,430 | ) | (30,386,967 | ) | 106,517,591 | |||||||||
| Net change in unrealized appreciation/depreciation |
11,317,277 | (10,589,579 | ) | 252,534,834 | (323,290,675 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(14,093,103 | ) | (1,548,948 | ) | 224,313,981 | (125,278,254 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(2,259,878 | ) | (11,811,674 | ) | — | (93,072,582 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(2,259,878 | ) | (11,811,674 | ) | — | (93,072,582 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
13,278,342 | 327,507,874 | 785,474,190 | 2,649,782,675 | ||||||||||||
| Cost of shares redeemed |
(83,539,935 | ) | (196,716,202 | ) | (634,873,882 | ) | (1,151,141,454 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(70,261,593 | ) | 130,791,672 | 150,600,308 | 1,498,641,221 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(86,614,574 | ) | 117,431,050 | 374,914,289 | 1,280,290,385 | |||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
357,137,484 | 239,706,434 | 2,768,171,387 | 1,487,881,002 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 270,522,910 | $ | 357,137,484 | $ | 3,143,085,676 | $ | 2,768,171,387 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (114,202 | ) | $ | 480,487 | $ | 2,166,114 | $ | — | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
600,000 | 12,400,000 | 37,200,000 | 102,900,000 | ||||||||||||
| Shares redeemed |
(4,200,000 | ) | (8,000,000 | ) | (32,400,000 | ) | (47,700,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(3,600,000 | ) | 4,400,000 | 4,800,000 | 55,200,000 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Italy Index Fund |
iShares MSCI Netherlands Investable Market Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,260,741 | $ | 3,714,465 | $ | 113,165 | $ | 3,819,725 | ||||||||
| Net realized gain (loss) |
(14,234,628 | ) | (7,907,880 | ) | (16,128,390 | ) | 8,037,705 | |||||||||
| Net change in unrealized appreciation/depreciation |
13,414,034 | (7,314,629 | ) | 13,890,255 | (605,357 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
440,147 | (11,508,044 | ) | (2,124,970 | ) | 11,252,073 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,368,973 | ) | (3,814,673 | ) | (612,457 | ) | (3,654,048 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,368,973 | ) | (3,814,673 | ) | (612,457 | ) | (3,654,048 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
67,200,242 | 233,854,014 | 18,401,363 | 63,107,207 | ||||||||||||
| Cost of shares redeemed |
(63,887,397 | ) | (150,419,367 | ) | (69,685,290 | ) | (96,575,333 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
3,312,845 | 83,434,647 | (51,283,927 | ) | (33,468,126 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
2,384,019 | 68,111,930 | (54,021,354 | ) | (25,870,101 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
144,611,982 | 76,500,052 | 121,740,406 | 147,610,507 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 146,996,001 | $ | 144,611,982 | $ | 67,719,052 | $ | 121,740,406 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (93,895 | ) | $ | 14,337 | $ | 57,962 | $ | 557,254 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
5,250,000 | 14,400,000 | 1,050,000 | 2,850,000 | ||||||||||||
| Shares redeemed |
(4,950,000 | ) | (8,850,000 | ) | (4,050,000 | ) | (4,500,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
300,000 | 5,550,000 | (3,000,000 | ) | (1,650,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 58 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Spain Index Fund |
iShares MSCI Sweden Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 3,743,321 | $ | 11,073,134 | $ | (585,439 | ) | $ | 18,747,767 | |||||||
| Net realized gain (loss) |
(38,857,578 | ) | (583,970 | ) | (12,966,353 | ) | 3,646,225 | |||||||||
| Net change in unrealized appreciation/depreciation |
19,806,752 | (10,416,178 | ) | 42,185,851 | (18,154,073 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(15,307,505 | ) | 72,986 | 28,634,059 | 4,239,919 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(6,999,079 | ) | (8,211,532 | ) | — | (19,236,805 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(6,999,079 | ) | (8,211,532 | ) | — | (19,236,805 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
52,698,918 | 418,742,090 | 58,764,851 | 366,716,894 | ||||||||||||
| Cost of shares redeemed |
(98,138,367 | ) | (424,605,441 | ) | (55,816,193 | ) | (271,324,012 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(45,439,449 | ) | (5,863,351 | ) | 2,948,658 | 95,392,882 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(67,746,033 | ) | (14,001,897 | ) | 31,582,717 | 80,395,996 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
180,359,625 | 194,361,522 | 329,887,184 | 249,491,188 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 112,613,592 | $ | 180,359,625 | $ | 361,469,901 | $ | 329,887,184 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income (accumulated net investment loss) included in net assets at end of period |
$ | 896,266 | $ | 4,152,024 | $ | (585,439 | ) | $ | — | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,575,000 | 10,200,000 | 2,250,000 | 11,850,000 | ||||||||||||
| Shares redeemed |
(3,000,000 | ) | (10,425,000 | ) | (2,325,000 | ) | (9,750,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(1,425,000 | ) | (225,000 | ) | (75,000 | ) | 2,100,000 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
59 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Switzerland Index Fund |
iShares MSCI United Kingdom Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 1,685,220 | $ | 11,696,805 | $ | 21,072,875 | $ | 37,030,142 | ||||||||
| Net realized gain (loss) |
3,077,752 | 9,971,355 | (13,166,761 | ) | 19,495,286 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(7,749,238 | ) | 39,334,532 | 104,806,073 | 45,745,307 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(2,986,266 | ) | 61,002,692 | 112,712,187 | 102,270,735 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(379,513 | ) | (11,911,242 | ) | (18,599,820 | ) | (33,922,128 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(379,513 | ) | (11,911,242 | ) | (18,599,820 | ) | (33,922,128 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
60,925,238 | 136,480,631 | 232,635,478 | 406,184,764 | ||||||||||||
| Cost of shares redeemed |
(28,236,425 | ) | (67,167,856 | ) | — | (205,612,227 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets from capital share transactions |
32,688,813 | 69,312,775 | 232,635,478 | 200,572,537 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE IN NET ASSETS |
29,323,034 | 118,404,225 | 326,747,845 | 268,921,144 | ||||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
524,158,835 | 405,754,610 | 1,199,332,793 | 930,411,649 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 553,481,869 | $ | 524,158,835 | $ | 1,526,080,638 | $ | 1,199,332,793 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 1,532,667 | $ | 226,960 | $ | 10,879,886 | $ | 8,406,831 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,625,000 | 5,125,000 | 14,200,000 | 23,400,000 | ||||||||||||
| Shares redeemed |
(1,250,000 | ) | (2,625,000 | ) | -- | (12,400,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in shares outstanding |
1,375,000 | 2,500,000 | 14,200,000 | 11,000,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 60 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Austria Investable Market Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 18.76 | $ | 17.27 | $ | 20.21 | $ | 29.78 | $ | 37.28 | $ | 31.08 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.03 | 0.42 | 0.43 | 0.51 | 0.56 | 0.51 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(1.93 | ) | 1.53 | (2.62 | ) | (9.36 | ) | (6.98 | ) | 6.42 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(1.90 | ) | 1.95 | (2.19 | ) | (8.85 | ) | (6.42 | ) | 6.93 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.21 | ) | (0.46 | ) | (0.75 | ) | (0.72 | ) | (1.08 | ) | (0.73 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.21 | ) | (0.46 | ) | (0.75 | ) | (0.72 | ) | (1.08 | ) | (0.73 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 16.65 | $ | 18.76 | $ | 17.27 | $ | 20.21 | $ | 29.78 | $ | 37.28 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(9.91 | )%c | 10.92 | % | (11.07 | )% | (28.52 | )% | (17.64 | )% | 22.35 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 78,265 | $ | 136,974 | $ | 110,520 | $ | 159,666 | $ | 193,602 | $ | 473,514 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.54 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.45 | % | 1.95 | % | 2.20 | % | 3.25 | % | 1.57 | % | 1.36 | % | ||||||||||||
| Portfolio turnover ratee |
7 | % | 12 | % | 11 | % | 26 | % | 26 | % | 21 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Belgium Investable Market Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 12.60 | $ | 11.78 | $ | 12.06 | $ | 17.64 | $ | 25.89 | $ | 22.83 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.03 | 0.35 | 0.19 | 0.22 | 0.78 | 0.76 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.39 | ) | 0.80 | (0.27 | ) | (5.46 | ) | (7.27 | ) | 2.74 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.36 | ) | 1.15 | (0.08 | ) | (5.24 | ) | (6.49 | ) | 3.50 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.32 | ) | (0.33 | ) | (0.20 | ) | (0.34 | ) | (1.76 | ) | (0.44 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.32 | ) | (0.33 | ) | (0.20 | ) | (0.34 | ) | (1.76 | ) | (0.44 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 11.92 | $ | 12.60 | $ | 11.78 | $ | 12.06 | $ | 17.64 | $ | 25.89 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(2.48 | )%c | 9.59 | % | (0.60 | )% | (29.15 | )% | (26.21 | )% | 15.36 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 26,213 | $ | 31,256 | $ | 58,896 | $ | 53,042 | $ | 119,955 | $ | 303,483 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.54 | % | 0.56 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.52 | % | 2.56 | % | 1.55 | % | 2.23 | % | 3.32 | % | 2.90 | % | ||||||||||||
| Portfolio turnover ratee |
10 | % | 12 | % | 17 | % | 33 | % | 31 | % | 12 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 62 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES® INC.
(For a share outstanding throughout each period)
iShares MSCI Emerging Markets Eastern Europe Index Fund
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Period from Sep 30, 2009a to Aug. 31, 2010 |
||||||||||
| Net asset value, beginning of period |
$ | 29.28 | $ | 25.66 | $ | 24.65 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.25 | 0.67 | 0.26 | |||||||||
| Net realized and unrealized gainc |
0.04 | 3.45 | 0.89 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
0.29 | 4.12 | 1.15 | |||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.43 | ) | (0.50 | ) | (0.13 | ) | ||||||
| Net realized gain |
— | — | (0.01 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.43 | ) | (0.50 | ) | (0.14 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 29.14 | $ | 29.28 | $ | 25.66 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
1.33 | %d | 15.86 | % | 4.68 | %d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 30,594 | $ | 32,212 | $ | 12,832 | ||||||
| Ratio of expenses to average net assetse |
0.69 | % | 0.68 | % | 0.69 | % | ||||||
| Ratio of expenses to average net assets prior to waived fees |
n/a | 0.68 | % | n/a | ||||||||
| Ratio of net investment income to average net assetse |
1.93 | % | 2.06 | % | 1.05 | % | ||||||
| Portfolio turnover ratef |
5 | % | 24 | % | 13 | % | ||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
63 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI EMU Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
Year ended Aug. 31, 2007a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 31.55 | $ | 30.75 | $ | 35.64 | $ | 45.97 | $ | 57.15 | $ | 46.14 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.19 | 1.23 | 0.80 | 0.93 | 1.71 | 1.40 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
0.22 | 0.71 | (4.76 | ) | (9.97 | ) | (9.59 | ) | 10.54 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.41 | 1.94 | (3.96 | ) | (9.04 | ) | (7.88 | ) | 11.94 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.31 | ) | (1.14 | ) | (0.93 | ) | (1.29 | ) | (3.30 | ) | (0.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.31 | ) | (1.14 | ) | (0.93 | ) | (1.29 | ) | (3.30 | ) | (0.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 31.65 | $ | 31.55 | $ | 30.75 | $ | 35.64 | $ | 45.97 | $ | 57.15 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
1.43 | %d | 5.78 | % | (11.19 | )% | (19.05 | )% | (14.52 | )% | 26.10 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 724,845 | $ | 738,233 | $ | 823,972 | $ | 741,270 | $ | 1,291,808 | $ | 2,971,565 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.52 | % | 0.52 | % | 0.54 | % | 0.56 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
1.34 | % | 3.38 | % | 2.29 | % | 3.07 | % | 3.06 | % | 2.60 | % | ||||||||||||
| Portfolio turnover rateg |
2 | % | 8 | % | 5 | % | 8 | % | 27 | % | 5 | % | ||||||||||||
| a | Per share amounts were adjusted to reflect a two-for-one stock split effective July 24, 2008. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| f | Annualized for periods of less than one year. |
| g | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 64 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI France Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 22.60 | $ | 21.03 | $ | 24.28 | $ | 30.70 | $ | 36.53 | $ | 31.16 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.12 | 0.86 | 0.65 | 0.66 | 0.93 | 0.77 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.37 | ) | 1.38 | (3.30 | ) | (6.13 | ) | (5.17 | ) | 5.06 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.25 | ) | 2.24 | (2.65 | ) | (5.47 | ) | (4.24 | ) | 5.83 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.18 | ) | (0.67 | ) | (0.60 | ) | (0.95 | ) | (1.59 | ) | (0.46 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.18 | ) | (0.67 | ) | (0.60 | ) | (0.95 | ) | (1.59 | ) | (0.46 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 22.17 | $ | 22.60 | $ | 21.03 | $ | 24.28 | $ | 30.70 | $ | 36.53 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.00 | )%c | 10.24 | % | (10.98 | )% | (17.11 | )% | (11.96 | )% | 18.83 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 270,523 | $ | 357,137 | $ | 239,706 | $ | 184,511 | $ | 227,203 | $ | 445,696 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
1.17 | % | 3.38 | % | 2.71 | % | 3.18 | % | 2.60 | % | 2.17 | % | ||||||||||||
| Portfolio turnover ratef |
1 | % | 6 | % | 6 | % | 6 | % | 10 | % | 6 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
65 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Germany Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 21.02 | $ | 19.45 | $ | 20.86 | $ | 27.55 | $ | 32.18 | $ | 23.68 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.02 | 0.86 | 0.38 | 0.58 | 0.88 | 0.68 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.99 | 1.38 | (1.49 | ) | (6.65 | ) | (3.84 | ) | 8.33 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.01 | 2.24 | (1.11 | ) | (6.07 | ) | (2.96 | ) | 9.01 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (0.67 | ) | (0.30 | ) | (0.62 | ) | (1.67 | ) | (0.51 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (0.67 | ) | (0.30 | ) | (0.62 | ) | (1.67 | ) | (0.51 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 23.03 | $ | 21.02 | $ | 19.45 | $ | 20.86 | $ | 27.55 | $ | 32.18 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
9.56 | %c | 10.84 | % | (5.35 | )% | (21.62 | )% | (9.81 | )% | 38.47 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,143,086 | $ | 2,768,171 | $ | 1,487,881 | $ | 619,638 | $ | 669,452 | $ | 1,641,245 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.51 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.17 | % | 3.45 | % | 1.80 | % | 3.18 | % | 2.72 | % | 2.32 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 13 | % | 5 | % | 15 | % | 11 | % | 4 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 66 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Italy Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.58 | $ | 15.00 | $ | 19.05 | $ | 25.04 | $ | 33.82 | $ | 30.48 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.14 | 0.54 | 0.39 | 0.47 | 1.53 | 1.35 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.14 | ) | (1.47 | ) | (3.99 | ) | (5.82 | ) | (7.71 | ) | 2.66 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.00 | c | (0.93 | ) | (3.60 | ) | (5.35 | ) | (6.18 | ) | 4.01 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.16 | ) | (0.49 | ) | (0.44 | ) | (0.64 | ) | (2.60 | ) | (0.67 | ) | ||||||||||||
| Return of capital |
— | — | (0.01 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.16 | ) | (0.49 | ) | (0.45 | ) | (0.64 | ) | (2.60 | ) | (0.67 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 13.42 | $ | 13.58 | $ | 15.00 | $ | 19.05 | $ | 25.04 | $ | 33.82 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
0.09 | %d | (6.80 | )% | (19.11 | )% | (20.78 | )% | (19.43 | )% | 13.20 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 146,996 | $ | 144,612 | $ | 76,500 | $ | 125,716 | $ | 244,154 | $ | 172,495 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.52 | % | 0.51 | % | 0.54 | % | 0.55 | % | 0.52 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsf |
2.21 | % | 3.15 | % | 2.17 | % | 2.85 | % | 5.06 | % | 4.02 | % | ||||||||||||
| Portfolio turnover rateg |
5 | % | 16 | % | 12 | % | 18 | % | 29 | % | 16 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Rounds to less than $0.01. |
| d | Not annualized. |
| e | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| f | Annualized for periods of less than one year. |
| g | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
67 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Netherlands Investable Market Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 18.45 | $ | 17.89 | $ | 18.52 | $ | 24.38 | $ | 29.75 | $ | 24.17 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.02 | 0.48 | 0.45 | 0.35 | 1.10 | 0.98 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.47 | 0.55 | (0.70 | ) | (5.55 | ) | (4.68 | ) | 5.05 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.49 | 1.03 | (0.25 | ) | (5.20 | ) | (3.58 | ) | 6.03 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.13 | ) | (0.47 | ) | (0.38 | ) | (0.66 | ) | (1.79 | ) | (0.45 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.13 | ) | (0.47 | ) | (0.38 | ) | (0.66 | ) | (1.79 | ) | (0.45 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 18.81 | $ | 18.45 | $ | 17.89 | $ | 18.52 | $ | 24.38 | $ | 29.75 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.77 | %c | 5.44 | % | (1.44 | )% | (20.59 | )% | (12.67 | )% | 25.22 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 67,719 | $ | 121,740 | $ | 147,611 | $ | 83,351 | $ | 209,653 | $ | 251,354 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.28 | % | 2.26 | % | 2.31 | % | 2.24 | % | 3.86 | % | 3.50 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 6 | % | 9 | % | 15 | % | 26 | % | 8 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 68 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Spain Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 35.89 | $ | 37.02 | $ | 47.65 | $ | 50.41 | $ | 58.06 | $ | 44.81 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.94 | 2.14 | 1.64 | 1.75 | 1.98 | 1.30 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(3.43 | ) | (1.36 | ) | (10.01 | ) | (2.14 | ) | (7.33 | ) | 12.33 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(2.49 | ) | 0.78 | (8.37 | ) | (0.39 | ) | (5.35 | ) | 13.63 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(2.12 | ) | (1.91 | ) | (2.26 | ) | (2.37 | ) | (2.30 | ) | (0.38 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(2.12 | ) | (1.91 | ) | (2.26 | ) | (2.37 | ) | (2.30 | ) | (0.38 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 31.28 | $ | 35.89 | $ | 37.02 | $ | 47.65 | $ | 50.41 | $ | 58.06 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(6.71 | )%c | 1.78 | % | (17.91 | )% | 0.64 | % | (9.76 | )% | 30.47 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 112,614 | $ | 180,360 | $ | 194,362 | $ | 278,734 | $ | 321,349 | $ | 522,556 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.54 | % | 0.56 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
5.84 | % | 5.31 | % | 3.72 | % | 4.70 | % | 3.28 | % | 2.36 | % | ||||||||||||
| Portfolio turnover ratee |
7 | % | 14 | % | 9 | % | 19 | % | 22 | % | 12 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
69 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Sweden Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 26.82 | $ | 24.46 | $ | 22.86 | $ | 24.48 | $ | 34.57 | $ | 25.88 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.05 | ) | 1.18 | 0.48 | 0.40 | 0.91 | 1.15 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
2.80 | 2.22 | 1.73 | (1.56 | ) | (8.63 | ) | 7.88 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.75 | 3.40 | 2.21 | (1.16 | ) | (7.72 | ) | 9.03 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
— | (1.04 | ) | (0.61 | ) | (0.46 | ) | (2.37 | ) | (0.34 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
— | (1.04 | ) | (0.61 | ) | (0.46 | ) | (2.37 | ) | (0.34 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 29.57 | $ | 26.82 | $ | 24.46 | $ | 22.86 | $ | 24.48 | $ | 34.57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
10.25 | %c | 13.40 | % | 9.70 | % | (4.04 | )% | (23.16 | )% | 35.01 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 361,470 | $ | 329,887 | $ | 249,491 | $ | 190,333 | $ | 227,654 | $ | 573,026 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.51 | % | 0.53 | % | 0.55 | % | 0.51 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.40 | )% | 3.80 | % | 1.97 | % | 2.34 | % | 2.91 | % | 3.42 | % | ||||||||||||
| Portfolio turnover ratee |
2 | % | 9 | % | 10 | % | 9 | % | 17 | % | 7 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 70 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Switzerland Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 24.67 | $ | 21.64 | $ | 20.71 | $ | 23.09 | $ | 25.78 | $ | 22.49 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.08 | 0.59 | 0.39 | 0.25 | 0.49 | 0.36 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
(0.27 | ) | 2.97 | 0.90 | (2.30 | ) | (2.51 | ) | 3.12 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.19 | ) | 3.56 | 1.29 | (2.05 | ) | (2.02 | ) | 3.48 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.02 | ) | (0.53 | ) | (0.36 | ) | (0.33 | ) | (0.67 | ) | (0.19 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.02 | ) | (0.53 | ) | (0.36 | ) | (0.33 | ) | (0.67 | ) | (0.19 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 24.46 | $ | 24.67 | $ | 21.64 | $ | 20.71 | $ | 23.09 | $ | 25.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(0.77 | )%c | 16.30 | % | 6.35 | % | (8.63 | )% | (7.97 | )% | 15.53 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 553,482 | $ | 524,159 | $ | 405,755 | $ | 271,855 | $ | 366,525 | $ | 318,998 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.56 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
0.69 | % | 2.35 | % | 1.80 | % | 1.42 | % | 1.93 | % | 1.42 | % | ||||||||||||
| Portfolio turnover ratee |
0 | %f | 7 | % | 7 | % | 16 | % | 11 | % | 5 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
| f | Rounds to less than 1%. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
71 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI United Kingdom Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 16.43 | $ | 15.01 | $ | 15.02 | $ | 19.35 | $ | 24.73 | $ | 21.92 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.27 | 0.54 | 0.46 | 0.50 | 0.83 | 0.84 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.03 | 1.35 | (0.03 | ) | (4.26 | ) | (4.89 | ) | 2.78 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.30 | 1.89 | 0.43 | (3.76 | ) | (4.06 | ) | 3.62 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.23 | ) | (0.47 | ) | (0.44 | ) | (0.57 | ) | (1.32 | ) | (0.81 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.23 | ) | (0.47 | ) | (0.44 | ) | (0.57 | ) | (1.32 | ) | (0.81 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 17.50 | $ | 16.43 | $ | 15.01 | $ | 15.02 | $ | 19.35 | $ | 24.73 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
8.07 | %c | 12.50 | % | 2.87 | % | (18.68 | )% | (17.16 | )% | 16.77 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,526,081 | $ | 1,199,333 | $ | 930,412 | $ | 739,124 | $ | 882,502 | $ | 1,127,738 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
3.33 | % | 3.07 | % | 2.98 | % | 3.90 | % | 3.64 | % | 3.51 | % | ||||||||||||
| Portfolio turnover ratee |
3 | % | 4 | % | 7 | % | 11 | % | 14 | % | 8 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 72 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (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.
These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
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. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Each Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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 Funds; 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; less 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.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| NOTES TO FINANCIAL STATEMENTS |
73 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of each Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
Fair value pricing could result in a difference between the prices used to calculate a 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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument.
| 74 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 29, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Schedule of Investments.
| iShares MSCI Index Fund and Investment Type |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Austria Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 77,441,649 | $ | — | $ | 254 | $ | 77,441,903 | ||||||||
| Short-Term Investments |
3,908,415 | — | — | 3,908,415 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 81,350,064 | $ | — | $ | 254 | $ | 81,350,318 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Belgium Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 26,160,024 | $ | — | $ | — | $ | 26,160,024 | ||||||||
| Short-Term Investments |
489,898 | — | — | 489,898 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 26,649,922 | $ | — | $ | — | $ | 26,649,922 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Eastern Europe |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 29,636,903 | $ | — | $ | — | $ | 29,636,903 | ||||||||
| Preferred Stocks |
928,831 | — | — | 928,831 | ||||||||||||
| Short-Term Investments |
5,470 | — | — | 5,470 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 30,571,204 | $ | — | $ | — | $ | 30,571,204 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EMU |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 710,482,076 | $ | — | $ | 83 | $ | 710,482,159 | ||||||||
| Preferred Stocks |
13,575,612 | — | — | 13,575,612 | ||||||||||||
| Short-Term Investments |
6,199,842 | — | — | 6,199,842 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 730,257,530 | $ | — | $ | 83 | $ | 730,257,613 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| France |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 270,308,090 | $ | — | $ | — | $ | 270,308,090 | ||||||||
| Short-Term Investments |
1,760,849 | — | — | 1,760,849 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 272,068,939 | $ | — | $ | — | $ | 272,068,939 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Germany |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,939,235,096 | $ | — | $ | — | $ | 2,939,235,096 | ||||||||
| Preferred Stocks |
195,425,994 | — | — | 195,425,994 | ||||||||||||
| Short-Term Investments |
19,727,907 | — | — | 19,727,907 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,154,388,997 | $ | — | $ | — | $ | 3,154,388,997 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
75 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Italy |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 146,796,209 | $ | — | $ | — | $ | 146,796,209 | ||||||||
| Short-Term Investments |
863,260 | — | — | 863,260 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 147,659,469 | $ | — | $ | — | $ | 147,659,469 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Netherlands Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 67,578,012 | $ | — | $ | — | $ | 67,578,012 | ||||||||
| Warrants |
— | — | 0 | a | 0 | a | ||||||||||
| Short-Term Investments |
143,365 | — | — | 143,365 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 67,721,377 | $ | — | $ | 0 | a | $ | 67,721,377 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Spain |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 112,436,726 | $ | — | $ | — | $ | 112,436,726 | ||||||||
| Short-Term Investments |
7,075,012 | — | — | 7,075,012 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 119,511,738 | $ | — | $ | — | $ | 119,511,738 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sweden |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 361,320,269 | $ | — | $ | — | $ | 361,320,269 | ||||||||
| Short-Term Investments |
5,952 | — | — | 5,952 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 361,326,221 | $ | — | $ | — | $ | 361,326,221 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Switzerland |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 547,525,705 | $ | — | $ | — | $ | 547,525,705 | ||||||||
| Short-Term Investments |
166,618 | — | — | 166,618 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 547,692,323 | $ | — | $ | — | $ | 547,692,323 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| United Kingdom |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,516,397,458 | $ | — | $ | — | $ | 1,516,397,458 | ||||||||
| Short-Term Investments |
3,772,533 | — | — | 3,772,533 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,520,169,991 | $ | — | $ | — | $ | 1,520,169,991 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
| 76 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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. 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.
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.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Funds’ Statements of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds 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 ordinary income and any net capital 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 is required.
| NOTES TO FINANCIAL STATEMENTS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
For its investment advisory services to each Fund except for the iShares MSCI Emerging Markets Eastern Europe Index Fund, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.59% | First $7 billion | |
| 0.54 | Over $7 billion, up to and including $11 billion | |
| 0.49 | Over $11 billion, up to and including $24 billion | |
| 0.44 | Over $24 billion, up to and including $48 billion | |
| 0.40 | Over $48 billion |
For its investment advisory services to the iShares MSCI Emerging Markets Eastern Europe Index Fund, BFA is entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.75% | First $14 billion | |
| 0.68 | Over $14 billion, up to and including $28 billion | |
| 0.61 | Over $28 billion, up to and including $42 billion | |
| 0.56 | Over $42 billion, up to and including $56 billion | |
| 0.50 | Over $56 billion, up to and including $70 billion | |
| 0.45 | Over $70 billion, up to and including $84 billion | |
| 0.40 | Over $84 billion |
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Funds, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from
| 78 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by each Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the six months ended February 29, 2012, BTC earned securities lending agent fees from the Funds as follows:
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for each Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest — affiliated” in the Statements of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but Barclays is not.
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO FINANCIAL STATEMENTS |
79 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| Austria Investable Market |
$ | 5,005,062 | $ | 5,759,596 | ||||
| Belgium Investable Market |
2,505,073 | 2,533,921 | ||||||
| Emerging Markets Eastern Europe |
1,310,797 | 1,301,297 | ||||||
| EMU |
12,926,239 | 14,571,704 | ||||||
| France |
3,948,308 | 4,748,716 | ||||||
| Germany |
29,689,995 | 24,008,696 | ||||||
| Italy |
6,597,568 | 6,266,937 | ||||||
| Netherlands Investable Market |
2,197,176 | 2,512,850 | ||||||
| Spain |
10,025,608 | 13,244,616 | ||||||
| Sweden |
5,749,651 | 6,346,628 | ||||||
| Switzerland |
2,436,345 | 3,695,723 | ||||||
| United Kingdom |
37,590,978 | 34,805,293 | ||||||
In-kind transactions (see Note 4) for the six months ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| Austria Investable Market |
$ | 19,544,356 | $ | 59,178,583 | ||||
| Belgium Investable Market |
1,352,650 | 4,686,027 | ||||||
| Emerging Markets Eastern Europe |
2,557,021 | 3,728,685 | ||||||
| EMU |
111,073,021 | 128,556,436 | ||||||
| France |
13,275,975 | 83,418,623 | ||||||
| Germany |
782,418,505 | 632,096,828 | ||||||
| Italy |
66,668,247 | 63,774,371 | ||||||
| Netherlands Investable Market |
18,389,532 | 69,588,572 | ||||||
| Spain |
52,409,572 | 97,817,377 | ||||||
| Sweden |
58,709,073 | 55,792,428 | ||||||
| Switzerland |
60,472,597 | 28,010,520 | ||||||
| United Kingdom |
231,222,575 | — | ||||||
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.
| 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 by each Fund is required to have a value of at least 102% of the current value of the loaned securities 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. 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 a fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. Each 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. 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 gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
| NOTES TO FINANCIAL STATEMENTS |
81 |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The Funds had tax basis net capital loss carryforwards as of August 31, 2011, the tax year-end of the Funds, as follows:
| iShares MSCI Index Fund | Expiring 2012 |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||||||||
| Austria Investable Market |
$ | 855,364 | $ | — | $ | — | $ | 9,795,917 | $ | 2,587,916 | $ | 7,102,366 | $ | 16,657,011 | $ | 13,826,937 | $ | 50,825,511 | ||||||||||||||||||
| Belgium Investable Market |
175,781 | 33,969 | — | — | 1,698,444 | 5,953,120 | 10,826,174 | 19,023,517 | 37,711,005 | |||||||||||||||||||||||||||
| Emerging Markets Eastern Europe |
— | — | — | — | — | — | — | 204,914 | 204,914 | |||||||||||||||||||||||||||
| EMU |
659,648 | 1,873,963 | — | — | — | 26,644,200 | 68,035,542 | 30,230,739 | 127,444,092 | |||||||||||||||||||||||||||
| France |
2,400,550 | — | — | 158,472 | 335,795 | 3,408,374 | 7,008,530 | 2,858,814 | 16,170,535 | |||||||||||||||||||||||||||
| Germany |
8,656,712 | 2,241,687 | — | 4,227,713 | 3,394,735 | 27,790,050 | 28,490,949 | 32,215,954 | 107,017,800 | |||||||||||||||||||||||||||
| Italy |
541,980 | 527,327 | — | — | 472,268 | 2,743,650 | 18,169,627 | 9,459,662 | 31,914,514 | |||||||||||||||||||||||||||
| Netherlands Investable Market |
2,481,175 | 129,137 | 403,525 | 260,715 | 1,195,162 | 5,819,153 | 22,256,170 | 2,329,005 | 34,874,042 | |||||||||||||||||||||||||||
| Spain |
995,671 | — | — | — | — | 5,946,927 | 15,120,672 | 8,619,903 | 30,683,173 | |||||||||||||||||||||||||||
| Sweden |
1,149,514 | — | 107,613 | — | 100,015 | 13,686,746 | 8,483,510 | 5,244,977 | 28,772,375 | |||||||||||||||||||||||||||
| Switzerland |
2,149,171 | 354,252 | — | — | — | 2,837,786 | 22,569,380 | 6,955,758 | 34,866,347 | |||||||||||||||||||||||||||
| United Kingdom |
4,272,059 | 1,517,783 | 7,063,063 | — | 261,754 | 16,140,312 | 23,559,917 | 22,514,433 | 75,329,321 | |||||||||||||||||||||||||||
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by funds for taxable years beginning after December 22, 2010 are not subject to expiration and must be utilized prior to the losses incurred in the tax years preceding enactment.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 29, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| Austria Investable Market |
$ | 138,577,141 | $ | 1,002,060 | $ | (58,228,883 | ) | $ | (57,226,823 | ) | ||||||
| Belgium Investable Market |
45,152,779 | 804,043 | (19,306,900 | ) | (18,502,857 | ) | ||||||||||
| Emerging Markets Eastern Europe |
35,657,738 | 236,392 | (5,322,926 | ) | (5,086,534 | ) | ||||||||||
| EMU |
1,123,134,208 | 16,164,280 | (409,040,875 | ) | (392,876,595 | ) | ||||||||||
| France |
405,821,783 | 2,012,175 | (135,765,019 | ) | (133,752,844 | ) | ||||||||||
| Germany |
3,584,792,114 | 96,971,211 | (527,374,328 | ) | (430,403,117 | ) | ||||||||||
| Italy |
213,248,519 | 1,089,239 | (66,678,289 | ) | (65,589,050 | ) | ||||||||||
| Netherlands Investable Market |
103,343,475 | 871,267 | (36,493,365 | ) | (35,622,098 | ) | ||||||||||
| Spain |
213,187,160 | 430,300 | (94,105,722 | ) | (93,675,422 | ) | ||||||||||
| Sweden |
391,434,852 | 12,114,560 | (42,223,191 | ) | (30,108,631 | ) | ||||||||||
| Switzerland |
549,781,260 | 46,649,296 | (48,738,233 | ) | (2,088,937 | ) | ||||||||||
| United Kingdom |
1,618,767,904 | 114,652,781 | (213,250,694 | ) | (98,597,913 | ) | ||||||||||
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| NOTES TO FINANCIAL STATEMENTS |
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Notes:
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Notes:
| NOTES |
85 |
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Notes:
| 86 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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iS-SAR-82-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI Australia Index Fund | EWA | NYSE Arca
iShares MSCI Hong Kong Index Fund | EWH | NYSE Arca
iShares MSCI Japan Small Cap Index Fund | SCJ | NYSE Arca
iShares MSCI Malaysia Index Fund | EWM | NYSE Arca
iShares MSCI Pacific ex-Japan Index Fund | EPP | NYSE Arca
iShares MSCI Singapore Index Fund | EWS | NYSE Arca
iShares MSCI South Korea Index Fund | EWY | NYSE Arca
iShares MSCI Taiwan Index Fund | EWT | NYSE Arca
iShares MSCI Thailand Investable Market Index Fund | THD | NYSE Arca
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iSHARES® MSCI AUSTRALIA INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (2.60)% | (4.76)% | (2.33)% | 4.28% | 3.85% | 4.26% | 14.24% | 13.99% | 14.00% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (2.60)% | (4.76)% | (2.33)% | 23.29% | 20.81% | 23.21% | 278.45% | 270.38% | 270.63% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Australia Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Australia IndexSM (the “Index”). The Index consists of stocks traded primarily on the Australian Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 2.75%, net of fees, while the total return for the Index was 2.86%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI HONG KONG INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 0.96% | 0.17% | 1.51% | 5.93% | 6.04% | 6.52% | 10.49% | 10.42% | 11.26% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 0.96% | 0.17% | 1.51% | 33.35% | 34.04% | 37.12% | 171.13% | 169.36% | 190.70% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Hong Kong Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Hong Kong IndexSM (the “Index”). The Index consists of stocks traded primarily on the Stock Exchange of Hong Kong Limited. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 5.41%, net of fees, while the total return for the Index was 5.64%.
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.35)% | (5.75)% | (3.91)% | 0.36% | 0.25% | 0.67% | 1.50% | 1.05% | 2.84% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (12/20/07). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (12/21/07), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Japan Small Cap Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Japan Small Cap IndexSM (the “Index”). The Index targets 40% of the eligible small-cap universe within each industry group in the MSCI Japan Index, which consists of stocks traded primarily on the Tokyo Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 0.12%, net of fees, while the total return for the Index was 0.24%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI MALAYSIA INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 9.49% | 8.68% | 10.17% | 11.44% | 11.71% | 11.96% | 13.73% | 13.63% | 14.54% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 9.49% | 8.68% | 10.17% | 71.89% | 73.93% | 75.89% | 261.90% | 258.99% | 288.64% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. As the Fund has a NAV which is determined prior to the opening of the regular trading day on the primary stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Malaysia Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Malaysia IndexSM (the “Index”). The Index consists of stocks traded primarily on the Kuala Lumpur Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 9.31%, net of fees, while the total return for the Index was 9.65%.
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.85)% | (2.34)% | (0.54)% | 4.84% | 4.63% | 4.93% | 13.23% | 13.07% | 13.22% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.85)% | (2.34)% | (0.54)% | 26.64% | 25.37% | 27.20% | 246.41% | 241.47% | 246.27% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Pacific ex-Japan Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Pacific ex-Japan IndexSM (the “Index”). The Index consists of stocks from Australia, Hong Kong, New Zealand and Singapore. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 3.25%, net of fees, while the total return for the Index was 3.39%.
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SINGAPORE INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 3.64% | 2.74% | 3.90% | 6.09% | 6.02% | 6.23% | 12.79% | 12.53% | 12.74% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 3.64% | 2.74% | 3.90% | 34.37% | 33.94% | 35.29% | 233.34% | 225.72% | 231.80% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Singapore Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Singapore IndexSM (the “Index”). The Index consists of stocks traded primarily on the Singapore Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 2.03%, net of fees, while the total return for the Index was 2.37%.
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH KOREA INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.61% | 4.28% | 6.06% | 5.11% | 5.39% | 5.55% | 12.05% | 11.81% | 13.19% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.61% | 4.28% | 6.06% | 28.30% | 30.05% | 31.02% | 211.98% | 205.38% | 245.11% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. As the Fund has a NAV which is determined prior to the opening of the regular trading day on the primary stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI South Korea Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Korea IndexSM (the “Index”). The Index consists of stocks traded primarily on the Stock Market Division of the Korean Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 6.69%, net of fees, while the total return for the Index was 6.83%.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI TAIWAN INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (1.86)% | (3.84)% | (1.61)% | 2.92% | 3.38% | 3.47% | 4.86% | 4.46% | 5.67% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (1.86)% | (3.84)% | (1.61)% | 15.46% | 18.06% | 18.59% | 60.77% | 54.74% | 73.52% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. As the Fund has a NAV which is determined prior to the opening of the regular trading day on the primary stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Taiwan Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Taiwan IndexSM (the “Index”). The Index consists of stocks traded primarily on the Taiwan Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 4.06%, net of fees, while the total return for the Index was 4.36%.
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 21.33% | 19.73% | 22.42% | 12.99% | 12.78% | 13.55% | 61.62% | 60.47% | 64.76% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (3/26/08). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/28/08), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Thailand Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Thailand Investable Market IndexSM (the “Index”). The Index is a free float-adjusted market capitalization index designed to measure broad based equity market performance in Thailand. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 10.59%, net of fees, while the total return for the Index was 10.86%.
| FUND PERFORMANCE OVERVIEWS |
13 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 to February 29, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| iShares MSCI Index Fund | Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses
Paid (9/1/11 to 2/29/12) |
||||||||||||
| Australia |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,027.50 | 0.52 | % | $ | 2.62 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Hong Kong |
||||||||||||||||
| Actual |
1,000.00 | 1,054.10 | 0.52 | 2.66 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Japan Small Cap |
||||||||||||||||
| Actual |
1,000.00 | 1,001.20 | 0.52 | 2.59 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Malaysia |
||||||||||||||||
| Actual |
1,000.00 | 1,093.10 | 0.52 | 2.71 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses
Paid (9/1/11 to 2/29/12) |
||||||||||||
| Pacific ex-Japan |
||||||||||||||||
| Actual |
$1,000.00 | $1,032.50 | 0.50 | % | $2.53 | |||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.50 | 2.51 | ||||||||||||
| Singapore |
||||||||||||||||
| Actual |
1,000.00 | 1,020.30 | 0.52 | 2.61 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| South Korea |
||||||||||||||||
| Actual |
1,000.00 | 1,066.90 | 0.60 | 3.08 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.90 | 0.60 | 3.02 | ||||||||||||
| Taiwan |
||||||||||||||||
| Actual |
1,000.00 | 1,040.60 | 0.61 | 3.09 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.61 | 3.07 | ||||||||||||
| Thailand Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,105.90 | 0.60 | 3.14 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.90 | 0.60 | 3.02 | ||||||||||||
| a | Expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| SHAREHOLDER EXPENSES |
15 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI AUSTRALIA INDEX FUND
February 29, 2012
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI AUSTRALIA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI HONG KONG INDEX FUND
February 29, 2012
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI HONG KONG INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI JAPAN SMALL CAP INDEX FUND
February 29, 2012
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI MALAYSIA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MALAYSIA INDEX FUND
February 29, 2012
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
February 29, 2012
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI PACIFIC EX-JAPAN INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SINGAPORE INDEX FUND
February 29, 2012
| 36 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SINGAPORE INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH KOREA INDEX FUND
February 29, 2012
| 38 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH KOREA INDEX FUND
February 29, 2012
| 40 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI TAIWAN INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
February 29, 2012
| 42 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TAIWAN INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
February 29, 2012
| 44 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
ISHARES® MSCI THAILAND INVESTABLE MARKET INDEX FUND
February 29, 2012
| 46 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Index Fund |
iShares MSCI Index Fund |
iShares MSCI Japan Small Cap Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 2,847,964,269 | $ | 1,907,288,110 | $ | 56,523,148 | ||||||
| Affiliated (Note 2) |
11,955,078 | 158,130,301 | 938,129 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 2,859,919,347 | $ | 2,065,418,411 | $ | 57,461,277 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 2,882,426,906 | $ | 1,982,396,481 | $ | 54,760,497 | ||||||
| Affiliated (Note 2) |
11,955,078 | 158,130,301 | 938,129 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
2,894,381,984 | 2,140,526,782 | 55,698,626 | |||||||||
| Foreign currencies, at valueb |
3,320,338 | 1,736,837 | 55,437 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
16,298,563 | — | — | |||||||||
| Dividends and interest |
31,483,514 | 442,546 | 116,022 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
2,945,484,399 | 2,142,706,165 | 55,870,085 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
15,202,002 | 348,674 | — | |||||||||
| Collateral for securities on loan (Note 5) |
11,811,527 | 157,296,851 | 935,802 | |||||||||
| Capital shares redeemed |
776,349 | — | — | |||||||||
| Investment advisory fees (Note 2) |
1,212,550 | 810,316 | 22,700 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
29,002,428 | 158,455,841 | 958,502 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,916,481,971 | $ | 1,984,250,324 | $ | 54,911,583 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 3,058,126,728 | $ | 2,258,787,183 | $ | 55,930,193 | ||||||
| Undistributed (distributions in excess of) net investment income |
7,570,760 | 7,108,321 | (383,606 | ) | ||||||||
| Undistributed net realized gain (accumulated net realized loss) |
(183,946,451 | ) | (356,753,330 | ) | 1,133,200 | |||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
34,730,934 | 75,108,150 | (1,768,204 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 2,916,481,971 | $ | 1,984,250,324 | $ | 54,911,583 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
121,000,000 | 108,225,000 | 1,200,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 24.10 | $ | 18.33 | $ | 45.76 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $11,021,781, $149,183,136 and $888,909, respectively. See Note 5. |
| b | Cost of foreign currencies: $3,290,991, $1,737,057 and $57,618, respectively. |
| c | $0.001 par value, number of shares authorized: 627.8 million, 250 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Malaysia Index Fund |
iShares MSCI Pacific ex-Japan Index Fund |
iShares MSCI Singapore Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 491,511,325 | $ | 2,914,493,090 | $ | 1,421,308,275 | ||||||
| Affiliated (Note 2) |
380,450 | 94,099,786 | 127,296,596 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 491,891,775 | $ | 3,008,592,876 | $ | 1,548,604,871 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 954,024,082 | $ | 3,490,574,719 | $ | 1,553,112,549 | ||||||
| Affiliated (Note 2) |
380,450 | 94,099,786 | 127,296,596 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
954,404,532 | 3,584,674,505 | 1,680,409,145 | |||||||||
| Foreign currencies, at valueb |
1,489,346 | 7,555,243 | 1,481,430 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
5,242,105 | 10,808,724 | — | |||||||||
| Dividends and interest |
1,362,004 | 22,834,771 | 1,324,908 | |||||||||
| Capital shares sold |
— | — | 128,198 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
962,497,987 | 3,625,873,243 | 1,683,343,681 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
6,373,553 | 11,164,984 | — | |||||||||
| Collateral for securities on loan (Note 5) |
— | 93,476,096 | 126,180,865 | |||||||||
| Investment advisory fees (Note 2) |
386,648 | 1,352,819 | 620,789 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
6,760,201 | 105,993,899 | 126,801,654 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 955,737,786 | $ | 3,519,879,344 | $ | 1,556,542,027 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 592,611,588 | $ | 3,371,650,524 | $ | 1,667,428,846 | ||||||
| Undistributed (distributions in excess of) net investment income |
(11,434,222 | ) | 269,346 | (14,725,970 | ) | |||||||
| Accumulated net realized loss |
(87,974,276 | ) | (428,354,176 | ) | (227,981,529 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
462,534,696 | 576,313,650 | 131,820,680 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 955,737,786 | $ | 3,519,879,344 | $ | 1,556,542,027 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
64,950,000 | 78,600,000 | 119,900,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 14.71 | $ | 44.78 | $ | 12.98 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ –, $88,462,845 and $119,099,674, respectively. See Note 5. |
| b | Cost of foreign currencies: $1,482,094, $7,505,652 and $1,464,812, respectively. |
| c | $0.001 par value, number of shares authorized: 300 million, 1 billion and 300 million, respectively. |
See notes to financial statements.
| 48 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI South Korea Index Fund |
iShares MSCI Taiwan Index Fund |
iShares MSCI Thailand Investable Market Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 1,545,014,827 | $ | 1,546,471,009 | $ | 543,138,910 | ||||||
| Affiliated (Note 2) |
190,747,052 | 336,461,303 | 514,089 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 1,735,761,879 | $ | 1,882,932,312 | $ | 543,652,999 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 3,453,011,876 | $ | 2,574,952,537 | $ | 645,337,464 | ||||||
| Affiliated (Note 2) |
190,747,052 | 336,461,303 | 514,089 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
3,643,758,928 | 2,911,413,840 | 645,851,553 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
6,369,312 | 3,276,711 | — | |||||||||
| Due from custodian (Note 4) |
— | — | 7,228,803 | |||||||||
| Dividends and interest |
28,969,726 | 727,545 | 1,838,721 | |||||||||
| Capital shares sold |
— | 24,245,975 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
3,679,097,966 | 2,939,664,071 | 654,919,077 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
2,502,327 | 26,062,297 | 7,228,803 | |||||||||
| Collateral for securities on loan (Note 5) |
189,971,231 | 332,375,190 | — | |||||||||
| Foreign taxes (Note 1) |
— | 24,671 | — | |||||||||
| Investment advisory fees (Note 2) |
1,614,777 | 1,159,705 | 273,604 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
194,088,335 | 359,621,863 | 7,502,407 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 3,485,009,631 | $ | 2,580,042,208 | $ | 647,416,670 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 2,696,584,672 | $ | 2,641,233,380 | $ | 545,161,656 | ||||||
| Undistributed (distributions in excess of) net investment income |
(16,601,754 | ) | (6,824,977 | ) | 1,610,653 | |||||||
| Accumulated net realized loss |
(1,103,886,911 | ) | (1,082,837,129 | ) | (1,570,271 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
1,908,913,624 | 1,028,470,934 | 102,214,632 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 3,485,009,631 | $ | 2,580,042,208 | $ | 647,416,670 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingb |
58,000,000 | 187,600,000 | 8,950,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 60.09 | $ | 13.75 | $ | 72.34 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $182,479,670, $312,978,799 and $ –, respectively. See Note 5. |
| b | $0.001 par value, number of shares authorized: 200 million, 900 million and 200 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
iShares MSCI Japan Small Cap Index Fund |
||||||||||
| NET INVESTMENT INCOME |
| |||||||||||
| Dividends — unaffiliateda |
$ | 76,212,429 | $ | 27,856,836 | $ | 641,412 | ||||||
| Interest — affiliated (Note 2) |
731 | 658 | 5 | |||||||||
| Securities lending income — affiliated (Note 2) |
21,990 | 538,043 | 12,267 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
76,235,150 | 28,395,537 | 653,684 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
7,278,173 | 4,695,489 | 159,493 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
7,278,173 | 4,695,489 | 159,493 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
68,956,977 | 23,700,048 | 494,191 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(48,947,665 | ) | (145,268,423 | ) | (119,537 | ) | ||||||
| In-kind redemptions — unaffiliated |
53,077,600 | 39,059,941 | 2,689,782 | |||||||||
| Foreign currency transactions |
(2,974,122 | ) | 40,512 | (7,990 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
1,155,813 | (106,167,970 | ) | 2,562,255 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(20,965,247 | ) | 230,817,502 | (4,308,329 | ) | |||||||
| Translation of assets and liabilities in foreign currencies |
(296,778 | ) | (4,053 | ) | (8,521 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(21,262,025 | ) | 230,813,449 | (4,316,850 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(20,106,212 | ) | 124,645,479 | (1,754,595 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 48,850,765 | $ | 148,345,527 | $ | (1,260,404 | ) | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $482,724, $ – and $47,726, respectively. |
See notes to financial statements.
| 50 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Index Fund |
iShares MSCI Pacific ex-Japan Index Fund |
iShares MSCI Index Fund |
||||||||||
| NET INVESTMENT INCOME |
| |||||||||||
| Dividends — unaffiliateda |
$ | 14,108,051 | $ | 73,061,402 | $ | 13,080,781 | ||||||
| Interest — affiliated (Note 2) |
293 | 910 | 347 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | 365,625 | 348,257 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
14,108,344 | 73,427,937 | 13,429,385 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
2,320,616 | 8,149,324 | 3,797,694 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
2,320,616 | 8,149,324 | 3,797,694 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
11,787,728 | 65,278,613 | 9,631,691 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
| |||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(9,192,255 | ) | (53,928,683 | ) | (15,114,190 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | 34,863,782 | 13,060,380 | |||||||||
| Foreign currency transactions |
(564,994 | ) | (2,376,966 | ) | (606,316 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(9,757,249 | ) | (21,441,867 | ) | (2,660,126 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
68,396,598 | 52,555,919 | (5,672,882 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
32,374 | (238,001 | ) | (110,635 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
68,428,972 | 52,317,918 | (5,783,517 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
58,671,723 | 30,876,051 | (8,443,643 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 70,459,451 | $ | 96,154,664 | $ | 1,188,048 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $902,176, $496,671 and $104,274, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
51 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Index Fund |
iShares MSCI Index Fund |
iShares MSCI Thailand Investable Market Index Fund |
||||||||||
| NET INVESTMENT INCOME |
| |||||||||||
| Dividends — unaffiliateda |
$ | 27,856,277 | $ | 2,110,274 | $ | 5,782,538 | ||||||
| Interest — unaffiliated |
368 | — | — | |||||||||
| Interest — affiliated (Note 2) |
1,981 | 1,469 | 169 | |||||||||
| Securities lending income — affiliated (Note 2) |
1,182,372 | 2,827,449 | b | — | ||||||||
|
|
|
|
|
|
|
|||||||
| 29,040,998 | 4,939,192 | 5,782,707 | ||||||||||
| Less: Other foreign taxes (Note 1) |
(49 | ) | (630,487 | ) | (21,792 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
29,040,949 | 4,308,705 | 5,760,915 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
10,190,887 | 7,289,514 | 1,506,485 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
10,190,887 | 7,289,514 | 1,506,485 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
18,850,062 | (2,980,809 | ) | 4,254,430 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
59,682,112 | (14,393,306 | ) | (4,939,520 | ) | |||||||
| In-kind redemptions — unaffiliated |
— | — | 12,221,554 | |||||||||
| Foreign currency transactions |
(887,736 | ) | (510,515 | ) | (162,082 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
58,794,376 | (14,903,821 | ) | 7,119,952 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
74,235,536 | 64,782,065 | 30,263,729 | |||||||||
| Translation of assets and liabilities in foreign currencies |
916,341 | 39,127 | 25,325 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
75,151,877 | 64,821,192 | 30,289,054 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
133,946,253 | 49,917,371 | 37,409,006 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 152,796,315 | $ | 46,936,562 | $ | 41,663,436 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $5,444,082, $364,689 and $642,504, respectively. |
| b | Net of foreign tax paid of $649,988. |
See notes to financial statements.
| 52 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Australia Index Fund |
iShares MSCI Hong Kong Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 68,956,977 | $ | 118,543,422 | $ | 23,700,048 | $ | 45,630,453 | ||||||||
| Net realized gain (loss) |
1,155,813 | 106,704,629 | (106,167,970 | ) | 84,133,431 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(21,262,025 | ) | 256,987,740 | 230,813,449 | 91,543,565 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
48,850,765 | 482,235,791 | 148,345,527 | 221,307,449 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(79,418,228 | ) | (126,555,555 | ) | (20,313,774 | ) | (46,031,342 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(79,418,228 | ) | (126,555,555 | ) | (20,313,774 | ) | (46,031,342 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
295,039,485 | 1,069,986,680 | 895,369,504 | 712,651,212 | ||||||||||||
| Cost of shares redeemed |
(438,414,679 | ) | (532,059,432 | ) | (647,133,385 | ) | (1,256,261,691 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(143,375,194 | ) | 537,927,248 | 248,236,119 | (543,610,479 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(173,942,657 | ) | 893,607,484 | 376,267,872 | (368,334,372 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
3,090,424,628 | 2,196,817,144 | 1,607,982,452 | 1,976,316,824 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 2,916,481,971 | $ | 3,090,424,628 | $ | 1,984,250,324 | $ | 1,607,982,452 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed net investment income included in net assets at end of period |
$ | 7,570,760 | $ | 18,032,011 | $ | 7,108,321 | $ | 3,722,047 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
12,800,000 | 43,800,000 | 56,175,000 | 37,275,000 | ||||||||||||
| Shares redeemed |
(19,600,000 | ) | (21,000,000 | ) | (39,375,000 | ) | (69,225,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(6,800,000 | ) | 22,800,000 | 16,800,000 | (31,950,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
53 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Japan Small Cap Index Fund |
iShares MSCI Malaysia Index Fund |
|||||||||||||||
| Six months February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 494,191 | $ | 901,280 | $ | 11,787,728 | $ | 28,277,199 | ||||||||
| Net realized gain (loss) |
2,562,255 | 1,510,649 | (9,757,249 | ) | 8,082,452 | |||||||||||
| Net change in unrealized appreciation/depreciation |
(4,316,850 | ) | 5,914,053 | 68,428,972 | 41,299,342 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
(1,260,404 | ) | 8,325,982 | 70,459,451 | 77,658,993 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(802,358 | ) | (1,015,659 | ) | (28,113,809 | ) | (26,214,422 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(802,358 | ) | (1,015,659 | ) | (28,113,809 | ) | (26,214,422 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
4,249,056 | 39,895,589 | 69,902,985 | 475,718,489 | ||||||||||||
| Cost of shares redeemed |
(21,661,508 | ) | (9,483,428 | ) | (134,913,123 | ) | (342,902,968 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(17,412,452 | ) | 30,412,161 | (65,010,138 | ) | 132,815,521 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(19,475,214 | ) | 37,722,484 | (22,664,496 | ) | 184,260,092 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
74,386,797 | 36,664,313 | 978,402,282 | 794,142,190 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 54,911,583 | $ | 74,386,797 | $ | 955,737,786 | $ | 978,402,282 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (383,606 | ) | $ | (75,439 | ) | $ | (11,434,222 | ) | $ | 4,891,859 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
100,000 | 900,000 | 5,025,000 | 32,925,000 | ||||||||||||
| Shares redeemed |
(500,000 | ) | (200,000 | ) | (10,350,000 | ) | (23,850,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(400,000 | ) | 700,000 | (5,325,000 | ) | 9,075,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 54 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Pacific ex-Japan Index Fund |
iShares MSCI Singapore Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 65,278,613 | $ | 142,331,398 | $ | 9,631,691 | $ | 66,235,936 | ||||||||
| Net realized gain (loss) |
(21,441,867 | ) | 289,132,578 | (2,660,126 | ) | 117,167,420 | ||||||||||
| Net change in unrealized appreciation/depreciation |
52,317,918 | 183,180,135 | (5,783,517 | ) | 18,189,273 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
96,154,664 | 614,644,111 | 1,188,048 | 201,592,629 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(77,100,962 | ) | (153,265,871 | ) | (33,093,262 | ) | (74,873,803 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(77,100,962 | ) | (153,265,871 | ) | (33,093,262 | ) | (74,873,803 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
51,295,859 | 433,392,558 | 49,018,078 | 315,210,889 | ||||||||||||
| Cost of shares redeemed |
(99,337,622 | ) | (784,052,063 | ) | (173,770,101 | ) | (458,731,234 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in net assets from capital share transactions |
(48,041,763 | ) | (350,659,505 | ) | (124,752,023 | ) | (143,520,345 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(28,988,061 | ) | 110,718,735 | (156,657,237 | ) | (16,801,519 | ) | |||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
3,548,867,405 | 3,438,148,670 | 1,713,199,264 | 1,730,000,783 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 3,519,879,344 | $ | 3,548,867,405 | $ | 1,556,542,027 | $ | 1,713,199,264 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 269,346 | $ | 12,091,695 | $ | (14,725,970 | ) | $ | 8,735,601 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
1,200,000 | 9,300,000 | 4,000,000 | 23,500,000 | ||||||||||||
| Shares redeemed |
(2,400,000 | ) | (17,100,000 | ) | (15,400,000 | ) | (34,300,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in shares outstanding |
(1,200,000 | ) | (7,800,000 | ) | (11,400,000 | ) | (10,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
55 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI South Korea Index Fund |
iShares MSCI Taiwan Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | 18,850,062 | $ | 21,371,322 | $ | (2,980,809 | ) | $ | 86,901,644 | |||||||
| Net realized gain (loss) |
58,794,376 | (60,197,500 | ) | (14,903,821 | ) | (8,104,404 | ) | |||||||||
| Net change in unrealized appreciation/depreciation |
75,151,877 | 635,977,653 | 64,821,192 | 293,449,652 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
152,796,315 | 597,151,475 | 46,936,562 | 372,246,892 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(21,597,221 | ) | (31,827,218 | ) | (88,700,282 | ) | (61,236,384 | ) | ||||||||
| Return of capital |
— | (4,789,805 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(21,597,221 | ) | (36,617,023 | ) | (88,700,282 | ) | (61,236,384 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
49,725,934 | 805,031,141 | 83,481,959 | 504,845,705 | ||||||||||||
| Cost of shares redeemed |
(767,139,988 | ) | (549,508,621 | ) | (319,187,913 | ) | (679,782,864 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(717,414,054 | ) | 255,522,520 | (235,705,954 | ) | (174,937,159 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(586,214,960 | ) | 816,056,972 | (277,469,674 | ) | 136,073,349 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
4,071,224,591 | 3,255,167,619 | 2,857,511,882 | 2,721,438,533 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 3,485,009,631 | $ | 4,071,224,591 | $ | 2,580,042,208 | $ | 2,857,511,882 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (16,601,754 | ) | $ | (13,854,595 | ) | $ | (6,824,977 | ) | $ | 84,856,114 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
950,000 | 13,050,000 | 6,200,000 | 33,200,000 | ||||||||||||
| Shares redeemed |
(14,700,000 | ) | (9,450,000 | ) | (26,000,000 | ) | (49,000,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(13,750,000 | ) | 3,600,000 | (19,800,000 | ) | (15,800,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 56 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Thailand Investable Market Index Fund |
||||||||
| Six months February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 4,254,430 | $ | 16,617,847 | ||||
| Net realized gain |
7,119,952 | 84,255,527 | ||||||
| Net change in unrealized appreciation/depreciation |
30,289,054 | 9,058,953 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
41,663,436 | 109,932,327 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(5,921,080 | ) | (15,281,425 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(5,921,080 | ) | (15,281,425 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
109,822,023 | 335,427,814 | ||||||
| Cost of shares redeemed |
(130,987,443 | ) | (317,542,787 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
(21,165,420 | ) | 17,885,027 | |||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
14,576,936 | 112,535,929 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
632,839,734 | 520,303,805 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 647,416,670 | $ | 632,839,734 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 1,610,653 | $ | 3,277,303 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
1,700,000 | 5,150,000 | ||||||
| Shares redeemed |
(2,300,000 | ) | (5,050,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
(600,000 | ) | 100,000 | |||||
|
|
|
|
|
|||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
57 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Australia Index Fund | ||||||||||||||||||||||||
| Six months Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 24.18 | $ | 20.92 | $ | 20.33 | $ | 23.96 | $ | 27.62 | $ | 21.59 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.56 | 0.99 | 0.72 | 0.78 | 0.96 | 0.89 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.01 | 3.33 | 0.69 | (3.47 | ) | (3.34 | ) | 6.24 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.57 | 4.32 | 1.41 | (2.69 | ) | (2.38 | ) | 7.13 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.65 | ) | (1.06 | ) | (0.82 | ) | (0.94 | ) | (1.28 | ) | (1.10 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.65 | ) | (1.06 | ) | (0.82 | ) | (0.94 | ) | (1.28 | ) | (1.10 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 24.10 | $ | 24.18 | $ | 20.92 | $ | 20.33 | $ | 23.96 | $ | 27.62 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.75 | %c | 20.54 | % | 6.86 | % | (8.91 | )% | (9.25 | )% | 33.97 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,916,482 | $ | 3,090,425 | $ | 2,196,817 | $ | 1,593,676 | $ | 1,059,092 | $ | 1,464,112 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
4.97 | % | 3.95 | % | 3.24 | % | 4.92 | % | 3.38 | % | 3.46 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 9 | % | 8 | % | 14 | % | 10 | % | 10 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 58 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
For a share outstanding throughout each period)
| iShares MSCI Hong Kong Index Fund | ||||||||||||||||||||||||
| Six months Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 17.59 | $ | 16.02 | $ | 14.39 | $ | 15.87 | $ | 18.30 | $ | 14.20 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.21 | 0.42 | 0.42 | 0.52 | 0.45 | 0.47 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.70 | 1.56 | 1.69 | (1.46 | ) | (2.25 | ) | 3.94 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.91 | 1.98 | 2.11 | (0.94 | ) | (1.80 | ) | 4.41 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.17 | ) | (0.41 | ) | (0.48 | ) | (0.54 | ) | (0.63 | ) | (0.31 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.17 | ) | (0.41 | ) | (0.48 | ) | (0.54 | ) | (0.63 | ) | (0.31 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 18.33 | $ | 17.59 | $ | 16.02 | $ | 14.39 | $ | 15.87 | $ | 18.30 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
5.41 | %c | 12.27 | % | 14.85 | % | (4.77 | )% | (10.54 | )% | 31.44 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,984,250 | $ | 1,607,982 | $ | 1,976,317 | $ | 1,951,777 | $ | 1,675,184 | $ | 1,445,309 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.52 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.65 | % | 2.25 | % | 2.67 | % | 4.29 | % | 2.34 | % | 2.92 | % | ||||||||||||
| Portfolio turnover ratee |
6 | % | 15 | % | 5 | % | 9 | % | 17 | % | 9 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
59 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Japan Small Cap Index Fund | ||||||||||||||||||||
| Six months Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Period from to Aug. 31, 2008 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 46.49 | $ | 40.74 | $ | 44.45 | $ | 43.24 | $ | 48.85 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.36 | 0.78 | 0.61 | 0.60 | 0.29 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
(0.36 | ) | 5.87 | (3.39 | ) | 1.29 | (5.74 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
0.00 | 6.65 | (2.78 | ) | 1.89 | (5.45 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.73 | ) | (0.90 | ) | (0.93 | ) | (0.68 | ) | (0.16 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.73 | ) | (0.90 | ) | (0.93 | ) | (0.68 | ) | (0.16 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 45.76 | $ | 46.49 | $ | 40.74 | $ | 44.45 | $ | 43.24 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
0.12 | %d | 16.38 | % | (6.25 | )% | 4.62 | % | (11.19 | )%d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 54,912 | $ | 74,387 | $ | 36,664 | $ | 35,556 | $ | 34,594 | ||||||||||
| Ratio of expenses to average net assetse |
0.52 | % | 0.51 | % | 0.53 | % | 0.56 | % | 0.53 | % | ||||||||||
| Ratio of net investment income to average net assetse |
1.62 | % | 1.72 | % | 1.46 | % | 1.59 | % | 0.93 | % | ||||||||||
| Portfolio turnover ratef |
2 | % | 10 | % | 7 | % | 7 | % | 7 | % | ||||||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 60 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Malaysia Index Fund | ||||||||||||||||||||||||
| Six months Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.92 | $ | 12.98 | $ | 9.79 | $ | 9.39 | $ | 10.97 | $ | 7.75 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.18 | 0.41 | 0.24 | 0.28 | 0.34 | 0.34 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
1.05 | 0.92 | 3.20 | 0.40 | (1.31 | ) | 3.08 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.23 | 1.33 | 3.44 | 0.68 | (0.97 | ) | 3.42 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.44 | ) | (0.39 | ) | (0.25 | ) | (0.28 | ) | (0.61 | ) | (0.20 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.44 | ) | (0.39 | ) | (0.25 | ) | (0.28 | ) | (0.61 | ) | (0.20 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 14.71 | $ | 13.92 | $ | 12.98 | $ | 9.79 | $ | 9.39 | $ | 10.97 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
9.31 | %c | 10.19 | % | 35.76 | % | 8.00 | % | (9.86 | )% | 44.64 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 955,738 | $ | 978,402 | $ | 794,142 | $ | 513,000 | $ | 473,091 | $ | 741,440 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.56 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
2.66 | % | 2.84 | % | 2.17 | % | 3.45 | % | 2.84 | % | 3.21 | % | ||||||||||||
| Portfolio turnover ratee |
12 | % | 49 | % | 29 | % | 52 | % | 92 | % | 87 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the six months ended February 29, 2012 and the years ended August 31, 2011, August 31, 2010, August 31, 2009, August 31, 2008 and August 31, 2007 would have been 4%, 14%, 10%, 12%, 16% and 3%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
61 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Pacific ex-Japan Index Fund | ||||||||||||||||||||||||
| Six months Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
Year ended Aug. 31, 2007a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 44.47 | $ | 39.25 | $ | 36.85 | $ | 41.37 | $ | 48.31 | $ | 37.34 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.82 | 1.64 | 1.25 | 1.38 | 1.64 | 1.52 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
0.46 | 5.31 | 2.52 | (4.79 | ) | (6.01 | ) | 11.18 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.28 | 6.95 | 3.77 | (3.41 | ) | (4.37 | ) | 12.70 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.97 | ) | (1.73 | ) | (1.37 | ) | (1.11 | ) | (2.51 | ) | (1.73 | ) | ||||||||||||
| Net realized gain |
— | — | — | — | (0.06 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.97 | ) | (1.73 | ) | (1.37 | ) | (1.11 | ) | (2.57 | ) | (1.73 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 44.78 | $ | 44.47 | $ | 39.25 | $ | 36.85 | $ | 41.37 | $ | 48.31 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
3.25 | %d | 17.61 | % | 10.27 | % | (7.23 | )% | (9.87 | )% | 34.86 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,519,879 | $ | 3,548,867 | $ | 3,438,149 | $ | 3,382,554 | $ | 3,263,971 | $ | 3,536,295 | ||||||||||||
| Ratio of expenses to average net assetse |
0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
4.01 | % | 3.53 | % | 3.09 | % | 4.83 | % | 3.35 | % | 3.43 | % | ||||||||||||
| Portfolio turnover ratef |
4 | % | 10 | % | 7 | % | 10 | % | 14 | % | 11 | % | ||||||||||||
| a | Per share amounts were adjusted to reflect a three-for-one stock split effective July 24, 2008. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 62 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Singapore Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.05 | $ | 12.17 | $ | 10.25 | $ | 11.44 | $ | 13.28 | $ | 9.11 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.08 | 0.45 | 0.32 | 0.32 | 0.47 | 0.47 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.13 | 0.92 | 1.97 | (1.16 | ) | (1.67 | ) | 4.01 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.21 | 1.37 | 2.29 | (0.84 | ) | (1.20 | ) | 4.48 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.28 | ) | (0.49 | ) | (0.37 | ) | (0.35 | ) | (0.64 | ) | (0.31 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.28 | ) | (0.49 | ) | (0.37 | ) | (0.35 | ) | (0.64 | ) | (0.31 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 12.98 | $ | 13.05 | $ | 12.17 | $ | 10.25 | $ | 11.44 | $ | 13.28 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.03 | %c | 11.27 | % | 22.68 | % | (5.87 | )% | (9.55 | )% | 49.92 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 1,556,542 | $ | 1,713,199 | $ | 1,730,001 | $ | 1,294,039 | $ | 1,476,968 | $ | 1,669,210 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.33 | % | 3.34 | % | 2.80 | % | 3.97 | % | 3.56 | % | 3.80 | % | ||||||||||||
| Portfolio turnover ratee |
1 | % | 10 | % | 9 | % | 15 | % | 16 | % | 8 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
63 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI South Korea Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 56.74 | $ | 47.76 | $ | 42.01 | $ | 43.55 | $ | 63.60 | $ | 46.00 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.30 | 0.29 | 0.32 | 0.30 | 0.80 | 0.51 | ||||||||||||||||||
| Net realized and unrealized gain (loss)b |
3.42 | 9.19 | 5.82 | (1.45 | ) | (19.87 | ) | 17.42 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
3.72 | 9.48 | 6.14 | (1.15 | ) | (19.07 | ) | 17.93 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.37 | ) | (0.43 | ) | (0.39 | ) | (0.39 | ) | (0.98 | ) | (0.33 | ) | ||||||||||||
| Return of capital |
— | (0.07 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.37 | ) | (0.50 | ) | (0.39 | ) | (0.39 | ) | (0.98 | ) | (0.33 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 60.09 | $ | 56.74 | $ | 47.76 | $ | 42.01 | $ | 43.55 | $ | 63.60 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
6.69 | %c | 19.76 | % | 14.65 | % | (2.31 | )% | (30.35 | )% | 39.18 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 3,485,010 | $ | 4,071,225 | $ | 3,255,168 | $ | 2,398,550 | $ | 1,985,763 | $ | 2,429,453 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.60 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | 0.68 | % | ||||||||||||
| Ratio of net investment income to average net assetsd |
1.12 | % | 0.49 | % | 0.67 | % | 0.91 | % | 1.35 | % | 0.96 | % | ||||||||||||
| Portfolio turnover ratef |
3 | % | 18 | % | 14 | % | 62 | % | 42 | % | 20 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| f | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the six months ended February 29, 2012 and the years ended August 31, 2011, August 31, 2010, August 31, 2009, August 31, 2008 and August 31, 2007 would have been 2%, 6%, 6%, 8%, 15% and 6%, respectively. See Note 4. |
See notes to financial statements.
| 64 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Taiwan Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 13.78 | $ | 12.19 | $ | 10.94 | $ | 13.13 | $ | 15.99 | $ | 12.57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment income (loss)a |
(0.02 | ) | 0.39 | 0.23 | 0.30 | 0.54 | 0.38 | |||||||||||||||||
| Net realized and unrealized gain (loss)b |
0.46 | 1.49 | 1.23 | (1.89 | ) | (3.01 | ) | 3.34 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
0.44 | 1.88 | 1.46 | (1.59 | ) | (2.47 | ) | 3.72 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.47 | ) | (0.29 | ) | (0.21 | ) | (0.60 | ) | (0.39 | ) | (0.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.47 | ) | (0.29 | ) | (0.21 | ) | (0.60 | ) | (0.39 | ) | (0.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 13.75 | $ | 13.78 | $ | 12.19 | $ | 10.94 | $ | 13.13 | $ | 15.99 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
4.06 | %c | 15.24 | % | 13.30 | % | (9.67 | )% | (15.69 | )% | 29.91 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 2,580,042 | $ | 2,857,512 | $ | 2,721,439 | $ | 3,035,331 | $ | 2,918,008 | $ | 2,769,764 | ||||||||||||
| Ratio of expenses to average net assetsd,e |
0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | 0.68 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assetsd |
(0.25 | )% | 2.64 | % | 1.90 | % | 3.18 | % | 3.54 | % | 2.61 | % | ||||||||||||
| Portfolio turnover ratef |
6 | % | 23 | % | 9 | % | 52 | % | 33 | % | 35 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| f | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the six months ended February 29, 2012 and the years ended August 31, 2011, August 31, 2010, August 31, 2009, August 31, 2008 and August 31, 2007 would have been 3%, 8%, 4%, 14%, 11% and 12%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
65 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Thailand Investable Market Index Fund | ||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Period from to Aug. 31, 2008 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 66.27 | $ | 55.06 | $ | 36.87 | $ | 38.83 | $ | 50.03 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.52 | 1.65 | 1.44 | 1.17 | 0.32 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
6.33 | 11.10 | 17.95 | (1.88 | ) | (11.52 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
6.85 | 12.75 | 19.39 | (0.71 | ) | (11.20 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.78 | ) | (1.54 | ) | (1.20 | ) | (1.25 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.78 | ) | (1.54 | ) | (1.20 | ) | (1.25 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 72.34 | $ | 66.27 | $ | 55.06 | $ | 36.87 | $ | 38.83 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
10.59 | %d | 23.33 | % | 53.19 | % | (0.33 | )% | (22.39 | )%d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 647,417 | $ | 632,840 | $ | 520,304 | $ | 94,021 | $ | 58,248 | ||||||||||
| Ratio of expenses to average net assetse,f |
0.60 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||
| Ratio of net investment income to average net assetse |
1.71 | % | 2.56 | % | 3.22 | % | 4.00 | % | 1.68 | % | ||||||||||
| Portfolio turnover rateg |
7 | % | 22 | % | 14 | % | 15 | % | 19 | % | ||||||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| g | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 66 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (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.
These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
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. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Each Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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 Funds; 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; less 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.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| NOTES TO FINANCIAL STATEMENTS |
67 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of each Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
Fair value pricing could result in a difference between the prices used to calculate a 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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument.
| 68 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 29, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Schedule of Investments.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Australia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,882,424,379 | $ | — | $ | 2,527 | $ | 2,882,426,906 | ||||||||
| Short-Term Investments |
11,955,078 | — | — | 11,955,078 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,894,379,457 | $ | — | $ | 2,527 | $ | 2,894,381,984 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Hong Kong |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,982,396,481 | $ | — | $ | — | $ | 1,982,396,481 | ||||||||
| Short-Term Investments |
158,130,301 | — | — | 158,130,301 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,140,526,782 | $ | — | $ | — | $ | 2,140,526,782 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Japan Small Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 54,760,497 | $ | — | $ | — | $ | 54,760,497 | ||||||||
| Short-Term Investments |
938,129 | — | — | 938,129 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 55,698,626 | $ | — | $ | — | $ | 55,698,626 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Malaysia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 954,024,082 | $ | — | $ | — | $ | 954,024,082 | ||||||||
| Short-Term Investments |
380,450 | — | — | 380,450 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 954,404,532 | $ | — | $ | — | $ | 954,404,532 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Pacific ex-Japan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,490,571,107 | $ | — | $ | 3,612 | $ | 3,490,574,719 | ||||||||
| Short-Term Investments |
94,099,786 | — | — | 94,099,786 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,584,670,893 | $ | — | $ | 3,612 | $ | 3,584,674,505 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Singapore |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,553,112,549 | $ | — | $ | — | $ | 1,553,112,549 | ||||||||
| Short-Term Investments |
127,296,596 | — | — | 127,296,596 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,680,409,145 | $ | — | $ | — | $ | 1,680,409,145 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
69 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| South Korea |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 3,347,249,308 | $ | — | $ | — | $ | 3,347,249,308 | ||||||||
| Preferred Stocks |
105,762,568 | — | — | 105,762,568 | ||||||||||||
| Short-Term Investments |
190,747,052 | — | — | 190,747,052 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 3,643,758,928 | $ | — | $ | — | $ | 3,643,758,928 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Taiwan |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,574,952,514 | $ | — | $ | 23 | $ | 2,574,952,537 | ||||||||
| Short-Term Investments |
336,461,303 | — | — | 336,461,303 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,911,413,817 | $ | — | $ | 23 | $ | 2,911,413,840 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Thailand Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 645,304,744 | $ | — | $ | — | $ | 645,304,744 | ||||||||
| Rights |
— | — | 0 | a | 0 | a | ||||||||||
| Warrants |
32,720 | — | — | 32,720 | ||||||||||||
| Short-Term Investments |
514,089 | — | — | 514,089 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 645,851,553 | $ | — | $ | 0 | a | $ | 645,851,553 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| a | Rounds to less than $1. |
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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. 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.
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.
| 70 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Funds’ Statements of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds 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 ordinary income and any net capital 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 is required.
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 Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
| NOTES TO FINANCIAL STATEMENTS |
71 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to each of the iShares MSCI Australia, iShares MSCI Hong Kong, iShares MSCI Japan Small Cap, iShares MSCI Malaysia and iShares MSCI Singapore Index Funds, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |||
| 0.59 | % | First $7 billion | ||
| 0.54 | Over $7 billion, up to and including $11 billion | |||
| 0.49 | Over $11 billion, up to and including $24 billion | |||
| 0.44 | Over $24 billion, up to and including $48 billion | |||
| 0.40 | Over $48 billion | |||
For its investment advisory services to each of the iShares MSCI South Korea, iShares MSCI Taiwan and iShares MSCI Thailand Investable Market Index Funds, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |||
| 0.74 | % | First $2 billion | ||
| 0.69 | Over $2 billion, up to and including $4 billion | |||
| 0.64 | Over $4 billion, up to and including $8 billion | |||
| 0.57 | Over $8 billion, up to and including $16 billion | |||
| 0.51 | Over $16 billion, up to and including $32 billion | |||
| 0.45 | Over $32 billion | |||
For its investment advisory services to the iShares MSCI Pacific ex-Japan Index Fund, BFA is entitled to an annual investment advisory fee of 0.50% based on the average daily net assets of the Fund.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Funds, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by each Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the six months ended February 29, 2012, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees |
|||
| Australia |
$ | 11,841 | ||
| Hong Kong |
289,715 | |||
| Japan Small Cap |
6,605 | |||
| Pacific ex-Japan |
196,875 | |||
| Singapore |
187,523 | |||
| South Korea |
636,662 | |||
| Taiwan |
1,749,969 | |||
| 72 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
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Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For the six months ended February 29, 2012, BTC, the Funds’ securities lending agent, has agreed to voluntarily reimburse the iShares MSCI Taiwan Index Fund in the amount of $227,496, related to the foreign tax on the securities lending income. Such reimbursement is included in the “Securities lending income — affiliated” in the Fund’s Statement of Operations.
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for each Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest—affiliated” in the Statements of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but Barclays is not.
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| Australia |
$ | 144,203,256 | $ | 160,176,517 | ||||
| Hong Kong |
104,670,951 | 359,069,439 | ||||||
| Japan Small Cap |
1,456,920 | 1,921,676 | ||||||
| Malaysia |
112,324,674 | 194,279,293 | ||||||
| Pacific ex-Japan |
134,430,418 | 147,112,941 | ||||||
| Singapore |
17,883,150 | 36,659,132 | ||||||
| South Korea |
113,044,661 | 861,805,911 | ||||||
| Taiwan |
145,218,346 | 450,527,785 | ||||||
| Thailand Investable Market |
37,091,357 | 37,605,549 | ||||||
In-kind transactions (see Note 4) for the six months ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| Australia |
$ | 293,752,298 | $ | 435,238,311 | ||||
| Hong Kong |
843,795,969 | 333,215,801 | ||||||
| Japan Small Cap |
4,210,481 | 21,456,291 | ||||||
| Pacific ex-Japan |
50,942,928 | 98,545,626 | ||||||
| Singapore |
47,614,910 | 169,314,746 | ||||||
| Thailand Investable Market |
109,516,273 | 129,974,921 | ||||||
| NOTES TO FINANCIAL STATEMENTS |
73 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.
| 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 by each Fund is required to have a value of at least 102% of the current value of the loaned securities 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. 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 a fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. Each 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. 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 gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
| 74 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The Funds had tax basis net capital loss carryforwards as of August 31, 2011, the tax year-end of the Funds, as follows:
| iShares MSCI Index Fund |
Expiring 2012 |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||||||||
| Australia |
$ | 596,240 | $ | 384,424 | $ | — | $ | 7,066 | $ | 529,868 | $ | 24,006,125 | $ | 23,348,244 | $ | 12,127,364 | $ | 60,999,331 | ||||||||||||||||||
| Hong Kong |
2,330,414 | 468,716 | 425,440 | 2,899,247 | 3,185,408 | 29,235,556 | 114,836,904 | 34,565,959 | 187,947,644 | |||||||||||||||||||||||||||
| Japan Small Cap |
— | — | — | — | — | 131,718 | 541,322 | 203,697 | 876,737 | |||||||||||||||||||||||||||
| Malaysia |
— | — | — | 774,158 | 1,127,892 | 40,223,530 | — | — | 42,125,580 | |||||||||||||||||||||||||||
| Pacific ex-Japan |
— | — | — | — | — | 66,207,828 | 104,799,503 | 36,600,987 | 207,608,318 | |||||||||||||||||||||||||||
| Singapore |
4,256,421 | 2,558,348 | — | — | 807,115 | 15,680,510 | 132,420,824 | 11,588,528 | 167,311,746 | |||||||||||||||||||||||||||
| South Korea |
3,363,449 | 11,590,303 | 3,172,573 | 38,097,223 | — | 178,889,302 | 226,591,665 | 78,503,704 | 540,208,219 | |||||||||||||||||||||||||||
| Taiwan |
9,129,874 | 12,022,719 | 14,435,986 | 64,999,586 | 16,734,578 | 343,375,145 | 363,052,013 | 19,669,958 | 843,419,859 | |||||||||||||||||||||||||||
| Thailand Investable Market |
— | — | — | — | — | 555,444 | 2,321,428 | 1,304,910 | 4,181,782 | |||||||||||||||||||||||||||
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by funds for taxable years beginning after December 22, 2010 are not subject to expiration and must be utilized prior to the losses incurred in the tax years preceding enactment.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 29, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Appreciation (Depreciation) |
||||||||||||
| Australia |
$ | 2,974,635,666 | $ | 141,776,171 | $ | (222,029,853 | ) | $ | (80,253,682 | ) | ||||||
| Hong Kong |
2,092,042,037 | 133,297,965 | (84,813,220 | ) | 48,484,745 | |||||||||||
| Japan Small Cap |
58,109,541 | 3,173,385 | (5,584,300 | ) | (2,410,915 | ) | ||||||||||
| Malaysia |
527,646,092 | 467,677,520 | (40,919,080 | ) | 426,758,440 | |||||||||||
| Pacific ex-Japan |
3,172,518,261 | 697,390,533 | (285,234,289 | ) | 412,156,244 | |||||||||||
| Singapore |
1,606,074,278 | 180,858,972 | (106,524,105 | ) | 74,334,867 | |||||||||||
| South Korea |
2,299,373,670 | 1,938,320,333 | (593,935,075 | ) | 1,344,385,258 | |||||||||||
| Taiwan |
2,109,920,262 | 1,082,595,183 | (281,101,605 | ) | 801,493,578 | |||||||||||
| Thailand Investable Market |
546,929,525 | 116,463,141 | (17,541,113 | ) | 98,922,028 | |||||||||||
| NOTES TO FINANCIAL STATEMENTS |
75 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| 76 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report distributions for federal income tax purposes.
| Total Cumulative Distributions for the Fiscal Year-to-Date |
% Breakdown of the Total
Cumulative Distributions for the Fiscal Year-to-Date |
|||||||||||||||||||||||||||||||
| iShares MSCI Index Fund | Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
||||||||||||||||||||||||
| Australia |
$0.51742 | $ | — | $ | 0.13462 | $ | 0.65204 | 79 | % | — | % | 21 | % | 100 | % | |||||||||||||||||
| Japan Small Cap |
0.54400 | — | 0.18542 | 0.72942 | 75 | — | 25 | 100 | ||||||||||||||||||||||||
| Malaysia |
0.21068 | — | 0.23346 | 0.44414 | 47 | — | 53 | 100 | ||||||||||||||||||||||||
| Pacific ex-Japan |
0.94622 | — | 0.02728 | 0.97350 | 97 | — | 3 | 100 | ||||||||||||||||||||||||
| Singapore |
0.25353 | — | 0.02363 | 0.27716 | 91 | — | 9 | 100 | ||||||||||||||||||||||||
| South Korea |
0.00541 | — | 0.36760 | 0.37301 | 1 | — | 99 | 100 | ||||||||||||||||||||||||
| Taiwan |
0.31618 | — | 0.15664 | 0.47282 | 67 | — | 33 | 100 | ||||||||||||||||||||||||
| Thailand Investable Market |
0.63918 | — | 0.14507 | 0.78425 | 82 | — | 18 | 100 | ||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
77 |
Table of Contents
Notes:
| 78 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
For more information visit www.iShares.com
or call 1-800-474-2737
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iS-SAR-83-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI Brazil Index Fund | EWZ | NYSE Arca
iShares MSCI Canada Index Fund | EWC | NYSE Arca
iShares MSCI Chile Investable Market Index Fund | ECH | NYSE Arca
iShares MSCI Israel Capped Investable Market Index Fund | EIS | NYSE Arca
iShares MSCI Mexico Investable Market Index Fund | EWW | NYSE Arca
iShares MSCI South Africa Index Fund | EZA | NYSE Arca
iShares MSCI Turkey Investable Market Index Fund | TUR | NYSE Arca
iShares MSCI USA Index Fund | EUSA | NYSE Arca
Table of Contents
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| 15 | ||||
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| 68 |
Table of Contents
iSHARES® MSCI BRAZIL INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.32)% | (4.74)% | (3.80)% | 12.31% | 12.28% | 13.06% | 21.11% | 20.76% | 22.77% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (4.32)% | (4.74)% | (3.80)% | 78.71% | 78.42% | 84.74% | 579.06% | 559.59% | 678.14% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Brazil Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Brazil IndexSM (the “Index”). The Index consists of stocks traded primarily on the BM&FBOVESPA (the Brazilian exchange). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 7.08%, net of fees, while the total return for the Index was 7.86%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CANADA INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (11.33)% | (12.15)% | (11.11)% | 4.59% | 4.40% | 4.84% | 12.07% | 11.94% | 12.40% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (11.33)% | (12.15)% | (11.11)% | 25.17% | 24.02% | 26.63% | 212.44% | 209.02% | 221.92% | ||||||||
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Canada Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Canada IndexSM (the “Index”). The Index consists of stocks traded primarily on the Toronto Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (1.14)%, net of fees, while the total return for the Index was (1.08)%.
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (1.32)% | (1.09)% | 1.12% | 9.19% | 9.27% | 10.13% | 45.97% | 46.42% | 51.43% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (11/12/07). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (11/16/07), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Chile Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Chile Investable Market IndexSM (the “Index”). The Index is a free float-adjusted market capitalization index that is designed to measure broad based equity market performance in Chile. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 0.98%, net of fees, while the total return for the Index was 2.11%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (26.16)% | (26.39)% | (25.94)% | (2.73)% | (2.74)% | (2.02)% | (10.33)% | (10.35)% | (7.70)% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (3/26/08). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/28/08), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Israel Capped Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Israel Capped Investable Market IndexSM (the “Index”). The Index is a custom, free float-adjusted market capitalization index designed to measure broad based equity market performance in Israel. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (10.12)%, net of fees, while the total return for the Index was (10.08)%.
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.67)% | (1.46)% | (1.50)% | 5.07% | 5.11% | 4.51% | 16.04% | 15.87% | 15.36% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Ten Years Ended 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.67)% | (1.46)% | (1.50)% | 28.07% | 28.27% | 24.70% | 342.83% | 336.11% | 317.58% | ||||||||
Index performance reflects the performance of the MSCI Mexico IndexSM through November 30, 2007 and the MSCI Mexico Investable Market IndexSM thereafter.
“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Mexico Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Mexico Investable Market IndexSM (the “Index”). The Index consists of stocks traded primarily on the Mexican Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 2.94%, net of fees, while the total return for the Index was 2.43%.
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI SOUTH AFRICA INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.27% | 3.76% | 5.86% | 7.85% | 7.32% | 8.82% | 18.64% | 18.42% | 19.86% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.27% | 3.76% | 5.86% | 45.94% | 42.36% | 52.61% | 371.49% | 363.58% | 417.47% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (2/3/03). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/7/03), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI South Africa Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI South Africa IndexSM (the “Index”). The Index consists of stocks traded primarily on the Johannesburg Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 4.55%, net of fees, while the total return for the Index was 4.90%.
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (8.75)% | (10.08)% | (8.31)% | 3.06% | 2.75% | 3.44% | 12.60% | 11.28% | 14.20% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (3/26/08). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/28/08), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Turkey Investable Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Turkey Investable Market IndexSM (the “Index”). The Index is a free float-adjusted market capitalization index designed to measure broad-based equity market performance in Turkey. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 10.04%, net of fees, while the total return for the Index was 10.26%.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI USA INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| 5.22% | 5.22% | 5.36% | 11.53% | 11.55% | 11.74% | 21.99% | 22.04% | 22.39% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (5/5/10). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (5/7/10), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI USA Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI USA IndexSM (the “Index”). The Index is a market capitalization weighted index designed to measure the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in the United States. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 13.22%, net of fees, while the total return for the Index was 13.36%.
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES® , INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 to February 29, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| iShares MSCI Index Fund | Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid During Period a (9/1/11 to 2/29/12) |
||||||||||||
| Brazil |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,070.80 | 0.61 | % | $ | 3.14 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.61 | 3.07 | ||||||||||||
| Canada |
||||||||||||||||
| Actual |
1,000.00 | 988.60 | 0.52 | 2.57 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| Chile Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,009.80 | 0.60 | 3.00 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.90 | 0.60 | 3.02 | ||||||||||||
| Israel Capped Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 898.80 | 0.61 | 2.88 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.61 | 3.07 | ||||||||||||
| SHAREHOLDER EXPENSES |
13 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund | Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid During Period a (9/1/11 to 2/29/12) |
||||||||||||
| Mexico Investable Market |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,029.40 | 0.52 | % | $ | 2.62 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.30 | 0.52 | 2.61 | ||||||||||||
| South Africa |
||||||||||||||||
| Actual |
1,000.00 | 1,045.50 | 0.61 | 3.10 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.61 | 3.07 | ||||||||||||
| Turkey Investable Market |
||||||||||||||||
| Actual |
1,000.00 | 1,100.40 | 0.61 | 3.19 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.80 | 0.61 | 3.07 | ||||||||||||
| USA |
||||||||||||||||
| Actual |
1,000.00 | 1,132.20 | 0.15 | 0.80 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,024.10 | 0.15 | 0.75 | ||||||||||||
| a | Expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI BRAZIL INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL INDEX FUND
February 29, 2012
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRAZIL INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI CANADA INDEX FUND
February 29, 2012
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CANADA INDEX FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI CHILE INVESTABLE MARKET INDEX FUND
February 29, 2012
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ISRAEL CAPPED INVESTABLE MARKET INDEX FUND
February 29, 2012
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI MEXICO INVESTABLE MARKET INDEX FUND
February 29, 2012
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI SOUTH AFRICA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI SOUTH AFRICA INDEX FUND
February 29, 2012
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
February 29, 2012
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI TURKEY INVESTABLE MARKET INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited)
February 29, 2012
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| 36 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| 38 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI USA INDEX FUND
February 29, 2012
| 40 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES® , INC.
February 29, 2012
| iShares MSCI Brazil Index Fund |
iShares MSCI Canada Index Fund |
iShares MSCI Chile Investable Market Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 6,455,080,908 | $ | 5,025,148,502 | $ | 517,105,583 | ||||||
| Affiliated (Note 2) |
479,511 | 44,682,264 | 629,248 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 6,455,560,419 | $ | 5,069,830,766 | $ | 517,734,831 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 10,508,070,076 | $ | 4,808,542,797 | $ | 706,794,846 | ||||||
| Affiliated (Note 2) |
479,511 | 44,682,264 | 629,248 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
10,508,549,587 | 4,853,225,061 | 707,424,094 | |||||||||
| Foreign currencies, at valueb |
16,211,934 | 10,198,286 | 866,144 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
— | 16,887,334 | 12,349,553 | |||||||||
| Dividends and interest |
49,287,522 | 4,585,499 | 9,822 | |||||||||
| Capital shares sold |
— | 137,863 | 6,765,849 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
10,574,049,043 | 4,885,034,043 | 727,415,462 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
— | 22,012,090 | 19,914,689 | |||||||||
| Collateral for securities on loan (Note 5) |
— | 44,677,748 | — | |||||||||
| Capital shares redeemed |
— | 413,589 | — | |||||||||
| Investment advisory fees (Note 2) |
5,108,390 | 1,973,218 | 316,217 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
5,108,390 | 69,076,645 | 20,230,906 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 10,568,940,653 | $ | 4,815,957,398 | $ | 707,184,556 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 7,789,638,887 | $ | 5,239,209,647 | $ | 585,850,052 | ||||||
| Undistributed (distributions in excess of) net investment income |
(197,834,804 | ) | (2,431,642 | ) | 1,470,232 | |||||||
| Accumulated net realized loss |
(1,078,603,069 | ) | (204,325,008 | ) | (69,824,769 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
4,055,739,639 | (216,495,599 | ) | 189,689,041 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 10,568,940,653 | $ | 4,815,957,398 | $ | 707,184,556 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
152,950,000 | 165,200,000 | 10,450,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 69.10 | $ | 29.15 | $ | 67.67 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $42,485,093 and $ —, respectively. See Note 5. |
| b | Cost of foreign currencies: $16,239,904, $10,049,346 and $866,144, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 340.2 million and 200 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
41 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Israel Capped Investable Market Index Fund |
iShares MSCI Mexico Investable Market Index Fund |
iShares MSCI South Africa Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 127,670,910 | $ | 1,418,580,423 | $ | 567,513,968 | ||||||
| Affiliated (Note 2) |
8,250,696 | 26,159,126 | 7,712,153 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 135,921,606 | $ | 1,444,739,549 | $ | 575,226,121 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 95,335,081 | $ | 1,329,954,076 | $ | 595,133,259 | ||||||
| Affiliated (Note 2) |
8,250,696 | 26,159,126 | 7,712,153 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
103,585,777 | 1,356,113,202 | 602,845,412 | |||||||||
| Foreign currencies, at valueb |
69,644 | 1,446,305 | 764,868 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
2,031,718 | 410,926 | 311,392 | |||||||||
| Dividends and interest |
113,004 | 59,059 | 10,277 | |||||||||
| Capital shares sold |
163,206 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
105,963,349 | 1,358,029,492 | 603,931,949 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
2,194,150 | — | 274,372 | |||||||||
| Collateral for securities on loan (Note 5) |
8,205,690 | 25,696,269 | 7,638,168 | |||||||||
| Capital shares redeemed |
— | 21,723 | — | |||||||||
| Investment advisory fees (Note 2) |
37,681 | 519,140 | 270,018 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
10,437,521 | 26,237,132 | 8,182,558 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 95,525,828 | $ | 1,331,792,360 | $ | 595,749,391 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 154,370,972 | $ | 1,454,120,756 | $ | 619,614,549 | ||||||
| Undistributed (distributions in excess of) net investment income |
(265,389 | ) | 23,579 | (4,064,229 | ) | |||||||
| Accumulated net realized loss |
(26,243,823 | ) | (33,735,862 | ) | (47,476,929 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
(32,335,932 | ) | (88,616,113 | ) | 27,676,000 | |||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 95,525,828 | $ | 1,331,792,360 | $ | 595,749,391 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
2,350,000 | 22,300,000 | 8,400,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 40.65 | $ | 59.72 | $ | 70.92 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $7,768,779, $24,091,458 and $7,245,168, respectively. See Note 5. |
| b | Cost of foreign currencies: $69,819, $1,436,864 and $708,159, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 255 million and 400 million, respectively. |
See notes to financial statements.
| 42 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES® , INC.
February 29, 2012
| iShares MSCI Turkey Investable Market Index Fund |
iShares MSCI USA Index Fund |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 540,780,229 | $ | 116,998,970 | ||||
| Affiliated (Note 2) |
42,823,808 | 2,668,992 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 583,604,037 | $ | 119,667,962 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||
| Unaffiliated |
$ | 436,608,743 | $ | 127,448,308 | ||||
| Affiliated (Note 2) |
42,823,808 | 2,716,223 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
479,432,551 | 130,164,531 | ||||||
| Foreign currencies, at valueb |
438,631 | — | ||||||
| Receivables: |
||||||||
| Investment securities sold |
— | 567,588 | ||||||
| Dividends and interest |
100,639 | 306,071 | ||||||
|
|
|
|
|
|||||
| Total Assets |
479,971,821 | 131,038,190 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
— | 621,409 | ||||||
| Collateral for securities on loan (Note 5) |
42,734,544 | 2,122,967 | ||||||
| Investment advisory fees (Note 2) |
204,493 | 15,528 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
42,939,037 | 2,759,904 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 437,032,784 | $ | 128,278,286 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 589,571,009 | $ | 115,692,412 | ||||
| Undistributed (distributions in excess of) net investment income |
(2,765,075 | ) | 419,436 | |||||
| Undistributed net realized gain (accumulated net realized loss) |
(45,602,842 | ) | 1,669,869 | |||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
(104,170,308 | ) | 10,496,569 | |||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 437,032,784 | $ | 128,278,286 | ||||
|
|
|
|
|
|||||
| Shares outstandingc |
8,350,000 | 4,350,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 52.34 | $ | 29.49 | ||||
|
|
|
|
|
|||||
| a | Securities on loan with values of $40,172,966 and $2,078,434, respectively. See Note 5. |
| b | Cost of foreign currencies: $437,453 and $ —, respectively. |
| c | $0.001 par value, number of shares authorized: 200 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
43 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Brazil Index Fund |
iShares MSCI Canada Index Fund |
iShares Investable Market |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 138,593,346 | $ | 53,913,326 | $ | 3,901,899 | ||||||
| Interest — affiliated (Note 2) |
1,471 | 781 | 146 | |||||||||
| Securities lending income — affiliated (Note 2) |
79 | 112,708 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| 138,594,896 | 54,026,815 | 3,902,045 | ||||||||||
| Less: Other foreign taxes (Note 1) |
— | (11,406 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
138,594,896 | 54,015,409 | 3,902,045 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
30,256,120 | 12,256,467 | 1,691,673 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
30,256,120 | 12,256,467 | 1,691,673 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
108,338,776 | 41,758,942 | 2,210,372 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(385,218,356 | ) | (45,005,982 | ) | (30,311,213 | ) | ||||||
| In-kind redemptions — unaffiliated |
— | 82,270,975 | — | |||||||||
| Foreign currency transactions |
(2,687,058 | ) | (20,664 | ) | (246,760 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(387,905,414 | ) | 37,244,329 | (30,557,973 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
873,979,806 | (160,680,164 | ) | 13,496,843 | ||||||||
| Translation of assets and liabilities in foreign currencies |
(87,860 | ) | 28,483 | 2,584 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
873,891,946 | (160,651,681 | ) | 13,499,427 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
485,986,532 | (123,407,352 | ) | (17,058,546 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 594,325,308 | $ | (81,648,410 | ) | $ | (14,848,174 | ) | ||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $15,495,160, $9,482,747 and $1,124,589, respectively. |
See notes to financial statements.
| 44 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Israel Capped Investable Market Index Fund |
iShares MSCI Mexico Investable Market Index Fund |
iShares MSCI South Africa Index Fund |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliateda |
$ | 1,274,325 | $ | 5,856,648 | $ | 8,861,632 | ||||||
| Interest — affiliated (Note 2) |
71 | 152 | 44 | |||||||||
| Securities lending income — affiliated (Note 2) |
26,963 | 323,281 | 40,972 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
1,301,359 | 6,180,081 | 8,902,648 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
247,059 | 2,941,854 | 1,569,941 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
247,059 | 2,941,854 | 1,569,941 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
1,054,300 | 3,238,227 | 7,332,707 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(4,778,308 | ) | (17,345,579 | ) | (3,505,023 | ) | ||||||
| In-kind redemptions — unaffiliated |
142,400 | 40,012,663 | 8,095,537 | |||||||||
| Foreign currency transactions |
(13,164 | ) | 214,095 | (245,958 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized gain (loss) |
(4,649,072 | ) | 22,881,179 | 4,344,556 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
(5,235,760 | ) | 9,593,745 | 18,755,290 | ||||||||
| Translation of assets and liabilities in foreign currencies |
(810 | ) | 35,326 | 40,760 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
(5,236,570 | ) | 9,629,071 | 18,796,050 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
(9,885,642 | ) | 32,510,250 | 23,140,606 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (8,831,342 | ) | $ | 35,748,477 | $ | 30,473,313 | |||||
|
|
|
|
|
|
|
|||||||
| a | Net of foreign withholding tax of $241,173, $ — and $ —, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
45 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Turkey Investable Market Index Fund |
iShares MSCI USA Index Fund |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliateda |
$ | 179 | $ | 695,202 | ||||
| Dividends — affiliated (Note 2) |
— | 3,352 | ||||||
| Interest — affiliated (Note 2) |
49 | 8 | ||||||
| Securities lending income — affiliated (Note 2) |
430,420 | 3,201 | ||||||
|
|
|
|
|
|||||
| Total investment income |
430,648 | 701,763 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
1,246,950 | 48,333 | ||||||
|
|
|
|
|
|||||
| Total expenses |
1,246,950 | 48,333 | ||||||
|
|
|
|
|
|||||
| Net investment income (loss) |
(816,302 | ) | 653,430 | |||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(11,038,388 | ) | (69,436 | ) | ||||
| Investments — affiliated (Note 2) |
— | (223 | ) | |||||
| In-kind redemptions — unaffiliated |
(12,540,869 | ) | 1,743,456 | |||||
| In-kind redemptions — affiliated (Note 2) |
— | 7,320 | ||||||
| Foreign currency transactions |
(8,965 | ) | — | |||||
|
|
|
|
|
|||||
| Net realized gain (loss) |
(23,588,222 | ) | 1,681,117 | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
58,587,128 | 10,349,403 | ||||||
| Translation of assets and liabilities in foreign currencies |
13,959 | — | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
58,601,087 | 10,349,403 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain |
35,012,865 | 12,030,520 | ||||||
|
|
|
|
|
|||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 34,196,563 | $ | 12,683,950 | ||||
|
|
|
|
|
|||||
| a | Net of foreign withholding tax of $ — and $46, respectively. |
See notes to financial statements.
| 46 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Brazil Index Fund |
iShares MSCI Canada Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 108,338,776 | $ | 367,867,712 | $ | 41,758,942 | $ | 86,191,078 | ||||||||
| Net realized gain (loss) |
(387,905,414 | ) | 13,713,035 | 37,244,329 | 183,034,604 | |||||||||||
| Net change in unrealized appreciation/depreciation |
873,891,946 | (647,882,263 | ) | (160,651,681 | ) | 229,031,923 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
594,325,308 | (266,301,516 | ) | (81,648,410 | ) | 498,257,605 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(68,772,164 | ) | (577,419,673 | ) | (59,847,665 | ) | (84,459,614 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(68,772,164 | ) | (577,419,673 | ) | (59,847,665 | ) | (84,459,614 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
6,184,114 | 2,935,390,134 | 553,927,661 | 2,412,404,012 | ||||||||||||
| Cost of shares redeemed |
(1,294,918,066 | ) | — | (689,020,722 | ) | (1,180,897,966 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(1,288,733,952 | ) | 2,935,390,134 | (135,093,061 | ) | 1,231,506,046 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(763,180,808 | ) | 2,091,668,945 | (276,589,136 | ) | 1,645,304,037 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
11,332,121,461 | 9,240,452,516 | 5,092,546,534 | 3,447,242,497 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 10,568,940,653 | $ | 11,332,121,461 | $ | 4,815,957,398 | $ | 5,092,546,534 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (197,834,804 | ) | $ | (237,401,416 | ) | $ | (2,431,642 | ) | $ | 15,657,081 | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
100,000 | 38,600,000 | 20,200,000 | 76,300,000 | ||||||||||||
| Shares redeemed |
(21,500,000 | ) | — | (25,400,000 | ) | (38,000,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(21,400,000 | ) | 38,600,000 | (5,200,000 | ) | 38,300,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
47 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Chile Investable Market Index Fund |
iShares MSCI Israel Capped Investable Market Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 2,210,372 | $ | 11,376,957 | $ | 1,054,300 | $ | 3,152,768 | ||||||||
| Net realized loss |
(30,557,973 | ) | (12,848,131 | ) | (4,649,072 | ) | (713,779 | ) | ||||||||
| Net change in unrealized appreciation/depreciation |
13,499,427 | (7,548,871 | ) | (5,236,570 | ) | (3,185,397 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease in net assets resulting from operations |
(14,848,174 | ) | (9,020,045 | ) | (8,831,342 | ) | (746,408 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(738,021 | ) | (11,314,677 | ) | (1,168,097 | ) | (3,733,516 | ) | ||||||||
| Return of capital |
— | (9,331 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(738,021 | ) | (11,324,008 | ) | (1,168,097 | ) | (3,733,516 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
132,344,863 | 288,309,806 | 38,159,889 | 46,097,654 | ||||||||||||
| Cost of shares redeemed |
(117,592,077 | ) | (230,298,194 | ) | (10,652,135 | ) | (92,072,921 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
14,752,786 | 58,011,612 | 27,507,754 | (45,975,267 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(833,409 | ) | 37,667,559 | 17,508,315 | (50,455,191 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
708,017,965 | 670,350,406 | 78,017,513 | 128,472,704 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 707,184,556 | $ | 708,017,965 | $ | 95,525,828 | $ | 78,017,513 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 1,470,232 | $ | (2,119 | ) | $ | (265,389 | ) | $ | (151,592 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
2,050,000 | 3,950,000 | 900,000 | 850,000 | ||||||||||||
| Shares redeemed |
(2,150,000 | ) | (3,350,000 | ) | (250,000 | ) | (1,750,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(100,000 | ) | 600,000 | 650,000 | (900,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 48 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Mexico Investable Market Index Fund |
iShares MSCI South Africa Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income |
$ | 3,238,227 | $ | 21,339,325 | $ | 7,332,707 | $ | 14,792,435 | ||||||||
| Net realized gain |
22,881,179 | 179,585,751 | 4,344,556 | 43,216,708 | ||||||||||||
| Net change in unrealized appreciation/depreciation |
9,629,071 | 111,537,604 | 18,796,050 | 45,035,353 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase in net assets resulting from operations |
35,748,477 | 312,462,680 | 30,473,313 | 103,044,496 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(7,141,587 | ) | (19,365,342 | ) | (8,638,286 | ) | (21,537,358 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(7,141,587 | ) | (19,365,342 | ) | (8,638,286 | ) | (21,537,358 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
560,541,597 | 737,959,537 | 131,820,642 | 174,104,575 | ||||||||||||
| Cost of shares redeemed |
(501,086,948 | ) | (1,237,364,625 | ) | (62,008,527 | ) | (256,700,202 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
59,454,649 | (499,405,088 | ) | 69,812,115 | (82,595,627 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
88,061,539 | (206,307,750 | ) | 91,647,142 | (1,088,489 | ) | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
1,243,730,821 | 1,450,038,571 | 504,102,249 | 505,190,738 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 1,331,792,360 | $ | 1,243,730,821 | $ | 595,749,391 | $ | 504,102,249 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 23,579 | $ | 3,926,939 | $ | (4,064,229 | ) | $ | (2,758,650 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
10,100,000 | 12,300,000 | 2,100,000 | 2,500,000 | ||||||||||||
| Shares redeemed |
(9,100,000 | ) | (21,100,000 | ) | (1,000,000 | ) | (3,800,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
1,000,000 | (8,800,000 | ) | 1,100,000 | (1,300,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| FINANCIAL STATEMENTS |
49 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Turkey Investable Market Index Fund |
iShares MSCI USA Index Fund |
|||||||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||||||
| OPERATIONS: |
||||||||||||||||
| Net investment income (loss) |
$ | (816,302 | ) | $ | 8,905,310 | $ | 653,430 | $ | 36,203 | |||||||
| Net realized gain (loss) |
(23,588,222 | ) | 71,241,274 | 1,681,117 | 10,879 | |||||||||||
| Net change in unrealized appreciation/depreciation |
58,601,087 | (215,343,703 | ) | 10,349,403 | 393,770 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
34,196,563 | (135,197,119 | ) | 12,683,950 | 440,852 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||||||
| From net investment income |
(1,252,849 | ) | (13,656,029 | ) | (244,960 | ) | (35,212 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total distributions to shareholders |
(1,252,849 | ) | (13,656,029 | ) | (244,960 | ) | (35,212 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||||||
| Proceeds from shares sold |
31,836,028 | 431,490,354 | 131,769,112 | 3,846,426 | ||||||||||||
| Cost of shares redeemed |
(76,423,920 | ) | (435,948,383 | ) | (21,163,297 | ) | (1,262,145 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets from capital share transactions |
(44,587,892 | ) | (4,458,029 | ) | 110,605,815 | 2,584,281 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCREASE (DECREASE) IN NET ASSETS |
(11,644,178 | ) | (153,311,177 | ) | 123,044,805 | 2,989,921 | ||||||||||
| NET ASSETS |
||||||||||||||||
| Beginning of period |
448,676,962 | 601,988,139 | 5,233,481 | 2,243,560 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| End of period |
$ | 437,032,784 | $ | 448,676,962 | $ | 128,278,286 | $ | 5,233,481 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Undistributed (distributions in excess of) net investment income |
$ | (2,765,075 | ) | $ | (695,924 | ) | $ | 419,436 | $ | 10,966 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||||||
| Shares sold |
650,000 | 6,400,000 | 4,900,000 | 150,000 | ||||||||||||
| Shares redeemed |
(1,700,000 | ) | (6,900,000 | ) | (750,000 | ) | (50,000 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in shares outstanding |
(1,050,000 | ) | (500,000 | ) | 4,150,000 | 100,000 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
See notes to financial statements.
| 50 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Brazil Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 65.00 | $ | 68.07 | $ | 58.26 | $ | 73.27 | $ | 61.59 | $ | 39.09 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.65 | 2.24 | 1.56 | 1.56 | 1.93 | 1.09 | ||||||||||||||||||
| Net realized and |
3.87 | (1.69 | ) | 10.83 | (14.63 | ) | 11.59 | 22.35 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
4.52 | 0.55 | 12.39 | (13.07 | ) | 13.52 | 23.44 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.42 | ) | (3.62 | ) | (2.58 | ) | (1.94 | ) | (1.41 | ) | (0.94 | ) | ||||||||||||
| Net realized gain |
— | — | — | — | (0.43 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.42 | ) | (3.62 | ) | (2.58 | ) | (1.94 | ) | (1.84 | ) | (0.94 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 69.10 | $ | 65.00 | $ | 68.07 | $ | 58.26 | $ | 73.27 | $ | 61.59 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
7.08 | %c | 0.36 | % | 21.12 | % | (16.05 | )% | 21.58 | % | 60.82 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end |
$ | 10,568,941 | $ | 11,332,121 | $ | 9,240,453 | $ | 8,777,366 | $ | 7,242,260 | $ | 4,434,334 | ||||||||||||
| Ratio of expenses to |
0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | 0.69 | % | ||||||||||||
| Ratio of net |
2.17 | % | 3.08 | % | 2.24 | % | 3.38 | % | 2.37 | % | 2.17 | % | ||||||||||||
| Portfolio turnover ratef |
2 | % | 11 | % | 13 | % | 30 | % | 30 | % | 22 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| f | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the six months ended February 29, 2012 and the years ended August 31, 2011, August 31, 2010, August 31, 2009, August 31, 2008 and August 31, 2007 would have been 2%, 11%, 13%, 14%, 19%, and 6%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
51 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Canada Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 29.89 | $ | 26.10 | $ | 23.70 | $ | 30.55 | $ | 29.87 | $ | 24.69 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.24 | 0.53 | 0.43 | 0.41 | 0.47 | 0.35 | ||||||||||||||||||
| Net realized and |
(0.63 | ) | 3.78 | 2.39 | (6.84 | ) | 0.72 | 5.11 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
(0.39 | ) | 4.31 | 2.82 | (6.43 | ) | 1.19 | 5.46 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.35 | ) | (0.52 | ) | (0.42 | ) | (0.42 | ) | (0.51 | ) | (0.28 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.35 | ) | (0.52 | ) | (0.42 | ) | (0.42 | ) | (0.51 | ) | (0.28 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 29.15 | $ | 29.89 | $ | 26.10 | $ | 23.70 | $ | 30.55 | $ | 29.87 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
(1.14 | )%c | 16.50 | % | 11.91 | % | (20.51 | )% | 3.88 | % | 22.33 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, |
$ | 4,815,957 | $ | 5,092,547 | $ | 3,447,242 | $ | 2,393,638 | $ | 2,071,061 | $ | 1,323,122 | ||||||||||||
| Ratio of expenses |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.52 | % | ||||||||||||
| Ratio of net |
1.79 | % | 1.70 | % | 1.63 | % | 2.00 | % | 1.46 | % | 1.32 | % | ||||||||||||
| Portfolio turnover ratef |
2 | % | 8 | % | 6 | % | 6 | % | 11 | % | 8 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 52 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Chile Investable Market Index Fund | ||||||||||||||||||||
| Six months Feb. 29, 2012 |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Period from to Aug. 31, 2008 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 67.11 | $ | 67.37 | $ | 44.61 | $ | 44.80 | $ | 48.84 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.24 | 0.95 | 0.59 | 0.76 | 0.92 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
0.40 | (0.23 | ) | 22.86 | (0.42 | ) | (4.38 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
0.64 | 0.72 | 23.45 | 0.34 | (3.46 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.08 | ) | (0.98 | ) | (0.66 | ) | (0.53 | ) | (0.58 | ) | ||||||||||
| Return of capital |
— | (0.00 | )d | (0.03 | ) | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.08 | ) | (0.98 | ) | (0.69 | ) | (0.53 | ) | (0.58 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 67.67 | $ | 67.11 | $ | 67.37 | $ | 44.61 | $ | 44.80 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
0.98 | %e | 0.93 | % | 52.88 | % | 0.89 | % | (7.15 | )%e | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 707,185 | $ | 708,018 | $ | 670,350 | $ | 263,205 | $ | 76,158 | ||||||||||
| Ratio of expenses to average net assetsf |
0.60 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||
| Ratio of net investment income to average net assetsf |
0.79 | % | 1.30 | % | 1.05 | % | 1.98 | % | 2.38 | % | ||||||||||
| Portfolio turnover rateg |
31 | % | 38 | % | 42 | % | 53 | % | 16 | % | ||||||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Rounds to less than $0.01. |
| e | Not annualized. |
| f | Annualized for periods of less than one year. |
| g | Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the six months ended February 29, 2012, the years ended August 31, 2011, August 31, 2010, August 31, 2009 and the period ended August 31, 2008 would have been 11%, 12%, 9%, 14% and 16%, respectively. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
53 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Israel Capped Investable Market Index Fund | ||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Period from to Aug. 31, 2008 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 45.89 | $ | 49.41 | $ | 46.87 | $ | 48.62 | $ | 50.33 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.54 | 1.39 | 1.40 | 0.98 | 0.21 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
(5.18 | ) | (3.18 | ) | 2.63 | (1.75 | ) | (1.92 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
(4.64 | ) | (1.79 | ) | 4.03 | (0.77 | ) | (1.71 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.60 | ) | (1.73 | ) | (1.49 | ) | (0.98 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.60 | ) | (1.73 | ) | (1.49 | ) | (0.98 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 40.65 | $ | 45.89 | $ | 49.41 | $ | 46.87 | $ | 48.62 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
(10.12 | )%d | (4.26 | )% | 8.57 | % | (0.63 | )% | (3.40 | )%d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 95,526 | $ | 78,018 | $ | 128,473 | $ | 107,792 | $ | 204,201 | ||||||||||
| Ratio of expenses to average net assetse |
0.61 | % | 0.59 | % | 0.61 | % | 0.66 | % | 0.63 | % | ||||||||||
| Ratio of net investment income to average net assetse |
2.58 | % | 2.49 | % | 2.64 | % | 2.66 | % | 0.93 | % | ||||||||||
| Portfolio turnover ratef |
11 | % | 17 | % | 21 | % | 27 | % | 8 | % | ||||||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 54 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Mexico Investable Market Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008 |
Year ended Aug. 31, 2007 |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 58.39 | $ | 48.17 | $ | 42.59 | $ | 51.94 | $ | 58.35 | $ | 41.30 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomea |
0.16 | 0.80 | 0.72 | 0.43 | 1.40 | 0.64 | ||||||||||||||||||
| Net realized and |
1.52 | 10.15 | 5.61 | (9.17 | ) | (6.21 | ) | 16.87 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
1.68 | 10.95 | 6.33 | (8.74 | ) | (4.81 | ) | 17.51 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.35 | ) | (0.73 | ) | (0.75 | ) | (0.61 | ) | (1.60 | ) | (0.46 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.35 | ) | (0.73 | ) | (0.75 | ) | (0.61 | ) | (1.60 | ) | (0.46 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 59.72 | $ | 58.39 | $ | 48.17 | $ | 42.59 | $ | 51.94 | $ | 58.35 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
2.94 | %c | 22.67 | % | 14.83 | % | (16.50 | )% | (8.44 | )% | 42.58 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, |
$ | 1,331,792 | $ | 1,243,731 | $ | 1,450,039 | $ | 694,278 | $ | 955,684 | $ | 1,382,810 | ||||||||||||
| Ratio of expenses to average net assetsd |
0.52 | % | 0.52 | % | 0.53 | % | 0.55 | % | 0.52 | % | 0.51 | % | ||||||||||||
| Ratio of net investment |
0.58 | % | 1.35 | % | 1.46 | % | 1.25 | % | 2.42 | % | 1.19 | % | ||||||||||||
| Portfolio turnover ratee |
5 | % | 5 | % | 11 | % | 13 | % | 13 | % | 14 | % | ||||||||||||
| a | Based on average shares outstanding throughout each period. |
| b | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| c | Not annualized. |
| d | Annualized for periods of less than one year. |
| e | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
55 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI South Africa Index Fund | ||||||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
Year ended Aug. 31, 2007a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 69.06 | $ | 58.74 | $ | 51.99 | $ | 55.80 | $ | 62.26 | $ | 48.84 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.89 | 1.65 | 1.18 | 1.94 | 2.28 | 1.50 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
2.04 | 11.08 | 6.92 | (3.84 | ) | (6.02 | ) | 13.18 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.93 | 12.73 | 8.10 | (1.90 | ) | (3.74 | ) | 14.68 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(1.07 | ) | (2.41 | ) | (1.35 | ) | (1.91 | ) | (2.72 | ) | (1.26 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(1.07 | ) | (2.41 | ) | (1.35 | ) | (1.91 | ) | (2.72 | ) | (1.26 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 70.92 | $ | 69.06 | $ | 58.74 | $ | 51.99 | $ | 55.80 | $ | 62.26 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
4.55 | %d | 21.58 | % | 15.80 | % | (2.23 | )% | (6.18 | )% | 30.34 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 595,749 | $ | 504,102 | $ | 505,191 | $ | 488,728 | $ | 429,655 | $ | 466,940 | ||||||||||||
| Ratio of expenses to average net assetse |
0.61 | % | 0.59 | % | 0.61 | % | 0.66 | % | 0.63 | % | 0.68 | % | ||||||||||||
| Ratio of net investment |
2.83 | % | 2.38 | % | 2.09 | % | 4.81 | % | 3.61 | % | 2.58 | % | ||||||||||||
| Portfolio turnover ratef |
2 | % | 4 | % | 5 | % | 16 | % | 21 | % | 8 | % | ||||||||||||
| a | Per share amounts were adjusted to reflect a two-for-one stock split effective July 24, 2008. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 56 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI Turkey Investable Market Index Fund | ||||||||||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Period from to Aug. 31, 2008 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 47.73 | $ | 60.81 | $ | 48.01 | $ | 52.42 | $ | 50.30 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment income (loss)b |
(0.09 | ) | 0.84 | 1.00 | 0.78 | 0.83 | ||||||||||||||
| Net realized and unrealized gain (loss)c |
4.85 | (12.59 | ) | 13.02 | (4.22 | ) | 1.29 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
4.76 | (11.75 | ) | 14.02 | (3.44 | ) | 2.12 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.15 | ) | (1.33 | ) | (1.22 | ) | (0.97 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.15 | ) | (1.33 | ) | (1.22 | ) | (0.97 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 52.34 | $ | 47.73 | $ | 60.81 | $ | 48.01 | $ | 52.42 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
10.04 | %d | (19.74 | )% | 29.55 | % | (5.56 | )% | 4.22 | %d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 437,033 | $ | 448,677 | $ | 601,988 | $ | 242,435 | $ | 152,021 | ||||||||||
| Ratio of expenses to average net assetse |
0.61 | % | 0.59 | % | 0.61 | % | 0.65 | % | 0.63 | % | ||||||||||
| Ratio of net investment income (loss) to average net assetse |
(0.40 | )% | 1.30 | % | 1.81 | % | 2.39 | % | 3.78 | % | ||||||||||
| Portfolio turnover ratef |
3 | % | 12 | % | 13 | % | 16 | % | 27 | % | ||||||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
57 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI USA Index Fund | ||||||||||||
| Six months ended Feb. 29, 2012 (Unaudited) |
Year ended Aug. 31, 2011 |
Period from to Aug. 31, 2010 |
||||||||||
| Net asset value, beginning of period |
$ | 26.17 | $ | 22.44 | $ | 24.83 | ||||||
|
|
|
|
|
|
|
|||||||
| Income from investment operations: |
||||||||||||
| Net investment incomeb |
0.28 | 0.51 | 0.17 | |||||||||
| Net realized and unrealized gain (loss)c |
3.16 | 3.73 | (2.49 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Total from investment operations |
3.44 | 4.24 | (2.32 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Less distributions from: |
||||||||||||
| Net investment income |
(0.12 | ) | (0.51 | ) | (0.07 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total distributions |
(0.12 | ) | (0.51 | ) | (0.07 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net asset value, end of period |
$ | 29.49 | $ | 26.17 | $ | 22.44 | ||||||
|
|
|
|
|
|
|
|||||||
| Total return |
13.22 | %d | 18.89 | % | (9.37 | )%d | ||||||
|
|
|
|
|
|
|
|||||||
| Ratios/Supplemental data: |
||||||||||||
| Net assets, end of period (000s) |
$ | 128,278 | $ | 5,233 | $ | 2,244 | ||||||
| Ratio of expenses to average net assetse |
0.15 | % | 0.15 | % | 0.15 | % | ||||||
| Ratio of net investment income to average net assetse |
2.03 | % | 1.90 | % | 2.21 | % | ||||||
| Portfolio turnover ratef |
2 | % | 8 | % | 1 | % | ||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 58 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (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.
These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
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. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Certain Funds may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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 Funds; 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; less 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.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| NOTES TO FINANCIAL STATEMENTS |
59 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of each Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
Fair value pricing could result in a difference between the prices used to calculate a 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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument.
| 60 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 29, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Schedule of Investments.
| Investments | ||||||||||||||||
| iShares MSCI Index Fund and Investment Type
|
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Brazil |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,869,980,850 | $ | — | $ | — | $ | 4,869,980,850 | ||||||||
| Preferred Stocks |
5,638,054,999 | — | — | 5,638,054,999 | ||||||||||||
| Rights |
34,227 | — | — | 34,227 | ||||||||||||
| Short-Term Investments |
479,511 | — | — | 479,511 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 10,508,549,587 | $ | — | $ | — | $ | 10,508,549,587 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Canada |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 4,808,542,698 | $ | — | $ | 99 | $ | 4,808,542,797 | ||||||||
| Short-Term Investments |
44,682,264 | — | — | 44,682,264 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 4,853,224,962 | $ | — | $ | 99 | $ | 4,853,225,061 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Chile Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 652,073,107 | $ | — | $ | — | $ | 652,073,107 | ||||||||
| Preferred Stocks |
54,721,739 | — | — | 54,721,739 | ||||||||||||
| Short-Term Investments |
629,248 | — | — | 629,248 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 707,424,094 | $ | — | $ | — | $ | 707,424,094 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Israel Capped Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 95,335,081 | $ | — | $ | — | $ | 95,335,081 | ||||||||
| Short-Term Investments |
8,250,696 | — | — | 8,250,696 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 103,585,777 | $ | — | $ | — | $ | 103,585,777 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Mexico Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 1,329,954,076 | $ | — | $ | — | $ | 1,329,954,076 | ||||||||
| Short-Term Investments |
26,159,126 | — | — | 26,159,126 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 1,356,113,202 | $ | — | $ | — | $ | 1,356,113,202 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| South Africa |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 595,133,259 | $ | — | $ | — | $ | 595,133,259 | ||||||||
| Short-Term Investments |
7,712,153 | — | — | 7,712,153 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 602,845,412 | $ | — | $ | — | $ | 602,845,412 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
61 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| Investments | ||||||||||||||||
| iShares MSCI Index Fund and Investment Type |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Turkey Investable Market |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 436,608,743 | $ | — | $ | — | $ | 436,608,743 | ||||||||
| Short-Term Investments |
42,823,808 | — | — | 42,823,808 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 479,432,551 | $ | — | $ | — | $ | 479,432,551 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| USA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 127,967,668 | $ | — | $ | — | $ | 127,967,668 | ||||||||
| Short-Term Investments |
2,196,863 | — | — | 2,196,863 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 130,164,531 | $ | — | $ | — | $ | 130,164,531 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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. 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.
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.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Funds’ Statements of Assets and Liabilities.
| 62 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds 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 ordinary income and any net capital 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 is required.
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 Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
For its investment advisory services to each of the iShares MSCI Canada and iShares MSCI Mexico Investable Market Index Funds, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.59% | First $7 billion | |
| 0.54 | Over $7 billion, up to and including $11 billion | |
| 0.49 | Over $11 billion, up to and including $24 billion | |
| 0.44 | Over $24 billion, up to and including $48 billion | |
| 0.40 | Over $48 billion |
| NOTES TO FINANCIAL STATEMENTS |
63 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to each of the iShares MSCI Brazil, iShares MSCI Chile Investable Market, iShares MSCI Israel Capped Investable Market, iShares MSCI South Africa and iShares MSCI Turkey Investable Market Index Funds, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.74% | First $2 billion | |
| 0.69 | Over $2 billion, up to and including $4 billion | |
| 0.64 | Over $4 billion, up to and including $8 billion | |
| 0.57 | Over $8 billion, up to and including $16 billion | |
| 0.51 | Over $16 billion, up to and including $32 billion | |
| 0.45 | Over $32 billion |
For its investment advisory services to the iShares MSCI USA Index Fund, BFA is entitled to an annual investment advisory fee of 0.15% based on the average daily net assets of the Fund.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Funds, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by each Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the six months ended February 29, 2012, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees | |
| Brazil |
$ 42 | |
| Canada |
60,689 | |
| Israel Capped Investable Market |
14,518 | |
| Mexico Investable Market |
174,074 | |
| South Africa |
22,062 | |
| Turkey Investable Market |
231,765 | |
| USA |
1,723 |
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for each Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest — affiliated” in the Statements of Operations.
| 64 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but Barclays is not.
Investments in issuers considered to be affiliates of the Funds (excluding short-term investments) during the six months ended February 29, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| iShares Index Fund and Name of Affiliated Issuer |
Shares Held at Beginning of Period |
Shares Purchased |
Shares Sold |
Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| MSCI USA |
||||||||||||||||||||||||||||
| BlackRock Inc. |
42 | 1,176 | (179 | ) | 1,039 | $ | 206,761 | $ | 1,330 | $ | 2,056 | |||||||||||||||||
| PNC Financial Services Group Inc. (The) |
236 | 5,913 | (897 | ) | 5,252 | 312,599 | 2,022 | 5,041 | ||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 519,360 | $ | 3,352 | $ | 7,097 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| Brazil |
$ | 224,151,924 | $ | 1,443,155,572 | ||||
| Canada |
89,698,796 | 109,874,579 | ||||||
| Chile Investable Market |
196,136,203 | 179,851,508 | ||||||
| Israel Capped Investable Market |
9,718,778 | 9,481,839 | ||||||
| Mexico Investable Market |
54,202,684 | 59,068,699 | ||||||
| South Africa |
9,471,586 | 10,295,203 | ||||||
| Turkey Investable Market |
14,664,976 | 18,237,736 | ||||||
| USA |
1,978,970 | 1,438,236 | ||||||
In-kind transactions (see Note 4) for the six months ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| Canada |
$ | 549,212,050 | $ | 682,881,894 | ||||
| Israel Capped Investable Market |
37,785,667 | 10,564,448 | ||||||
| Mexico Investable Market |
559,945,426 | 500,581,610 | ||||||
| South Africa |
131,322,497 | 61,877,815 | ||||||
| Turkey Investable Market |
31,778,298 | 76,317,674 | ||||||
| USA |
131,322,120 | 21,137,757 | ||||||
| NOTES TO FINANCIAL STATEMENTS |
65 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
| 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 by each Fund is required to have a value of at least 102% of the current value of the loaned securities 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. 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 a fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. Each 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. 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 gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
| 66 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The Funds had tax basis net capital loss carryforwards as of August 31, 2011, the tax year-end of the Funds, as follows:
| iShares MSCI Index Fund | Expiring 2012 |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | |||||||||||||||||||||||||||
| Brazil |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 198,226,310 | $ | — | $ | 198,226,310 | ||||||||||||||||||
| Canada |
— | 2,931,648 | — | 5,363,291 | 5,107,471 | 27,886,883 | 68,928,677 | 14,903,919 | 125,121,889 | |||||||||||||||||||||||||||
| Chile Investable Market |
— | — | — | — | — | 1,886,881 | 11,712,090 | 976,991 | 14,575,962 | |||||||||||||||||||||||||||
| Israel Capped Investable Market |
— | — | — | — | — | 784,479 | 10,801,191 | 7,130,249 | 18,715,919 | |||||||||||||||||||||||||||
| Mexico Investable Market |
3,136,171 | 12,912 | 632,766 | — | 853,150 | 8,973,988 | 2,789,471 | 22,863,665 | 39,262,123 | |||||||||||||||||||||||||||
| South Africa |
527,613 | — | 260,738 | 1,607,845 | 972,024 | 15,339,464 | 14,856,365 | 6,137,142 | 39,701,191 | |||||||||||||||||||||||||||
| Turkey Investable Market |
— | — | — | — | — | 720,636 | 5,982,737 | 3,859,184 | 10,562,557 | |||||||||||||||||||||||||||
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by funds for taxable years beginning after December 22, 2010 are not subject to expiration and must be utilized prior to the losses incurred in the tax years preceding enactment.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 29, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| Brazil |
$ | 7,093,794,348 | $ | 4,298,777,470 | $ | (884,022,231 | ) | $ | 3,414,755,239 | |||||||
| Canada |
5,163,306,147 | 330,019,945 | (640,101,031 | ) | (310,081,086 | ) | ||||||||||
| Chile Investable Market |
535,081,919 | 205,907,029 | (33,564,854 | ) | 172,342,175 | |||||||||||
| Israel Capped Investable Market |
136,826,534 | 921,359 | (34,162,116 | ) | (33,240,757 | ) | ||||||||||
| Mexico Investable Market |
1,455,498,264 | 70,628,285 | (170,013,347 | ) | (99,385,062 | ) | ||||||||||
| South Africa |
585,091,868 | 73,535,443 | (55,781,899 | ) | 17,753,544 | |||||||||||
| Turkey Investable Market |
590,310,920 | 10,285,360 | (121,163,729 | ) | (110,878,369 | ) | ||||||||||
| USA |
119,679,261 | 11,300,772 | (815,502 | ) | 10,485,270 | |||||||||||
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| NOTES TO FINANCIAL STATEMENTS |
67 |
Table of Contents
Supplemental Information (Unaudited)
iSHARES® , INC.
Section 19(a) Notices
The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report distributions for federal income tax purposes.
| Total Cumulative
Distributions for the Fiscal Year-to-Date |
% Breakdown of the Total Cumulative Distributions for the Fiscal Year-to-Date |
|||||||||||||||||||||||||||||||
| iShares MSCI Index Fund | Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
||||||||||||||||||||||||
| Canada |
$ | 0.24965 | $ | — | $ | 0.10364 | $ | 0.35329 | 71 | % | — | % | 29 | % | 100 | % | ||||||||||||||||
| Mexico Investable Market |
0.24375 | — | 0.10293 | 0.34668 | 70 | — | 30 | 100 | ||||||||||||||||||||||||
| Turkey Investable Market |
0.07191 | — | 0.07462 | 0.14653 | 49 | — | 51 | 100 | ||||||||||||||||||||||||
| USA |
0.08495 | — | 0.03592 | 0.12087 | 70 | — | 30 | 100 | ||||||||||||||||||||||||
| 68 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes:
| NOTES |
69 |
Table of Contents
Notes:
| 70 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
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iS-SAR-84-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI Emerging Markets Index Fund | EEM | NYSE Arca
Table of Contents
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| 26 |
Table of Contents
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.99)% | (1.35)% | (0.11)% | 5.51% | 5.31% | 6.21% | 18.43% | 18.38% | 18.81% | ||||||||
| Cumulative Total Returns | ||||||||||||||||
| Year Ended 2/29/12 | Five Years Ended 2/29/12 | Inception to 2/29/12 | ||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||
| (0.99)% | (1.35)% | (0.11)% | 30.73% | 29.53% | 35.13% | 350.66% | 348.81% | 363.55% | ||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (4/7/03). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (4/11/03), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets IndexSM (the “Index”). The Index is designed to measure equity market performance in the global emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 5.12%, net of fees, while the total return for the Index was 5.27%.
| FUND PERFORMANCE OVERVIEW |
5 |
Table of Contents
Fund Performance Overview (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 to February 29, 2012.
ACTUAL EXPENSES
The first line in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning Account Value (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
|||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,051.20 | 0.68 | % | $ | 3.47 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.68 | 3.42 | ||||||||||||
| a | Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| SHAREHOLDER EXPENSES |
7 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
9 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
11 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
13 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULE OF INVESTMENTS |
21 |
Table of Contents
Consolidated Statement of Assets and Liabilities (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
February 29, 2012
| ASSETS |
||||
| Investments, at cost: |
||||
| Unaffiliated |
$ | 38,497,256,995 | ||
| Affiliated (Note 2) |
1,577,254,681 | |||
|
|
|
|||
| Total cost of investments |
$ | 40,074,511,676 | ||
|
|
|
|||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||
| Unaffiliated |
$ | 40,956,687,250 | ||
| Affiliated (Note 2) |
1,577,254,681 | |||
|
|
|
|||
| Total fair value of investments |
42,533,941,931 | |||
| Foreign currencies, at valueb |
27,329,588 | |||
| Cash |
19,000,000 | |||
| Receivables: |
||||
| Investment securities sold |
32,258,749 | |||
| Due from custodian (Note 4) |
200,223 | |||
| Dividends and interest |
72,428,644 | |||
| Capital shares sold |
59,936,606 | |||
|
|
|
|||
| Total Assets |
42,745,095,741 | |||
|
|
|
|||
| LIABILITIES |
||||
| Payables: |
||||
| Investment securities purchased |
123,179,297 | |||
| Collateral for securities on loan (Note 5) |
1,541,885,216 | |||
| Foreign taxes (Note 1) |
1,419,899 | |||
| Investment advisory fees (Note 2) |
21,258,773 | |||
|
|
|
|||
| Total Liabilities |
1,687,743,185 | |||
|
|
|
|||
| NET ASSETS |
$ | 41,057,352,556 | ||
|
|
|
|||
| Net assets consist of: |
||||
| Paid-in capital |
$ | 42,554,826,771 | ||
| Distributions in excess of net investment income |
(55,772,558 | ) | ||
| Accumulated net realized loss |
(3,903,287,149 | ) | ||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
2,461,585,492 | |||
|
|
|
|||
| NET ASSETS |
$ | 41,057,352,556 | ||
|
|
|
|||
| Shares outstandingc |
922,950,000 | |||
|
|
|
|||
| Net asset value per share |
$ | 44.48 | ||
|
|
|
|||
| a | Securities on loan with a value of $1,452,597,865. See Note 5. |
| b | Cost of foreign currencies: $27,019,024. |
| c | $0.001 par value, number of shares authorized: 2 billion. |
See notes to consolidated financial statements.
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statement of Operations (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Six months ended February 29, 2012
| NET INVESTMENT INCOME |
||||
| Dividends — unaffiliateda |
$ | 256,919,677 | ||
| Interest — unaffiliated |
1,215 | |||
| Interest — affiliated (Note 2) |
15,789 | |||
| Securities lending income — affiliated (Note 2) |
12,375,188 | |||
|
|
|
|||
| 269,311,869 | ||||
| Less: Other foreign taxes (Note 1) |
(803,977 | ) | ||
|
|
|
|||
| Total investment income |
268,507,892 | |||
|
|
|
|||
| EXPENSES |
||||
| Investment advisory fees (Note 2) |
114,936,258 | |||
| Commitment fees (Note 7) |
14,670 | |||
|
|
|
|||
| Total expenses |
114,950,928 | |||
| Less investment advisory fees waived (Note 2) |
(1,890,992 | ) | ||
|
|
|
|||
| Net expenses |
113,059,936 | |||
|
|
|
|||
| Net investment income |
155,447,956 | |||
|
|
|
|||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||
| Net realized gain (loss) from: |
||||
| Investments — unaffiliated |
(692,463,177 | ) | ||
| Investments — affiliated (Note 2) |
(119,037 | ) | ||
| In-kind redemptions — unaffiliated |
77,924,055 | |||
| In-kind redemptions — affiliated (Note 2) |
(12,443 | ) | ||
| Foreign currency transactions |
(22,911,732 | ) | ||
|
|
|
|||
| Net realized loss |
(637,582,334 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation/depreciation on: |
||||
| Investments |
2,557,830,541 | |||
| Translation of assets and liabilities in foreign currencies |
2,288,157 | |||
|
|
|
|||
| Net change in unrealized appreciation/depreciation |
2,560,118,698 | |||
|
|
|
|||
| Net realized and unrealized gain |
1,922,536,364 | |||
|
|
|
|||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 2,077,984,320 | ||
|
|
|
|||
| a | Net of foreign withholding tax of $25,065,117. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
23 |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES® MSCI EMERGING MARKETS INDEX FUND
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 155,447,956 | $ | 729,292,060 | ||||
| Net realized gain (loss) |
(637,582,334 | ) | 2,985,401,279 | |||||
| Net change in unrealized appreciation/depreciation |
2,560,118,698 | 63,663,978 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
2,077,984,320 | 3,778,357,317 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(296,184,965 | ) | (763,134,134 | ) | ||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(296,184,965 | ) | (763,134,134 | ) | ||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
7,489,507,551 | 5,567,132,618 | ||||||
| Cost of shares redeemed |
(1,710,503,261 | ) | (14,852,761,754 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
5,779,004,290 | (9,285,629,136 | ) | |||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN NET ASSETS |
7,560,803,645 | (6,270,405,953 | ) | |||||
| NET ASSETS |
||||||||
| Beginning of period |
33,496,548,911 | 39,766,954,864 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 41,057,352,556 | $ | 33,496,548,911 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (55,772,558 | ) | $ | 84,964,451 | |||
|
|
|
|
|
|||||
| SHARES ISSUED AND REDEEMED |
||||||||
| Shares sold |
184,050,000 | 118,800,000 | ||||||
| Shares redeemed |
(45,450,000 | ) | (324,000,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in shares outstanding |
138,600,000 | (205,200,000 | ) | |||||
|
|
|
|
|
|||||
See notes to consolidated financial statements.
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES® MSCI EMERGING MARKETS INDEX FUND
(For a share outstanding throughout each period)
| Six months ended Feb. 29, 2012 (Consolidated) (Unaudited) |
Year ended Aug. 31, 2011 (Consolidated) |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Year ended Aug. 31, 2008a |
Year ended Aug. 31, 2007a |
|||||||||||||||||||
| Net asset value, beginning of period |
$ | 42.71 | $ | 40.19 | $ | 35.48 | $ | 40.07 | $ | 44.78 | $ | 32.48 | ||||||||||||
|
|
|
|
|
|
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|
|
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|
|
|
|||||||||||||
| Income from investment operations: |
||||||||||||||||||||||||
| Net investment incomeb |
0.19 | 0.81 | 0.58 | 0.66 | 1.10 | 0.63 | ||||||||||||||||||
| Net realized and unrealized gain (loss)c |
1.93 | 2.56 | 4.73 | (4.66 | ) | (4.64 | ) | 12.19 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total from investment operations |
2.12 | 3.37 | 5.31 | (4.00 | ) | (3.54 | ) | 12.82 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.35 | ) | (0.85 | ) | (0.60 | ) | (0.59 | ) | (1.17 | ) | (0.52 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total distributions |
(0.35 | ) | (0.85 | ) | (0.60 | ) | (0.59 | ) | (1.17 | ) | (0.52 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net asset value, end of period |
$ | 44.48 | $ | 42.71 | $ | 40.19 | $ | 35.48 | $ | 40.07 | $ | 44.78 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total return |
5.12 | %d | 8.23 | % | 14.97 | % | (9.47 | )% | (8.36 | )% | 39.86 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 41,057,353 | $ | 33,496,549 | $ | 39,766,955 | $ | 30,268,121 | $ | 20,302,756 | $ | 18,198,371 | ||||||||||||
| Ratio of expenses to average net assetse,f |
0.68 | % | 0.67 | % | 0.68 | % | 0.72 | % | 0.72 | % | 0.74 | % | ||||||||||||
| Ratio of expenses to average net assets prior to waived feese,f |
0.69 | % | 0.67 | % | 0.68 | % | 0.72 | % | 0.72 | % | 0.74 | % | ||||||||||||
| Ratio of net investment income to average net assetse |
0.93 | % | 1.76 | % | 1.45 | % | 2.32 | % | 2.32 | % | 1.63 | % | ||||||||||||
| Portfolio turnover rateg |
8 | % | 17 | % | 14 | % | 5 | % | 11 | % | 5 | % | ||||||||||||
| a | Per share amounts were adjusted to reflect a three-for-one stock split effective July 24, 2008. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current period presentation of foreign taxes. |
| g | Portfolio turnover rates exclude portfolio securities received or delivered in Creation Units but include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rates for the six months ended February 29, 2012 and year ended August 31, 2011 would have been 7% and 15%, respectively. See Note 4. |
See notes to consolidated financial statements.
| FINANCIAL HIGHLIGHTS |
25 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
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.
These consolidated financial statements relate only to the following fund (the “Fund”):
| iShares MSCI Index Fund | Diversification Classification | |
| Emerging Markets |
Non-diversified |
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
The investment objective of the Fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of its underlying index. The investment adviser uses a “passive” or index approach to try to achieve the Fund’s investment objective.
The Fund carries out its investment strategies associated with investment in Indian securities by investing in a wholly-owned subsidiary in the Republic of Mauritius (the “Subsidiary”), which in turn invests in Indian securities included in the underlying index. The investment adviser of the Fund also serves as the investment adviser to the Subsidiary. Through this investment structure, the Fund expects to obtain certain benefits under a current tax treaty between Mauritius and India. The accompanying consolidated financial statements for the Fund include the accounts of the Subsidiary.
The Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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; less 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.
Pursuant to the Company’s organizational documents, the Fund’s officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Fund in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of the Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
| • | Exchange-traded funds (“ETFs”) traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the ETF is primarily traded. ETFs traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Fund’s assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment 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.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
27 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
The following table summarizes the value of each of the Fund’s investments according to the fair value hierarchy as of February 29, 2012. The breakdown of the Fund’s investments into major categories is disclosed in its Consolidated Schedule of Investments.
| Investments | ||||||||||||||||
| Investment Type | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 37,273,362,646 | $ | 14,854,181 | $ | — | $ | 37,288,216,827 | ||||||||
| Preferred Stocks |
3,668,450,358 | — | — | 3,668,450,358 | ||||||||||||
| Rights |
20,065 | — | — | 20,065 | ||||||||||||
| Short-Term Investments |
1,577,254,681 | — | — | 1,577,254,681 | ||||||||||||
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|
|
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| $ | 42,519,087,750 | $ | 14,854,181 | $ | — | $ | 42,533,941,931 | |||||||||
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SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Fund may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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 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.
The 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 Fund as a component of realized and unrealized gains and losses from investments for financial reporting purposes.
FOREIGN TAXES
The Fund may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Fund invests. These foreign taxes, if any, are paid by the Fund and are reflected in its Consolidated Statement of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Fund’s Consolidated Statement of Assets and Liabilities.
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
The Fund conducts its investment activities in India through the Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”). In order to be eligible to claim benefits under the DTAA, the Subsidiary must satisfy certain conditions, including the establishment and maintenance of valid tax residence in Mauritius. The Subsidiary is subject to tax in Mauritius on its net income at the rate of 15%. However, a system of foreign tax credits effectively reduces the Mauritius income tax rate to a maximum of 3%. These income taxes, if any, are paid by the Fund and are disclosed in the Consolidated Statement of Operations. Further, the Subsidiary is not subject to capital gains tax in Mauritius nor is it subject to tax in Mauritius on any gains from the sale of securities. Any dividends paid by the Subsidiary to the Fund will also be exempt from tax in Mauritius. The foregoing is based upon current interpretation and practice and is subject to future changes in the tax laws of India or Mauritius and in the DTAA.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Fund.
FEDERAL INCOME TAXES
The Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of the 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 ordinary income and any net capital 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 is required.
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 consolidated financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of the Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Fund, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
The Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. The Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
29 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
For its investment advisory services to the Fund, BFA is entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |||
| 0.75 | % | First $14 billion | ||
| 0.68 | Over $14 billion, up to and including $28 billion | |||
| 0.61 | Over $28 billion, up to and including $42 billion | |||
| 0.56 | Over $42 billion, up to and including $56 billion | |||
| 0.50 | Over $56 billion, up to and including $70 billion | |||
| 0.45 | Over $70 billion, up to and including $84 billion | |||
| 0.40 | Over $84 billion | |||
BFA has voluntarily waived a portion of its investment advisory fees for the Fund in the amount $1,886,824.
BFA has contractually agreed to waive a portion of its investment advisory fees for the Fund through June 30, 2013 in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares funds. In association with this agreement, for the six months period ended February 29, 2012, BFA waived its investment advisory fees for the Fund in the amount of $4,168.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Fund, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. The Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by the Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the six months ended February 29, 2012, BTC earned securities lending agent fees from the Fund of $6,663,563.
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for the Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Fund.
The Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest — affiliated” in the Consolidated Statement of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but Barclays is not.
The Fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the Fund’s underlying index.
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
Investments in issuers considered to be affiliates of the Fund (excluding short-term investments) during the six months ended February 29, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| Name of Affiliated Issuer |
Shares Held at Beginning of Period |
Shares Purchased |
Shares Sold |
Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| iShares MSCI Malaysia Index Fund |
349,867 | 43,826 | (393,693 | ) | — | $ | — | $ | — | $ | (131,480 | ) | ||||||||||||||||
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Certain directors and officers of the Company are also officers of BTC and/or BFA.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended February 29, 2012, aggregated $5,492,080,559 and $2,864,220,770, respectively.
In-kind purchases and sales (see Note 4) for the six months ended February 29, 2012, aggregated $4,032,621,151 and $1,013,455,143, respectively.
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by the Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of the Fund are not redeemable. Transactions in capital shares for the Fund are disclosed in detail in the Consolidated Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Consolidated Statement of Assets and Liabilities.
| 5. | 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 for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
31 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
maintained thereafter, at a value equal to at least 100% of the current value of the securities on loan. 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 a 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Consolidated Statement of Assets and Liabilities. Securities lending income, as disclosed in the Consolidated Statement of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Fund. Because such gains or losses are not taxable to the Fund and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Fund’s tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
The Fund had tax basis net capital loss carryforwards as of August 31, 2011, the tax year-end of the Fund, as follows:
| Expiring 2012 |
Expiring 2013 |
Expiring 2014 |
Expiring 2015 |
Expiring 2016 |
Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||||||||||||||||
| $ | 840,778 | $ | 20,296,564 | $ | 11,239,258 | $ | 29,973,301 | $ | 13,844,901 | $ | 228,196,854 | $ | 1,201,366,175 | $ | 873,167,649 | $ | 2,378,925,480 | |||||||||||||||||
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by funds for taxable years beginning after December 22, 2010 are not subject to expiration and must be utilized prior to the losses incurred in the tax years preceding enactment.
The Fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 29, 2012, the cost of investments for federal income tax purposes was $40,356,523,671. Net unrealized appreciation was $2,177,418,260, of which $5,663,584,616 represented gross unrealized appreciation on securities and $3,486,166,356 represented gross unrealized depreciation on securities.
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Fund’s consolidated financial statements.
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS INDEX FUND
| 7. | LINE OF CREDIT |
The Fund, along with certain other iShares funds, is a party to a $125 million credit agreement with State Street Bank and Trust Company, which expires October 31, 2012. The credit agreement was established to facilitate the funding of purchases of securities in India. The credit agreement has the following terms: a commitment fee of 0.08% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.00% per annum or (b) the U.S. Federal Funds rate plus 1.00% per annum on amounts borrowed. The commitment fee is allocated to each fund participating in the credit agreement based on each fund’s pro-rata share of the aggregate average daily value of assets invested in local Indian securities. The Fund did not borrow under the credit agreement during the period ended February 29, 2012.
| 8. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the consolidated financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the consolidated financial statements.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
33 |
Table of Contents
Notes
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
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iS-SAR-85-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI BRIC Index Fund | BKF | NYSE Arca
iShares MSCI Emerging Markets Asia Index Fund | EEMA | NASDAQ
iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund | EMDI | NASDAQ
iShares MSCI Emerging Markets Energy Sector Capped Index Fund | EMEY | NASDAQ
iShares MSCI Emerging Markets Growth Index Fund | EGRW | NASDAQ
iShares MSCI Emerging Markets Minimum Volatility Index Fund | EEMV | NYSE Arca
iShares MSCI Emerging Markets Small Cap Index Fund | EEMS | NYSE Arca
iShares MSCI Emerging Markets Value Index Fund | EVAL | NASDAQ
Table of Contents
| 5 | ||||
| 13 | ||||
| 15 | ||||
| 15 | ||||
| 21 | ||||
| iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund |
29 | |||
| iShares MSCI Emerging Markets Energy Sector Capped Index Fund |
31 | |||
| 33 | ||||
| 40 | ||||
| 44 | ||||
| 54 | ||||
| 61 | ||||
| 71 | ||||
| 79 | ||||
| 89 | ||||
| 94 |
Table of Contents
iSHARES® MSCI BRIC INDEX FUND
Performance as of February 29, 2012
| Average Annual Total Returns | Cumulative Total Returns | |||||||||||||||||||||||||||||||
| Year Ended 2/29/12 | Inception to 2/29/12 | Inception to 2/29/12 | ||||||||||||||||||||||||||||||
| NAV | MARKET | INDEX | NAV | MARKET | INDEX | NAV | MARKET | INDEX | ||||||||||||||||||||||||
| (6.17)% | (7.32)% | (4.07)% | (4.20)% | (4.28)% | (3.93)% | (16.87)% | (17.16)% | (15.84)% | ||||||||||||||||||||||||
Total returns for the period since inception are calculated from the inception date of the Fund (11/12/07). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (11/16/07), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI BRIC Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI BRIC IndexSM (the “Index”). The Index is a free float-adjusted market capitalization index that is designed to measure the combined equity market performance in Brazil, Russia, India and China (“BRIC”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was 4.76%, net of fees, while the total return for the Index was 5.77%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| 1.99% | 1.22% | 2.09% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/8/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/9/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Asia Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Asia IndexSM (the “Index”). The Index is designed to measure the equity market performance in the emerging market countries of Asia. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from February 8, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 1.99%, net of fees, while the total return for the Index was 2.09%.
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| 1.26% | 0.54% | 1.35% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/8/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/9/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Consumer Discretionary IndexSM (the “Index”). The Index is designed to measure the combined equity market performance of the consumer discretionary sector of emerging market countries. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from February 8, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 1.26%, net of fees, while the total return for the Index was 1.35%.
| * | Other includes industries which individually represent less than 1% of net assets. |
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS ENERGY SECTOR CAPPED INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| 0.51% | 0.22% | 0.70% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/8/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/9/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Energy Sector Capped Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Energy 25/50 IndexSM (the “Index”). The Index is designed to measure the performance of energy-related companies in emerging market countries. A capping methodology is applied that limits the weight of any single component to a maximum of 25% of the Index. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from February 8, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 0.51%, net of fees, while the total return for the Index was 0.70%.
| * | Other includes industries which individually represent less than 1% of net assets. |
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| 2.64% | 1.97% | 2.77% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/8/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/9/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Growth Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Growth IndexSM (the “Index”). The Index generally represents approximately 50% of the MSCI Emerging Markets Index and consists of those securities classified by the Index provider as most representing the growth style. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from February 8, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 2.64%, net of fees, while the total return for the Index was 2.77%.
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| 16.24% | 16.24% | 16.54% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 10/18/11.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (10/20/11), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Minimum Volatility Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Minimum Volatility Index (the “Index”). The Index measures the performance of equity securities in global emerging markets that have lower absolute volatility. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from October 18, 2011 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 16.24%, net of fees, while the total return for the Index was 16.54%.
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| (2.64)% | (2.31)% | (1.11)% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 8/16/11.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (8/18/11), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Small Cap Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Small Cap IndexSM (the “Index”). The Index measures the performance of equity securities of small capitalization companies, whose market capitalization represents the bottom 14% of companies in emerging market countries, as measured by market capitalization. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended February 29, 2012, the total return for the Fund was (0.80)%, net of fees, while the total return for the Index was 0.64%.
| FUND PERFORMANCE OVERVIEWS |
11 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| 0.82% | 0.23% | 0.95% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 2/8/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/9/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets Value Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Value IndexSM (the “Index”). The Index generally represents approximately 50% of the MSCI Emerging Markets Index and consists of those securities classified by the Index provider as most representing the value style. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from February 8, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 0.82%, net of fees, while the total return for the Index was 0.95%.
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 (or commencement of operations, as applicable) to February 29, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| iShares MSCI Index Fund |
Beginning (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| BRIC |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,047.60 | 0.69 | % | $ | 3.51 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.40 | 0.69 | 3.47 | ||||||||||||
| Emerging Markets Asia |
||||||||||||||||
| Actual |
1,000.00 | 1,019.90 | 0.49 | 0.28 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| Emerging Markets Consumer Discretionary Sector |
||||||||||||||||
| Actual |
1,000.00 | 1,012.60 | 0.68 | 0.39 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.68 | 3.42 | ||||||||||||
| Emerging Markets Energy Sector Capped |
||||||||||||||||
| Actual |
1,000.00 | 1,005.10 | 0.68 | 0.39 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.50 | 0.68 | 3.42 | ||||||||||||
| SHAREHOLDER EXPENSES |
13 |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund |
Beginning (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| Emerging Markets Growth |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,026.40 | 0.49 | % | $ | 0.28 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| Emerging Markets Minimum Volatility |
||||||||||||||||
| Actual |
1,000.00 | 1,162.40 | 0.25 | 0.99 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.60 | 0.25 | 1.26 | ||||||||||||
| Emerging Markets Small Cap |
||||||||||||||||
| Actual |
1,000.00 | 992.00 | 0.69 | 3.42 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,021.40 | 0.69 | 3.47 | ||||||||||||
| Emerging Markets Value |
||||||||||||||||
| Actual |
1,000.00 | 1,008.20 | 0.49 | 0.28 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| a | The beginning of the period (commencement of operations) is October 18, 2011 for the iShares MSCI Emerging Markets Minimum Volatility Index Fund and February 8, 2012 for the iShares MSCI Emerging Markets Asia , iShares MSCI Emerging Markets Consumer Discretionary Sector, iShares MSCI Emerging Markets Energy Sector Capped, iShares MSCI Emerging Markets Growth and iShares MSCI Emerging Markets Value Index Funds. |
| b | Actual expenses for the Funds are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days for the iShares MSCI BRIC and iShares MSCI Emerging Markets Small Cap Index Funds, 134 days for the iShares MSCI Emerging Markets Minimum Volatility Index Fund and 21 days for the iShares MSCI Emerging Markets Asia , iShares MSCI Emerging Markets Consumer Discretionary Sector, iShares MSCI Emerging Markets Energy Sector Capped, iShares MSCI Emerging Markets Growth and iShares MSCI Emerging Markets Value Index Funds) and divided by the number of days in the year (366 days). Hypothetical expenses for all the Funds, which are based on a hypothetical half year, are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 29, 2012
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 29, 2012
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI BRIC INDEX FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ASIA INDEX FUND
February 29, 2012
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS CONSUMER DISCRETIONARY SECTOR INDEX FUND
February 29, 2012
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS ENERGY SECTOR CAPPED INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS ENERGY SECTOR CAPPED INDEX FUND
February 29, 2012
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| 36 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
37 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| 38 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS GROWTH INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
39 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| 40 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
41 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| 42 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
43 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| 44 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
45 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| 46 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
47 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| 48 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
49 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| 50 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
51 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| 52 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS SMALL CAP INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
53 |
Table of Contents
Consolidated Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| 54 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
55 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| 56 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
57 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| 58 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| CONSOLIDATED SCHEDULES OF INVESTMENTS |
59 |
Table of Contents
Consolidated Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS VALUE INDEX FUND
February 29, 2012
| 60 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 29, 2012
| iShares MSCI BRIC Index Fund |
iShares MSCI Emerging Markets |
iShares MSCI Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 887,062,502 | $ | 10,936,797 | $ | 10,290,686 | ||||||
| Affiliated (Note 2) |
35,792,545 | 10,000 | 10,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 922,855,047 | $ | 10,946,797 | $ | 10,300,686 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 964,016,586 | $ | 11,149,664 | $ | 10,422,533 | ||||||
| Affiliated (Note 2) |
35,792,545 | 10,000 | 10,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
999,809,131 | 11,159,664 | 10,432,533 | |||||||||
| Foreign currencies, at valueb |
1,038,811 | 737 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
286,361 | — | 36,671 | |||||||||
| Dividends and interest |
1,435,012 | 2,253 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
1,002,569,315 | 11,162,654 | 10,469,204 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
472,025 | — | 27,640 | |||||||||
| Collateral for securities on loan (Note 5) |
35,076,097 | — | — | |||||||||
| Investment advisory fees (Note 2) |
490,738 | 3,080 | 3,977 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
36,038,860 | 3,080 | 31,617 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 966,530,455 | $ | 11,159,574 | $ | 10,437,587 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 984,820,733 | $ | 10,949,433 | $ | 10,313,556 | ||||||
| Distributions in excess of net investment income or accumulated net investment loss |
(2,656,756 | ) | (118 | ) | (3,977 | ) | ||||||
| Accumulated net realized loss |
(92,665,485 | ) | (2,632 | ) | (3,847 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
77,031,963 | 212,891 | 131,855 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 966,530,455 | $ | 11,159,574 | $ | 10,437,587 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
22,000,000 | 200,000 | 200,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 43.93 | $ | 55.80 | $ | 52.19 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $32,699,034, $ — and $ —, respectively. See Note 5. |
| b | Cost of foreign currencies: $1,040,138, $733 and $ —, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
61 |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
|
Index Fund |
iShares MSCI Emerging Markets Index Fund |
iShares MSCI Emerging Markets Minimum Volatility Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 10,213,482 | $ | 10,841,634 | $ | 94,646,137 | ||||||
| Affiliated (Note 2) |
10,000 | 10,201 | 56,306 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 10,223,482 | $ | 10,851,835 | $ | 94,702,443 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 10,264,301 | $ | 11,123,146 | $ | 101,325,137 | ||||||
| Affiliated (Note 2) |
10,000 | 10,201 | 56,306 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
10,274,301 | 11,133,347 | 101,381,443 | |||||||||
| Foreign currencies, at valueb |
— | 720 | 74,476 | |||||||||
| Cash |
— | — | 7,171 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
52,251 | — | — | |||||||||
| Dividends and interest |
5,677 | 2,814 | 60,941 | |||||||||
| Capital shares sold |
— | — | 25,772,122 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
10,332,229 | 11,136,881 | 127,296,153 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
52,676 | — | 25,586,443 | |||||||||
| Collateral for securities on loan (Note 5) |
— | — | 56,306 | |||||||||
| Investment advisory fees (Note 2) |
3,913 | 3,060 | 10,845 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
56,589 | 3,060 | 25,653,594 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 10,275,640 | $ | 11,133,821 | $ | 101,642,559 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 10,227,401 | $ | 10,854,325 | $ | 95,616,473 | ||||||
| Undistributed (distributions in excess of) net investment income |
1,732 | 657 | (301,894 | ) | ||||||||
| Accumulated net realized loss |
(4,302 | ) | (2,686 | ) | (283,218 | ) | ||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
50,809 | 281,525 | 6,611,198 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 10,275,640 | $ | 11,133,821 | $ | 101,642,559 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
200,000 | 200,000 | 1,800,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 51.38 | $ | 55.67 | $ | 56.47 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $ —, $ — and $53,901, respectively. See Note 5. |
| b | Cost of foreign currencies: $ —, $717 and $72,729, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| 62 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Emerging Markets Small Cap Index Fund |
Index Fund |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 39,172,841 | $ | 10,508,102 | ||||
| Affiliated (Note 2) |
27,539 | 10,000 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 39,200,380 | $ | 10,518,102 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (Note 1): |
||||||||
| Unaffiliated |
$ | 38,752,274 | $ | 10,590,421 | ||||
| Affiliated (Note 2) |
27,539 | 10,000 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
38,779,813 | 10,600,421 | ||||||
| Foreign currencies, at valuea |
86,414 | 1,614 | ||||||
| Receivables: |
||||||||
| Dividends and interest |
74,080 | 2,390 | ||||||
|
|
|
|
|
|||||
| Total Assets |
38,940,307 | 10,604,425 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Foreign taxes (Note 1) |
414 | — | ||||||
| Investment advisory fees (Note 2) |
20,391 | 2,932 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
20,805 | 2,932 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 38,919,502 | $ | 10,601,493 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 46,340,055 | $ | 10,520,963 | ||||
| Undistributed (distributions in excess of) net investment income |
(98,042 | ) | 1,064 | |||||
| Accumulated net realized loss |
(6,904,766 | ) | (2,851 | ) | ||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
(417,745 | ) | 82,317 | |||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 38,919,502 | $ | 10,601,493 | ||||
|
|
|
|
|
|||||
| Shares outstandingb |
800,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 48.65 | $ | 53.01 | ||||
|
|
|
|
|
|||||
| a | Cost of foreign currencies: $86,166 and $1,621, respectively. |
| b | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
63 |
Table of Contents
Consolidated Statements of Operations (Unaudited)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI BRIC Index Fund |
iShares MSCI Emerging Markets |
iShares MSCI Emerging Markets Index Funda |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliatedb |
$ | 6,580,193 | $ | 2,962 | $ | — | ||||||
| Interest — affiliated (Note 2) |
178 | — | — | |||||||||
| Securities lending income — affiliated (Note 2) |
343,050 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
6,923,421 | 2,962 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
2,682,325 | 4,274 | 3,977 | |||||||||
| Commitment fees (Note 7) |
1,506 | — | — | |||||||||
| Interest expense (Note 7) |
679 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
2,684,510 | 4,274 | 3,977 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (1,194 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
2,684,510 | 3,080 | 3,977 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
4,238,911 | (118 | ) | (3,977 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(59,133,193 | ) | — | (1,645 | ) | |||||||
| In-kind redemptions — unaffiliated |
18,130,984 | — | — | |||||||||
| Foreign currency transactions |
(782,351 | ) | (2,632 | ) | (2,202 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(41,784,560 | ) | (2,632 | ) | (3,847 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
65,422,649 | 212,867 | 131,847 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(28,101 | ) | 24 | 8 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
65,394,548 | 212,891 | 131,855 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
23,609,988 | 210,259 | 128,008 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 27,848,899 | $ | 210,141 | $ | 124,031 | ||||||
|
|
|
|
|
|
|
|||||||
| a | For the period from February 8, 2012 (commencement of operations) to February 29, 2012. |
| b | Net of foreign withholding tax of $678,105, $191 and $ —, respectively. |
See notes to consolidated financial statements.
| 64 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Period ended February 29, 2012
| Emerging Markets Index Funda |
iShares MSCI Emerging Markets Index Funda |
iShares MSCI Emerging Markets Minimum Volatility Index Fundb |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliatedc |
$ | 5,645 | $ | 3,717 | $ | 154,764 | ||||||
| Interest — affiliated (Note 2) |
— | — | 7 | |||||||||
| Securities lending income — affiliated (Note 2) |
— | — | 6 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
5,645 | 3,717 | 154,777 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
3,913 | 4,246 | 78,526 | |||||||||
| Commitment fees (Note 7) |
— | — | 9 | |||||||||
| Interest expense (Note 7) |
— | — | 113 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
3,913 | 4,246 | 78,648 | |||||||||
| Less investment advisory fees waived (Note 2) |
— | (1,186 | ) | (49,879 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
3,913 | 3,060 | 28,769 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
1,732 | 657 | 126,008 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(3,141 | ) | — | (199,276 | ) | |||||||
| Foreign currency transactions |
(1,161 | ) | (2,686 | ) | (83,942 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(4,302 | ) | (2,686 | ) | (283,218 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
50,819 | 281,512 | 6,679,000 | |||||||||
| Translation of assets and liabilities in foreign currencies |
(10 | ) | 13 | (67,802 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
50,809 | 281,525 | 6,611,198 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
46,507 | 278,839 | 6,327,980 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 48,239 | $ | 279,496 | $ | 6,453,988 | ||||||
|
|
|
|
|
|
|
|||||||
| a | For the period from February 8, 2012 (commencement of operations) to February 29, 2012. |
| b | For the period from October 18, 2011(commencement of operations) to February 29, 2012. |
| c | Net of foreign withholding tax of $388, $47 and $15,203, respectively. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
65 |
Table of Contents
Consolidated Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Six months ended February 29, 2012
| iShares MSCI Emerging Markets Small Cap Index Fund |
iShares MSCI Emerging Markets Index Funda |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliatedb |
$ | 384,191 | $ | 3,996 | ||||
| Interest — unaffiliated |
2 | — | ||||||
| Interest — affiliated (Note 2) |
13 | — | ||||||
|
|
|
|
|
|||||
| 384,206 | 3,996 | |||||||
| Less: Other foreign taxes (Note 1) |
(6,664 | ) | — | |||||
|
|
|
|
|
|||||
| Total investment income |
377,542 | 3,996 | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
175,733 | 4,069 | ||||||
| Commitment fees (Note 7) |
62 | — | ||||||
| Interest expense (Note 7) |
424 | — | ||||||
|
|
|
|
|
|||||
| Total expenses |
176,219 | 4,069 | ||||||
| Less investment advisory fees waived (Note 2) |
— | (1,137 | ) | |||||
|
|
|
|
|
|||||
| Net expenses |
176,219 | 2,932 | ||||||
|
|
|
|
|
|||||
| Net investment income |
201,323 | 1,064 | ||||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(4,937,690 | ) | — | |||||
| In-kind redemptions — unaffiliated |
(1,885,037 | ) | — | |||||
| Foreign currency transactions |
(18,018 | ) | (2,851 | ) | ||||
|
|
|
|
|
|||||
| Net realized loss |
(6,840,745 | ) | (2,851 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
966,225 | 82,319 | ||||||
| Translation of assets and liabilities in foreign currencies |
3,870 | (2 | ) | |||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
970,095 | 82,317 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain (loss) |
(5,870,650 | ) | 79,466 | |||||
|
|
|
|
|
|||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (5,669,327 | ) | $ | 80,530 | |||
|
|
|
|
|
|||||
| a | For the period from February 8, 2012 (commencement of operations) to February 29, 2012. |
| b | Net of foreign withholding tax of $34,304 and $400, respectively. |
See notes to consolidated financial statements.
| 66 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI BRIC Index Fund |
iShares MSCI Emerging Markets Asia Index Fund |
|||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Year ended August 31, 2011 |
Period from to February 29, 2012 (Unaudited) |
||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||
| OPERATIONS: |
||||||||||||
| Net investment income (loss) |
$ | 4,238,911 | $ | 20,442,911 | $ | (118 | ) | |||||
| Net realized gain (loss) |
(41,784,560 | ) | 18,189,682 | (2,632 | ) | |||||||
| Net change in unrealized appreciation/depreciation |
65,394,548 | (29,622,905 | ) | 212,891 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net increase in net assets resulting from operations |
27,848,899 | 9,009,688 | 210,141 | |||||||||
|
|
|
|
|
|
|
|||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||
| From net investment income |
(5,209,525 | ) | (22,858,814 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Total distributions to shareholders |
(5,209,525 | ) | (22,858,814 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||
| Proceeds from shares sold |
247,215,549 | 111,929,766 | 10,949,433 | |||||||||
| Cost of shares redeemed |
(169,518,412 | ) | (178,701,150 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets from capital share transactions |
77,697,137 | (66,771,384 | ) | 10,949,433 | ||||||||
|
|
|
|
|
|
|
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
100,336,511 | (80,620,510 | ) | 11,159,574 | ||||||||
| NET ASSETS |
||||||||||||
| Beginning of period |
866,193,944 | 946,814,454 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| End of period |
$ | 966,530,455 | $ | 866,193,944 | $ | 11,159,574 | ||||||
|
|
|
|
|
|
|
|||||||
| Distributions in excess of net investment income or accumulated net investment loss included in net assets at end of period |
$ | (2,656,756 | ) | $ | (1,686,142 | ) | $ | (118 | ) | |||
|
|
|
|
|
|
|
|||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||
| Shares sold |
6,050,000 | 2,300,000 | 200,000 | |||||||||
| Shares redeemed |
(4,550,000 | ) | (3,850,000 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in shares outstanding |
1,500,000 | (1,550,000 | ) | 200,000 | ||||||||
|
|
|
|
|
|
|
|||||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
67 |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares
MSCI Emerging Markets Consumer Discretionary Sector Index Fund |
iShares
MSCI Emerging Markets Energy Sector Capped Index Fund |
|||||||
| Period from February 8, 2012a to February 29, 2012 (Unaudited) |
Period from February 8, 2012a to February 29, 2012 (Unaudited) |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$ | (3,977 | ) | $ | 1,732 | |||
| Net realized loss |
(3,847 | ) | (4,302 | ) | ||||
| Net change in unrealized appreciation/depreciation |
131,855 | 50,809 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
124,031 | 48,239 | ||||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
10,313,556 | 10,227,401 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
10,313,556 | 10,227,401 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
10,437,587 | 10,275,640 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 10,437,587 | $ | 10,275,640 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income (accumulated net investment loss) included in net assets at end of period |
$ | (3,977 | ) | $ | 1,732 | |||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
200,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
200,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| 68 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Growth Index Fund |
iShares MSCI Emerging Markets Minimum Volatility Index Fund |
|||||||
| Period from to February 29, 2012 (Unaudited) |
Period from to February 29, 2012 (Unaudited) |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 657 | $ | 126,008 | ||||
| Net realized loss |
(2,686 | ) | (283,218 | ) | ||||
| Net change in unrealized appreciation/depreciation |
281,525 | 6,611,198 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
279,496 | 6,453,988 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
— | (427,902 | ) | |||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
— | (427,902 | ) | |||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
10,854,325 | 95,616,473 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
10,854,325 | 95,616,473 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
11,133,821 | 101,642,559 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 11,133,821 | $ | 101,642,559 | ||||
|
|
|
|
|
|||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | 657 | $ | (301,894 | ) | |||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
200,000 | 1,800,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
200,000 | 1,800,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL STATEMENTS |
69 |
Table of Contents
Consolidated Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Emerging Markets Small Cap Index Fund |
iShares MSCI Emerging Markets Value Index Fund |
|||||||||||
| Six months ended February 29, 2012 (Unaudited) |
Period from to August 31, 2011 |
Period from to February 29, 2012 (Unaudited) |
||||||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||||||
| OPERATIONS: |
||||||||||||
| Net investment income |
$ | 201,323 | $ | 92,673 | $ | 1,064 | ||||||
| Net realized loss |
(6,840,745 | ) | (93,859 | ) | (2,851 | ) | ||||||
| Net change in unrealized appreciation/depreciation |
970,095 | (1,387,840 | ) | 82,317 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets resulting from operations |
(5,669,327 | ) | (1,389,026 | ) | 80,530 | |||||||
|
|
|
|
|
|
|
|||||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||||||
| From net investment income |
(362,200 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total distributions to shareholders |
(362,200 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||||||
| Proceeds from shares sold |
— | 70,832,414 | 10,520,963 | |||||||||
| Cost of shares redeemed |
(24,492,359 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in net assets from capital share transactions |
(24,492,359 | ) | 70,832,414 | 10,520,963 | ||||||||
|
|
|
|
|
|
|
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
(30,523,886 | ) | 69,443,388 | 10,601,493 | ||||||||
| NET ASSETS |
||||||||||||
| Beginning of period |
69,443,388 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| End of period |
$ | 38,919,502 | $ | 69,443,388 | $ | 10,601,493 | ||||||
|
|
|
|
|
|
|
|||||||
| Undistributed (distributions in excess of) net investment income included in net assets at end of period |
$ | (98,042 | ) | $ | 62,835 | $ | 1,064 | |||||
|
|
|
|
|
|
|
|||||||
| SHARES ISSUED AND REDEEMED |
||||||||||||
| Shares sold |
— | 1,400,000 | 200,000 | |||||||||
| Shares redeemed |
(600,000 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net increase (decrease) in shares outstanding |
(600,000 | ) | 1,400,000 | 200,000 | ||||||||
|
|
|
|
|
|
|
|||||||
| a | Commencement of operations. |
See notes to consolidated financial statements.
| 70 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout each period)
| iShares MSCI BRIC Index Fund | ||||||||||||||||||||
| Six months ended Feb. 29,
2012 |
Year ended Aug. 31, 2011 (Consolidated) |
Year ended Aug. 31, 2010 |
Year ended Aug. 31, 2009 |
Period from to Aug. 31, 2008 |
||||||||||||||||
| Net asset value, beginning of period |
$ | 42.25 | $ | 42.94 | $ | 37.57 | $ | 44.13 | $ | 56.50 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from investment operations: |
||||||||||||||||||||
| Net investment incomeb |
0.21 | 0.89 | 0.66 | 0.58 | 0.72 | |||||||||||||||
| Net realized and unrealized gain (loss)c |
1.74 | (0.58 | ) | 5.35 | (6.60 | ) | (12.93 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total from investment operations |
1.95 | 0.31 | 6.01 | (6.02 | ) | (12.21 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less distributions from: |
||||||||||||||||||||
| Net investment income |
(0.27 | ) | (1.00 | ) | (0.64 | ) | (0.54 | ) | (0.16 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total distributions |
(0.27 | ) | (1.00 | ) | (0.64 | ) | (0.54 | ) | (0.16 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net asset value, end of period |
$ | 43.93 | $ | 42.25 | $ | 42.94 | $ | 37.57 | $ | 44.13 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total return |
4.76 | %d | 0.49 | % | 15.95 | % | (13.08 | )% | (21.65 | )%d | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios/Supplemental data: |
||||||||||||||||||||
| Net assets, end of period (000s) |
$ | 966,530 | $ | 866,194 | $ | 946,814 | $ | 497,839 | $ | 161,092 | ||||||||||
| Ratio of expenses to average net assetse |
0.69 | % | 0.67 | % | 0.69 | % | 0.72 | % | 0.72 | % | ||||||||||
| Ratio of expenses to average net assets prior to waived feese,f |
n/a | 0.67 | % | n/a | n/a | n/a | ||||||||||||||
| Ratio of net investment income to average net assetse |
1.09 | % | 1.86 | % | 1.52 | % | 1.87 | % | 1.74 | % | ||||||||||
| Portfolio turnover rateg |
21 | % | 13 | % | 9 | % | 7 | % | 9 | % | ||||||||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Ratios for the periods ended August 31, 2010 and prior have been recalculated, as necessary, to conform with the current presentation of foreign taxes. |
| g | Portfolio turnover rates exclude portfolio securities received or delivered in Creation Units but include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the six months ended February 29, 2012 and years ended August 31, 2011, August 31, 2010, August 31, 2009 and the period ended August 31, 2008 would have been 15%, 10%, 8%, 6% and 2%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
71 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Emerging Markets Asia Index Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 54.71 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment lossb |
(0.00 | )c | ||
| Net realized and unrealized gaind |
1.09 | |||
|
|
|
|||
| Total from investment operations |
1.09 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 55.80 | ||
|
|
|
|||
| Total return |
1.99 | %e | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 11,160 | ||
| Ratio of expenses to average net assetsf |
0.49 | % | ||
| Ratio of expenses to average net assets prior to waived feesf |
0.68 | % | ||
| Ratio of net investment loss to average net assetsf |
(0.02 | )% | ||
| Portfolio turnover rateg |
0 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | Rounds to less than $0.01. |
| d | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| e | Not annualized. |
| f | Annualized for periods of less than one year. |
| g | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. See Note 4. |
See notes to consolidated financial statements.
| 72 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 51.54 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment lossb |
(0.02 | ) | ||
| Net realized and unrealized gainc |
0.67 | |||
|
|
|
|||
| Total from investment operations |
0.65 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 52.19 | ||
|
|
|
|||
| Total return |
1.26 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 10,438 | ||
| Ratio of expenses to average net assetse |
0.68 | % | ||
| Ratio of net investment loss to average net assetse |
(0.68 | )% | ||
| Portfolio turnover ratef |
0 | %g | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. See Note 4. |
| g | Rounds to less than 1%. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
73 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Emerging Markets Energy Sector Capped Index Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 51.12 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.01 | |||
| Net realized and unrealized gainc |
0.25 | |||
|
|
|
|||
| Total from investment operations |
0.26 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 51.38 | ||
|
|
|
|||
| Total return |
0.51 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 10,276 | ||
| Ratio of expenses to average net assetse |
0.68 | % | ||
| Ratio of net investment income to average net assetse |
0.30 | % | ||
| Portfolio turnover ratef |
1 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the period ended February 29, 2012 would have been 1%. See Note 4. |
See notes to consolidated financial statements.
| 74 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Emerging Markets Growth Index Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 54.24 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.00 | c | ||
| Net realized and unrealized gaind |
1.43 | |||
|
|
|
|||
| Total from investment operations |
1.43 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 55.67 | ||
|
|
|
|||
| Total return |
2.64 | %e | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 11,134 | ||
| Ratio of expenses to average net assetsf |
0.49 | % | ||
| Ratio of expenses to average net assets prior to waived feesf |
0.68 | % | ||
| Ratio of net investment income to average net assetsf |
0.11 | % | ||
| Portfolio turnover rateg |
0 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | Rounds to less than $0.01. |
| d | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| e | Not annualized. |
| f | Annualized for periods of less than one year. |
| g | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
75 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Emerging Markets Minimum Volatility Index Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 49.30 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.21 | |||
| Net realized and unrealized gainc |
7.67 | |||
|
|
|
|||
| Total from investment operations |
7.88 | |||
|
|
|
|||
| Less distributions from: |
||||
| Net investment income |
(0.71 | ) | ||
|
|
|
|||
| Total distributions |
(0.71 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$ | 56.47 | ||
|
|
|
|||
| Total return |
16.24 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 101,643 | ||
| Ratio of expenses to average net assetse |
0.25 | % | ||
| Ratio of expenses to average net assets prior to waived feese |
0.69 | % | ||
| Ratio of net investment income to average net assetse |
1.10 | % | ||
| Portfolio turnover ratef |
7 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the period ended February 29, 2012 would have been 7%. See Note 4. |
See notes to consolidated financial statements.
| 76 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout each period)
iShares MSCI Emerging Markets Small Cap Index Fund
| Six months ended Feb. 29, 2012 (Unaudited) |
Period from to Aug. 31, 2011 |
|||||||
| Net asset value, beginning of period |
$ | 49.60 | $ | 50.54 | ||||
|
|
|
|
|
|||||
| Income from investment operations: |
||||||||
| Net investment incomeb |
0.17 | 0.07 | ||||||
| Net realized and unrealized lossc |
(0.67 | ) | (1.01 | ) | ||||
|
|
|
|
|
|||||
| Total from investment operations |
(0.50 | ) | (0.94 | ) | ||||
|
|
|
|
|
|||||
| Less distributions from: |
||||||||
| Net investment income |
(0.45 | ) | 0.00 | |||||
|
|
|
|
|
|||||
| Total distributions |
(0.45 | ) | 0.00 | |||||
|
|
|
|
|
|||||
| Net asset value, end of period |
$ | 48.65 | $ | 49.60 | ||||
|
|
|
|
|
|||||
| Total return |
(0.80 | )%d | (1.86 | )%d | ||||
|
|
|
|
|
|||||
| Ratios/Supplemental data: |
||||||||
| Net assets, end of period (000s) |
$ | 38,920 | $ | 69,443 | ||||
| Ratio of expenses to average net assetse |
0.69 | % | 0.69 | % | ||||
| Ratio of net investment income to average net assetse |
0.79 | % | 3.33 | % | ||||
| Portfolio turnover ratef |
9 | % | 2 | % | ||||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout each period. |
| c | The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rates exclude portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the six months ended February 29, 2012 and the period from August 16, 2011 to August 31, 2011 would have been 9% and 2%, respectively. See Note 4. |
See notes to consolidated financial statements.
| CONSOLIDATED FINANCIAL HIGHLIGHTS |
77 |
Table of Contents
Consolidated Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Emerging Markets Value Index Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 52.58 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.01 | |||
| Net realized and unrealized gainc |
0.42 | |||
|
|
|
|||
| Total from investment operations |
0.43 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 53.01 | ||
|
|
|
|||
| Total return |
0.82 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 10,601 | ||
| Ratio of expenses to average net assetse |
0.49 | % | ||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | ||
| Ratio of net investment income to average net assetse |
0.18 | % | ||
| Portfolio turnover ratef |
0 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. See Note 4. |
See notes to consolidated financial statements.
| 78 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (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.
These consolidated financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
| a | The Fund commenced operations on February 8, 2012. |
| b | The Fund commenced operations on October 18, 2011. |
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
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. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Each Fund carries out its investment strategies associated with investment in Indian securities by investing in a wholly-owned subsidiary in the Republic of Mauritius (each, a “Subsidiary”), which in turn invests in Indian securities included in the underlying index. The investment adviser of each Fund also serves as the investment adviser to each Subsidiary. Through this investment structure, each Fund expects to obtain certain benefits under a current tax treaty between Mauritius and India. The accompanying consolidated financial statements for each Fund include the accounts of its Subsidiary.
Certain Funds may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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 Funds; 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; less 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.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
79 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of each Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
Fair value pricing could result in a difference between the prices used to calculate a 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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
| 80 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 29, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Consolidated Schedule of Investments.
| iShares MSCI Index Fund and Investment Type
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| BRIC |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 788,781,718 | $ | — | $ | — | $ | 788,781,718 | ||||||||
| Preferred Stocks |
175,234,070 | — | — | 175,234,070 | ||||||||||||
| Rights |
798 | — | — | 798 | ||||||||||||
| Short-Term Investments |
35,792,545 | — | — | 35,792,545 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 999,809,131 | $ | — | $ | — | $ | 999,809,131 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Asia |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 11,062,664 | $ | — | $ | — | $ | 11,062,664 | ||||||||
| Preferred Stocks |
87,000 | — | — | 87,000 | ||||||||||||
| Short-Term Investments |
10,000 | — | — | 10,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 11,159,664 | $ | — | $ | — | $ | 11,159,664 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Consumer Discretionary Sector |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 10,184,403 | $ | — | $ | — | $ | 10,184,403 | ||||||||
| Preferred Stocks |
238,130 | — | — | 238,130 | ||||||||||||
| Short-Term Investments |
10,000 | — | — | 10,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 10,432,533 | $ | — | $ | — | $ | 10,432,533 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Energy Sector Capped |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 9,071,309 | $ | — | $ | — | $ | 9,071,309 | ||||||||
| Preferred Stocks |
1,192,992 | — | — | 1,192,992 | ||||||||||||
| Short-Term Investments |
10,000 | — | — | 10,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 10,274,301 | $ | — | $ | — | $ | 10,274,301 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
81 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund and Investment Type
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Emerging Markets Growth |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 10,190,441 | $ | — | $ | — | $ | 10,190,441 | ||||||||
| Preferred Stocks |
932,705 | — | — | 932,705 | ||||||||||||
| Short-Term Investments |
10,201 | — | — | 10,201 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 11,133,347 | $ | — | $ | — | $ | 11,133,347 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Minimum Volatility |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 95,097,681 | $ | — | $ | — | $ | 95,097,681 | ||||||||
| Preferred Stocks |
6,227,456 | — | — | 6,227,456 | ||||||||||||
| Short-Term Investments |
56,306 | — | — | 56,306 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 101,381,443 | $ | — | $ | — | $ | 101,381,443 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Small Cap |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 38,025,557 | $ | 54,032 | $ | 16,571 | $ | 38,096,160 | ||||||||
| Preferred Stocks |
646,029 | — | — | 646,029 | ||||||||||||
| Rights |
6,723 | 1,355 | — | 8,078 | ||||||||||||
| Warrants |
2,007 | — | — | 2,007 | ||||||||||||
| Short-Term Investments |
27,539 | — | — | 27,539 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 38,707,855 | $ | 55,387 | $ | 16,571 | $ | 38,779,813 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets Value |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 9,558,173 | $ | — | $ | — | $ | 9,558,173 | ||||||||
| Preferred Stocks |
1,032,244 | — | — | 1,032,244 | ||||||||||||
| Rights |
4 | — | — | 4 | ||||||||||||
| Short-Term Investments |
10,000 | — | — | 10,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 10,600,421 | $ | — | $ | — | $ | 10,600,421 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method.
| 82 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds 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.
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.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Consolidated Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Funds’ Consolidated Statements of Assets and Liabilities.
Each Fund conducts its investment activities in India through its Subsidiary and expects to obtain benefits under the Double Tax Avoidance Agreement (“DTAA”). In order to be eligible to claim benefits under the DTAA, each Subsidiary must satisfy certain conditions, including the establishment and maintenance of valid tax residence in Mauritius. Each Subsidiary is subject to tax in Mauritius on its net income at the rate of 15%. However, a system of foreign tax credits effectively reduces the Mauritius income tax rate to a maximum of 3%. These income taxes, if any, are paid by the Funds and are disclosed in the Consolidated Statements of Operations. Further, each Subsidiary is not subject to capital gains tax in Mauritius nor is it subject to tax in Mauritius on any gains from the sale of securities. Any dividends paid by a Subsidiary to its Fund will also be exempt from tax in Mauritius. The foregoing is based upon current interpretation and practice and is subject to future changes in the tax laws of India or Mauritius and in the DTAA.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds 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 ordinary income and any net capital 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 is required.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
83 |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 Funds’ consolidated financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
Each Subsidiary has entered into a separate contract with BFA under which BFA provides investment advisory services to the Subsidiary but does not receive separate compensation from the Subsidiary for providing it with such services. Each Subsidiary has also entered into separate arrangements that provide for the provision of other services to the Subsidiary (including administrative, custody, transfer agency and other services), and BFA pays the costs and expenses related to the provision of those services.
For its investment advisory services to each of the iShares MSCI BRIC, iShares MSCI Emerging Markets Consumer Discretionary Sector, iShares MSCI Emerging Markets Energy Sector Capped, iShares MSCI Emerging Markets Minimum Volatility and iShares MSCI Emerging Markets Small Cap Index Funds, BFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds (including the assets invested in the Subsidiary), as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.75% | First $14 billion | |
| 0.68 | Over $14 billion, up to and including $28 billion | |
| 0.61 | Over $28 billion, up to and including $42 billion | |
| 0.56 | Over $42 billion, up to and including $56 billion | |
| 0.50 | Over $56 billion, up to and including $70 billion | |
| 0.45 | Over $70 billion, up to and including $84 billion | |
| 0.40 | Over $84 billion |
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI Emerging Markets Minimum Volatility Index Fund through December 31, 2014 in order to limit total annual operating expenses to 0.25% of average daily net assets.
| 84 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee based on the average daily net assets of each Fund as follows:
| iShares MSCI Index Fund | Investment Advisory Fee |
|||
| Emerging Markets Asia |
0.68 | % | ||
| Emerging Markets Growth |
0.68 | |||
| Emerging Markets Value |
0.68 | |||
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI Emerging Markets Asia, iShares Emerging Markets Growth and iShares Emerging Markets Value Index Funds through December 31, 2014 in order to limit total annual operating expenses to 0.49% of average daily net assets.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Funds, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by each Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the period ended February 29, 2012, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees |
|||
| BRIC |
$ | 184,719 | ||
| Emerging Markets Minimum Volatility |
3 | |||
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for each Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest — affiliated” in the Consolidated Statements of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but Barclays is not.
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
85 |
Table of Contents
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iSHARES®, INC.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the period ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| BRIC |
$ | 276,617,688 | $ | 167,588,775 | ||||
| Emerging Markets Asia |
6,611,825 | — | ||||||
| Emerging Markets Consumer Discretionary Sector |
6,045,840 | 36,663 | ||||||
| Emerging Markets Energy Sector Capped |
3,597,236 | 52,235 | ||||||
| Emerging Markets Growth |
5,689,852 | — | ||||||
| Emerging Markets Minimum Volatility |
56,962,999 | 2,779,546 | ||||||
| Emerging Markets Small Cap |
4,526,404 | 19,259,785 | ||||||
| Emerging Markets Value |
5,592,191 | — | ||||||
In-kind transactions (see Note 4) for the period ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| BRIC |
$ | 89,219,400 | $ | 122,117,900 | ||||
| Emerging Markets Asia |
4,324,971 | — | ||||||
| Emerging Markets Consumer Discretionary Sector |
4,283,154 | — | ||||||
| Emerging Markets Energy Sector Capped |
6,671,622 | — | ||||||
| Emerging Markets Growth |
5,151,783 | — | ||||||
| Emerging Markets Minimum Volatility |
40,661,960 | — | ||||||
| Emerging Markets Small Cap |
— | 10,124,035 | ||||||
| Emerging Markets Value |
4,915,911 | — | ||||||
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Consolidated Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
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Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 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 by each Fund is required to have a value of at least 102% of the current value of the loaned securities 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. 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 a fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. Each 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Consolidated Statements of Assets and Liabilities. Securities lending income, as disclosed in the Consolidated Statements of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. 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 gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
The Funds had tax basis net capital loss carryforwards as of August 31, 2011, the tax year-end of the Funds, as follows:
| iShares MSCI Index Fund | Expiring 2017 |
Expiring 2018 |
Expiring 2019 |
Total | ||||||||||||
| BRIC |
$ | 1,540,740 | $ | 11,268,086 | $ | 7,760,558 | $ | 20,569,384 | ||||||||
Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by funds for taxable years beginning after December 22, 2010 are not subject to expiration and must be utilized prior to the losses incurred in the tax years preceding enactment.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
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Notes to Consolidated Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
As of February 29, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| BRIC |
$ | 933,893,724 | $ | 124,678,923 | $ | (58,763,516 | ) | $ | 65,915,407 | |||||||
| Emerging Markets Asia |
10,946,797 | 370,677 | (157,810 | ) | 212,867 | |||||||||||
| Emerging Markets Consumer Discretionary Sector |
10,300,686 | 331,000 | (199,153 | ) | 131,847 | |||||||||||
| Emerging Markets Energy Sector Capped |
10,223,482 | 264,163 | (213,344 | ) | 50,819 | |||||||||||
| Emerging Markets Growth |
10,851,835 | 404,337 | (122,825 | ) | 281,512 | |||||||||||
| Emerging Markets Minimum Volatility |
94,702,443 | 6,851,858 | (172,858 | ) | 6,679,000 | |||||||||||
| Emerging Markets Small Cap |
39,304,095 | 2,865,290 | (3,389,572 | ) | (524,282 | ) | ||||||||||
| Emerging Markets Value |
10,518,102 | 270,472 | (188,153 | ) | 82,319 | |||||||||||
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ consolidated financial statements.
| 7. | LINE OF CREDIT |
The Funds, along with certain other iShares funds, are a party to a $125 million credit agreement with State Street Bank and Trust Company, which expires October 31, 2012. The credit agreement was established to facilitate the funding of purchases of securities in India. The credit agreement has the following terms: a commitment fee of 0.08% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.00% per annum or (b) the U.S. Federal Funds rate plus 1.00% per annum on amounts borrowed. The commitment fee is allocated to each fund participating in the credit agreement based on each fund’s pro-rata share of the aggregate average daily value of assets invested in local Indian securities.
For the period ended February 29, 2012, the maximum amounts borrowed, and average borrowings and interest rates under the credit agreement were as follows:
| iShares MSCI Index Fund | Maximum Amount Borrowed |
Average Borrowings |
Average Interest Rates |
|||||||||
| BRIC |
$ | 2,400,000 | $ | 106,077 | 1.27 | % | ||||||
| Emerging Markets Minimum Volatility |
400,000 | 17,680 | 1.27 | |||||||||
| Emerging Markets Small Cap |
1,500,000 | 66,298 | 1.27 | |||||||||
| 8. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the consolidated financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the consolidated financial statements.
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Board Review and Approval of Investment Advisory
Contract (Unaudited)
iSHARES®, INC.
I. iShares MSCI Emerging Markets Asia, iShares MSCI Emerging Markets Consumer Discretionary Sector, iShares MSCI Emerging Markets Energy Sector Capped, iShares MSCI Emerging Markets Growth, and iShares MSCI Emerging Markets Value Index Funds
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required to consider and approve the proposed Investment Advisory Contract between the Company and BFA on behalf of the Funds (the “Advisory Contract”). As required by Section 15(c), the Board requested, and BFA provided, such information as the Board, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on December 5-6, 2011, the Board approved the selection of BFA and the Advisory Contract for the Funds, based on its review of qualitative and quantitative information provided by BFA. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board meetings. The Independent Directors were advised by their independent counsel throughout the process.
In selecting BFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Nature, Extent and Quality of Services to be Provided by BFA — The Board reviewed the scope of services to be required of or provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience as well as the resources expected to be available from BFA and its affiliates for the support of the Funds and their shareholders. The Board considered in particular that BFA’s services for other iShares funds reflect BFA’s core competencies, including BFA’s effective use of its proprietary investment systems analyzing securities market risk, asset class correlations and expected returns. The Board also considered services provided by BFA and its affiliates to other iShares funds in connection with the review of counterparty and issuer credit risk and securities lending opportunities and the oversight of intermediaries that provide shareholder support and processing functions. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Funds would be similar to the scope and quality of services provided to other iShares funds.
The Board also considered BFA’s compliance program and its compliance record with respect to other iShares funds. The Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board reviewed and considered BFA’s investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures.
The Board took into account discussions at prior Board meetings, including representations and information provided by management regarding the resources and strengths of BFA and the financial condition of BFA and BlackRock.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Funds under the Advisory Contract supported the Board’s approval of the Advisory Contract.
Fund Expenses — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Funds in comparison with the same information for other registered investment companies objectively selected by Lipper
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Board Review and Approval of Investment Advisory Contract (Unaudited) (Continued)
iSHARES®, INC.
as comprising the Funds’ applicable peer group pursuant to Lipper’s proprietary methodology (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Group included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at-cost” service providers). In support of its review of the statistical information, the Board was provided with a general description of the methodology used by Lipper to determine the applicable Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board also noted that the proposed investment advisory fee rate and overall expenses for the Funds compared favorably to the investment advisory fee rate and overall expenses of the funds in the Lipper Group.
Based on this review, the other factors considered at the meeting, and their general knowledge of mutual fund pricing, the Board concluded that the proposed investment advisory fees and expense levels of the Funds, as compared to the investment advisory fees and expense levels of the funds in the Lipper Group, supported the Board’s approval of the Advisory Contract.
Costs of Services to be Provided to the Funds and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Funds to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Funds since the proposed relationships had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis and will thus be in a position to evaluate whether, following the expiration of the Advisory Contract’s initial two year term, any adjustments in Funds fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board noted that the Advisory Contract for the iShares MSCI Emerging Markets Consumer Discretionary Sector Index Fund and the iShares MSCI Emerging Markets Energy Sector Capped Index Fund already provided for breakpoints in these Funds’ investment advisory fee rates as the assets of these Funds, on an aggregated basis with the assets of certain other iShares funds, increase. The Board further noted that the Advisory Contract for the iShares MSCI Emerging Markets Asia Index Fund, the iShares MSCI Emerging Markets Growth Index Fund and the iShares MSCI Emerging Markets Value Index Fund did not provide for any breakpoints in these Funds’ investment advisory rates as the assets of these Funds increase. However, the Board noted that should material economies of scale exist in the future, a breakpoint structure for these Funds may be appropriate. The Board noted information presented at prior Board meetings regarding BFA’s historic profitability as investment adviser to the iShares fund complex and noted that BFA and BlackRock had continued to make significant investments in the iShares fund complex and the infrastructure supporting the iShares funds.
Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the structure of the investment advisory fees reflects appropriate sharing of potential economies of scale with the Funds’ shareholders and supported the Board’s approval of the Advisory Contract.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board considered certain information regarding the investment advisory/management fee rate for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act, collective trust funds, and institutional separate accounts (together, the “Other Accounts”). The Board noted that BFA and its affiliates do not manage Other Accounts that track the same underlying indexes as the Funds. The Board further noted that BFA previously provided the Board with detailed information regarding how Other Accounts (particularly institutional clients) generally differ from the Funds, including in terms of the different services provided as well as other significant differences in the approach of BFA and its affiliates to the Funds, on one hand,
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Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks of managing and providing other services to the Funds, as publicly traded exchange traded funds, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board noted that the investment advisory fee rate under the Advisory Contract for the Funds was generally higher than the investment advisory/management fee rates for Other Accounts that are institutional clients of BFA (or its affiliates), and concluded that the differences appeared to be consistent with the factors discussed.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider any ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Funds by BFA since the proposed relationship had not yet commenced. However, the Board noted that BFA would not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Funds in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Funds’ securities lending agent, for loaning any portfolio securities. The Board further noted that any portfolio transactions on behalf of the Funds placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.
Based on the considerations described above, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract.
II. iShares MSCI Emerging Markets Minimum Volatility Index Fund
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. As required by Section 15(c), the Board requested and BFA provided such information as the Board, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. An ad-hoc sub-committee of the Independent Directors (the “Ad-Hoc Sub-Committee”) met with management on April 19, 2011 and April 26, 2011, to discuss the types of information the Board required and the manner in which management would organize and present such information. At a meeting held on May 16, 2011, management presented information to the Board relating to the continuance of the Advisory Contract and the Board reviewed and discussed such information at length. The Board also requested from management certain additional information. At a meeting held on June 22-23, 2011, the Board reviewed additional information provided by management in response to the Board’s requests. The Board approved the selection of BFA and the continuance of the Advisory Contract for the Fund, based on its review of qualitative and quantitative information provided by BFA, including its review of supplemental information management provided at the request of the Board. The Board noted its satisfaction with the high level of information, and detailed responses, provided by BFA. The Independent Directors were advised
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Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
by their independent counsel throughout the process. In selecting BFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Nature, Extent and Quality of Services Provided by BFA — The Board reviewed the scope of services to be provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, in supporting other iShares funds and their shareholders. The Board acknowledged that additional resources to support other iShares funds and their shareholders were added in 2010, for example, in such areas as investor education, product management, and capital markets support. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Fund would be similar to the scope and quality of services provided to other iShares funds. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Fund. In addition to the above considerations, the Board reviewed and considered BFA’s investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.
Expenses of the Fund — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising the Fund’s applicable peer group pursuant to Lipper’s proprietary methodology and any registered funds that would otherwise have been excluded from Lipper’s comparison group because of their size or other differentiating factors, but were nonetheless included at the request of BFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track an index similar to that tracked by the Fund, the Lipper Group included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Fund.
The Board also noted that the investment advisory fees and overall expenses for the Fund compared favorably to the investment advisory fee rate and overall expenses of the funds in the Lipper Group.
Based on this review, the Board concluded that the investment advisory fees and expense levels of the Fund, as compared to the investment advisory fees and expense levels of the funds in the relevant Lipper Group, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.
Costs of Services to be Provided to the Fund and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Fund to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Fund since the Fund had not yet launched. The Board noted that it expects to receive
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Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
profitability information from BFA on at least an annual basis following the Fund’s launch and thus be in a position to evaluate whether any adjustments in Fund fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Fund’s assets. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board also reviewed BFA’s historic profitability as investment adviser to the iShares fund complex and noted that BFA and BlackRock had continued to make significant investments in the iShares fund complex and the infrastructure supporting the iShares funds. Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees reflects appropriate sharing of potential economies of scale with the Fund’s shareholders and supported the Board’s approval of the continuance of the Advisory Contract for the coming year.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (together, the “Other Accounts”). The Board noted that BFA and its affiliates do not manage Other Accounts with a substantially similar investment objective and strategy as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how Other Accounts (particularly institutional clients) generally differ from the Fund, including in terms of the different services provided as well as other significant differences in the approach of BFA and its affiliates to the Fund, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks of managing and providing other services to the Fund, as a publicly traded exchanged traded fund, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for Other Accounts for which BFA (or its affiliates) provides investment advisory/management services, and concluded that the differences appeared to be consistent with the factors discussed.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider any ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Fund by BFA since the Fund had not yet launched. However, the Board noted that BFA does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Fund’s securities lending agent, and its affiliates, in the event of any loaning of portfolio securities of the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund’s shareholders and thus would not alter the Board’s conclusion that the arrangements support the Board’s approval of the continuance of the Advisory Contract for the coming year.
Based on the considerations described above, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Fund and its shareholders to approve the continuance of the Advisory Contract for the coming year.
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Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report distributions for federal income tax purposes.
| Total Cumulative
Distributions for the Fiscal Year-to-Date |
% Breakdown of the Total
Cumulative Distributions for the Fiscal Year-to-Date |
|||||||||||||||||||||||||||||||
| iShares MSCI Index Fund | Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
||||||||||||||||||||||||
| Emerging Markets Minimum Volatility |
$ | 0.07844 | $ | — | $ | 0.63473 | $ | 0.71317 | 11 | % | — | % | 89 | % | 100 | % | ||||||||||||||||
| Emerging Markets Small Cap |
0.21262 | — | 0.24013 | 0.45275 | 47 | — | 53 | 100 | ||||||||||||||||||||||||
| 94 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
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iS-SAR-810-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI All Country World Minimum Volatility Index Fund | ACWV | NYSE Arca
iShares MSCI Emerging Markets EMEA Index Fund | EEME | NASDAQ
iShares MSCI World Index Fund | URTH | NYSE Arca
Table of Contents
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| iShares MSCI All Country World Minimum Volatility Index Fund |
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| 57 |
Table of Contents
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 7.30% | 7.54% | 7.31% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 10/18/11.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (10/20/11), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI All Country World Minimum Volatility Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Country World Minimum Volatility Index (the “Index”). The Index is designed to measure the combined performance of equity securities in both emerging and developed markets that have lower absolute volatility. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from October 18, 2011 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 7.30%, net of fees, while the total return for the Index was 7.31%.
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 13.33% | 12.80% | 13.50% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/18/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (1/19/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Emerging Markets EMEA Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets EMEA Index (the “Index”). The Index is designed to measure the performance of equity securities in the emerging market countries of Europe, the Middle East and Africa. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 18, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 13.33%, net of fees, while the total return for the Index was 13.50%.
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI WORLD INDEX FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 7.81% | 7.83% | 7.84% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/10/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (1/12/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI World Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI World Index (the “Index”). The Index is designed to measure the performance of equity securities in the top 85% of equity market capitalization, as calculated by the index provider, in certain developed market countries. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 10, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 7.81%, net of fees, while the total return for the Index was 7.84%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 (or commencement of operations, as applicable) to February 29, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| iShares MSCI Index Fund |
Beginning (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| All Country World Minimum Volatility |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,073.00 | 0.34 | % | $ | 1.29 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.20 | 0.34 | 1.71 | ||||||||||||
| Emerging Markets EMEA |
||||||||||||||||
| Actual |
1,000.00 | 1,133.30 | 0.49 | 0.60 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.40 | 0.49 | 2.46 | ||||||||||||
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Index Fund |
Beginning (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| World |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,078.10 | 0.24 | % | $ | 0.34 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.70 | 0.24 | 1.21 | ||||||||||||
| a | The beginning of the period (commencement of operations) is October 18, 2011, January 18, 2012 and January 10, 2012 for the iShares MSCI All Country World Minimum Volatility Index Fund, iShares MSCI Emerging Markets EMEA Index Fund and iShares MSCI World Index Fund, respectively. |
| b | Actual expenses for the Funds are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (134 days for the iShares MSCI All Country World Minimum Volatility Index Fund, 42 days for the iShares MSCI Emerging Markets EMEA Index Fund and 50 days for the iShares MSCI World Index Fund) and divided by the number of days in the year (366 days). Hypothetical expenses for all the Funds, which are based on a hypothetical half year, are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| SHAREHOLDER EXPENSES |
9 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
11 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI ALL COUNTRY WORLD MINIMUM VOLATILITY INDEX FUND
February 29, 2012
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
February 29, 2012
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI EMERGING MARKETS EMEA INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
29 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
31 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
33 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
35 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI WORLD INDEX FUND
February 29, 2012
| 36 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 29, 2012
| iShares MSCI All Country World Minimum Volatility Index Fund |
iShares MSCI Emerging Index Fund |
iShares MSCI World Index Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 30,782,662 | $ | 5,109,818 | $ | 20,073,993 | ||||||
| Affiliated (Note 2) |
506,766 | 5,088 | 80,361 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 31,289,428 | $ | 5,114,906 | $ | 20,154,354 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (including securities on loana) (Note 1): |
||||||||||||
| Unaffiliated |
$ | 31,598,480 | $ | 5,794,927 | $ | 21,581,907 | ||||||
| Affiliated (Note 2) |
512,356 | 5,088 | 80,705 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
32,110,836 | 5,800,015 | 21,662,612 | |||||||||
| Foreign currencies, at valueb |
7,951 | — | 11,768 | |||||||||
| Cash |
— | — | 304 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
239,561 | — | 6,250 | |||||||||
| Due from custodian (Note 4) |
1,762,056 | — | — | |||||||||
| Dividends and interest |
30,400 | — | 54,588 | |||||||||
| Capital shares sold |
1,479,310 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
35,630,114 | 5,800,015 | 21,735,522 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
3,465,225 | — | 22,022 | |||||||||
| Collateral for securities on loan (Note 5) |
124,868 | — | 11,380 | |||||||||
| Investment advisory fees (Note 2) |
3,019 | 2,165 | 4,063 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
3,593,112 | 2,165 | 37,465 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 32,037,002 | $ | 5,797,850 | $ | 21,698,057 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 31,247,996 | $ | 5,115,818 | $ | 20,127,850 | ||||||
| Undistributed net investment income (accumulated net investment loss) |
24,634 | (3,077 | ) | 65,094 | ||||||||
| Accumulated net realized loss |
(61,014 | ) | — | (3,477 | ) | |||||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
825,386 | 685,109 | 1,508,590 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 32,037,002 | $ | 5,797,850 | $ | 21,698,057 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingc |
600,000 | 100,000 | 400,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 53.40 | $ | 57.98 | $ | 54.25 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Securities on loan with values of $118,564, $ — and $10,818, respectively. See Note 5. |
| b | Cost of foreign currencies: $7,831, $ — and $11,600, respectively. |
| c | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
37 |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Period ended February 29, 2012
| iShares MSCI All Country World Minimum Volatility Index Funda |
iShares MSCI Emerging Index Fundb |
iShares MSCI World Index Fundc |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliatedd |
$ | 90,004 | $ | — | $ | 71,788 | ||||||
| Dividends — affiliated (Note 2) |
26 | — | 161 | |||||||||
| Interest — affiliated (Note 2) |
3 | — | — | |||||||||
| Securities lending income — affiliated (Note 2) |
199 | — | 22 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
90,232 | — | 71,971 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
13,010 | 4,270 | 6,877 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
13,010 | 4,270 | 6,877 | |||||||||
| Less investment advisory fees waived (Note 2) |
(56 | ) | (1,193 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
12,954 | 3,077 | 6,877 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income (loss) |
77,278 | (3,077 | ) | 65,094 | ||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(59,619 | ) | — | (3,539 | ) | |||||||
| Foreign currency transactions |
(1,395 | ) | — | 62 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(61,014 | ) | — | (3,477 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
821,408 | 685,109 | 1,508,258 | |||||||||
| Translation of assets and liabilities in foreign currencies |
3,978 | — | 332 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
825,386 | 685,109 | 1,508,590 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain |
764,372 | 685,109 | 1,505,113 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 841,650 | $ | 682,032 | $ | 1,570,207 | ||||||
|
|
|
|
|
|
|
|||||||
| a | For the period from October 18, 2011 (commencement of operations) to February 29, 2012. |
| b | For the period from January 18, 2012 (commencement of operations) to February 29, 2012. |
| c | For the period from January 10, 2012 (commencement of operations) to February 29, 2012. |
| d | Net of foreign withholding tax of $3,271, $ — and $2,354, respectively. |
See notes to financial statements.
| 38 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI All Country World Minimum Volatility Index Fund |
iShares MSCI Emerging Markets EMEA Index Fund |
|||||||
| Period from to February 29, 2012 (Unaudited) |
Period from to February 29, 2012 (Unaudited) |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income (loss) |
$ | 77,278 | $ | (3,077 | ) | |||
| Net realized loss |
(61,014 | ) | — | |||||
| Net change in unrealized appreciation/depreciation |
825,386 | 685,109 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
841,650 | 682,032 | ||||||
|
|
|
|
|
|||||
| DISTRIBUTIONS TO SHAREHOLDERS: |
||||||||
| From net investment income |
(52,644 | ) | — | |||||
|
|
|
|
|
|||||
| Total distributions to shareholders |
(52,644 | ) | — | |||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
31,247,996 | 5,115,818 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
31,247,996 | 5,115,818 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
32,037,002 | 5,797,850 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 32,037,002 | $ | 5,797,850 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income (accumulated net investment loss) included in net assets at end of period |
$ | 24,634 | $ | (3,077 | ) | |||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
600,000 | 100,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
600,000 | 100,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
39 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI World Index Fund |
||||
| Period from to February 29, 2012 (Unaudited) |
||||
| INCREASE (DECREASE) IN NET ASSETS |
||||
| OPERATIONS: |
||||
| Net investment income |
$ | 65,094 | ||
| Net realized loss |
(3,477 | ) | ||
| Net change in unrealized appreciation/depreciation |
1,508,590 | |||
|
|
|
|||
| Net increase in net assets resulting from operations |
1,570,207 | |||
|
|
|
|||
| CAPITAL SHARE TRANSACTIONS: |
||||
| Proceeds from shares sold |
20,127,850 | |||
|
|
|
|||
| Net increase in net assets from capital share transactions |
20,127,850 | |||
|
|
|
|||
| INCREASE IN NET ASSETS |
21,698,057 | |||
| NET ASSETS |
||||
| Beginning of period |
— | |||
|
|
|
|||
| End of period |
$ | 21,698,057 | ||
|
|
|
|||
| Undistributed net investment income included in net assets at end of period |
$ | 65,094 | ||
|
|
|
|||
| SHARES ISSUED |
||||
| Shares sold |
400,000 | |||
|
|
|
|||
| Net increase in shares outstanding |
400,000 | |||
|
|
|
|||
| a | Commencement of operations. |
See notes to financial statements.
| 40 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout the period)
| iShares MSCI All Country World Minimum Volatility Index Fund | ||||
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 50.02 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.38 | |||
| Net realized and unrealized gainc |
3.26 | |||
|
|
|
|||
| Total from investment operations |
3.64 | |||
|
|
|
|||
| Less distributions from: |
||||
| Net investment income |
(0.26 | ) | ||
|
|
|
|||
| Total distributions |
(0.26 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$ | 53.40 | ||
|
|
|
|||
| Total return |
7.30 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 32,037 | ||
| Ratio of expenses to average net assetse |
0.34 | % | ||
| Ratio of expenses to average net assets prior to waived feese |
0.34 | % | ||
| Ratio of net investment income to average net assetse |
2.03 | % | ||
| Portfolio turnover ratef |
10 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the period ended February 29, 2012 would have been 10%. See Note 4. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
41 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
| iShares MSCI Emerging Markets EMEA Index Fund | ||||
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 51.16 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment lossb |
(0.03 | ) | ||
| Net realized and unrealized gainc |
6.85 | |||
|
|
|
|||
| Total from investment operations |
6.82 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 57.98 | ||
|
|
|
|||
| Total return |
13.33 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 5,798 | ||
| Ratio of expenses to average net assetse |
0.49 | % | ||
| Ratio of expenses to average net assets prior to waived feese |
0.68 | % | ||
| Ratio of net investment loss to average net assetse |
(0.49 | )% | ||
| Portfolio turnover ratef |
0 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 42 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
| iShares MSCI World Index Fund | ||||
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 50.32 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.16 | |||
| Net realized and unrealized gainc |
3.77 | |||
|
|
|
|||
| Total from investment operations |
3.93 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 54.25 | ||
|
|
|
|||
| Total return |
7.81 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 21,698 | ||
| Ratio of expenses to average net assetse |
0.24 | % | ||
| Ratio of net investment income to average net assetse |
2.27 | % | ||
| Portfolio turnover ratef |
0 | %g | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
| g | Rounds to less than 1%. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
43 |
Table of Contents
Notes to Financial Statements (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.
These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
| iShares MSCI Index Fund | Diversification Classification | |
| All Country World Minimum Volatilitya |
Non-diversified | |
| Emerging Markets EMEAb |
Non-diversified | |
| Worldc |
Diversified |
| a | The Fund commenced operations on October 18, 2011. |
| b | The Fund commenced operations on January 18, 2012. |
| c | The Fund commenced operations on January 10, 2012. |
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
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. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Each Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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 Funds; 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; less 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.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| 44 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of each Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
| • | Exchange-traded funds (“ETFs”) traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the ETF is primarily traded. ETFs traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
Fair value pricing could result in a difference between the prices used to calculate a 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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument.
| NOTES TO FINANCIAL STATEMENTS |
45 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 29, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Schedule of Investments.
| iShares MSCI Index Fund and
|
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| All Country World Minimum Volatility |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 31,575,007 | $ | — | $ | — | $ | 31,575,007 | ||||||||
| Investment Companies |
375,134 | — | — | 375,134 | ||||||||||||
| Preferred Stocks |
23,473 | — | — | 23,473 | ||||||||||||
| Short-Term Investments |
137,222 | — | — | 137,222 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 32,110,836 | $ | — | $ | — | $ | 32,110,836 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Emerging Markets EMEA |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,695,475 | $ | 12,731 | $ | — | $ | 5,708,206 | ||||||||
| Preferred Stocks |
86,721 | — | — | 86,721 | ||||||||||||
| Short-Term Investments |
5,088 | — | — | 5,088 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,787,284 | $ | 12,731 | $ | — | $ | 5,800,015 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| World |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 21,578,060 | $ | — | $ | — | $ | 21,578,060 | ||||||||
| Preferred Stocks |
47,405 | — | — | 47,405 | ||||||||||||
| Short-Term Investments |
37,147 | — | — | 37,147 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 21,662,612 | $ | — | $ | — | $ | 21,662,612 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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. 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.
| 46 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Funds’ Statements of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds 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 ordinary income and any net capital 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 is required.
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 Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
| NOTES TO FINANCIAL STATEMENTS |
47 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
For its investment advisory services to the iShares MSCI All Country World Minimum Volatility Index Fund, BFA is entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:
| Investment Advisory Fee | Aggregate Average Daily Net Assets | |
| 0.35% | First $30 billion | |
| 0.32 | Over $30 billion, up to and including $60 billion | |
| 0.28 | Over $60 billion |
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI All Country World Minimum Volatility Index Fund through June 30, 2013 in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares funds.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee based on the average daily net assets of each Fund as follows:
| iShares MSCI Index Fund | Investment Advisory Fee |
|||
| Emerging Markets EMEA |
0.68 | % | ||
| World |
0.24 | |||
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI Emerging Markets EMEA Index Fund through December 31, 2014 in order to limit total annual operating expenses to 0.49% of average daily net assets.
The U.S. Securities and Exchange Commission has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”) to serve as securities lending agent for the Funds, subject to applicable conditions. BTC is an affiliate of BFA. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, and any fees or other payments to and from borrowers of securities. Each Fund retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. As securities lending agent, BTC is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BTC is also responsible for fees and expenses incurred by each Fund as a result of the investment of cash collateral received for securities on loan in a money market fund managed by BFA or an affiliate.
For the period ended February 29, 2012, BTC earned securities lending agent fees from the Funds as follows:
| iShares MSCI Index Fund | Securities Lending Agent Fees |
|||
| All Country World Minimum Volatility |
$ | 107 | ||
| World |
12 | |||
| 48 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for each Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest—affiliated” in the Statements of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but Barclays is not.
The iShares MSCI All Country World Minimum Volatility Index Fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the Fund’s underlying index.
Investments in issuers considered to be affiliates of the Funds (excluding short-term investments) during the period ended February 29, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| iShares MSCI Index Fund and Name of Affiliated Issuer |
Shares Held at Beginning of Period |
Shares Purchased |
Shares Sold |
Shares Held of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| All Country World Minimum Volatility |
||||||||||||||||||||||||||||
| iShares S&P India Nifty 50 Index Fund |
— | 15,102 | — | 15,102 | $ | 375,134 | $ | 26 | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 375,134 | $ | 26 | $ | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| World |
||||||||||||||||||||||||||||
| BlackRock Inc. |
— | 81 | — | 81 | $ | 16,119 | $ | — | $ | — | ||||||||||||||||||
| PNC Financial Services Group Inc. (The) |
— | 461 | — | 461 | 27,439 | 161 | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
| $ | 43,558 | $ | 161 | $ | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BTC and/or BFA.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the period ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | Purchases | Sales | ||||||
| All Country World Minimum Volatility |
$ | 3,575,898 | $ | 1,352,257 | ||||
| World |
26,404 | 13,508 | ||||||
| NOTES TO FINANCIAL STATEMENTS |
49 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
In-kind transactions (see Note 4) for the period ended February 29, 2012 were as follows:
| iShares MSCI Index Fund | In-kind Purchases |
In-kind Sales |
||||||
| All Country World Minimum Volatility |
$ | 28,988,183 | $ | — | ||||
| Emerging Markets EMEA |
5,109,818 | — | ||||||
| World |
20,107,850 | — | ||||||
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.
| 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 by each Fund is required to have a value of at least 102% of the current value of the loaned securities 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. 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 a fund or through one or more joint accounts or money market funds, including those managed by BFA or its affiliates. Each 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 February 29, 2012, any securities on loan were collateralized by cash. The cash collateral received was invested in money market funds managed by BFA. The value of the securities on loan as of February 29, 2012 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Statements of Operations, represents the income earned from the investment of the cash collateral, net of fees and other payments to and from borrowers, and less the fees paid to BTC as securities lending agent.
| 50 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
| 6. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. 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 gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 29, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares MSCI Index Fund | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| All Country World Minimum Volatility |
$ | 31,289,428 | $ | 906,986 | $ | (85,578 | ) | $ | 821,408 | |||||||
| Emerging Markets EMEA |
5,114,906 | 689,670 | (4,561 | ) | 685,109 | |||||||||||
| World |
20,154,354 | 1,646,428 | (138,170 | ) | 1,508,258 | |||||||||||
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 7. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| NOTES TO FINANCIAL STATEMENTS |
51 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited)
iSHARES®, INC.
I. iShares MSCI All Country World Minimum Volatility Index Fund
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BFA (the “Advisory Contract”) on behalf of the Fund. As required by Section 15(c), the Board requested and BFA provided such information as the Board, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Contract. An ad-hoc sub-committee of the Independent Directors (the “Ad-Hoc Sub-Committee”) met with management on April 19, 2011 and April 26, 2011, to discuss the types of information the Board required and the manner in which management would organize and present such information. At a meeting held on May 16, 2011, management presented information to the Board relating to the continuance of the Advisory Contract and the Board reviewed and discussed such information at length. The Board also requested from management certain additional information. At a meeting held on June 22-23, 2011, the Board reviewed additional information provided by management in response to the Board’s requests. The Board approved the selection of BFA and the continuance of the Advisory Contract for the Fund, based on its review of qualitative and quantitative information provided by BFA, including its review of supplemental information management provided at the request of the Board. The Board noted its satisfaction with the high level of information, and detailed responses, provided by BFA. The Independent Directors were advised by their independent counsel throughout the process. In selecting BFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Nature, Extent and Quality of Services Provided by BFA — The Board reviewed the scope of services to be provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, in supporting other iShares funds and their shareholders. The Board acknowledged that additional resources to support other iShares funds and their shareholders were added in 2010, for example, in such areas as investor education, product management, and capital markets support. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Fund would be similar to the scope and quality of services provided to other iShares funds. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Fund. In addition to the above considerations, the Board reviewed and considered BFA’s investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Fund under the Advisory Contract supported the Board’s approval of the continuance of the Advisory Contract for the coming year.
Expenses of the Fund — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising the Fund’s applicable peer group pursuant to Lipper’s proprietary methodology and any registered funds that would otherwise have been excluded from Lipper’s comparison group because of their size or other differentiating factors, but were nonetheless included at the request of BFA (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track an index similar to that tracked by the Fund, the Lipper Group included in part mutual funds, closed-end funds, exchange traded
| 52 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Fund.
The Board also noted that the investment advisory fees and overall expenses for the Fund compared favorably to the investment advisory fee rate and overall expenses of the funds in the Lipper Group.
Based on this review, the Board concluded that the investment advisory fees and expense levels of the Fund, as compared to the investment advisory fees and expense levels of the funds in the relevant Lipper Group, supported the Board’s approval of the continuance of the Advisory Contract for the coming year.
Costs of Services to be Provided to the Fund and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Fund to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Fund since the Fund had not yet launched. The Board noted that it expects to receive profitability information from BFA on at least an annual basis following the Fund’s launch and thus be in a position to evaluate whether any adjustments in Fund fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Fund’s assets. The Board noted that the Advisory Contract for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board also reviewed BFA’s historic profitability as investment adviser to the iShares fund complex and noted that BFA and BlackRock had continued to make significant investments in the iShares fund complex and the infrastructure supporting the iShares funds. Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees reflects appropriate sharing of potential economies of scale with the Fund’s shareholders and supported the Board’s approval of the continuance of the Advisory Contract for the coming year.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (together, the “Other Accounts”). The Board noted that BFA and its affiliates do not manage Other Accounts with a substantially similar investment objective and strategy as the Fund. The Board further noted that BFA provided the Board with detailed information regarding how Other Accounts (particularly institutional clients) generally differ from the Fund, including in terms of the different services provided as well as other significant differences in the approach of BFA and its affiliates to the Fund, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks of managing and providing other services to the Fund, as a publicly traded exchanged traded fund, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board noted that the investment advisory fee rate under the Advisory Contract for the Fund was generally higher than the investment advisory/management fee rates for Other Accounts for which BFA (or its affiliates) provides investment advisory/management services, and concluded that the differences appeared to be consistent with the factors discussed.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
53 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider any ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Fund by BFA since the Fund had not yet launched. However, the Board noted that BFA does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Fund’s securities lending agent, and its affiliates, in the event of any loaning of portfolio securities of the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund’s shareholders and thus would not alter the Board’s conclusion that the arrangements support the Board’s approval of the continuance of the Advisory Contract for the coming year.
Based on the considerations described above, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Fund and its shareholders to approve the continuance of the Advisory Contract for the coming year.
II. iShares MSCI Emerging Markets EMEA and iShares MSCI World Index Funds
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required to consider and approve the proposed Investment Advisory Contract between the Company and BFA on behalf of the Funds (the “Advisory Contract”). As required by Section 15(c), the Board requested, and BFA provided, such information as the Board, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on December 5-6, 2011, the Board approved the selection of BFA and the Advisory Contract for the Funds, based on its review of qualitative and quantitative information provided by BFA. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board. The Independent Directors were advised by their independent counsel throughout the process.
In selecting BFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Nature, Extent and Quality of Services to be Provided by BFA — The Board reviewed the scope of services to be required of or provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience as well as the resources expected to be available from BFA and its affiliates for the support of the Funds and their shareholders. The Board considered in particular that BFA’s services for other iShares funds reflect BFA’s core competencies, including BFA’s effective use of its proprietary investment systems analyzing securities market risk, asset class correlations and expected returns. The Board also considered services provided by BFA and its affiliates to other iShares funds in connection with the review of counterparty and issuer credit risk and securities lending opportunities and the oversight of intermediaries that provide shareholder support and processing functions. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Funds would be similar to the scope and quality of services provided to other iShares funds.
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Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
The Board also considered BFA’s compliance program and its compliance record with respect to other iShares funds. The Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board reviewed and considered BFA’s investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures.
The Board took into account discussions at prior Board meetings, including representations and information provided by management regarding the resources and strengths of BFA and the financial condition of BFA and BlackRock.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Funds under the Advisory Contract supported the Board’s approval of the Advisory Contract.
Fund Expenses — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Funds in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising the Funds’ applicable peer group pursuant to Lipper’s proprietary methodology (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Group included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at-cost” service providers). In support of its review of the statistical information, the Board was provided with a general description of the methodology used by Lipper to determine the applicable Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board also noted that the proposed investment advisory fee rate and overall expenses for the Funds compared favorably to the investment advisory fee rate and overall expenses of the funds in the Lipper Group.
Based on this review, the other factors considered at the meeting, and their general knowledge of mutual fund pricing, the Board concluded that the proposed investment advisory fees and expense levels of the Funds, as compared to the investment advisory fees and expense levels of the funds in the Lipper Group, supported the Board’s approval of the Advisory Contract.
Costs of Services to be Provided to the Funds and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Funds to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Funds since the proposed relationships had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis and will thus be in a position to evaluate whether, following the expiration of the Advisory Contract’s initial two year term, any adjustments in Funds fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board noted that the Advisory Contract did not provide for any breakpoints in the Funds’ investment advisory rates as the assets of the Funds increase. However, the Board noted that should material economies of scale exist in the future, a breakpoint structure for the Funds may be appropriate. The Board noted information presented at prior Board meetings regarding BFA’s historic profitability as investment adviser to the iShares fund complex and noted that BFA and BlackRock had continued to make significant investments in the iShares fund complex and the infrastructure supporting the iShares funds.
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
55 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the structure of the investment advisory fees reflects appropriate sharing of potential economies of scale with the Funds’ shareholders and supported the Board’s approval of the Advisory Contract.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board considered certain information regarding the investment advisory/management fee rate for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act, collective trust funds, and institutional separate accounts (together, the “Other Accounts”). The Board noted that BFA and its affiliates manage Other Accounts that track the same underlying index as the iShares MSCI World Index Fund, but they do not manage Other Accounts that track the same underlying index as the iShares MSCI Emerging Markets EMEA Index Fund. The Board further noted that BFA previously provided the Board with detailed information regarding how Other Accounts (particularly institutional clients) generally differ from the Funds, including in terms of the different services provided as well as other significant differences in the approach of BFA and its affiliates to the Funds, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks of managing and providing other services to the Funds, as publicly traded exchange traded funds, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board noted that the investment advisory fee rate under the Advisory Contract for the Funds was generally higher than the investment advisory/management fee rates for Other Accounts that are institutional clients of BFA (or its affiliates), and concluded that the differences appeared to be consistent with the factors discussed.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider any ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Funds by BFA since the proposed relationship had not yet commenced. However, the Board noted that BFA would not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Funds in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Funds’ securities lending agent, for loaning any portfolio securities. The Board further noted that any portfolio transactions on behalf of the Funds placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.
Based on the considerations described above, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract.
| 56 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Supplemental Information (Unaudited)
iSHARES®, INC.
Section 19(a) Notices
The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report distributions for federal income tax purposes.
| Total Cumulative
Distributions for the Fiscal Year-to-Date |
% Breakdown of the Total Cumulative Distributions for the Fiscal Year-to-Date |
|||||||||||||||||||||||||||||||
| iShares MSCI Index Fund | Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
Net Investment Income |
Net Realized Capital Gains |
Return of Capital |
Total Per Share |
||||||||||||||||||||||||
| All Country World Minimum Volatility |
$0.15043 | $ | — | $ | 0.11279 | $0.26322 | 57 | % | — | % | 43 | % | 100 | % | ||||||||||||||||||
| SUPPLEMENTAL INFORMATION |
57 |
Table of Contents
Notes:
| 58 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
For more information visit www.iShares.com
or call 1-800-474-2737
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iS-SAR-811-0212
Table of Contents
|
February 29, 2012 |
2012 Semi-Annual Report
iShares, Inc.
iShares MSCI Global Agriculture Producers Fund | VEGI | NYSE Arca
iShares MSCI Global Energy Producers Fund | FILL | NYSE Arca
iShares MSCI Global Gold Miners Fund | RING | NYSE Arca
iShares MSCI Global Select Metals & Mining Producers Fund | PICK | NYSE Arca
iShares MSCI Global Silver Miners Fund | SLVP | NYSE Arca
Table of Contents
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| 10 | ||||
| 12 | ||||
| 12 | ||||
| 16 | ||||
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| 41 | ||||
| 48 |
Table of Contents
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 3.09% | 3.42% | 3.17% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/31/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/2/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Global Agriculture Producers Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI ACWI Select Agriculture Producers Investable Market Index (the “Index”). The Index is designed to measure the combined performance of equity securities of companies primarily engaged in the business of agriculture in both developed and emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 31, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 3.09%, net of fees, while the total return for the Index was 3.17%.
| * | Other includes industries which individually represented less than 1% of net assets. |
| FUND PERFORMANCE OVERVIEWS |
5 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 5.89% | 6.25% | 5.95% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/31/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/2/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Global Energy Producers Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI ACWI Select Energy Producers Investable Market Index (the “Index”). The Index is designed to measure the combined performance of equity securities of companies primarily engaged in the business of energy exploration and production in both developed and emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 31, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 5.89%, net of fees, while the total return for the Index was 5.95%.
| 6 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL GOLD MINERS FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||
| Inception to 2/29/12 | ||||
| NAV | MARKET | INDEX | ||
| (0.04)% | (0.80)% | (0.00)% | ||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/31/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/2/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Global Miners Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI ACWI Select Gold Miners Investable Market Index (the “Index”). The Index is designed to measure the combined performance of equity securities of companies primarily engaged in the business of gold mining in both developed and emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 31, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was (0.04)%, net of fees, while the total return for the Index was (0.00)%.
| FUND PERFORMANCE OVERVIEWS |
7 |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 1.58% | 2.30% | 1.63% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/31/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/2/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Global Select Metals & Mining Producers Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index (the “Index”). The Index is designed to measure the combined performance of equity securities of companies primarily involved in the extraction and production of diversified metals, aluminum, steel, and precious metals and minerals, excluding gold and silver, in both developed and emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 31, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 1.58%, net of fees, while the total return for the Index was 1.63%.
| 8 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Fund Performance Overview
iSHARES® MSCI GLOBAL SILVER MINERS FUND
Performance as of February 29, 2012
| Cumulative Total Returns | ||||||||||
| Inception to 2/29/12 | ||||||||||
| NAV | MARKET | INDEX | ||||||||
| 2.61% | 2.85% | 2.65% | ||||||||
“Cumulative Total Returns” represent the total change in value of an investment over the period indicated and are calculated from an inception date of 1/31/12.
The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/2/12), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The performance shown above assumes reinvestment of all dividends and capital gain distributions and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.
The iShares MSCI Global Silver Miners Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI ACWI Select Silver Miners Investable Market Index (the “Index”). The Index is designed to measure the combined performance of equity securities of companies primarily engaged in the business of silver mining in both developed and emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from January 31, 2012 (inception date of the Fund) through February 29, 2012, the total return for the Fund was 2.61%, net of fees, while the total return for the Index was 2.65%.
| FUND PERFORMANCE OVERVIEWS |
9 |
Table of Contents
Shareholder Expenses (Unaudited)
iSHARES®, INC.
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares and (2) ongoing costs, including management fees and other Fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 1, 2011 (or commencement of operations, as applicable) to February 29, 2012.
ACTUAL EXPENSES
The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| iShares MSCI Fund |
Beginning (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| Global Agriculture Producers |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,030.90 | 0.38 | % | $ | 0.31 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,023.00 | 0.38 | 1.91 | ||||||||||||
| Global Energy Producers |
||||||||||||||||
| Actual |
1,000.00 | 1,058.90 | 0.39 | 0.32 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| Global Gold Miners |
||||||||||||||||
| Actual |
1,000.00 | 999.60 | 0.39 | 0.31 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| Global Select Metals & Mining Producers |
||||||||||||||||
| Actual |
1,000.00 | 1,015.80 | 0.39 | 0.31 | ||||||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| 10 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Shareholder Expenses (Unaudited) (Continued)
iSHARES®, INC.
| iShares MSCI Fund |
Beginning (9/1/11) |
Ending Account Value (2/29/12) |
Annualized Expense Ratio |
Expenses Paid (9/1/11 to 2/29/12) |
||||||||||||
| Global Silver Miners |
||||||||||||||||
| Actual |
$ | 1,000.00 | $ | 1,026.10 | 0.39 | % | $ | 0.31 | ||||||||
| Hypothetical (5% return before expenses) |
1,000.00 | 1,022.90 | 0.39 | 1.96 | ||||||||||||
| a | The beginning of the period (commencement of operations) for the Funds is January 31, 2012. |
| b | Actual expenses for the Funds are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (29 days) and divided by the number of days in the year (366 days). Hypothetical expenses, which are based on a hypothetical half year, are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (182 days) and divided by the number of days in the year (366 days). |
| SHAREHOLDER EXPENSES |
11 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 29, 2012
| 12 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
13 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 29, 2012
| 14 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL AGRICULTURE PRODUCERS FUND
February 29, 2012
| Value | ||||||
| TOTAL INVESTMENTS |
$ | 5,127,607 | ||||
| Other Assets, Less Liabilities — 0.04% |
2,274 | |||||
|
|
|
|||||
| NET ASSETS — 100.00% |
$ | 5,129,881 | ||||
|
|
|
|||||
NVDR — Non-Voting Depositary Receipts
SDR — Swedish Depositary Receipts
| a | Non-income earning security. |
| b | Affiliated issuer. See Note 2. |
| c | The rate quoted is the annualized seven-day yield of the fund at period end. |
See notes to financial statements.
| SCHEDULES OF INVESTMENTS |
15 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 29, 2012
| 16 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
17 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 29, 2012
| 18 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
19 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL ENERGY PRODUCERS FUND
February 29, 2012
| 20 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL GOLD MINERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
21 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 29, 2012
| 22 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
23 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 29, 2012
| 24 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
25 |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 29, 2012
| 26 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Schedule of Investments (Unaudited) (Continued)
iSHARES® MSCI GLOBAL SELECT METALS & MINING PRODUCERS FUND
February 29, 2012
| SCHEDULES OF INVESTMENTS |
27 |
Table of Contents
Schedule of Investments (Unaudited)
iSHARES® MSCI GLOBAL SILVER MINERS FUND
February 29, 2012
| 28 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Assets and Liabilities (Unaudited)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Global Agriculture Producers Fund |
iShares MSCI Global Energy Producers Fund |
iShares MSCI Global Gold Miners Fund |
||||||||||
| ASSETS |
||||||||||||
| Investments, at cost: |
||||||||||||
| Unaffiliated |
$ | 4,966,601 | $ | 5,034,827 | $ | 27,792,172 | ||||||
| Affiliated (Note 2) |
49,357 | 5,174 | 5,208 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total cost of investments |
$ | 5,015,958 | $ | 5,040,001 | $ | 27,797,380 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments in securities, at fair value (Note 1): |
||||||||||||
| Unaffiliated |
$ | 5,077,285 | $ | 5,226,630 | $ | 27,456,798 | ||||||
| Affiliated (Note 2) |
50,322 | 5,174 | 5,208 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total fair value of investments |
5,127,607 | 5,231,804 | 27,462,006 | |||||||||
| Foreign currencies, at valuea |
— | 3,712 | — | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
20,021 | — | 175,138 | |||||||||
| Due from custodian (Note 4) |
590 | 114,554 | — | |||||||||
| Dividends and interest |
3,797 | 15,846 | 5,792 | |||||||||
| Capital shares sold |
— | — | 29,306 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
5,152,015 | 5,365,916 | 27,672,242 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
20,932 | 114,554 | 175,368 | |||||||||
| Investment advisory fees (Note 2) |
1,202 | 1,214 | 1,164 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
22,134 | 115,768 | 176,532 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 5,129,881 | $ | 5,250,148 | $ | 27,495,710 | ||||||
|
|
|
|
|
|
|
|||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$ | 5,016,794 | $ | 5,040,238 | $ | 27,825,960 | ||||||
| Undistributed net investment income |
2,780 | 18,183 | 5,142 | |||||||||
| Accumulated net realized loss |
(1,324 | ) | (124 | ) | (68 | ) | ||||||
| Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies |
111,631 | 191,851 | (335,324 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET ASSETS |
$ | 5,129,881 | $ | 5,250,148 | $ | 27,495,710 | ||||||
|
|
|
|
|
|
|
|||||||
| Shares outstandingb |
200,000 | 200,000 | 1,100,000 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net asset value per share |
$ | 25.65 | $ | 26.25 | $ | 25.00 | ||||||
|
|
|
|
|
|
|
|||||||
| a | Cost of foreign currencies: $ —, $3,674 and $ —, respectively. |
| b | $0.001 par value, number of shares authorized: 500 million, 500 million and 500 million, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
29 |
Table of Contents
Statements of Assets and Liabilities (Unaudited) (Continued)
iSHARES®, INC.
February 29, 2012
| iShares MSCI Global Select Metals & Mining Producers Fund |
iShares MSCI Global Silver Miners Fund |
|||||||
| ASSETS |
||||||||
| Investments, at cost: |
||||||||
| Unaffiliated |
$ | 2,473,797 | $ | 4,933,750 | ||||
| Affiliated (Note 2) |
2,241 | 4,576 | ||||||
|
|
|
|
|
|||||
| Total cost of investments |
$ | 2,476,038 | $ | 4,938,326 | ||||
|
|
|
|
|
|||||
| Investments in securities, at fair value (Note 1): |
||||||||
| Unaffiliated |
$ | 2,501,839 | $ | 5,101,332 | ||||
| Affiliated (Note 2) |
2,241 | 4,576 | ||||||
|
|
|
|
|
|||||
| Total fair value of investments |
2,504,080 | 5,105,908 | ||||||
| Foreign currencies, at valuea |
3,841 | — | ||||||
| Receivables: |
||||||||
| Investment securities sold |
5,499 | 36,988 | ||||||
| Due from custodian (Note 4) |
16,533 | 12,047 | ||||||
| Dividends |
11,624 | — | ||||||
|
|
|
|
|
|||||
| Total Assets |
2,541,577 | 5,154,943 | ||||||
|
|
|
|
|
|||||
| LIABILITIES |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
25,298 | 50,385 | ||||||
| Investment advisory fees (Note 2) |
777 | 1,098 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
26,075 | 51,483 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 2,515,502 | $ | 5,103,460 | ||||
|
|
|
|
|
|||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$ | 2,476,586 | $ | 4,939,471 | ||||
| Undistributed net investment income (accumulated net investment loss) |
11,281 | (1,098 | ) | |||||
| Accumulated net realized loss |
(467 | ) | (2,497 | ) | ||||
| Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies |
28,102 | 167,584 | ||||||
|
|
|
|
|
|||||
| NET ASSETS |
$ | 2,515,502 | $ | 5,103,460 | ||||
|
|
|
|
|
|||||
| Shares outstandingb |
100,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| Net asset value per share |
$ | 25.16 | $ | 25.52 | ||||
|
|
|
|
|
|||||
| a | Cost of foreign currencies: $3,796 and $ —, respectively. |
| b | $0.001 par value, number of shares authorized: 500 million and 500 million, respectively. |
See notes to financial statements.
| 30 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Operations (Unaudited)
iSHARES®, INC.
Period ended February 29, 2012
| iShares MSCI Global Agriculture Producers Funda |
iShares MSCI Global Energy Producers Funda |
iShares MSCI Global Gold Miners Funda |
||||||||||
| NET INVESTMENT INCOME |
||||||||||||
| Dividends — unaffiliatedb |
$ | 3,982 | $ | 19,397 | $ | 6,306 | ||||||
|
|
|
|
|
|
|
|||||||
| Total investment income |
3,982 | 19,397 | 6,306 | |||||||||
|
|
|
|
|
|
|
|||||||
| EXPENSES |
||||||||||||
| Investment advisory fees (Note 2) |
1,227 | 1,214 | 1,164 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,227 | 1,214 | 1,164 | |||||||||
| Less investment advisory fees waived (Note 2) |
(25 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net expenses |
1,202 | 1,214 | 1,164 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net investment income |
2,780 | 18,183 | 5,142 | |||||||||
|
|
|
|
|
|
|
|||||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments — unaffiliated |
(557 | ) | (18 | ) | (68 | ) | ||||||
| Foreign currency transactions |
(767 | ) | (106 | ) | — | |||||||
|
|
|
|
|
|
|
|||||||
| Net realized loss |
(1,324 | ) | (124 | ) | (68 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation on: |
||||||||||||
| Investments |
111,649 | 191,803 | (335,374 | ) | ||||||||
| Translation of assets and liabilities in foreign currencies |
(18 | ) | 48 | 50 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net change in unrealized appreciation/depreciation |
111,631 | 191,851 | (335,324 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net realized and unrealized gain (loss) |
110,307 | 191,727 | (335,392 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 113,087 | $ | 209,910 | $ | (330,250 | ) | |||||
|
|
|
|
|
|
|
|||||||
| a | For the period from January 31, 2012 (commencement of operations) to February 29, 2012. |
| b | Net of foreign withholding tax of $5, $536 and $551, respectively. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
31 |
Table of Contents
Statements of Operations (Unaudited) (Continued)
iSHARES®, INC.
Period ended February 29, 2012
| iShares MSCI Global Select Metals & Mining Producers Funda |
iShares MSCI Global Silver Miners Funda |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Dividends — unaffiliatedb |
$ | 12,058 | $ | — | ||||
|
|
|
|
|
|||||
| Total investment income |
12,058 | — | ||||||
|
|
|
|
|
|||||
| EXPENSES |
||||||||
| Investment advisory fees (Note 2) |
777 | 1,098 | ||||||
|
|
|
|
|
|||||
| Total expenses |
777 | 1,098 | ||||||
|
|
|
|
|
|||||
| Net investment income (loss) |
11,281 | (1,098 | ) | |||||
|
|
|
|
|
|||||
| NET REALIZED AND UNREALIZED GAIN (LOSS) |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments — unaffiliated |
(66 | ) | (2,497 | ) | ||||
| Foreign currency transactions |
(401 | ) | — | |||||
|
|
|
|
|
|||||
| Net realized loss |
(467 | ) | (2,497 | ) | ||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation on: |
||||||||
| Investments |
28,042 | 167,582 | ||||||
| Translation of assets and liabilities in foreign currencies |
60 | 2 | ||||||
|
|
|
|
|
|||||
| Net change in unrealized appreciation/depreciation |
28,102 | 167,584 | ||||||
|
|
|
|
|
|||||
| Net realized and unrealized gain |
27,635 | 165,087 | ||||||
|
|
|
|
|
|||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | 38,916 | $ | 163,989 | ||||
|
|
|
|
|
|||||
| a | For the period from January 31, 2012 (commencement of operations) to February 29, 2012. |
| b | Net of foreign withholding tax of $94 and $ —, respectively. |
See notes to financial statements.
| 32 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets
iSHARES®, INC.
| iShares MSCI Global Agriculture Producers Fund |
iShares MSCI Global Energy Producers Fund |
|||||||
| Period from to February 29, 2012 (Unaudited) |
Period from to February 29, 2012 (Unaudited) |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 2,780 | $ | 18,183 | ||||
| Net realized loss |
(1,324 | ) | (124 | ) | ||||
| Net change in unrealized appreciation/depreciation |
111,631 | 191,851 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets resulting from operations |
113,087 | 209,910 | ||||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
5,016,794 | 5,040,238 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
5,016,794 | 5,040,238 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
5,129,881 | 5,250,148 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 5,129,881 | $ | 5,250,148 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 2,780 | $ | 18,183 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
200,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
200,000 | 200,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
33 |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Global Gold Miners Fund |
iShares MSCI Global Select Metals & Mining Producers Fund |
|||||||
| Period from to February 29, 2012 (Unaudited) |
Period from to February 29, 2012 (Unaudited) |
|||||||
| INCREASE (DECREASE) IN NET ASSETS |
||||||||
| OPERATIONS: |
||||||||
| Net investment income |
$ | 5,142 | $ | 11,281 | ||||
| Net realized loss |
(68 | ) | (467 | ) | ||||
| Net change in unrealized appreciation/depreciation |
(335,324 | ) | 28,102 | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in net assets resulting from operations |
(330,250 | ) | 38,916 | |||||
|
|
|
|
|
|||||
| CAPITAL SHARE TRANSACTIONS: |
||||||||
| Proceeds from shares sold |
27,825,960 | 2,476,586 | ||||||
|
|
|
|
|
|||||
| Net increase in net assets from capital share transactions |
27,825,960 | 2,476,586 | ||||||
|
|
|
|
|
|||||
| INCREASE IN NET ASSETS |
27,495,710 | 2,515,502 | ||||||
| NET ASSETS |
||||||||
| Beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 27,495,710 | $ | 2,515,502 | ||||
|
|
|
|
|
|||||
| Undistributed net investment income included in net assets at end of period |
$ | 5,142 | $ | 11,281 | ||||
|
|
|
|
|
|||||
| SHARES ISSUED |
||||||||
| Shares sold |
1,100,000 | 100,000 | ||||||
|
|
|
|
|
|||||
| Net increase in shares outstanding |
1,100,000 | 100,000 | ||||||
|
|
|
|
|
|||||
| a | Commencement of operations. |
See notes to financial statements.
| 34 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Statements of Changes in Net Assets (Continued)
iSHARES®, INC.
| iShares MSCI Global Silver Miners Fund |
||||
| Period from January 31, 2012a to February 29, 2012 (Unaudited) |
||||
| INCREASE (DECREASE) IN NET ASSETS |
||||
| OPERATIONS: |
||||
| Net investment loss |
$ | (1,098 | ) | |
| Net realized loss |
(2,497 | ) | ||
| Net change in unrealized appreciation/depreciation |
167,584 | |||
|
|
|
|||
| Net increase in net assets resulting from operations |
163,989 | |||
|
|
|
|||
| CAPITAL SHARE TRANSACTIONS: |
||||
| Proceeds from shares sold |
4,939,471 | |||
|
|
|
|||
| Net increase in net assets from capital share transactions |
4,939,471 | |||
|
|
|
|||
| INCREASE IN NET ASSETS |
5,103,460 | |||
| NET ASSETS |
||||
| Beginning of period |
— | |||
|
|
|
|||
| End of period |
$ | 5,103,460 | ||
|
|
|
|||
| Accumulated net investment loss included in net assets at end of period |
$ | (1,098 | ) | |
|
|
|
|||
| SHARES ISSUED |
||||
| Shares sold |
200,000 | |||
|
|
|
|||
| Net increase in shares outstanding |
200,000 | |||
|
|
|
|||
| a | Commencement of operations. |
See notes to financial statements.
| FINANCIAL STATEMENTS |
35 |
Table of Contents
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Global Agriculture Producers Fund
| Period from Jan. 31, 2012a to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 24.88 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.02 | |||
| Net realized and unrealized gainc |
0.75 | |||
|
|
|
|||
| Total from investment operations |
0.77 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 25.65 | ||
|
|
|
|||
| Total return |
3.09 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 5,130 | ||
| Ratio of expenses to average net assetse |
0.38 | % | ||
| Ratio of expenses to average net assets prior to waived feese |
0.39 | % | ||
| Ratio of net investment income to average net assetse |
0.88 | % | ||
| Portfolio turnover ratef |
1 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. Excluding such cash transactions, the portfolio turnover rate for the period ended February 29, 2012 would have been 1%. See Note 4. |
See notes to financial statements.
| 36 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Global Energy Producers Fund
| Period from Jan. 31, 2012a to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 24.79 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.12 | |||
| Net realized and unrealized gainc |
1.34 | |||
|
|
|
|||
| Total from investment operations |
1.46 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 26.25 | ||
|
|
|
|||
| Total return |
5.89 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 5,250 | ||
| Ratio of expenses to average net assetse |
0.39 | % | ||
| Ratio of net investment income to average net assetse |
5.84 | % | ||
| Portfolio turnover ratef |
0 | %g | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. See Note 4. |
| g | Rounds to less than 1%. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
37 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Global Gold Miners Fund
| Period from Jan. 31, 2012a to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 25.00 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.03 | |||
| Net realized and unrealized lossc |
(0.03 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$ | 25.00 | ||
|
|
|
|||
| Total return |
(0.04 | )%d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 27,496 | ||
| Ratio of expenses to average net assetse |
0.39 | % | ||
| Ratio of net investment income to average net assetse |
1.72 | % | ||
| Portfolio turnover ratef |
1 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 38 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Global Select Metals & Mining Producers Fund
| Period from Jan. 31, 2012a to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 24.76 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment incomeb |
0.11 | |||
| Net realized and unrealized gainc |
0.29 | |||
|
|
|
|||
| Total from investment operations |
0.40 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 25.16 | ||
|
|
|
|||
| Total return |
1.58 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 2,516 | ||
| Ratio of expenses to average net assetse |
0.39 | % | ||
| Ratio of net investment income to average net assetse |
5.66 | % | ||
| Portfolio turnover ratef |
0 | %g | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered in Creation Units but includes portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units partially for cash in U.S. dollars. See Note 4. |
| g | Rounds to less than 1%. |
See notes to financial statements.
| FINANCIAL HIGHLIGHTS |
39 |
Table of Contents
Financial Highlights (Continued)
iSHARES®, INC.
(For a share outstanding throughout the period)
iShares MSCI Global Silver Miners Fund
| Period from to Feb. 29, 2012 (Unaudited) |
||||
| Net asset value, beginning of period |
$ | 24.87 | ||
|
|
|
|||
| Income from investment operations: |
||||
| Net investment lossb |
(0.01 | ) | ||
| Net realized and unrealized gainc |
0.66 | |||
|
|
|
|||
| Total from investment operations |
0.65 | |||
|
|
|
|||
| Net asset value, end of period |
$ | 25.52 | ||
|
|
|
|||
| Total return |
2.61 | %d | ||
|
|
|
|||
| Ratios/Supplemental data: |
||||
| Net assets, end of period (000s) |
$ | 5,103 | ||
| Ratio of expenses to average net assetse |
0.39 | % | ||
| Ratio of net investment loss to average net assetse |
(0.39 | )% | ||
| Portfolio turnover ratef |
1 | % | ||
| a | Commencement of operations. |
| b | Based on average shares outstanding throughout the period. |
| c | The amount reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities. |
| d | Not annualized. |
| e | Annualized for periods of less than one year. |
| f | Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. |
See notes to financial statements.
| 40 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (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.
These financial statements relate only to the following funds (each, a “Fund,” and collectively, the “Funds”):
| iShares MSCI Fund | Diversification Classification | |
| Global Agriculture Producersa |
Non-diversified | |
| Global Energy Producersa |
Non-diversified | |
| Global Gold Minersa |
Non-diversified | |
| Global Select Metals & Mining Producersa |
Non-diversified | |
| Global Silver Minersa |
Non-diversified |
| a | The Fund commenced operations on January 31, 2012. |
Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.
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. The investment adviser uses a “passive” or index approach to try to achieve each Fund’s investment objective.
Each Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. markets. This 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 Funds; 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; less 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.
Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.
| 1. | SIGNIFICANT ACCOUNTING POLICIES |
The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| NOTES TO FINANCIAL STATEMENTS |
41 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY VALUATION
U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The securities and other assets of each Fund are valued at fair value pursuant to the policies and procedures approved by the Board of Directors of the Company (the “Board”).
| • | Equity investments traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
| • | Open-end U.S. mutual funds are valued at that day’s published net asset value (NAV). |
| • | Exchange-traded funds (“ETFs”) traded on a recognized securities exchange are valued at that day’s last reported trade price or the official closing price, as applicable, on the exchange where the ETF is primarily traded. ETFs traded on a recognized exchange for which there were no sales on that day are valued at the last traded price. |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the fair value of such investment or if a price is not available, the investment will be valued based upon other available factors in accordance with policies approved by the Board. Such valuations are reported to the Board.
Fair value pricing could result in a difference between the prices used to calculate a 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.
Various inputs are used in determining the fair value of investments. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an investment 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 three levels of the fair value hierarchy are as follows:
| • | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities; |
| • | 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; and |
| • | Level 3 — Unobservable inputs for the asset or liability, including the Funds’ assumptions used in determining the fair value of investments. |
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds’ perceived risk of that instrument.
| 42 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
The following table summarizes the value of each of the Funds’ investments according to the fair value hierarchy as of February 29, 2012. The breakdown of each Fund’s investments into major categories is disclosed in its respective Schedule of Investments.
| iShares MSCI Fund and Investment Type |
Investments | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Global Agriculture Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,003,540 | $ | — | $ | — | $ | 5,003,540 | ||||||||
| Preferred Stocks |
73,745 | — | — | 73,745 | ||||||||||||
| Investment Companies |
45,209 | — | — | 45,209 | ||||||||||||
| Short-Term Investments |
5,113 | — | — | 5,113 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,127,607 | $ | — | $ | — | $ | 5,127,607 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Energy Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,110,261 | $ | — | $ | — | $ | 5,110,261 | ||||||||
| Preferred Stocks |
116,369 | — | — | 116,369 | ||||||||||||
| Short-Term Investments |
5,174 | — | — | 5,174 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,231,804 | $ | — | $ | — | $ | 5,231,804 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Gold Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 27,456,798 | $ | — | $ | — | $ | 27,456,798 | ||||||||
| Short-Term Investments |
5,208 | — | — | 5,208 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 27,462,006 | $ | — | $ | — | $ | 27,462,006 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Select Metals & Mining Producers |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 2,335,390 | $ | 592 | $ | — | $ | 2,335,982 | ||||||||
| Preferred Stocks |
165,857 | — | — | 165,857 | ||||||||||||
| Short-Term Investments |
2,241 | — | — | 2,241 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 2,503,488 | $ | 592 | $ | — | $ | 2,504,080 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Global Silver Miners |
||||||||||||||||
| Assets: |
||||||||||||||||
| Common Stocks |
$ | 5,101,332 | $ | — | $ | — | $ | 5,101,332 | ||||||||
| Short-Term Investments |
4,576 | — | — | 4,576 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 5,105,908 | $ | — | $ | — | $ | 5,105,908 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NOTES TO FINANCIAL STATEMENTS |
43 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source. Any taxes withheld that are reclaimable from foreign tax authorities as of February 29, 2012 are reflected in dividends receivable. Non-cash dividends received in the form of stock in an elective dividend, if any, are recorded as dividend income at fair value. Distributions received by the Funds may include a return of capital that is estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. 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. 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.
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.
FOREIGN TAXES
The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in “Other foreign taxes.” Foreign taxes payable as of February 29, 2012, if any, are disclosed in the Funds’ Statements of Assets and Liabilities.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.
FEDERAL INCOME TAXES
Each Fund is treated as an entity separate from the Company’s other funds 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 ordinary income and any net capital 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 is required.
| 44 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
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 Funds’ financial statements and disclosures.
| 2. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Pursuant to an Investment Advisory Agreement with the Company, BlackRock Fund Advisors (“BFA”) manages the investment of each Fund’s assets. BFA is a California corporation indirectly owned by BlackRock, Inc. (“BlackRock”). Under the Investment Advisory Agreement, BFA is responsible for substantially all expenses of the Funds, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees, litigation expenses and any extraordinary expenses.
For its investment advisory services to each Fund, BFA is entitled to an annual investment advisory fee of 0.39% based on the average daily net assets of each Fund.
BFA has contractually agreed to waive a portion of its investment advisory fees for the iShares MSCI Global Agriculture Producers and iShares MSCI Global Select Metals & Mining Producers Funds through December 31, 2014 in an amount equal to the investment advisory fees payable on the amount of each Fund’s investment in other iShares funds. The iShares MSCI Global Select Metals & Mining Producers Fund did not hold any iShares funds during the period ended February 29, 2012.
At the Special Board of Directors meeting held on January 5, 2012, the Board approved a new distribution agreement with BlackRock Investments, LLC (“BRIL”). BRIL is an affiliate of BFA. Effective April 1, 2012, BRIL will replace SEI Investments Distribution Co. as the distributor for each Fund. Pursuant to the new distribution agreement, BFA will be responsible for any fees or expenses for distribution services provided to the Funds.
Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is included in “Interest—affiliated” in the Statements of Operations.
The PNC Financial Services Group, Inc. (“PNC”) and Barclays PLC (“Barclays”) are the largest stockholders of BlackRock. Due to the ownership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but Barclays is not.
The iShares MSCI Global Agriculture Producers and iShares MSCI Global Select Metals & Mining Producers Funds, in order to improve their portfolio liquidity and their ability to track their respective underlying index, may invest in shares of other iShares funds that invest in securities in each Fund’s respective underlying index.
| NOTES TO FINANCIAL STATEMENTS |
45 |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Investments in issuers considered to be affiliates of the Fund (excluding short-term investments) during the period ended February 29, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:
| iShares MSCI Fund and Name of Affiliated Issuer |
Shares Held at Beginning of Period |
Shares Purchased |
Shares Sold |
Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Net Realized Gain (Loss) |
|||||||||||||||||||||
| Global Agriculture Producers |
||||||||||||||||||||||||||||
| iShares S&P India Nifty 50 Index Fund |
— | 1,820 | — | 1,820 | $ | 45,209 | $ | — | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Certain directors and officers of the Company are also officers of BlackRock Institutional Trust Company, N.A. and/or BFA.
| 3. | INVESTMENT PORTFOLIO TRANSACTIONS |
Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the period ended February 29, 2012 were as follows:
| iShares MSCI Fund | Purchases | Sales | ||||||
| Global Agriculture Producers |
$ | 395,986 | $ | 20,040 | ||||
| Global Energy Producers |
257,842 | 3,236 | ||||||
| Global Gold Miners |
174,599 | 174,319 | ||||||
| Global Select Metals & Mining Producers |
403,141 | 9,021 | ||||||
| Global Silver Miners |
38,338 | 36,986 | ||||||
In-kind transactions (see Note 4) for the period ended February 29, 2012 were as follows:
| iShares MSCI Fund | In-kind Purchases |
In-kind Sales |
||||||
| Global Agriculture Producers |
$ | 4,635,457 | $ | — | ||||
| Global Energy Producers |
4,780,240 | — | ||||||
| Global Gold Miners |
27,791,960 | — | ||||||
| Global Select Metals & Mining Producers |
2,079,742 | — | ||||||
| Global Silver Miners |
4,934,895 | — | ||||||
| 4. | CAPITAL SHARE TRANSACTIONS |
Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.
The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities, which constitutes an optimized representation of the securities of that fund’s underlying index, and a specified amount of cash. Certain funds in the Company may be offered in Creation Units solely or partially for cash in U.S. dollars. Investors purchasing and redeeming Creation Units may pay a purchase transaction fee and a redemption transaction fee directly to State Street
| 46 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Notes to Financial Statements (Unaudited) (Continued)
iSHARES®, INC.
Bank and Trust Company, the Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities.
From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.
| 5. | INCOME TAX INFORMATION |
For purposes of U.S. GAAP, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. 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 gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share.
The tax character of current year distributions will be determined at the end of the current fiscal year.
The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.
As of February 29, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
| iShares MSCI Fund | Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| Global Agriculture Producers |
$ | 5,015,958 | $ | 166,508 | $ | (54,859 | ) | $ | 111,649 | |||||||
| Global Energy Producers |
5,040,001 | 211,154 | (19,351 | ) | 191,803 | |||||||||||
| Global Gold Miners |
27,797,380 | 107,109 | (442,483 | ) | (335,374 | ) | ||||||||||
| Global Select Metals & Mining Producers |
2,476,038 | 78,038 | (49,996 | ) | 28,042 | |||||||||||
| Global Silver Miners |
4,938,326 | 224,961 | (57,379 | ) | 167,582 | |||||||||||
Management has reviewed the tax positions as of February 29, 2012, inclusive of the open tax return years, and has determined that no provision for income tax is required in the Funds’ financial statements.
| 6. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
| NOTES TO FINANCIAL STATEMENTS |
47 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited)
iSHARES®, INC.
Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required to consider and approve the proposed Investment Advisory Contract between the Company and BFA on behalf of the Funds (the “Advisory Contract”). As required by Section 15(c), the Board requested, and BFA provided, such information as the Board, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Contract.
At a meeting held on December 5-6, 2011, the Board approved the selection of BFA and the Advisory Contract for the Funds, based on its review of qualitative and quantitative information provided by BFA. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board meetings. The Independent Directors were advised by their independent counsel throughout the process.
In selecting BFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, considered the following factors, no one of which was controlling, and made the following conclusions:
Nature, Extent and Quality of Services to be Provided by BFA — The Board reviewed the scope of services to be required of or provided by BFA under the Advisory Contract. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience as well as the resources expected to be available from BFA and its affiliates for the support of the Funds and their shareholders. The Board considered in particular that BFA’s services for other iShares funds reflect BFA’s core competencies, including BFA’s effective use of its proprietary investment systems analyzing securities market risk, asset class correlations and expected returns. The Board also considered services provided by BFA and its affiliates to other iShares funds in connection with the review of counterparty and issuer credit risk and securities lending opportunities and the oversight of intermediaries that provide shareholder support and processing functions. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Funds would be similar to the scope and quality of services provided to other iShares funds.
The Board also considered BFA’s compliance program and its compliance record with respect to other iShares funds. The Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board reviewed and considered BFA’s investment and risk management processes and strategies, and matters related to BFA’s portfolio compliance policies and procedures.
The Board took into account discussions at prior Board meetings, including representations and information provided by management regarding the resources and strengths of BFA and the financial condition of BFA and BlackRock.
Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BFA to the Funds under the Advisory Contract supported the Board’s approval of the Advisory Contract.
Fund Expenses — The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of the Funds in comparison with the same information for other registered investment companies objectively selected by Lipper as comprising the Funds’ applicable peer group pursuant to Lipper’s proprietary methodology (the “Lipper Group”). Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Group included in part mutual funds, closed-end funds, exchange traded funds, or funds with differing investment objective classifications, investment focuses and
| 48 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
other characteristics (e.g., actively managed funds and funds sponsored by “at-cost” service providers). In support of its review of the statistical information, the Board was provided with a general description of the methodology used by Lipper to determine the applicable Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board also noted that the proposed investment advisory fee rate and overall expenses for the Funds compared favorably to the investment advisory fee rate and overall expenses of the funds in the Lipper Group.
Based on this review, the other factors considered at the meeting, and their general knowledge of mutual fund pricing, the Board concluded that the proposed investment advisory fees and expense levels of the Funds, as compared to the investment advisory fees and expense levels of the funds in the Lipper Group, supported the Board’s approval of the Advisory Contract.
Costs of Services to be Provided to the Funds and Profits to be Realized by BFA and Affiliates — The Board did not consider the profitability of the Funds to BFA based on the fees payable under the Advisory Contract or revenue to be received by BFA or its affiliates in connection with services to be provided to the Funds since the proposed relationships had not yet commenced. The Board noted that it expects to receive profitability information from BFA on at least an annual basis and will thus be in a position to evaluate whether, following the expiration of the Advisory Contract’s initial two year term, any adjustments in Funds fees would be appropriate.
Economies of Scale — The Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board noted that the Advisory Contract did not provide for any breakpoints in the Funds’ investment advisory rates as the assets of the Funds increase. However, the Board noted that should material economies of scale exist in the future, a breakpoint structure for the Funds may be appropriate. The Board noted information presented at prior Board meetings regarding BFA’s historic profitability as investment adviser to the iShares fund complex and noted that BFA and BlackRock had continued to make significant investments in the iShares fund complex and the infrastructure supporting the iShares funds.
Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the structure of the investment advisory fees reflects appropriate sharing of potential economies of scale with the Funds’ shareholders and supported the Board’s approval of the Advisory Contract.
Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates — The Board considered certain information regarding the investment advisory/management fee rate for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end and closed-end funds registered under the 1940 Act, collective trust funds, and institutional separate accounts (together, the “Other Accounts”). The Board noted that BFA and its affiliates do not manage Other Accounts that track the same underlying indexes as the Funds. The Board further noted that BFA previously provided the Board with detailed information regarding how Other Accounts (particularly institutional clients) generally differ from the Funds, including in terms of the different services provided as well as other significant differences in the approach of BFA and its affiliates to the Funds, on one hand, and Other Accounts, on the other. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks of managing and providing other services to the Funds, as publicly traded exchange traded funds, as compared to Other Accounts that are institutional clients in light of differing regulatory requirements and client-imposed mandates. The Board noted that the investment advisory fee rate under the Advisory Contract for the Funds was generally higher than the investment advisory/management fee rates for
| BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT |
49 |
Table of Contents
Board Review and Approval of Investment Advisory
Contract (Unaudited) (Continued)
iSHARES®, INC.
Other Accounts that are institutional clients of BFA (or its affiliates), and concluded that the differences appeared to be consistent with the factors discussed.
Other Benefits to BFA and/or its Affiliates — Except as noted below, the Board did not consider any ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Funds by BFA since the proposed relationship had not yet commenced. However, the Board noted that BFA would not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board considered the potential payment of advisory fees and/or administration fees to BFA and BTC (or their affiliates) in connection with any investments by the Funds in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also considered the potential for revenue to BTC, the Funds’ securities lending agent, for loaning any portfolio securities. The Board further noted that any portfolio transactions on behalf of the Funds placed through a BFA affiliate or purchased from an underwriting syndicate in which a BFA affiliate participates, are reported to the Board pursuant to Rule 17e-1 or Rule 10f-3, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.
Based on the considerations described above, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services to be rendered and that could not have been the product of arm’s-length bargaining and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract.
| 50 | 2012 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS |
Table of Contents
For more information visit www.iShares.com
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iS-SAR-812-0212
Table of Contents
Copies of the semi-annual reports transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 are attached.
Item 2. Code of Ethics.
Not applicable to this semi-annual filing.
Item 3. Audit Committee Financial Expert.
Not applicable to this semi-annual filing.
Item 4. Principal Accountant Fees and Services.
Not applicable to this semi-annual filing.
Item 5. Audit Committee of Listed Registrants.
Not applicable to this semi-annual filing.
Table of Contents
Item 6. Investments.
| (a) | Schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form. |
| (b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.
Item 11. 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 attached certification. |
| (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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a) (1) Not applicable to this semi-annual filing.
(a) (2) Section 302 Certifications are attached.
(a) (3) Not applicable to the Registrant.
(b) Section 906 Certifications are attached.
Table of Contents
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: | April 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: | April 18, 2012 | |
| By: /s/ Jack Gee | ||
| Jack Gee, Treasurer and Chief Financial Officer (Principal Financial Officer) | ||
| Date: | April 18, 2012 | |